IDB Approves $200M Credit Line to Expand Rural Electrification in Peru’s Amazon

In a transformative move to address energy inequality and promote sustainable development in remote areas, the Inter-American Development Bank (IDB) has approved a $200 million Conditional Credit Line for Investment Projects (CCLIP) to support Peru's rural electrification efforts in the Amazon region. The approval includes an initial $70 million loan that will focus on bringing renewable energy solutions to some of the country's most underserved and environmentally vulnerable communities.

This major investment, endorsed by the IDB's Board of Executive Directors under the Multiple Works Loans category, falls under the umbrella of the IDB Group's Amazonia Forever regional coordination program. The initiative reflects a growing commitment to environmental sustainability, social inclusion, and equitable access to energy in the Amazon Basin.

Electrifying the Amazon: A Leap Toward Equity and Sustainability

The newly approved CCLIP aims to advance Peru's energy transition by facilitating access to clean, renewable electricity in 25 remote communities across the Loreto and Amazonas departments. These communities, collectively home to over 30,000 residents—including at least eight Indigenous communities—will benefit from reliable and environmentally sustainable power for the first time.

The first operation under the credit line will help install hybrid mini-grids, combining solar photovoltaic systems with battery storage, to serve 7,600 rural households. These systems are tailored to operate efficiently in isolated, off-grid environments, where extending the conventional grid would be financially or logistically unfeasible.

"This program is not just about lighting homes—it's about transforming lives," said an IDB official. "Energy access is the key to education, health, economic opportunity, and preserving the dignity of Indigenous and rural populations."

Capacity Building and Institutional Strengthening

Beyond infrastructure development, the program also invests in training and capacity-building. Community members will receive instruction on the efficient and productive use of electricity, enabling them to maximize the benefits of access—whether in small-scale agriculture, refrigeration, education, or telecommunications.

The project will also support the General Directorate of Rural Electrification (DGER) under the Ministry of Energy and Mines, helping improve its technical capabilities and project management systems. Similarly, staff at the regional public utility Electro Oriente will be trained to operate and maintain solar and battery technologies, ensuring the long-term sustainability of installations.

These components address a critical need to close the implementation gap that often hinders rural electrification programs, by pairing infrastructure development with operational readiness and community engagement.

Socioeconomic and Environmental Impact

The Peruvian Amazon is one of the most ecologically rich yet socioeconomically disadvantaged regions of Latin America. Limited access to basic services, including energy, has been a persistent barrier to development. The IDB-backed program offers a model for green development that respects cultural heritage while improving living conditions.

Key outcomes of the first loan operation include:

• Installation of 25 hybrid solar mini-grids with modern battery storage

• Access to electricity for more than 30,000 residents in remote areas

• Training for community members in the efficient use of energy

• Institutional support for better project oversight and energy system maintenance

• Reduced reliance on fossil fuels, supporting Peru's climate and emissions targets

The program also aligns with Peru's National Electrification Plan and contributes to its commitment under the Paris Agreement and Sustainable Development Goal 7 (Affordable and Clean Energy).

Financial Structure and National Support

The first loan under the credit line is structured with a 17-year repayment term, including a 6.5-year grace period, and carries an interest rate based on the Secured Overnight Financing Rate (SOFR)—a globally recognized benchmark.

In addition to the IDB's $70 million contribution, Peru's government will provide $18 million in counterpart funding, demonstrating strong national ownership and support for the initiative.

Future phases of the $200 million credit line will build on lessons learned from the first operation, with a focus on scaling up impact, reaching more isolated communities, and replicating successful models across other parts of the Peruvian Amazon.

A Model for Regional Transformation

The initiative complements the Northeast Productive Development Program (PRODEPRO) approved by the IDB in 2023 and reinforces the IDB's broader role in catalyzing sustainable, inclusive development in Latin America's most marginalized regions.

By addressing both infrastructure and institutional challenges, the CCLIP represents a holistic approach to rural electrification, setting a new standard for energy access programs in ecologically sensitive and underserved areas.

With this support, Peru is not only electrifying its Amazon but also empowering its communities, safeguarding its environment, and moving decisively toward a low-carbon, inclusive future.