Summary of proposed guarantee
Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.
- Project name
- Energía Eólica de Honduras S.A
- Project ID
- Fiscal year
- Guarantee holder
Globeleq Mesoamérica Energy S.A.
- Investor country
- Host country
- Environmental category
- Date SPG disclosed
- November 01, 2013
- Project Board date
- December 19, 2013
- Gross exposure
- $84.0 million
- Project type
- Strategic priority area
- ESRS for Energía Eólica de Honduras S.A November 01, 2013
This summary covers an investment by Globeleq Mesoamérica Energy S.A. of Panama in Energía Eólica de Honduras S.A. in Honduras. The investor has applied for a MIGA guarantee of $84.0 million for a period of up to 20 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
The project consists of the development in two phases of a 126 megawatt wind park located 20 kilometers south of the capital city of Tegucigalpa, between the municipalities of Santa Ana and San Buenaventura. The construction of phase one has been completed and started commercial operations in December 2011. Phase two, currently in development, involves the expansion of the power plant by adding 24 megawatts of additional capacity through the installation of five G-87 and seven G-97 Gamesa wind turbines.
The proposed project will supply relatively cheap, clean, and renewable energy in one of the region’s poorest countries. It will diversify Honduras’s energy matrix, as about 60 percent of the country’s electricity generation currently comes from sources that are derived from fossil fuels. Approximately 270 tons of greenhouse gas emissions will be eliminated by replacing these thermal sources with wind power.
In addition, most of the project’s electricity will be generated during the dry season, when the country’s hydropower capacity (which contributes 37 percent of Honduras’ energy requirements) is significantly reduced.
The proposed project will help stabilize the country’s energy costs by decreasing the use of imported oil. This will also lower the volatility of electricity tariffs during the 25-year term of the power-purchase agreement with the state-owned utility.
Approximately 150 temporary jobs will be created during the construction of phase 2 and the plant will employ more than 40 people on an ongoing basis. Training programs will be provided to permanent personnel.
As a major foreign direct investment in Honduras, the proposed project is expected to have a significant demonstration effect by increasing private-investor confidence in the Honduran economy and the country’s institutions.
This project is aligned with the World Bank Group Country Assistance Strategy for Honduras, particularly with regard to developing renewable energy connections to the country’s grid.
MIGA’s support for this project is aligned with the Agency’s priorities of insuring investments into countries eligible for financing from the International Development Association as well as insuring complex projects.