COFIDE Climate Action Framework Loan

The development of Peru's energy market has been rife with challenges and opportunities in recent years. The Peruvian government thereby supports the implementation of sustainable energy projects to meet their commitments to greenhouse emission reduction, which were submitted as part of the COP21 climate change negotiations in Paris.

As of 2019, the country’s power generation capacity was based on a mix of contributions from natural gas, hydro, wind, biomass and solar facilities. Large hydroelectric stations and natural gas provided around 95% of the power generation, while wind, biomass, solar and small hydro produced the remaining 5%. It’s worth noting that around 1.4 GW of the national power capacity is thermal based and dedicated to stand-alone systems in remote geographies, such the Amazon region, with high generation costs.

This project consists of climate action activities, primarily in the renewable energy and energy efficiency sectors, located throughout the country. Together with the European Investment Bank (EIB) and EU LAIF, a total of EUR 702.500.000 of which an EU contribution of EUR 4 224 000 will be dedicated to this project.

The main objective of the Project is to support the reduction of greenhouse gas emissions and mitigation of climate change in Peru through the promotion of sustainable energy. This means concretely increasing and/or improving end-user access to affordable, reliable, sustainable and modern energy in Peru, as well as increasing private sector investment in sustainable energy in the country.

This will be achieved through the following components:

• Projects by private sector entities promoting renewable energy and energy efficiency investments in Peru will be financed by the EIB Loan.
• Technical Assistance (TA)- activities financed from the LAIF TA, such as:
  • the strengthening of the Borrower/Promoter's capacities
  • improving Social and Corporate Governance
  • support for up-stream concrete policy/regulatory measures that enable private investment in the sustainable energy sector, policy dialogue
• Pilot Component: aims to deploy an investment component with a high environmental/social added value. This component is further expected to possess powerful demonstrational/replication effect, such as the piloting of sustainable energy technologies with high environmental/social impact. It is proposed to use the LAIF Investment Grant to demonstrate the viability of renewed hybridisation of Peru’s fossil fuels systems, as stand-alone power supply solutions.