IDB to fund 100 MW solar PV project in El Salvador

Driven by a need to mitigate the high cost of imported fossil fuels and excellent natural potential, Central America has become a hot market for utility-scale solar and wind projects.

From the beginning of the year to mid-November, Honduras installed 389 MW of solar PV, which could allow the nation to receive a higher portion of its electricity from solar than any other nation on earth including Italy and Germany.

In El Salvador, progress has been slower. The nation awarded power contracts for 94 MW of utility-scale solar in June 2014, but to date the largest utility-scale solar project which has been built is a 2.5 MW plant in Moncagua.

That is expected to change. On Thursday the Inter-American Development Bank announced that it will supply two loans totaling US$88 million to finance the construction, operation and maintenance of a 100 MW solar PV project in El Salvador. This includes $57.7 million in ordinary capital and $30 million from the Canadian Climate Fund for the Private Sector.

The Providencia Solar project comprised the majority of the 94 MW awarded in last summer’s auction, and developers Neoen and Almaval bid in for 60 MW-AC at a price of $0.102 per kilowatt-hour. IDB estimated the total cost of the project at $144 million for the 60MW-AC/74 MW-DC project, however since that time Providencia has gotten larger.

Neoen is the majority owner of the project, which will be located near the Monseñor Óscar Arnulfo Romero airport outside San Salvador. Neoen recently made headlines by leading a consortium that completed the Cestas project in France, the largest solar project in Europe to date.

When completed La Providencia is expected to generate 170 gigawatt-hours (GWh) annually, which will increase the nation’s electricity generation by roughly 3%.

IDB is also considering financing a 20 MW project in El Salvador under development by SolarReserve.

For more coverage of Latin American solar markets in Spanish, please see the pv magazine Latinoamérica website.