Ecuador has an electric power generation deficit because of an increase in demand since the 1990s. Hidroabanico is a mini hydropower plant in the city of Macas that will generate 37.5 megawatts of clean energy and contribute to the supply of electricity in Ecuador. This hydropower plant will replace polluting energy sources and create jobs in an economically depressed area. By participating in Hidroabanico’s capital structure, the IIC recognizes the project’s contribution to the generation of clean energy in Ecuador. The World Bank is also participating in the project as trustee of the Netherlands Clean Development Mechanism Facility, which will purchase the project’s emissions rights. The revenues from the emission reduction purchase agreement will lower both the project’s risk and its financial costs.
According to the World Bank Carbon Finance Unit, the electric power generated by the Hidroabanico project will displace the equivalent of approximately 800,000 tons of the greenhouse gas CO2 over a six-year period.
This project will also help improve Ecuador’s ability to generate relatively clean energy from renewable natural resources instead of using hydrocarbon fuels or importing power from neighboring countries. It is also in line with the Ecuadorian government’s strategy to boost private sector participation in the energy sector, which has, in recent years, accounted for a significant portion of total public investment.
The Hidroabanico project will generate power and decrease Ecuador’s energy shortfall without consuming nonrenewable resources or requiring the construction of large dams that would involve deforestation or displacement of human settlements.
Basic Information Project Name: Hidroabanico II Project Number: EC2071B-01 Country: Ecuador Sector: Utilities Approval Date: 12/06/2005 Date of First Disbursement: 04/17/2006 Financial Information Type of Financing: Loan Total Project Cost: $ 4,000,000 Financing Currency: United States Dollar IIC Financing Amount: $ 4,000,000