A new plant on the island of Mindinao in the Philippines will be combined with the existing Bubanawan hydroelectric plant in the first full-scale demonstration of the environmental and economic benefits of combining hydro and photovoltaic-based power.Washington D.C. – June 10, 2003 [SolarAccess.com] The International Finance Corporation (IFC), the private sector arm of the World Bank Group, and Cagayan Electric Power and Light Company, Inc (CEPALCO) have agreed to finance the US$5.4 million solar photovoltaic power project in the with partial funding from the Global Environment Facility (GEF). “This project represents GEF’s initial foray into supporting large-scale photovoltaic applications, which can ultimately reduce costs and improve performance,” said Mohamed El-Ashry, CEO and chairman of the GEF. The GEF, which funds innovative applications of renewable energy technologies, will provide a US$4 million forgivable loan through IFC, with CEPALCO contributing the remainder as equity. The 950 kW project will be the largest distributed, grid-connected photovoltaic installation in the developing world, according to the IFC. Sumitomo Corporation of Japan is the turnkey contractor for the project, and the solar modules are being manufactured by Sharp Corporation of Japan. The project, expected to become operational in 2004, has an innovative financing structure, with IFC/GEF financing a loan that converts to a grant after five years of operation if certain conditions are met. “IFC is proud to be associated with this path-breaking renewable energy project,” said Gavin Murray, IFC director of Environment and Social Development. “This financing structure provides a model for donor-assisted projects by promoting timely execution and operation of the project through the adoption of project financing discipline.” CEPALCO is the third largest electric distribution utility in the Philippines. It is a private, investor-owned utility with a peak load of about 80 MW. CEPALCO holds the power distribution license for a coastal region on Mindanao reaching from the city of Cagayan de Oro in the west to the town of Jasaan in the northeast. “We are very excited to be a part of this pioneering project, and look forward to moving towards a future with cleaner and more environmentally sustainable generating technologies,” said Ramon C. Abaya, Chairman of CEPALCO. Established in 1991, the GEF helps developing countries fund projects and programs that protect the global environment and is the designated financial mechanism for international agreements on biodiversity, climate change, and persistent organic pollutants. The activities of the GEF, funded by member countries, are largely implemented through the World Bank, UNDP, and UNEP. The IFC acts as a private sector interface for the GEF, operating through the World Bank as a GEF implementing agency.