Finnfund (Finnish Fund for Industrial Cooperation Ltd), a finance company that provides long-term venture capital for private projects in developing countries, has paid $15 million of the approximately $160 million needed for a 100 MW solar project in El Salvador.
The company responsible for the project is Bosforo Ltda. De CV, jointly owned by AES Soluciones, Ltda. De CV, part of AES El Salvador, the Salvadoran unit of U.S. power distributor AES Corporation; and CMI Solaris Investments, SL, owned by Guatemalan agro-industrial group Corporación Multi-Inversiones (CMI).
The Bosphorus PV project will be built across three phases, and will consist of 10 solar installations distributed in different regions.
In early December, AES and CMI announced they had received the first funding for the project from the Overseas Private Investment Corporation (OPIC), a U.S. government agency that helps American businesses invest in emerging markets.
The project, consisting of 10 solar power plants with a capacity of 10 MW each, will be located in low income, rural areas, where many residents depend on remittances from abroad, and illiteracy is common.
For the first 40 MW phase of the project, the company has reached an agreement in three municipalities in the eastern part of the country: Conchagua, El Carmen and Pasaquina.
In the second phase, the two companies will install 40 MW of solar at four locations across the western part of the country, according to the Ministry of Economy.
The third phase will likely be built at unspecified sites in central El Salvador, although the local authorities have yet to confirm whether energy regulator Consejo Nacional de Energía (CNE) will grant long-term PPAs.
Over the years, Finnfund has financed several companies in Central America, but this is the first investment in El Salvador.
“Solar energy in El Salvador fits well with Finnfund’s strategy. For us it is particularly important that the projects are taking place in poor areas which, in terms of development, have been left behind in many ways. We have paid special attention to cooperation with local communities,” says Jaakko Kangasniemi, CEO of Finnfund.