ERCO Secures USD 33 Million from Finnfund and Proparco to Expand Solar Capacity in Colombia

Finnfund, a Finnish impact investor, and Proparco, France’s development finance institution, have committed USD 33 million to ERCO, a leading integrated solar energy platform in Colombia. The investment, complemented by a guarantee from the European Union, will support the company’s expansion of solar generation capacity and contribute to a more diversified and resilient energy mix in the country.

Investment to accelerate ERCO’s solar energy expansion

The investment forms part of a larger equity financing round led by an international consortium of development finance institutions and impact investors, with Augment Infrastructure Managers leading the round.

The funds will finance the construction and expansion of solar energy assets that are expected to contribute to the growth of Colombia’s renewable energy capacity over the coming years. The projects will be developed in partnership with European clean technology companies and solutions.

According to Ari Nironen, Senior Investment Manager at Finnfund, Colombia has significant renewable energy potential, making the expansion of solar generation an important component of a more resilient and reliable power system.

“ERCO has established itself as a leading integrated solar platform with a strong track record in project development, construction, operation and energy retail. We are pleased to support the company’s next growth phase and its contribution to Colombia’s clean energy transition,” Nironen said.

For Marianne Pallez, Senior Investment Officer at Proparco, ERCO’s combination of local expertise, an integrated platform and its track record in project execution positions the company to respond to Colombia’s growing demand for energy infrastructure.

“We look forward to supporting ERCO as it expands its platform, scales impact across Colombia and contributes to the country’s long-term energy security,” Pallez said.

EU guarantee supports renewable energy investment

The project is supported through EDFI Renewable Energy Transition (RET), a guarantee managed by EDFI Management Company under the European Fund for Sustainable Development Plus (EFSD+) programme, which forms part of the EU’s Global Gateway strategy.

The guarantee is intended to reduce investment risk and enable additional equity investment. According to the information provided, EU foreign direct investment is responsible for 80% of non-conventional renewable energy generation in Colombia.

François Roudié, Ambassador of the European Union to Colombia, highlighted the role of the partnership in supporting the country’s energy transition.

“The EU is a natural ally for Colombia in advancing its energy transition, greening power generation and building a more competitive, resilient and secure energy system,” Roudié said.

He added that the investment represents an example of how Colombia and the EU can work together on renewable energy projects through European development finance and guarantee mechanisms.

ERCO targets 1 GWp of additional solar capacity by 2030

Founded in 2012, ERCO has developed from a solar engineering and maintenance company into an integrated clean energy platform. Its activities now include solar project development, engineering and construction services, energy generation and digital energy retail.

The company has delivered more than 2,000 solar projects and is one of Colombia’s leading players in the commercial and industrial solar market.

ERCO is targeting approximately 1 GWp of additional solar generation capacity by 2030. The company also plans to scale battery energy storage capacity as part of its efforts to support a more diversified and climate-resilient electricity mix.

Colombia’s electricity system depends heavily on hydropower, which makes it vulnerable to climate-related weather events, including droughts associated with El Niño. At the same time, electricity demand is expected to continue growing as the economy expands and electrification increases.

Against this backdrop, ERCO aims to scale solar generation and battery energy storage to improve the resilience and stability of the country’s energy system while reducing greenhouse gas emissions.

Financing to support solar and battery storage deployment

The new investment will provide ERCO with capital to accelerate its current growth phase and deploy additional renewable energy infrastructure.

Luis Fernando Gómez, Chief Financial Officer of ERCO, said the support from Finnfund, Proparco and the company’s investors will help accelerate the deployment of solar and battery storage capacity in Colombia.

The investment will also strengthen ERCO’s ability to leverage local financing and rotate capital into new projects, with the objective of expanding Colombia’s renewable energy capacity while generating social, environmental and productive impact across the country.

The company’s growing portfolio is expected to increase renewable electricity generation, reduce dependence on fossil-fuel-based generation and help address risks associated with variability in hydropower generation.

It is also expected to support industrial and commercial customers with access to cleaner and more reliable energy solutions.

ERCO exceeds 2X Challenge thresholds for women’s participation

The investment also includes an inclusive growth component. ERCO currently exceeds the 2X Challenge thresholds for female employment and leadership.

Women represent 26% of ERCO’s employees and 33% of its managers. The company has committed to maintaining and strengthening women’s participation across its workforce and leadership teams.