The Asian Development Bank (ADB) has approved financing of up to $100 million to overcome constraints to private sector investment in renewable power projects in Pacific island countries.
“The objective is to implement more renewable energy projects in the Pacific by working with power utilities to identify transactions at an early stage,” said ADB official Carmela Locsin. The Pacific Renewable Energy Program will support an estimated five renewable energy projects in ADB’s Pacific developing member countries over a five-year period.
Funding for power utilities in the Pacific is inadequate. Private sector investment in particular is crucial to expand renewable power generation as the region transitions from fossil fuels to clean energy. However, investment is restricted by a lack of governmental credit support for the payment obligations of power utilities. Development is also hampered due to a lack of bankable power purchase agreements, uncertainties over foreign currency availability and convertibility, and perceived political risks.
The programme is expected by the ADB to help remove barriers to investment by enhancing the creditworthiness of power utilities and mitigating perceived political risk for lenders.
A first, unnamed project proposed for approval under the programme has been identified and a financing plan is under discussion. To meet international donor requirements, participating projects will be required to adopt environmental and social standards and to demonstrate good gender parity in their energy projects and/or related community projects.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.
