ECUADOR-PERU POWER INTERCONNECTION

Promoter – Financial Intermediary

CORPORACION ELECTRICA DEL ECUADOR CELEC EP

Location

• Ecuador

Description

Investment loan to part-finance the Ecuadorian side of the Power Interconnection System between Ecuador and Peru in 500kV.

Additionality and Impact

The project concerns the implementation of a power interconnection between Ecuador and Peru and contributes to making the energy system more efficient and resilient, whist allowing increasing integration of more renewable electricity generation capacity. The project addresses multiple market failures, such as security of supply, market integration, as well as negative carbon and air pollution externalities. It will increase electricity trade across the border, decrease overall generation costs and reduce environmental externalities, whilst delivering excellent economic and social benefits.

 

The project is well-aligned with EU and national priorities by promoting the Green Transition and a Sustainable and Inclusive Economy, both regional EU priorities, the country-specific priorities for Peru and Ecuador, and the Global Gateway initiative's Climate and Energy priority. Likewise, the project addresses national priorities such as Ecuador's National Development Plan and Peru's National Strategy on Climate Change by 2050.

 

The EIB's financial contribution focuses around offering flexible financing terms in line with the project, namely through a long tenor and interest rate type for each disbursement (multiple tranches may be chosen). The EIB has provided advice to the promoter resulting in a better assessment of CO2 emissions reduction, climate risk and biodiversity impacts.

Objectives

The project will improve power supply security in Ecuador and Peru and optimise market cost structures, while fostering regional power trade. It will also support the connection of future renewable energy generation facilities in Ecuador. Thereby, it will contribute to mitigate climate change, develop social and economic infrastructure, as well as competitive and secure energy.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Under Global Europe NDICI guarantee

Under EFSD+ Guarantee

Proposed EIB finance (Approximate amount)

USD 125 million (EUR 113 million)

Total cost (Approximate amount)

USD 278 million (EUR 252 million)

Environmental aspects

If located in the EU, the project would fall under Annex I of the EU Environmental Impact Assessment (EIA) Directive 2014/52/EU (amending the Directive 2011/92/EU), requiring an EIA. In accordance with the national related regulations in Ecuador, Environmental and Social Impact Assessments (ESIA) for the project are being carried out. The promoter has to ensure that the project complies with the EIB's Environmental and Social Standards and the respective principles of EU Directives.

Procurement

The promoter has to ensure that implementation of the project will be done in accordance with the EIB's Guide to Procurement.

Status

Signed - 28/12/2023