The structured financing by AES Dominicana Renewable Energy (ADRE) for the construction and O&M of 3 greenfield non-conventional renewable energy (NCRE) projects totalling 240MWac was chosen by the judges to win the IJGlobal ESG Awards 2024 renewables trophy for the region.

The transaction also included the refinance short-term facilities previously obtained by ADRE to build 3 NCRE projects totalling 150MWac of installed capacity.

One of the IJ judges said: “This is a large, impactful project with ESG risks well managed. It covers a number of ESG topics. Beyond emissions, it also tackles biodiversity as well as social issues.”

The total project cost was around $480 million including a $368 million, 7-year miniperm A/B Loan from IDB Invest; $27 million in SBCL for the DSRA; and $85 million in equity contributions. The transaction has more than $300 million in interest rate swaps.

This transaction is the largest financing for a renewable energy project and the largest syndicated deal – 22 institutions participated in the financing under IDB Invest’s A/B Loan – for the Dominican Republic and for a Caribbean economy.

IDB Invest – together with Bladex, JPMorgan, and Scotiabank – led the underwriting process as joint lead arrangers and joint bookrunners.

The transaction was 2x oversubscribed with more than $485 million orders. It is expected that this transaction could create a demonstration effect attracting more lenders and investors to the Dominican Republic.

The submission states: “Thanks to IDB Invest’s involvement, the project has implemented a comprehensive environmental and social plan focusing on mitigating environmental impacts and enhancing social outcomes.

“To comply with IDB Invest’s E&S policies – aligned with IFC performance standards – ADRE will be implementing an E&S Action Plan (ESAP) to enhance its E&S practices and policies.”

This includes:

• developing an E&S management system manual for each project defining all E&S plans, programmes and procedures
• conducting a human rights assessment and community risk assessment
• instituting a corporate gender policy aiming to achieve equal pay and compensation for equal work, promote the hiring of women
• updating its external and internal grievance mechanisms, in particular, to better address claims of gender-based violence and harassment
• enhancing the design of the Peravia projects to have more resilient plants to climate change
• developing and implementing a stakeholder engagement analysis
• enhancing the pollution prevention policies
• developing a protection and conservation biodiversity plans to protect critical habitats including the development of a biodiversity action plan (BAP) to achieve “net gain” of critical habitat values at the Peravia projects
• enhancing the land acquisition and resettlement policies by introducing socioeconomic compensation measures to ensure fair treatment of potentially affected communities

The implementation of this transaction is key for AES as the project represents its first phase of its decarbonisation strategy aiming to achieve net zero carbon emissions from electricity sales by 2040.

For AES, it was key to structure the financing with a flexible structure as this project should set the foundation for establishing ADRE as AES’ renewable energy platform in the DR for the development of future NCRE projects.

Further, the loans are expected to be refinanced through a capital market solution once the greenfield projects reach operation and market conditions are adequate.