Risk addressed: Technology risk

Under the right conditions, bifacial solar technology can be a step change in solar plant yields and efficiency, including land-use efficiency. This project was only the second in Brazil to employ bifacial technology, and one of the first in Latin America, and this small track record deterred private investors. To address this barrier, IDB Invest (the “private arm” of the Inter-American Development Bank), along with other development finance institutions, structured a transaction that included features to directly mitigate the project’s financial risk of incorporating this new technology, reducing risk perceptions and mobilising private capital to the project. 

To finance the design, construction, commissioning and operation of four bifacial PV plants with a combined capacity of 157 MW, IDB Invest arranged financing of up to USD 69 million in senior loans composed of USD 54 million of IDB Invest’s own funds and a USD 15 million blended finance tranche, with USD 7.5 million each from the Canadian Climate Fund for the Private Sector in the Americas and the Clean Investment Fund.

IDB Invest structured the blended finance tranche to defer principal payments in the case of significant underperformance, provided a solution that allowed the revenue from the expected yield gain to be credited in the financing of the project, thereby improving the overall project economics. The blended finance tranche also included incentives for gender and diversity outcomes in construction.

The IDB Invest repeated the structure in the next bifacial solar PV project it financed, but after that it became sufficiently comfortable so as to no longer require credit enhancement.