EIB Global lends $125m to Ecuador for interconnection with Peru
EIB Global and Empresa Pública Estratégica Corporación Eléctrica del Ecuador (CELEC EP) have signed a $125 million loan agreement to finance the implementation of the Ecuadorian side of a power interconnection system between Ecuador and Peru.
The project aims to improve power supply security in Ecuador and Peru, optimise market cost structures and foster regional power trade.
The interconnector is a key component of the Sistema de Interconexión Eléctrica Andina, consisting of a 550km high-voltage transmission line from the Chorrillos substation in Ecuador to the Nueva Piura substation in Peru.
The interconnection between the two countries is hoped to improve security of supply and enable the two countries to trade electricity, which will reduce generation costs.
The project will be implemented by CELEC EP, the Ecuadorian state-owned energy company responsible for the generation, transmission and distribution of electricity in Ecuador, increasing Ecuador and Peru’s electricity transmission capacity.
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Said the president of the European Investment Bank Nadia Calviño in a release: “As the financial arm of the European Union, we are proud to be supporting such an important project to improve the security of electricity supply and trade between Ecuador and Peru while also contributing to decarbonisation and the fight against climate change.
“Alongside our partners, the EIB is underpinning sustainable economic development for Ecuador under the EU’s Latin America and the Caribbean Global Gateway Investment Agenda.”
Added CEO of Empresa Pública Estratégica Corporación Eléctrica del Ecuador, Paúl Urgilés: “The 500kV electricity interconnection between Ecuador and Peru will enable efficient and secure electricity trade between the two countries thanks to their interconnected hydrological systems.
“Spearheaded by the president of Ecuador Daniel Noboa Azín and the minister of Energy and Mines Andrea Arrobo Peña, the project will ensure a secure and reliable supply of electricity for Ecuador with no more power cuts.”
The project falls under the EU Global Gateway initiative, co-financed by the Inter-American Development Bank with an additional $125 million loan.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”