Brazilian bank BNDES has said it will increase financing for solar power projects from 70% to 80% of project value, as it looks to prioritise the development of alternative energy sources.
BNDES, which is Latin America's largest development bank, said it would no longer finance coal-fired and oil-fired power plants.
The Rio de Janeiro-based bank said it would cut financing for gas-fired power plants to 50% of total required investment, from a current level of 70%.
BNDES also said it would reduce financing for large hydropower plants (HPPs) from 70% to 50%. Brazil’s hydropower sector, although a very significant renewable power source in the country, has come up against strong opposition from local environmental groups in recent years.
“The measures aim to contribute to increase alternative energy sources in the Brazilian power mix, directing investments to projects with high social and environmental returns,” the bank said, according to a Reuters report.
BNDES wants to encourage development of the solar power industry in particular, by improving credit conditions for the sector, it added.
Marilene Ramos, director of infrastructure and sustainability at BNDES, said that the solar sector would “grow significantly because these are high visibility projects,” according to an Agencia Brasil report.
These solar projects “have the means – if financed in this way – to pay off in a relatively short time, and represent, to the cities and municipalities, a huge economy,” she added.
The bank, which is the world’s biggest backer of renewable energy, has to date reportedly arranged nearly US$25.9 billion in financing for clean energy.
Most recently, it approved a US$84 million loan for Brazil’s Neoenergia this week, according to local reports. Most of the financing is expected to be used to fund the Calango 6 wind farm, which has a designed capacity of 30 MW.
The project, located in the Bajó municipality of the state of Rio Grande do Norte, was given the go-ahead at an energy auction held in June 2014. The first part of the loan is due to be allocated in August 2017, and the final part in July 2033.