The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank, will insure four solar projects under development that will add 50 megawatts (MW) of clean power to Jordan’s grid, the Washington DC-based agency said in a statement.
MIGA’s investment guarantees of $15.6 million cover equity investments by private equity fund Adenium Solar Jordan in four solar projects in Ma’an and Mafraq for up to 20 years against the risk of transfer restriction, expropriation, breach of contract, and war and civil disturbance.
Developers of the projects have already secured a 20-year power purchase agreement (PPA) with the National Electric Power Company (NEPCO), Jordan’s state-owned utility, according to the statement.
The four projects – Jordan Solar One (in Al Mafraq), Al Ward Al Joury, Zahart Al Salam, and Al Zanbaq in Ma’an – are part of a broader initiative launched by the Jordanian government which involves a total of 12 industry-scale solar photovoltaic (PV) solar parks, making it the largest private sector-led solar initiative in the Middle East and North Africa.
The World Bank’s International Finance Corporation (IFC) is also backing the projects as a lender, MIGA said. According to a press release issued by the IFC in October 2014, the World Bank’s financing arm has already finalised a $207.5 million debt package for the construction of seven of the 12 solar plants. In addition to acting as lead arranger, the IFC is also providing $91.5 million in loans from its own account for the seven projects, which constitute phase one of the Jordanian government’s initiative.
Another $116 million is being provided by Arab Bank, Europe Arab Bank, Dutch development bank FMO, Finnish development finance company FinnFund and OPEC's Fund for International Development.
Of the $207.5 million-debt package finalized last October, about $129.7 million will go towards these four solar plants, a spokesperson for the IFC said.
“The plants will help diversify Jordan’s energy mix, improving energy security and reducing reliance on fuel imports,” MIGA said in its statement.
In addition to having to meet an increase in electricity demand, Jordan also has to generate 10 percent of its electricity from renewable energy sources by 2020 if it is to comply with the Renewable and Energy Efficiency Law it passed in 2010.
“By insuring Adenium – a private-equity fund that focuses on alternative energy – we’re supporting a business model that we hope will be used increasingly to help tackle climate change,” stated Keiko Honda, MIGA’s executive vice president and chief executive.