Palau : Disaster Resilient Clean Energy Financing - Additional Financing
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
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Project Officer
Abbasov, Rafayil
Sectors Group
Request for information -
Approval Date
11 December 2023 -
Country/Economy
Palau -
Sector
- Energy
Related Projects
| Project Name | Disaster Resilient Clean Energy Financing - Additional Financing | ||||
| Project Number | 54011-002 | ||||
| Country / Economy | Palau |
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| Project Status | Approved | ||||
| Project Type / Modality of Assistance | Grant |
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| Source of Funding / Amount |
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| Operational Priorities | OP2: Accelerating progress in gender equality OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability OP4: Making cities more livable OP6: Strengthening governance and institutional capacity |
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| Sector / Subsector | Energy / Renewable energy generation - solar |
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| Gender | 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 renewable 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 |
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| Project Outcome | |
|---|---|
| Description of Outcome | Consumers' energy expenditures reduced |
| Progress Toward Outcome | -- |
| Implementation Progress | |
| Description of Project 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 Advanced low-carbon technologies in clean energy subprojects made available for commercial and other eligible enterprises including women-led businesses |
| Status of Implementation Progress (Outputs, Activities, and Issues) | Activities have yet to commence Activities have yet to commence DRCEF Investment Facility Charter signed by Palau Minister of Finance on 17 February 2021. Activities have yet to commence Activities have yet to commence Activities have yet to commence Activities have yet to commence Activities have yet to commence |
| 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 | Sectors Group |
| Responsible ADB Division | Energy Sector Office (SG-ENE) |
| Executing Agencies |
Ministry of Finance |
| Timetable | |
|---|---|
| Concept Clearance | 06 Sep 2021 |
| Fact Finding | 26 Jun 2023 to 30 Jun 2023 |
| MRM | 18 Aug 2023 |
| Approval | 11 Dec 2023 |
| Last Review Mission | - |
| Last PDS Update | 11 Dec 2023 |
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| Title | Document Type | Document Date |
|---|---|---|
| Project Agreement (Externally Financed - Japan Fund for the Joint Crediting Mechanism) for Grant 0931-PAL: Disaster Resilient Clean Energy Financing - Additional Financing | Project/Program Agreements | Jan 2024 |
| Grant Agreement (Externally Financed - Japan Fund for the Joint Crediting Mechanism) for Grant 0931-PAL: Disaster Resilient Clean Energy Financing - Additional Financing | Grant Agreement | Jan 2024 |
| Disaster Resilient Clean Energy Financing - Additional Financing: Additional Financing Report | Additional Financing (Cofinancing) | Dec 2023 |
| Disaster Resilient Clean Energy Financing - Additional Financing: Gender Action Plan | Gender Action Plans | Dec 2023 |
| Disaster Resilient Clean Energy Financing - Additional Financing: Project Administration Manual | Project/Program Administration Manual | Nov 2023 |
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