The Inter-American Development Bank (IDB) has agreed $195M loan as part of a financing package valued at more than $1.2B for development of the 531MW Alto Maipo hydroelectric project in Chile.

The project is being developed by Alto Maipo Spa, which is owned by AES Gener (60%) and Antofagasta Minerals (40%). It consists of the construction of two run-of- river hydroelectric facilities, with 90% of the infrastructure, including the powerhouses and 67km of tunnels, to be located underground.

The facilities to be built as part of the project include the Alfalfal II and Las Lajas plants, and 17km of new 110/220 kV transmission lines. Once operational, the project will contribute an annual average of 2300GWh to the Chilean grid.

Chile’s electricity matrix at the end of 2012 relied to a large extent (63%) on thermoelectric power, much of it in the form of imported fossil fuels. Alto Maipo will help contribute to displacing approximately one million tons of carbon emissions per year. The country’s energy demand has been increasing by 5% per year since 1985.

"This project makes a major contribution to Chile’s energy strategy over the coming years," indicated Jean-Marc Aboussouan, chief of the Infrastructure Division of the Bank’s Structured and Corporate Finance Department. "We have been able to structure a loan commensurate with the needs of a project of this size, and our involvement in identifying measures to mitigate environmental and social impacts has been significant."

The project is cofinanced by the International Finance Corporation, the US Overseas Private Investment Corporation and six commercial banks. The total project cost will be roughly $2B, 60% in the form of debt and the remaining 40% in equity.

The facilities are expected to come on line in 2018.