United States : Honduras to Further Decarbonize its Electricity Sector and National Electric Power Company

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Conditional Credit Line for Investment Projects (CCLIP) and a first 50 million individual loan under this credit line to support Honduras as it decarbonizes its electricity sector and National Electric Power Company. For the same purpose, IDB has also approved 5.1 million in non-reimbursable financing and 2 million in non-reimbursable investment financing from the Strategic Climate Fund, as well as a 2.5 million grant from IDB CLIMA. The program, which has been approved by the Board of Executive Directors of the IDB, will directly benefit 1.9 million customers of the Honduran National Interconnected System by giving them access to reliable and clean electricity. It will also benefit Afro-Honduran women, indigenous peoples, and young people in the projects area of influence through training on building and installing solar photovoltaic systems, as well as workshops on gender.

The program will also strengthen the capacities of national entities that have a hand in designing public energy policy to mitigate and adapt to climate change, as well as to monitor and report these initiatives. Although Honduras has made progress on adding non-conventional renewables to its energy mix, the country still has work to do to meet its Nationally Determined Contributions, reduce its dependence on fossil fuels, and become more resilient to climate change. The credit line aims to help decarbonized the electricity sector, give citizens better access to electricity, and improve the sectors financial and operational sustainability, through investments that enable a sustainable, reliable, and efficient supply of electricity. The first individual lending operation will support Hondurass process of decarbonizing its power generation mix and making it more climate resilient. It will also enhance the sectors financial sustainability and build capacities to give Honduras the option of issuing bonds in green capital markets so it can meet its climate commitments. It will therefore finance actions like developing and implementing disaster-resilient solar farms on the grounds of the National Electric Power Companys substations or hydroelectric power plants, or implementing battery storage systems at substations to guarantee a constant and efficient supply.

It will also build up the National Electric Power Companys technical and institutional capacity to efficiently manage electricity projects in ways that mitigate and adapt to climate change, and to monitor and report actions and investments in the sector. The first individual 50 million IDB loan has two components. The first 32.5 million tranche has a 25-year repayment term, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR). The second 17.5 million tranche of concessional resources has a 40-year repayment term and grace period, and a 0.25% annual interest rate. The 5.1 million in reimbursable financing from the Strategic Climate Fund has a 30-year repayment term, a 10.5-year grace period, and a 0.98% annual interest rate. About the IDB The Inter-American Development Bank (IDB) is devoted to improving lives in Latin America and the Caribbean. Established in 1959, the IDB partners with the public sector in the region to design and provide innovative, high-impact solutions for sustainable and inclusive development. Through financing, technical experience, and knowledge, it drives growth and well-being in 26 countries. Visit our website athttps://www.iadb.org/en. Contacts Alvarez-Rodriguez, Isabel Maria isabela@iadb.org Salgado Derqui,Javier Jose javiers@iadb.org You may also like Conditional Credit Line for Investment Projects (CCLIP): Decarbonization and Sustainability in the Just Energy Transition of Honduras HO-O0015 Learn more IDB CLIMA: Decarbonization of the National Electric Power Company (ENEE) and Support for Financial Sustainability HO-L1245 and HO-G1265 Learn more IDB CLIMA Grant: Decarbonization of the National Electric Power Company (ENEE) and Support for Financial Sustainability HO-J0003 Learn more Honduras and the IDB The IDB Office in Honduras aims to advance an agenda that contributes to institutional strengthening, expanding productive opportunities, and promoting greater inclusive and environmentally responsible growth, benefiting both Honduran men and women.

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United States : Honduras to Further Decarbonize its Electricity Sector and National Electric Power Company

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