Finnfund To Contribute US$3M To Carec Facility

07/18/2005

Author:
Renewable Energy News
United States
energy.sourceguides.com

Categories:
Cleantech
Venture Capital

Preview:
Finnish development finance company Finnfund will invest US$3mn in the Central American renewable energy, energy efficiency and cleaner production facility (Carec), an official at Carec's developer, said US non-profit organization E+Co. Finnfund's contribution brings Carec's total debt and equity to US$15mn, which it can now start distributing to qualified projects, E+Co Capital Latin America CEO Fernando Alvarado said.

Article:
Monday, July 18, 2005 18:49 -- Finnish development finance company Finnfund will invest US$3mn in the Central American renewable energy, energy efficiency and cleaner production facility (Carec), an official at Carec's developer, US non-profit organization E+Co, told Business News Americas (www.bnamericas.com).

Carec is a fund designed to invest in Central American SMEs looking to develop hydro, biomass, wind, geothermal and co-generation projects to reduce the region's dependence on costly imported hydrocarbons.

Finnfund's contribution brings Carec's total debt and equity to US$15mn, which it can now start distributing to qualified projects, E+Co Capital Latin America CEO Fernando Alvarado said.

Last year the Central American Bank for Economic Integration (Cabei) and the Inter-American Development Bank's Multilateral Investment Fund (MIF) each approved US$5mn loans for the facility.

The Belgian Investment Company for Developing Countries (BIO) agreed to invest US$2mn in April this year and Finnfund has agreed to provide US$2mn in debt and US$1mn in equity.

The Carec facility is structured to have up to US$13-15mn in equity and some US$5-7mn of debt, which would bring its total capitalization to US$15-20mn.

E+Co is currently in conversations with US and European private sector banks to obtain the remaining US$5mn, Alvarado said. Documentation for these loans should be finalized in September this year.

E+Co aims to disburse the US$20mn within the first five years of operations and recover that money in the remaining five years of the 10-year Carec facility.

Currently there are 10 projects in the region that have been identified for funding, Alvarado said. By year-end the construction of two small-scale hydro projects - one in Guatemala and the other in Honduras - could begin using Carec financing, he added.

Demand growth in the region's power sector is approximately 5-6% a year, meaning that some 5,000-5,700MW of installed capacity will have to come online over the next 10 years, according to Carec information.

Ideally, renewable energy resources will make up between 50-60% of that, which would require approximately 300-350MW of new renewable energy resources to come online each year, Carec said. At present only about 160MW of renewable energy comes online in the region every year.