The Development Bank (BNDES) of Brazil approved on Tuesday special financing conditions for those wanting to implement renewable energy generation projects in isolated areas of the Amazon region. An auction has been scheduled by the Ministry of Mines and Energy for May 11th for energy projects to be implemented in the state of Amazonas.

“The possibility introduced by ANEEL (Brazilian Energy Regulating Agency) opened the opportunity for BNDES to encourage, through more attractive financial conditions, the replacement [by renewal energy projects] of generation projects using fossil fuels and of greater environmental impact, which are no longer financed by the Bank,” said the statement issued by BNDES on Tuesday.

According to the entity the predominant source of electrical energy in isolated systems is thermal, powered by diesel or natural gas. The state of Amazonas currently has 225 diesel plants, with an installed capacity of 683 megawatts (MW), which consume 687 million liters of fuel per year and emits about two million tons of carbon dioxide (CO2).

This is the first time the government, through its energy distributor (Amazonas Energia), is opening up the chance of implementing projects of renewable energy to serve the region.

According to the BNDES the winning projects’ financeable items could use up to fifteen percent of the resources from the National Climate Change Fund, at an annual interest rate of one percent, and complement financing with the government’s TJLP (long term interest rate), whose current rate is 7.5 percent per year.

The Climate Fund may allocate up to R$200 million to finance these projects. According to officials, 36 renewable energy projects have already been registered for the May ANEEL auction.