Zurich’s Surety, Credit and Political Risk group said it was providing the cover as part of the insurance programme for the scheme as developed by US broker Alliant Emerging Markets on behalf of the project supporter CQuest Capital.

Hidromaule SA owns the Lircay project and CQuest capital has provided funds against future delivery of carbon credits from electricity generation at the run-of-river plant.

The 19.4MW (2 x 9.7MW Francis) plant is on the Lircay river, approximately 30km northeast of Talca, and takes advantage of water rights owned by an irrigation organisation, the Canal Maule Association. The plant is designed to generate an average 130GWh (gross) of electricity per year.

The project is registered under the UNFCC’s Clean Development Mechanism to sell carbon credits (Certified Emissions Reductions – CERs), and is expected to generate approximately 50,000 credits over 2008-2012. Zurich said the credits are expected to produce US$1M of additional revenue annually.

The development cost of the project is approximately US$29M and the International Finance Corporation (IFC) has given a loan of almost US$21.7M, or about three-quarters of the cost, to help fund construction.

Hidromaule SA is a Chile-based developer owned by an Italian-Chilean consortium, Sorgent-e SRL and Empresa Austral Andina SA, respectively.