Engie Decarbonization Instrument

The project aims to support Engie Energía Chile (“EECL” or the “Company”) in the construction and operation of the Wind Calama (the “Project”), a wind project with an installed capacity of 151.2 megawatts (“MW”), to be located near the city of Calama in the Antofagasta Region, Chile. The energy produced will replace the anticipated decommissioning of units U14 and U15 of EECL, each with a capacity of 125 MW that are part of the Tocopilla Thermoelectric Plant (“TTP”). The estimated cost of the Project is US$152.9 million. IDB Invest will participate in the transaction through a senior loan of up to 12 years, for an amount of US$110.0 million. In parallel, IDB Invest will mobilize resources of the Clean Technology fund (“CTF”) for up to US$15.0 million, to complement the Project’s financing.

The main objective of this operation is to deploy a pilot financial instrument that supports decarbonization activities in Chile, by monetizing a clean technology project’s actual displacement of CO2 emissions of existing fossil fuel fired power assets. In the absence of a carbon credits market, the financing structure will establish a minimum price for the emissions through a lower financing cost in the CTF loan. Methodology of this mechanism is being developed alongside a technical consultant, so that it can be replicated in other projects in Chile and in Latin America and the Caribbean, with the broader objective to foster the development of a carbon credits market.