Project detail - Villonacoenergy SA.

Who is our prospective customer?

Villonacoenergy S.A. is Special Purpose Vehicle organized under the laws of Ecuador and owned by Cobra Servicios, Comunicaciones y Energía S.L.U., a subsidiary of VINCI S.A. Cobra Group is an 80-year-old business composed by 16 companies, with worldwide experience in 65 countries and 5 continents. Cobra is a developer, Engineering, Procurement, and Construction (EPC) and Operations and Maintenance (O&M) contractor in the infrastructure and renewable energy sectors, with strong presence in Spain, United States, Latin America, and Australia. It has 19GW of solar, onshore and offshore wind, and thermal installed capacity and 2.75 GW in operation.

What is our funding objective?

FMO is a parallel lender for a up to USD 70 mln loan that will finance the design, construction, operation, and maintenance of Villonaco III, a 112.2 MW wind power plant in Loja Ecuador. The project includes 19 wind turbine generators, a 33/138 kV step-up substation, and an approximately 24.5 km 138 kV transmission line. The power plant will be connected to the national grid of Ecuador and the energy generated by the project will be sold under 25-year power purchase agreements with nine state-owned electricity distribution companies. The Project will contribute to the decarbonization and transformation of Ecuador’s energy matrix by generating electricity from non-conventional renewable sources, supporting the country’s energy transition.

Why do we want to fund this investment?

The loan will be used for 100% green power generation project; it will contribute to the development of new renewable energy projects, key for the country’s energy security and renewables target. FMO’s investment aims to support activities that contribute to climate mitigation contributing to SDG 13, in line with the FMO’ s methodology to determine the green finance attribution.

What is the Environmental and Social categorization rationale?

FMO’s environmental and social (E&S) risk category for this transaction is considered Category B+, reflecting the potential adverse E&S risks which are largely reversible and can be addressed through appropriate mitigation measures. Due diligence has confirmed that IFC Performance Standards (PS) assessed as applicable to the project concern: PS1: Assessment and Management of Environmental and Social risks and Impacts; PS2: Labor and Working Conditions; PS3: Resource Efficiency and Pollution Prevention; PS4: Community Health, Safety and Security; PS5 Land Acquisition and Involuntary Resettlement; and PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources. IFC PS7 (Indigenous Peoples) has not been considered as applicable as baseline studies, consultations and stakeholder meetings confirm there are no Indigenous communities impacted directly or indirectly by the project. While the project is not expected to affect cultural heritage (PS8), mitigation measures, training and a Chance Find procedure have been prepared. Key E&S risks identified relate to: i) the importance and fragility of Ecuador’s biodiversity and ecosystems, and the potential terrestrial impacts that may arise, including on flora, fauna, and erosion during construction, as well as possible collision risks to birds and bats during operations; and ii) land acquisition and any associated issues that may occur regarding land tenure, land use, temporary land use and economic displacement. Mitigation measures for the project have been developed, and any gaps identified during due diligence have been included into an agreed Environmental and Social Action Plan (ESAP).