BIO’s first direct infrastructure investment in Honduras

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11.07.2011

Promoting small-scale renewable energy

BIO has committed USD 3 million to Semsa, the independent developer of a hydroelectric project on the Mezapa River in the rural Department Atlantida, Honduras. The investment program involves the construction of a 9.4MW run-of-the river hydropower station, connected to the local grid. While meeting environmental concerns, the project reduces dependency on conventional fuel and improves infrastructure and employment for the local community.

Although Honduras has a large potential of renewable energy (hydro, wind, solar and biomass), around 60% of its electricity generation is still based on conventional oil fuel, for which it has no own natural resources. While larger hydro projects do have significant environmental impacts and affect continuity of electricity supply in case of a break down, the country can highly benefit from a series of smaller hydro-electricity initiatives.

Semsa was founded in 2005 against the background of an incentives law for renewable energy generation, stimulating private initiatives in the Honduran context. It developed this small hydro project on the Mezapa River in a rural area North of Honduras, which underwent limited infrastructure development so far.

According to estimates, the project will supply an annual average of 42,050 MW-h of electricity to the Honduran grid, shifting the production from other sources that generate greenhouse gas emissions such as diesel and bunker fuel fed generators. Due to its small scale nature (run of the river, ecological flow,…), the project’s environmental impact is negligible .

In addition, the local community will benefit from:

- Job creation both during construction phase and once the project will be up and running

- Opening up of agricultural areas by improvement of access roads and construction of a new bridge over the Mezapa River

- Improvement of the electricity grid resulting in reduction of losses (and costs of it which are passed on to the electricity bills)

- Active involvement of the sponsor in conservation of local forests

This first direct infrastructure investment in Honduras shows once again the importance of access to finance for private companies in developing countries. By supporting the expansion of their activities with long-term financing BIO is contributing to the stimulation of innovation and the development of new skills. Renewable energy projects are a priority for BIO because they generate a direct impact on both the national/local economy and the living conditions of the population.


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