CentAm Needs $13bn in Energy Project Financing

Central America will need an estimated $13bn to finance 7,000MW of generation capacity by 2015, according to Hector Rodriguez, coordinator of ARECA, a renewable energy project supported by development bank Cabei. As a result, many countries in the region are slashing taxes and import fees relating to renewable energy projects. The region is looking to satisfy an average annual increase in electricity demand of 6% over the last quarter century. Honduras, for example, passed a law that eliminated all taxes and tariffs on the purchase of materials and services for renewable energy projects, and provides a financial incentive worth 10% of the base price of electricity. “That was definitely part of the motivation in creating our wind project,” Jay Gallegos, CEO of MesoAmerica Energy, tells LatinFinance. The company’s wind energy project, Energia Eolica de Honduras, began operations in June and will generate 102MW. The project cost $260m and was financed primarily by Globeleq Generation. The country plans to build 21 new energy projects, including five large hydroelectric projects with investment price tags ranging from $110m-$700m. Panama, meanwhile, plans to add 22 renewable energy projects over the next four years, adding 1,061MW to its system at a cost of $4.37bn. Italy-based ENEL, Europe’s largest energy provider, has projects in five Central American nations and, according to Francesco Starace, CEO of ENEL Green Power, plans to expand further.