OREANDA-NEWS. May 17, 2017. The Inter-American Investment Corporation (IIC), acting on behalf of the Inter-American Development Bank (IDB) Group, has signed a financing package of US$18.5 million with Itelecom to upgrade public roadway lighting systems to high efficiency LED technology in eight municipalities in Chile.

The project will replace 81,000 older luminaires with high efficiency LED technology. The new luminaires are up to 60% more efficient than the existing infrastructure, saving approximately 26,000 Megawatt-hours (MWh) of electricity per year. The cost savings from the reduced energy consumption will allow local authorities to cover the payment obligations under the contracts.

The project aims to demonstrate the viability of savings-driven financing models to support investments in energy efficiency and their potential to mobilize private capital through energy service companies. This innovative PPP financing and operation model will complement publicly-funded programs and could be replicated in other municipalities in Chile and Latin America and the Caribbean. The project will reduce greenhouse gas emissions from street lighting by about 17,500 tons of CO2e per year.

This blended finance operation includes an IDB loan of US$7 million and co-loans from the Canadian Climate Fund for the Private Sector in the Americas (C2F) and the Clean Technology Fund (CTF) for US$7 million and US$4.5 million, respectively. The project will also benefit from technical assistance and a first-loss guarantee of US$2.5 million from CTF’s Chile PEEERA Program, which support investments at scale in energy efficiency and self-supply renewable energy technologies.