FMO Financing of Argentine Renewable Energy Transition Hits USD 90 Mln After Wind Farms Loan
FMO has extended a USD 26 million long-term loan to Argentine energy company Genneia to develop two wind farms at Villalonga and Chubut Norte in the provinces of Buenos Aires and Chubut.
FMO’s total financial backing for Argentina’s strategy to boost the share of its energy supply derived from renewable sources to 20% by 2025, from only 2% currently, has now reached USD 90 million.
The wind farms are being financed under the Argentine Government’s RenovAr programme, which was launched in 2015 to attract foreign investors into the energy sector. FMO’s two earlier loans to wind energy and solar power projects in Argentina were also under the RenovAr programme.
Taken together, the Argentinian energy projects in which FMO has participated in the financing, have a capacity of more than 200 MW, or enough electricity to supply roughly 300,000 people. President Macri is seeking to phase out energy subsidies by encouraging the growth in domestic and sustainable power production and reducing the country’s dependence on energy imports.
Frederik van Pallandt, Director of Energy at FMO, said: “FMO and other development finance institutions are strongly supporting Argentina’s ambition to move towards a more sustainable domestic energy supply base and cut its dependence on hydrocarbon imports. This is the bank’s third investment in the renewable power generating industry in the country and the first where an Argentine company is implementing the projects.”
The two new wind farms will together be able to produce more than 78 MW of power, or enough electricity to supply 110,000 people.
FMO‘s loan, together with a credit from the Latin American development bank CAF, is covering the unsecured part of the total USD 131 million in debt package for Genneia. The majority of the financing is being provided by Japanese bank SMBC and is insured by Danish export credit agency EKF.
A central pillar of RenovAr is a 20-year power purchasing agreement, whereby electricity contracts are guaranteed by a special government fund (FODER), backed by the World Bank.