IFC loans US$400 million to ENGIE Chile for new BESS
IFC loans US$400 million to ENGIE Chile for new BESS
The International Finance Corporation (IFC) has signed a US$400 million loan to Engie Energía Chile S.A. (ENGIE Chile) to fund the installation of new Battery Energy Storage Systems (BESS’).
The BESS’ (capacity yet unknown) will help facilitate the supply of clean energy to Chile’s National Electric System (SEN).
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A member of the World Bank Group, this is IFC’s first sustainability-linked loan in Chile’s energy sector and is set to accelerate Engie’s decarbonisation programme in the country.
The financing package consists of US$200 million provided by the IFC; US$114.5 million from investors under IFC’s Managed Co-lending Portfolio Program; and US$35.5 million from ILX Fund, a Sustainable Development Goals (SDG)-focused investor under IFC’s B Loan Program.
IFC is also expecting to close a US$50 million parallel loan in the next few weeks, bringing the financing package to a total of US$400 million.
According to IFC, the loan was structured with the specific objective of decommissioning or converting ENGIE Chile’s remaining coal generation assets.
“IFC is mobilizing the necessary capital for sustainable innovation to promote decarbonization initiatives and adapt to global warming,” said Manuel Reyes-Retana, regional director at IFC.
“Supporting leading companies such as Engie is vital to face the current climate challenges efficiently, and, for us, it is setting a precedent in green and sustainability-linked loans for the energy industry in Chile.”
Rosaline Corinthien, CEO of Engie Chile, added: “We are very happy to have obtained this support from the IFC, a green loan that accounts for the work we do every day hand in hand with caring for people and the environment. Linked to our ESG performance, we have committed with IFC on targets for non-financial indicators on emissions and diversity, two key elements of our corporate strategy. This financing is a fundamental piece to materialize our ambitious investment plan in renewable energies in Chile, and thus continue leading the country’s energy transition.”
The funding package represents IFC broadening its international financing portfolio. Earlier this year the company partnered with fellow development bank AfDB to finance a total of 25MW of co-located energy storage in Malawi and Eritrea.
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.”