The Inter-American Development Bank (IDB) has approved a $20 million loan to Panama for a program that could see small hydropower projects provide electricity to rural areas.

The rural electrification program will promote public and private investment to provide service for more than 10,000 rural households, located mostly in very poor remote areas. The project includes a system of subsidies for new investments that will motivate private enterprises to invest in rural electrification, through either grid extension or renewable energy projects in isolated areas. Among the eligible schemes are small hydroelectric projects, wind power plants, and solar photovoltaic systems.

The IDB has been supporting the Government of Panama’s efforts to increase national electricity coverage levels through the Rural Electrification Program (REP) since 2006. During the REP’s Phase One from October 2006 until December 2013, IDB loans totalling approximately $20.8 million funded electricity extension programs in numerous rural communities and off-grid power systems in the indigenous comarcas of Guna Yala and Embera Wounnan. The REP’s Phase One extended electricity coverage to more than 12,000 households and numerous schools and hospitals in Panama’s poorest rural communities.