Brazil - Accelerating Energy Transition in the Amazon Project

Overview & Synopsis

Accelerating Energy Transition in the Amazon Project for Brazil, the development objectives are to increase renewable energy generation and reduce energy costs in the Legal Amazon. Component 1: Investments in Renewable Energy and Grid Enhancement establishes a dedicated credit line through Banco da Amazonia SA (BASA), acting as a Financial Intermediary (FI), to finance private and eligible public sub-borrowers for clean electricity generation, grid enhancement, and energy efficiency across the Legal Amazon; eligible clean generation includes retrofitting diesel power plants with solar photovoltaic and battery energy storage, greenfield solar, wind, small hydropower up to 30 megawatt, and sustainable biofuel or biomass uses, including capital expenditures and working capital for contractors implementing Light for All projects such as mini grids and solar home systems; eligible grid investments include distribution network connections of Isolated Systems (SISOLs) to the national grid, reduction of technical and non-technical losses, smart grid technologies, and measures that enhance climate resilience of electricity distribution; eligible energy efficiency investments include measures for large energy users in water and wastewater, commerce and industry, and efficient public lighting, including public private partnership models; sub-projects must demonstrate a minimum greenhouse gas reduction relative to baseline as specified in the Project Operations Manual, mobilize private capital with higher thresholds for large enterprises than for micro, small, and medium enterprises, meet technical, financial, and environmental and social robustness criteria, and be selected on a first come first served basis subject to portfolio rules that ensure diversification, a minimum share of lending in SISOLs, a ringfenced portion for new access, and caps on individual sub-loans; BASA will on-lend in local currency and manage foreign exchange risk through hedging, and will monitor sub-project performance, including renewable capacity enabled and lifetime cost savings from reduced diesel use. Component 2: Capacity Building strengthens BASA’s institutional capacity to implement and sustain the operation and to crowd in additional capital. Sub-component 2.1: Feasibility assessment on potential additional BASA financial products evaluates instruments such as debentures, mezzanine finance, dedicated energy funds, public private partnerships, and partial credit guarantees to optimize funding and improve access to finance for smaller firms, in coordination with the International Finance Corporation. Sub-component 2.2: Strengthening of BASA Capacities enhances marketing and communications to reach local governments and enterprises, improves sub-project pipeline identification, due diligence, risk assessment, environmental and social and fiduciary systems, and builds portfolio management, monitoring, verification, and training on energy transition technologies, financial literacy, and climate resilience for BASA staff, clients, and stakeholders. Sub-component 2.3: Gender and Inclusion Program expands opportunities for women and minorities through a Young Apprentice Program that provides technical, leadership, and gender-based violence prevention training linked to renewable energy careers and through Women and Minorities in Local Leadership activities that build local operation and maintenance skills and leadership in beneficiary communities. Sub-component 2.4: Project Management supports project management unit staffing, safeguards and fiduciary expertise, and logistics to ensure timely, compliant implementation.