CONTEXT

Colombia is a country with good coverage of the electric power service, with an average coverage rate nationwide of 96.1 per cent and disaggregated in urban and rural 99.6 per cent and 84.8 per cent respectively. However, two-thirds of the national territory is not served and is referred to as ZNI (Non-Interconnected Zones). In the ZNI areas, approximately 1.83 million people live in 1,565 locations, of which only 34 per cent have electric power service.

Enabling access to electricity for off-grid consumers presents unique opportunities, where the low carbon growth trajectory can be the only viable, cost-effective solution to providing energy services to remote populations.

PROJECT

The objective of the project was to promote and increase private investments in renewable energy generation in the non-interconnected zones (ZNIs) of Colombia while reducing GHG emissions.

With this project, BASE addressed the fundamental challenge of catalysing investments in renewable energy-based mini-grid system projects and transforming the energy landscape via combinations of smart financing instruments and technologies to the benefit of underserved populations. This not only increased access to electricity, but also leapfrogs fossil fuel dominated electricity supply with renewable energy technologies and provide a more sustainable, reliable and high-quality service for consumers. This is indelibly linked with accomplishing a range of development goals and is widely considered to have a catalytic impact on development pathways.

OUTCOME

The programme provided Bancóldex, Colombia’s second-tier public bank in charge of supporting entrepreneurial development, with additional long term finance to enhance access to long term finance by private sector investors on terms and conditions needed to cover CAPEX and payback requirements of renewable energy projects in the ZNIs. Bancóldex will on-lend to international financial institutions that should, in turn, provide sub-loans on adequate terms to investors.

To ensure more favourable environmental impacts and promote replication, the programme focused on providing access to long term finance to energy generation operators and technology providers that already have a credit history and experience with mini-grids and investments in areas not interconnected to the grid. This project received USD 10 million in concessional financing from international donors and is part of the Inter-American Development Bank (IDB) efforts to support Bancoldex. BASE provided its experience and expertise to structure and develop the investment strategy