IDB To Back Costa Rica's Power Sector

The Inter-American Development Bank (IDB) said Tuesday it would provide a US$250-million 25-year loan to help strengthen Costa Rica's electricity sector and back a 305-MW hydropower project.

The funds will be used to enhance power generation, transmission and distribution capacity, to revamp power plants and improve energy efficiency. The initiative also includes the installation of 500 photovoltaic (PV) systems in rural areas. The project has also received local funding of US$41.7 million.

The IDB financing, which has a five-year grace period, will bear an interest rate based on the London Interbank Offered Rate (LIBOR). Some US$98 million of the total will go to co-fund the Reventazon hydropower plant (HPP), planned to become operational in 2016. The facility is estimated to generate 1,407 GWh a year. The IDB is evaluating options to provide additional non-sovereign guarantee financing for the hydropower project.

In 2011 Costa Rica had 2,650 MW of installed power generation capacity, with a 77% share of renewables, which meets current demand. However, electricity consumption is expected to grow by 5.1% per year so the country is looking to add 1,714 MW of fresh capacity through 2024. Of the total, 98% will be from renewable energy sources.