Posted by: Arjan Visser, Senior Consultant, Sustainable Business Practices
In November, Enclude concluded an assignment under the Inter-American Development Bank (IDB) that delivered recommendations to the Government of Honduras and its financing partners (the IDB and the International Finance Corporation) on the development of a national investment facility for renewable energy.
Both power consumption and prices of imported fossil fuels have been rising steadily in Honduras in recent years, increasing the country’s carbon output and imposing a greater cost burden on local energy consumers. Access to capital will be an important need amongst clean energy project developers. Offering credit lines through a renewable energy facility that provides low cost funds over an extended term would encourage banks and equity investors to finance projects structured as long-term power purchase agreements with large, private consumers of electricity as well as with the state-owned power company.
Relying on a list of key potential energy projects, Enclude presented recommendations on how a US$10 million contribution from the UNDP Scaling-Up Renewable Energy Program (SREP) could be leveraged with additional funding from equity and debt providers to increase private sector investment in clean energy production. In addition, Enclude’s team worked with the country’s Ministry of Finance to acquire an additional US$15 million in funding for the proposed clean energy facility. The country’s preparedness for a pipeline of clean energy projects and the availability of newly-raised capital helped to make Honduras the most prepared country among those participating in the SREP program.