Palau: Disaster Resilient Clean Energy Financing - Additional Financing

Sovereign Project | 54011-002

The additional financing for the DRCEF Facility is to further accelerate clean energy investments by NDBP through establishing a new product under DRCEF. The new product will be a revolving facility on-lent by the NDBP with a subsidized interest rate on terms and conditions set forth in grant and project agreements between ADB and MOF/NDBP. The pricing and tenor of the proposed on-lending by the NDBP will include its administration charge and risk premium based on appraisal of loan applications to be further designed and reviewed at due diligence stage. The scope of the new product will be further determined at due diligence stage but will support an additional DRCEF Output 4: a new product for incentivizing adoption of advanced low-carbon technologies in clean energy projects made available and operationalized.

Project Details

Project Name Disaster Resilient Clean Energy Financing - Additional Financing
Project Number 54011-002
Country Palau
Project Status Proposed
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Energy efficiency and conservation

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The additional financing for the DRCEF Facility is to further accelerate clean energy investments by NDBP through establishing a new product under DRCEF. The new product will be a revolving facility on-lent by the NDBP with a subsidized interest rate on terms and conditions set forth in grant and project agreements between ADB and MOF/NDBP. The pricing and tenor of the proposed on-lending by the NDBP will include its administration charge and risk premium based on appraisal of loan applications to be further designed and reviewed at due diligence stage. The scope of the new product will be further determined at due diligence stage but will support an additional DRCEF Output 4: a new product for incentivizing adoption of advanced low-carbon technologies in clean energy projects made available and operationalized. The eligible projects may include: (i) rooftop solar PV, battery energy storage system, and energy management system for residential housing and/or commercial buildings; (ii) floating solar PV, battery energy storage system, and energy management system; and (iii) electric transportation (electric ferries, electric buses).
Project Rationale and Linkage to Country/Regional Strategy In 2015, the government adopted the Palau Climate Change Policy for Climate and Disaster Resilient Low Emissions Development, including the objective to mitigate global climate change by working toward low-carbon emission development, maximizing energy efficiency, protecting carbon sinks, and minimizing greenhouse gas emissions. The nationally determined contribution of Palau in 2015 aims to reduce energy sector greenhouse gas emissions by 22% compared to the 2005 level by 2025. A key government development priority set in the Energy Policy (2010) and the Energy Act (2016) is to diversify the energy generation mix by including more indigenous, renewable energy resources. Introduced in 2012, net metering was intended to benefit consumers for off-grid and on-grid rooftop PV solar generation. However, despite the strategies and policies in place, high cost of capital remains a key constraint for households and industries to install renewable energy systems. The current electrification rate of the country is almost 100%, but installed renewable energy, mostly solar (2.7 megawatt), is estimated to account for less than 7% of total electricity consumption.
Impact

Access to disaster resilient energy for consumers increased

Safe, resilient and prepared communities for calamities and women livelihood recovery enhanced

Resilience of Palau communities to climate change and disasters enhanced

Outcome

Consumers' energy

expenditures reduced

Outputs

Disaster resilient clean energy financing for eligible borrowers made available

Accessibility to disaster resilient clean energy loans for eligible women borrowers improved

Capacity and awareness of stakeholders increased

Advance low-carbon technologies in clean energy projects made available.

Geographical Location Nation-wide
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Abbasov, Rafayil
Responsible ADB Department Pacific Department
Responsible ADB Division PAEN
Executing Agencies
Ministry of Finance
3rd Floor, Executive Bldg, ROP Capitol
Ngerulmud, Melekeok State,P.O. Box 6011
Koror, PW 96940, Republic of Palau
Timetable
Concept Clearance 06 Sep 2021
Fact Finding 01 Feb 2022 to 28 Feb 2022
MRM -
Approval -
Last Review Mission -
Last PDS Update 08 Sep 2021

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Related Publications

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Tenders

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Contracts Awarded

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Procurement Plan

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