IDB Invest Closes Financing for Uruguay’s First Green Transmission Line, Boosts the Energy Sector
- With this project, IDB Invest will launch the world's first certificate for green transmission lines, an innovative solution that promotes environmentally sustainable investments in energy transportation.
- The IDB Invest Green Transmission Lines Certificate will allow the region's energy sector to attract new investors seeking profitability through green projects.
IDB Invest, a member of the IDB Group, is providing $87 million worth of financing for Uruguay’s Financial Trust for the Closing of the 500 kV Transmission Ring (Tacuarembó-Salto), seeking to strengthen the country's national electricity transmission system through the use of renewable energy resources.
The project, which seeks to ensure the reliability of the country's national electricity transmission system while promoting the use of renewable energy, involves the design, construction, operation and maintenance of a 365-kilometer-long transmission line at a 500 kV voltage, which will interconnect the substations at the Departments of Tacuarembó and Salto. In addition, as part of the planned works, the Chamberlain substation will be built and the Salto substation will be reinforced. The project complements the Melo - Tacuarembó transmission line, another operation also financed by IDB Invest.
With this project, IDB Invest will launch the first certificate for green transmission lines worldwide. A green transmission line is a structure that transports energy from renewable sources, for example, wind, hydro, solar and sustainable biomass, among others. This certificate, which assesses transmission lines according to their environmental impacts and their contribution to mitigating climate change, is a tool that creates a link between long-term stable assets, such as transmission lines, and institutional, local and international investors who are looking for this type of asset. It also provides an additional sustainability component in the structure.
The project, with a total cost of $204 million, is financed by a $67.6 million IDB Invest loan and a $20 million mobilization from donor funds managed by IDB Invest. The financial plan will be completed with capital contributions from the sponsor, the National Administration of Power Plants and Electric Transmission (UTE) and with a local bond issue.
With this investment, IDB Invest provides and mobilizes long-term financing through the modality of operating leasing. In addition, it integrates its environmental and social policies and practices into the property management and land acquisition process through communication mechanisms and public consultation with the property owners.
The energy transition in Latin America and the Caribbean, necessary to comply with the emission reduction commitments of the Paris Agreement, implies a reduction of between 25 and 30 percent of greenhouse gas emissions in the energy sector until 2030. Achieving this goal requires investment in clean energy and associated infrastructure. Investment in electricity transmission networks is necessary to efficiently transport the projected increase in renewable energy and thus contribute to achieving the decarbonization of the region’s energy matrices.
This deal is expected to contribute to four United Nations Sustainable Development Goals (SDGs): Affordable and Clean Energy (SDG 7), Decent Work and Economic Growth (SDG 8), Industry, Innovation and Infrastructure (SDG 9) and Partnerships to achieve goals (SDG 17).
For more information about the Green Transmission Lines Certificate.
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $13.1 billion in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About the National Administration of Power Plants and Transmission (UTE)
UTE, or National Administration of Electric Power Plants and Transmission, is a vertically integrated public service company established under the laws of Uruguay. UTE was created by Law 4,273 of October 21, 1912. It provides services related to generation, transmission and distribution of electric power to approximately 1.3 million customers. At the end of 2020, UTE's transmission network consisted of transmission lines of approximately 87,212 km of low and medium voltage and 5,790 km of medium to high voltage.