The Nordic Investment Bank (NIB) has agreed to lend the Greenland Self-Rule Government EUR47M for the construction of a new hydropower plant in the country.

The 22.5MW (3×7.5MW) plant is under construction outside the town of Ilulissat on the west coast of Greenland. The plant will harness the water discharge from two natural glacial lakes.

“This project is of high importance for Greenland as the island is reducing its dependence on energy production from fossil fuels. The new power plant will help increase power generation from renewable sources,” said Henrik Normann, NIB President and CEO.

Project infrastructure includes a 5.5km tunnel, underground powerhouse, a 60kV overhead transmission line, roads and a small harbour.

The first of three turbines at the plant is planned to be commissioned in November 2012 and full operation is planned from September 2013.

The funding agreement was for a 15-year-maturity loan.