IDB finances 54 MW merchant solar project in Chile

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Yesterday a division of the InterAmerican Development Bank (IDB) announced that it would supply US$20 million towards the construction of French developer Solairedirect’s Los Loros solar PV project in Northern Chile.

This will be joined by $18 million from from the Canadian Climate Fund for the Private Sector in the Americas and $7 million from the China Co-Financing Fund. Additionally Proparco, the French Development Agency, will contribute a senior loan of $20 million.

The Los Loros project will be connected to Chile’s Central (SIC) grid, and unlike the vast majority of large solar projects constructed globally its output will not be sold through a power purchase agreement (PPA) or feed-in tariff contract, but entirely on the spot market.

The few “merchant” solar plants like the Los Loros which have been built to date are mostly located in Latin America. SunEdison and SunPower have both built merchant projects in Chile, which followed Gauss Energía’s 30 MW merchant solar plant, the Aura Solar 1, in Mexico.

Additionally, First Solar has built an 18 MW PV plant without a PPA in Texas. However the company hesitated to call its Barilla project it a merchant plant as it was open to offers of a PPA.

Export and development Banks have played a major role in large-scale solar in Latin America, and particularly in merchant solar projects in the region. Like Solairedirect’s Los Loros, both the SunEdison and SunPower projects were funded by development banks.

Last year Spain’s Grupo Isastur reported that its subsidiary Isotron Chile had been contracted to carry out civil works for the Los Loros project. The construction of a substation and a line of seven kilometers is also planned.

Additional reporting by Blanca Díaz López.