Patrick Doyle
Senior Energy and Climate Officer
Structured and Corporate Finance Department
patrickd@iadb.org
Private Sector with Purpose

We seek to create opportunities for
current and future generations in
Latin America and the Caribbean
through sustainable private sector
investments.

Through the Structured and
Corporate Finance Department (SCF),
IDB partners with private sector
stakeholders to achieve breakthrough
financial results with high
development impact.
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Our expertise
Infrastructure
Industries
and Services
Syndications
Financial
Markets
Social
Infrastructure
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IDB Private Sector- Structured and Corporate Finance Department
Our Clients
 Corporations, private utilities and infrastructure operators,
financial institutions, and state-owned entities without a
sovereign guarantee
Our Products and Services
 Loans (syndications and parallel)
 Project Finance and Public Private Partnerships
 Guarantees
 Technical cooperation
 Climate change concessional finance
 Clean energy audits
In 2011-2012, over $1 billion lent for over $6B in climate
investments
 Renewables – solar, wind, biomass, hydro, biofuels
 planetBanking “Green lines” for banks and private equity funds
 Industrial, commercial building, hotel energy efficiency
 Agriculture methane capture and use
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Directly financing large-scale renewable energy
Wind

US$108 million - El Libertador and Palmatir wind
farms in Uruguay 115 MW

US$ 40 million - 250 MW Eurus wind farm in Mexico

US$ 21 million - 67.5 MW La Ventosa wind farm in
Mexico

US$ 78.3 million - Bani and Pecasa 80.6 MW wind
farms in the Dominican Republic
Geothermal

US$ 40 million - San Jacinto-Tizate 72 MW
renewable energy expansion in Nicaragua
Biomass

US$ 6.5 million - 15.6 MW biomass cogeneration
plant in Chile
Hydro

Pando Monte Lirio: 83.3 MW run of river hydro
power plants in Panama
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Providing corporate loans for sustainable agriculture and
promoting renewable forestry with Nordic companies
Project Overview
 SCF is supporting Stora-Enso and the Montes del Plata
Group through a $200 million loan to build and operate
a eucalyptus pulp plant and bio-mass electricity plant.
 The largest private sector investment in Uruguay history
(approx. $2 billion), it follows IDB’s strict environmental
and social standards for renewable forestry
Development Impact
 Create 5,800 and 5,350 jobs during construction and
operations, respectively
 Forest Stewardship Certified plantations and carbon
credits produced
 160 MW of renewable energy (approx. 70 MW exceed
internal needs and will be supplied to the national grid
and other industrial entities)
 Contribute $750 million annually to GDP and generate
$700 million in exports per year
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Mobilizing private capital
 We act as catalyst, leveraging our own investments (A loans) and mobilizing
other sources for co-financing through our B loans and parallel loans
 B lenders include commercial banks, institutions and impact investors
 Other financing partners include development finance institutions and
private equity investors
Number of B-Loans Closed: 90
Historical Results
Amount of B-Loan mobilized: $8.19 billion
Number of historical participants: 141 institutions
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Greening SME’s through planetBanking loans and
Technical Assistance
Green Lines
A/B Loans
Cofinance
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Technical Assistance
Financial Institution
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Subloans
Green Projects
-Energy efficiency
-Renewable energy
-Sustainable agriculture
-Cleaner production
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Example planetBanking Greenline Projects Financed
Sector
Proyecto
País
Renewable Energy
Micro-hydro plant
Honduras
Clean water
Water treatment plant
Panamá
Cleaner Production
Bicycle manufacturing center
México
Energy Efficiency
LEED Gold certified buildings
including a new education center
Panamá
Sustainable
agriculture and
water efficiency
Drip irrigation system
Colombia
Intermediario
Financiero
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Mobilizing private capital
 We act as catalyst, leveraging our own investments (A loans) and mobilizing
other sources for co-financing through our B loans and parallel loans
 B lenders include commercial banks, institutions and impact investors
 Other financing partners include development finance institutions and
private equity investors
Number of B-Loans Closed: 90
Historical Results
Amount of B-Loan mobilized: $8.19 billion
Number of historical participants: 141 institutions
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Promoting renewable forestry practices
Project Overview
 IDB is supporting Montes del Plata Group through a
$200 million loan to build and operate a eucalyptus pulp
plant and bio-mass electricity plant.
 The largest private sector investment in Uruguay history
(approx. $2 billion), it follows IDB’s strict environmental
and social standards for renewable forestry
Development Impact
 Create 5,800 and 5,350 jobs during construction and
operations, respectively
 Produce 160 MW of renewable energy (approx. 70 MW
exceed internal needs and will be supplied to the
national grid and other industrial entities)
 Contribute $750 million annually to GDP and
generate$700 million in exports per year
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Structured and Corporate Finance
Department Tools for
Clean Technology Investment
Catalyzing climate investment
with public funds
Barriers to Clean Energy Investment by
the Private Sector

