The Inter-American Development Bank (IDB) has approved a US$40.9 million loan from its ordinary capital and a $25 million loan from the Canada Climate Fund to finance a 64.8 MW solar PV project in Uruguay.
Fotowatio Renewable Ventures (FRV) plans to build the The La Jacinta solar project five kilometers south of the city of Salto near the border with Argentina. The project was awarded through a 200 MW government in solicitation in 2013, however FRV says that this is the first project to receive a power purchase agreement (PPA).
While Uruguay has significant solar ambitions, so far the nation’s largest completed PV project is only 1.75 MW, and a $0.091/kWh price cap on projects in the 2013 solicitation caused many analysts to question the viability of projects awarded.
For many solar projects financing is the biggest hurdle, and this is especially true of Latin America. The La Jacinta project is one of only five PV projects larger than 50 MW in Latin America that has received both a PPA and financing, according to GTM Research’s 2014 Latin America PV Playbook.
FRV had announced the close of $94 million in bank financing for the project a week prior, and IDB funding will support a $70 million project finance agreement with DNB Group and Intesa Sanpaolo. Spain’s Santander Bank is also providing $24 million in funding.
IDB mentions the important role of development banks in projects like this in project documents. The Banks participation is critical for the financial feasibility of the project by providing and mobilizing financing at tenors that are not available in the commercial market, states IDB. There are very few examples of non-recourse project financing of this nature in Uruguay and those examples are generally limited to 12 years.
FRV plans to build the the project using BYD multicrystalline silicon PV modules, with completion scheduled for May 2015.