Through PREP, ADB hopes to encourage the private sector’s interest in renewable energy in the Pacific Islands. Pictured is a photo of dawn at Fanning Island, Kiribati one of the Pacific Islands nations. (Photo Credit: Tom Patterson/www.goodfreephotos.com)
- Approximately 5 renewable energy projects in the Pacific Islands will be supported financially by the ADB under a new facility worth $100 million
- The Pacific Renewable Energy Program (PREP) will provide loans, guarantees, and letters of credit to select projects over a period of next 5 years
- One of the projects has been identified and financing plan for the same is under discussion, but ADB doesn’t share details about the project
- Through this facility, the bank wants to mobilize private investment and help utilities here to reduce their reliance on grant and subsidies
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The Asian Development Bank (ADB) plans to support an estimated 5 separate renewable energy projects in its Pacific developing member nations over the next 5 years, under a newly approved facility. With a budget of up to $100 million, the Pacific Renewable Energy Program (PREP) will provide financing support as loans, guarantees, and letters of credit to such projects.
The main aim behind this is to help such projects overcome their constraints in securing private sector investment in the target nations. It will encourage private sector investment by using donor funds to backstop the power payment obligations of power utilities. More about the PREP facility can be learnt on ADB’s website.
“The program will help to build urgently needed capacity for energy sector expansion and private sector interest in clean energy projects in the region,” said PARD Director General Carmela Locsin. “The objective is to implement more renewable energy projects in the Pacific by working with power utilities to identify transactions at an early stage.”
Eventually, through the program, ADB aims to have the utilities reduce their reliance on grants and subsidies by spurring self-sustaining private sector development. The bank says it has identified its first project under the facility, and a financing plan is under discussion, but doesn’t disclose the details.
To be considered under this facility, interested renewable energy projects will need to adopt environmental and social standards and also demonstrate good gender parity in their energy projects and/or related community projects, specifies the bank.
ADB has already been supporting renewable energy initiatives in the region through various grants and financing measures. In March 2019, it joined Green Climate Fund and Government of Australia to pool in $44.6 million grant to support battery storage, grid connected RE hybrid systems and mini-grid in Tonga (see $44.6mn Grant For Renewable Energy In Tonga).