New Financial Mechanisms for Clean Energy Investments in Latin America

NEWFINANCIALMECHANISMS FORCLEANENERGY INVESTMENTSINLATINAMERICA ©2023UnitedNationsEnvironmentProgramme ISBN:978-92-807-4027-1 Jobnumber:DTI/2525/PA Thispublicationmaybereproducedinwholeorinpartandinanyformforeducationalornon-profitserviceswithoutspecialpermissionfromthecopyrightholder,providedacknowledgementofthesourceismade.TheUnitedNationsEnvironmentProgrammewouldappreciatereceivingacopyofanypublicationthatusesthispublicationasasource. NouseofthispublicationmaybemadeforresaleoranyothercommercialpurposewhatsoeverwithoutpriorpermissioninwritingfromtheUnitedNationsEnvironmentProgramme.Applicationsforsuchpermission,withastatementofthepurposeandextentofthereproduction,shouldbeaddressedtotheDirector,CommunicationDivision,UnitedNationsEnvironmentProgramme,unep-communication-director@un.org. Disclaimers ThedesignationsemployedandthepresentationofmaterialinthispublicationdonotimplytheexpressionofanyopinionwhatsoeveronthepartoftheSecretariatoftheUnitedNationsconcerningthelegalstatusofanycountry,territory,cityorareaorofitsauthorities,orconcerningthedelimitationofitsfrontiersorboundaries. MentionofacommercialcompanyorproductinthisdocumentdoesnotimplyendorsementbytheUnitedNationsEnvironmentProgrammeortheauthors.Theuseofinformationfromthisdocumentforpublicityoradvertisingisnotpermitted.Trademarknamesandsymbolsareusedinaneditorialfashionwithnointentiononinfringementoftrademarkorcopyrightlaws. TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheUnitedNationsEnvironmentProgramme.Weregretanyerrorsoromissionsthatmayhavebeenunwittinglymade. ©Maps,photosandillustrationsasspecified UnitedNationsEnvironmentProgramme(2023).NewfinancialmechanismsforcleanenergyinvestmentsinLatinAmerica.Paris. Acknowledgements Aspartofthisreport,UNEPwouldliketoexpresstheirgratitudetoallofthosewhohavecontributedtothedevelopmentofthisreport.UNEPacknowledgesalltheinstitutionsandindividualsthatacceptedtobeinterviewed,providedintegralinformationandthusaidedinthecreationofthisreport.WewouldliketoextendourappreciationspecificallytoFrancoBorrello,MS.CleanEnergyMarketsExpertConsultant,whoplayedacriticalroleinthisundertaking.Thesuccessofthisresearchandthereportwouldnothavebeenpossiblewithoutthecontributionsmade.TheworkdeliveredbyBaptisteGaydon,RakeshShejwal,andIgnacioRomeroforcoordinationandreportconceptualization,aswellasfromKarlaDelgado-Olguinfordesignandlayouthavealsobeenparamountindeliveringthispaper. ii ThisreportwaspartiallyfundedbytheEuropeanUnionthroughtheEUROCLIMAProgramme. NEWFINANCIALMECHANISMSFORCLEANENERGYINVESTMENTSINLATINAMERICA ListofAcronyms ANDEAdministraciónNacionaldeElectricidad(decentralizedpublicinstitutioninchargeofelectricitygeneration,transmissionanddistributioninParaguay) BICEBancodeInversiónyComercioExterior(nationaldevelopmentbankofArgentina) CABEICentralAmericanBankforEconomicIntegration(inSpanish,BCIE) CAFCorporaciónAndinadeFomento(DevelopmentBankofLatinAmerica) CAMMESAMixed-capitalenterpriseinchargeoftheelectricitysystemoperation(dispatch)inArgentina CELECCorporaciónEléctricadelEcuadorEP(state-ownedelectricitycompanyinEcuador) DevCoDevelopmentcompany DFIDevelopmentfinanceinstitutions(developmentbanks) ECLACEconomicCommissionforLatinAmericaandtheCaribbean(inSpanish,CEPAL) EEEnergyEfficiency ENDEEmpresaNacionaldeElectricidad(state-ownedelectricitycompanyinBolivia) ENEEEmpresaNacionaldeEnergíaEléctrica(state-ownedelectricitycompanyinHonduras) ENELEmpresaNicaragüensedeElectricidad(state-ownedelectricitycompanyinNicaragua) ESCOEnergyServicesCompany ESGEnvironmental,Social,andGovernance(non-financialfactors) FAOFoodandAgricultureOrganization GCFGreenClimateFund GDPGrossDomesticProduct ICEInstitutoCostarricensedeElectricidad(state-ownedelectricitycompanyinCostaRica) iii NEWFINANCIALMECHANISMSFORCLEANENERGYINVESTMENTSINLATINAMERICA IDB(orIADB)Inter-AmericanDevelopmentBank IDFCInternationalDevelopmentFinanceClub IEAInternationalEnergyAgency IPPIndependentPowerProducer(privatepowergenerators) IRENAInternationalRenewableEnergyAgency LATAMLatinAmerica MERMercadoEléctricoRegional(regionalelectricitymarketinCentralAmerica) NCREGNon-conventionalrenewableenergygeneration NDCsNationallyDeterminedCommitments(forclimatechange) OLADELatin-AmericanEnergyOrganization(inSpanish,“OrganizaciónLatinoamericanadelaEnergía”) PEPrivateEquity PPAPowerPurchaseAgreement(long-termcontractsforcleanenergyprojects) PVSolarphotovoltaics RDGRenewableDistributedGeneration RERenewableEnergy SMEsSmallandmédiumenterprises TATechnicalAssistance UNEPUnitedNationsEnvironmentProgramme VCVentureCapital WBWorldBank iv NEWFINANCIALMECHANISMSFORCLEANENERGYINVESTMENTSINLATINAMERICA TableofContents ListofAcronyms���������������������������������������������������������������������������������������������iii ExecutiveSummary�����������������������������������������������������������������������������������������vi 1�Introduction�����������������������������������