The project is being developed by a Chilean registered special purpose vehicle, Norvind S.A. (“Norvind” or the “Company”). Norvind is eighty percent owned by the Norwegian power developer Statkraft Norfund Power Invest A.S (“SN Power”), through its subsidiary SN Power Chile Inversiónes Eléctricas Ltd, and twenty percent owned by its Chilean partner, Inversiones Totoral S.A., a subsidiary of Centinela S.A., the investment vehicle of the Pavez family.

The total project cost is approximately $140 million. IFC will provide the debt financing for the project in the form of a $35 million A Loan and a $35 million B Loan.

30.75 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.75
Equity

* These investment figures are indicative

The project will be located in Chile’s IV region, 294km north of Santiago, on a site located between the Pacific coast and the Pan-American Highway.

The project will:

- be the second grid connected wind farm in Chile and the first project financed wind farm, adding approximately 110 GWh per annum of wind power to the grid and supporting capacity building in Chile’s nascent wind market;
- contribute to the Chilean government’s ambitious target of 5% energy contribution from NCRE and provide a demonstration effect as the first project to be financed based on the incentives created under the new law;
- provide diversification to the Chilean energy mix which is currently overly dependent on hydro and diesel (in place of natural gas);
- reduce local (SOx and NOx) air pollution, which is particularly evident with the heavy winter smog in Santiago, by substituting heavily polluting coal and oil-fired capacity;
- reduce global air pollution by replacing fossil fuel powered capacity and contributing approximately 70,000 tCO2e /year in carbon emission reductions;
- contribute to increased power generation capacity to address the crisis created by the loss of Argentinean gas supply; and
- create 200 local jobs during construction and approximately 10 permanent jobs during operation.

IFC’s additionality to the investment comprises:

a) Structuring additionality: IFC has supported the client and its Sponsors over the last 4 years of project development on multiple issues including i) developing bankable wind data; (ii) suitable turbine selection; (iii) market standards for turbine supply agreements; (iv) market standards for construction contracts; and (v) securing carbon revenues to allow monetization.

b) Regulatory additionality: IFC has worked closely with the Sponsors, the regulators and advisors to understand the new regulatory structure in Chile for non-conventional renewable energy, applying its understanding of a range of similar regulatory structures worldwide, to enable the project to be the first financed on the basis of revenues associated with this law.

c) Financial additionality: i) providing the first limited recourse project financing of a wind project in Chile; (ii) providing financing with a longer average life than that available from commercial banks; and (iii) providing comfort to the B-Loan participants both through IFC’s structuring role and in light of regulatory and political risk.

This project is categorized as B. The project is expected to have largely positive environmental and social impacts as it will provide a renewable source of electric power and reduce the potential growth in fossil-based electric power generation sources and related Greenhouse Gases (GHGs). The projects remaining limited number of additional environmental and social impacts that may result can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria.

Key environmental and social issues identified during due diligence activities include: potential threats for flora and fauna during construction and operation, including the potential for cumulative impacts; occupational and public safety during construction; and noise during the operational phase. Applicable Performance Standards include:

PS1 - Social and Environmental Assessment and Management System;
PS2 – Labor and Working Conditions;
PS3 – Pollution Prevention and Abatement; and
PS6 – Biodiversity Conservation and Sustainable Natural Resource Management.