IDB Approves $1B Credit Line to Modernize and Decarbonize Ecuador’s Power Grid

The initiative aims to improve the reliability, capacity, and sustainability of Ecuador’s power grid while supporting the country’s long-term decarbonization goals.

The Inter-American Development Bank (IDB) has approved a $1 billion Conditional Credit Line for Investment Projects (CCLIP) to strengthen, modernize, and expand Ecuador’s electricity system—one of the country’s most significant energy sector financing packages in recent years. The initiative aims to improve the reliability, capacity, and sustainability of Ecuador’s power grid while supporting the country’s long-term decarbonization goals.

Alongside the CCLIP, the Board approved an initial operation worth $270 million, complemented by a $30 million concessional loan from the Clean Technology Fund (CTF). Together, these resources will fund critical investments in transmission, distribution, digitalization, renewable energy integration, and rural electrification.

Modernizing Ecuador’s Electricity Backbone

The programme will support sweeping upgrades across Ecuador’s electricity transmission and distribution networks. A major objective is to enhance the grid’s resilience and capacity to accommodate growing demand, integrate new renewable energy sources, and ensure stable service even in remote or climate-vulnerable regions.

Key components include:

• Upgrading over 700 km of transmission lines with high-efficiency advanced conductors

• Modernizing and digitalizing national and regional control centres and connection points

• Expanding transmission capacity to integrate new power generation—especially wind, solar, hydro, and other renewable sources

• Reinforcing electricity substations and modernizing distribution control centres

• Strengthening distributed generation, such as hybrid systems in the Galápagos Islands

These upgrades will help Ecuador transition to a cleaner, more reliable energy matrix while reducing vulnerability to grid failures.

Expanding Access in the Amazon and Rural Areas

The programme places particular emphasis on expanding electricity access in underserved communities. More than 5,600 new households in the Ecuadorian Amazon—including Indigenous and rural families—are expected to gain access to the electricity grid by 2031.

Improved access will support social inclusion and economic development, enabling households, schools, clinics, and small businesses to benefit from reliable electricity. The expansion aligns with Ecuador’s national strategy to close infrastructure gaps in historically marginalized regions.

A Major Step Toward Reducing Carbon Emissions

One of the programme’s most significant contributions is its climate impact. By displacing fossil-fuel-based solutions traditionally used to maintain electricity system quality, the initiative is expected to reduce 1.3 million tons of CO₂ emissions.

These environmental benefits reflect Ecuador’s broader targets for decarbonization and renewable energy expansion, as well as the IDB’s commitment to supporting climate resiliency and clean energy transitions across Latin America and the Caribbean.

Part of the Amazonia Forever Initiative

The new CCLIP forms part of Amazonia Forever, the IDB Group’s regional initiative focused on protecting the Amazon rainforest while improving livelihoods in the nine countries of the Amazon basin. Through Amazonia Forever, the IDB supports sustainable infrastructure, climate-smart economic alternatives, biodiversity protection, and social inclusion for Amazonian communities.

Ecuador’s electricity modernization programme reflects this holistic vision by promoting low-carbon development, boosting rural connectivity, and reducing pressure on forest ecosystems.

Financing Conditions

The first approved loan under the CCLIP includes:

• $270 million IDB loan

  • Repayment term: 22.5 years

  • Grace period: 8 years

  • Interest rate: SOFR-based

  • Local counterpart financing: $78.3 million

• $30 million Clean Technology Fund (CTF) loan

  • Repayment term: 20 years

  • Grace period: 8 years

  • Annual interest rate: 1.19%

These conditions reflect the concessional nature of the financing and the project's strong alignment with global climate objectives.

A Transformative Investment in Ecuador’s Energy Future

The approval of the $1 billion credit line marks a major advance in Ecuador’s efforts to modernize its power sector, reduce emissions, and ensure reliable electricity for all communities, particularly those in remote regions. It also reinforces the IDB’s commitment to supporting clean, sustainable, and inclusive development across Latin America.