In 2013, the Government of Uruguay launched a 200MW tender program to attract private sector participation in the development of solar photovoltaic (PV) power plants and increase the share of renewable energy in Uruguay's energy matrix.
IDB Invest and the Canadian Climate Fund for the Private Sector in the Americas (C2F) addressed the primary market barriers to institutional investor investment in Uruguay’s nascent solar market. Their joint participation reduced counterparty risk and improved project bankability. Post construction phase, IDB Invest’s A / B bond product allowed for project refinancing through an instrument that appealed to investors with an appetite for long-term assets. IDB Invest and C2F’s participation demonstrates a series of key insights for overcoming the inherent challenges of project finance in an emerging sector and provides a replicable model for how to draw in institutional investors to renewable energy financing in Latin America;
• Blended finance can help bridge the gap to market maturity.
• Blended finance can be an effective tool to incentivize gender impact.
• Blended finance structures demonstrate the benefits that development banks can bring to private investors.
• Where pipeline is sufficient, taking a programmatic approach to blended finance can produce greater sector impact than ad hoc investing.
• Fit-for-purpose financing can tap into new investor sets.