Caribbean Resilient Renewable Energy Infrastructure Investment Facility

active

Prospective

The proposed project will mobilize private capital for scaling up renewable energy (RE) through risk mitigation of RE investments, project development and procurement support, direct investments in RE integration infrastructure, providing incentives for public sector using performance based criteria in the participating countries (St Lucia, Grenada and SVG ), and technical assistance at all participants countries and regional levels.The project have four components.:1. Component 1: Regional RE Coordination Unit (RCU), Institutional Strengthening, and Implementation Support . This component will be implemented through two key subcomponents: a) Regional Coordination Unit (RCU and Regional Aggregation for RE development, and b) Technical Assistance. The overarching goal is to address the unique challenges faced by individual Caribbean countries in their energy transition by pooling resources and expertise at the regional level. i. Subcomponent 1. Regional RE Coordination Unit (RCU) and Institutional Strengthening Mechanism (US$ 3 million). The RCU will serve as the central entity responsible for coordinating the aggregation of RE projects across the region to offer a larger size for private sector developers. The primary function of the RCU will be to act as a supporting project developer and transaction advisor to the participating countries. The RCU will be responsible for overall quality assurance, coordination, and reporting for the project. This subcomponent will also support the regional procurement aggregation mechanism, which is critical aspect of the facility mechanism, focusing on consolidating RE projects across different jurisdictions to enable larger size bids. ii. Subcomponent 1.2: Technical Assistance . The Technical Assistance subcomponent is designed to build capacity and provide technical support to the national governments. This subcomponent will focus on the following areas:(i)Capacity Building program that will focus on national PIUs and other national counterparts to enhance their skills in project management, regulatory compliance, and technical aspects of RE development through workshops, seminars, and on-the-job training. (ii) Development of Standardized Documentation: (iii) Advisory Services will be provided to address specific technical, legal, and financial issues that may arise during project development and implementation. The project will provide technical assistance for ECPCGC on implementation to address several issues. This will include attaining consensus from ECCU governments on the structure and amending the legal framework for the ECPCGC to include the REIIF, revising the operations manuals, safeguards policies, etc., to reflect the REIIF requirements, and creating a new financing window for renewable energy guarantees and deciding on the range of financing that will be made available. More critically, Component 2 will offer support to hire additional staff who are experts in RE financing, risks, sector issues, etc., to run the new REIIF window and coordinate with the Regional Technical Renewable Energy Unit, including the legal and operational relationships, with the ECPCGC. The technical assistance will cover ECPCGC outreach and capacity building for participating banks on the REIIF partial credit guarantees, liquidity cover, and insurance terms and conditions. Finally, this component will provide financing for the development of a specific parametric insurance product that covers damages to renewable energy generation investments (e.g., solar farms, wind farms, etc.) financed by banks participating in the REIIF. This funding will provide support to the Caribbean Catastrophe Risk Insurance Facility (CCRIF) in collaboration with the ECPCGC to engage in product development.2. Component 2: Risk Mitigation Fund . The Renewable Energy Infrastructure Investment Facility (REIIF) will provide a range of risk mitigation solutions for participating banks in the region via a new window with multiple product offerings implemented by the Eastern Caribbean Partial Credit Guarantee Corporation (ECPCGC). The REIIF will focus on mitigating risks specific to the renewable energy (RE) sector, including credit risks of the underlying independent power producers and developers and the limited availability of various forms of working capital and long-term funds for utility-scale RE investment. The REIIF is structured as an expandable concept, starting with a first phase with three countries participating (Grenada, St. Lucia, St. Vincent and the Grenadines) with equal shares of IDA financing to be put into the REIIF. Three ECCU countries have access to IDA credit financing on Small Economy Terms with a 10-year grace, 40-year final maturity, fixed interest of 1.37% in USD, and 2% of the principal repayable years 11-20 and 4% years 21-40. Given only three countries will be participating in phase one of the REIIF, the REIIF risk mitigation solutions will only be offered in those three participating countries initially. The risk mitigation tools will be offered on a first come, first serve basis and will have loan size limits to ensure equity in access to the REIIF. The risk tools will enable participating banks to open access to debt financing for the RE sector, extend long-tenor financing, and do so efficiently at lower market rates than would otherwise be possible. The IDA financing from the three countries will be used in three core risk mitigation solutions (also shown in the graphic below), as well as an integrated technical assistance program for ECPCGC.3. Component 3: Renewable Energy Integration and Infrastructure modernization, Institutional Strengthening, and National Implementation Support. Modernizing the electricity grid is crucial for integrating renewable energy sources and improving the reliability and resilience of the energy infrastructure. This component will provide financing for optimization and strengthening of transmission and distribution networks of participating countries to prepare the grid infrastructure to be ready to integrate more RE generation, including battery storage. This component will finance the works associated with increasing the wheeling capacity of the existing transmission lines, upgrading the capacity of the existing primary sub-stations, or creating new primary substations in each country. The design and construction of the grid infrastructure (T&D, substations, control centers etc.) to integrate renewables will integrate climate resilient design, to strengthen infrastructure resilience to climate hazards and risks4. Component 4: Contingent Emergency Response. This component, known as the Contingent Emergency Response Component (CERC), will be available if needed, to redeploy some of the project resources alongside those of other projects in specific country project portfolio to respond to an emergency. The available resources will be made available to finance emergency response activities and to address crisis and emergency needs. An Immediate Response Mechanism Coordinating Agency and expenditure management procedures will be defined in an Immediate Response Mechanism Operational Manual, to be prepared separately and approved by the World Bank, in line with guidance provided under OP 10.00, paragraph 12. In case this component is used, the project will be restructured to allocate financing, revise the PDO and indicators, and detail implementation arrangements.

World Bank

Project

Solar, Energy Storage, Power Transmission, Wind, Seaport, Government, Power Generation (CCGT), Commercial