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Neoenergia Lands $155 Million Sustainability-Linked Loan From World Bank’s IFC

Neoenergia Lands $155 Million Sustainability-Linked Loan From World Bank’s IFC

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IFC and Iberdrola launched a new joint effort to promote the transition to clean and more efficient energy in several emerging markets, which includes a new IFC green and sustainability-linked loan of BRL 800 million (equivalent to $155 million) to Iberdrola’s Brazil affiliate Neoenergia Elektro.

IFC’s investment in Neoenergia Elektro will support network improvements and new connections in the states of Sao Paulo and Mato Grosso do Sul. It will also contribute to climate mitigation by improving network efficiency and enabling more renewable power to be distributed to end consumers, as well as climate adaptation by reducing downtime caused by extreme climatic events.

The price of the IFC loan will be linked to Neoenergia Elektro meeting two corporate sustainability targets. The first one is increased network digitalization, which will reduce energy losses and related GHG emissions. The second is increased female electricians in its workforce, leveraging on Neoenergia’s “School for Electricians” program. These innovative sustainability-linked indicators position Neoenergia Elektro at the forefront of sustainability in its sector. IFC has also sponsored a Second Party Opinion of Neoenergia’s updated Sustainability-linked Finance Framework reflecting these indicators.

The investment in Neoenergia Elektro will be the second such combined green and sustainability-linked loan for an energy company in Latin America, only after IFC’s green and sustainability-linked loan of BRL 550 million (approximately $115 million) to Neoenergia Coelba in 2022. 

José Sainz Armada, Director of Finance, Control and Resources at Iberdrola, said: “With this agreement, we advance in the energy transition, decarbonization and electrification in developing countries, where Iberdrola is already working. It also consolidates IFC as one of our allies when it comes to providing financing for our projects in all fields of action, from photovoltaic and wind farms to green hydrogen, and smart networks.”

See related article: World Bank’s IFC and Sococim Partner for €242 Million to Boost Low-Carbon Cement Production in Senegal

Global Partnership in Emerging Markets

IFC’s loan to Neoenergia Elektro is part of a broader global partnership between Iberdrola and IFC announced today at the WBG Innovate for Climate event in Bilbao, Spain.

Alfonso García Mora, IFC’s Vice President for Europe, Latin America and the Caribbean, said: “We are proud of the collaboration with Iberdrola in emerging markets. The loans that we have signed with Neoenergia represent a first step in a broader collaboration that will promote the energy transition in Brazil, Poland, Morocco and Southeast Asia. Iberdrola, as a pioneer in the industry, is a strategic ally for IFC.”

Iberdrola – majority shareholder of Neoenergia- is one of the world’s largest utilities by market capitalization, operating across all segments of the energy value chain. It operates in many regions that overlap with IFC, including in Europe, Latin America, Asia, and Africa. Iberdrola is also a leader in sustainable finance, with more than 48 billion euros issued in green and ESG debt.

In addition to the two IFC investments in Iberdrola’s Brazilian subsidiary, the partnership includes a potential new green and sustainability-linked loan to Iberdrola to finance wind and solar projects in countries such as Poland, Morocco and Vietnam.

Iberdrola and IFC are also jointly exploring collaborations on early-stage project development in emerging energy solutions, including offshore wind and green hydrogen. These collaborations may involve, amongst others, co-funding feasibility studies, pilot projects or stakeholder engagement plans.

IFC is a leader in sustainable finance for emerging markets. Since 2020, IFC has invested more than $4.5 billion in green and sustainability-linked financing to infrastructure companies in emerging markets. IFC’s sustainable finance offering includes also complementary client services, such as project preparation support and climate advisory – assisting in the definition of ambitious sustainability strategies, developing concrete decarbonization action plans, assessing climate risks, and ensuring a just transition. 

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