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Information barriers
– Unaware /lack of confidence in savings and
performance predictions
– Projects require $20 to $200K in engineering
analysis to prove feasibility
Lack of finance
– High collateral requirements from banks and low
value to energy savings assets once installed
High transaction costs
– Project finance is costly and risky
– High engineering cost/project value ratio
– MM&V if required by financier
Resource risk - Production uncertainty
Offtaker/purchaser risk
– Long term contracts needed to recover upfront
capex/energy payments
Technology risks
– Uncertain installation and O&M costs and life of
project, warranties from new cleantech
companies less valuable
IDB Private Sector Tools
• Grants for technical assistance –
audits, feasibility studies, green
building analysis (NDF and SECCI)
• Energy Efficiency Finance Facility
for facilitated approval of $500K $5M loans – first loss guarantee
via donor funds in select
countries (NDF)
• Greenlines of credit and
Financial institution training and
market analyses (NDF&SECCI)
• Concessional loans via the
Canadian Climate Fund (C2F)
• Brazil Energy Efficiency credit
and savings contract
performance guarantees (GEF)
• High risk equity/subdebt funds?
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IDB Concessional Loan
Donor Reimbursable Fund
SCF’s climate team manages the $250M Canadian Climate Fund for
the Private Sector in the Americas (C2F)

Co-financing with IDB Group loans for climate change mitigation and adaptation projects

No grant funding, no equity

Concessional loans to overcome barriers:
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Risk barriers, e.g.:
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Financial Tools
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Technology risk (Output, costs, reliability)
•
Unsecured
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Resource risk (Probability scenarios)
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Payment terms
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Offtaker risk (Credit or alternative purchasers)
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Targeted risks
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Local currency
Cost barriers, e.g.:
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Subordinated loans, e.g.:
Bridge the gap between renewable energy
production costs and market prices
Reduce costs of “greening a project” – (e.g.
energy efficiency, methane capture,
reforestation) to meet corporate hurdle rates
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Lower cost loans, e.g.:
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Longer tenor
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Lower interest rate
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Lower fees
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Local currency
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Reducing initial costs or off-taker, resource or technology risks
Value Proposition/Need
 Wind, biomass, geothermal, biomass, reforestation
project with risks that can not be taken by lenders
and
 Equity unable to be raised or high equity
requirements make project uneconomical
Financial additionality
 Risk barrier – PPA or fuel sale agreement
insufficient to cover loan at DSCR required based on
resource assessment
 Cost barrier – Power price reduced by reducing
debt/equity ratio and reducing interest rate on debt
C2F Solution
 Provide C2F subordinated debt (at
below market rates if justified)
 Use barrier analysis to quantify the
amount of subordinated debt needed
to cover the default risk
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Technical Assistance and the
IDB Private Sector
Technical Assistance Funding for Private Sector Project
Identification and Feasibility Analyses
Projects - 24 performed or in progress
 Energy efficiency - Investment Grade energy efficiency audits
 Renewable energy self-supply engineering analyses - methane, biomass, solar, cogeneration
 Green-building design value added engineering consulting
Clients
 Hospital, university, airport, commercial buildings
 Agroprocessors
• Beef, swine, chicken, fish and shrimp (aquaculture)
• Milk, sugar, wheat, rice, peanuts, fruit, palm oil
 Manufacturers
• Recycling centers, beverages, bottlers, snacks, textiles
Results
 Financially viable investments
 Potential GHG reductions
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SCF and Energy Efficiency
$10M NDF Energy Efficiency Guarantee Fund supporting
a $50M SCF Energy Efficiency Finance Facility
Eligible projects
 Energy efficiency and small-scale, self-supply renewable energy projects, including agricultural
methane, biomass, solar
Eligible countries
 Central America, Colombia, Dominican Republic, Jamaica and Bolivia
 Max Loan Size: $5M
Concessional finance
The Energy Efficiency Finance Facility will benefit from an €8 million contribution from the Nordic
Development Fund:
 €7M is reimbursable funding to provide up to 25% first-loss guarantees to SCF loans in NDF
eligible countries.
 The guarantees will enhance the credit profile and reduce the price of the IDB A loan
 €1 million is non-reimbursable grant funding critical to reduce the transaction costs – support
engineering feasibility and environmental impact analyses and legal costs as necessary to
make small loans economically viable
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Consulting Procurement
Selection and Contracting Process for Private Sector Projects
 Responsible Officer (RO) prepares the terms of reference (TORs)
 RO prepares short list with at least three firms
 http://www.iadb.org/resources/business/doingBusiness/formConsultant.
cfm
 RO shares proposals submitted with partner co-financiers
 RO evaluates the proposals based on the TOR and the Evaluation Matrix
 Discusses with and recommends to Management a firm/individual
 RO notifies the winner via e-mail or fax and upon acceptance notifies the
client
 A Consultant Service Agreement (CSA) is negotiated between the client, the
firm and the Bank, with the assistance of legal
 Client pays for consulting services provided to the Bank
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Our deal is with the future.
Patrick Doyle
patrickd@iadb.org