GCF and World Bank kick off hydropower project in Solomon Islands
The signing of the Funded Activity Agreement (FAA) enables GCF to begin transferring USD 86 million in climate financing to the World Bank for this USD 234 million project which is expected to provide a clean and reliable source of electricity in the capital, Honiara, by 2024.
Universal grid-connected electricity supply is a major challenge across the Solomon Islands. With a 45% electrification rate and a high dependency on diesel generators for power supply in the capital, the country has one of the highest electricity rates in the world (USD 0.82/kWh). The Tina River Hydropower Project will not only diversify Solomon Islands’ source of electricity, but will also shift Honiara’s grid from 3% renewables in 2017 to 68% at commissioning.
“Providing a clean and reliable source of energy is crucial to helping the people of Solomon Islands move towards the path of low-emission, climate resilient development,” said Yannick Glemarec, GCF Executive Director. “GCF’s unique capacity to take risks has made private sector investment in this project possible. We hope this project will be a good example for other Pacific island countries looking to develop in a sustainable way.”
The Tina River project is the first utility-scale hydropower plant in the country. It is also the first privately-invested renewable energy project in the Solomon Islands, and as such, is seen as a replicable model for other Pacific Island countries to use low-emission energy sources to balance variable solar power.
The project will significantly reduce greenhouse gas emissions as it will shift the country's dependency on diesel-generated energy to a more stable, green power supply with lower electricity tariffs. It will also help the state-owned Solomon Islands Electricity Authority to reach their goal of doubling the number of households in Honiara supplied with electricity by 2024.
“We are particularly pleased to sign this second project-level agreement with the Green Climate Fund,” said Laura Tuck, World Bank Vice-President for Sustainable Development. “The GCF contribution is an important part of the financing package that will enable this transformative, renewable power generation project to move ahead. We look forward to concluding our other project-level agreements with GCF in the near future and remain committed to deepening our partnership.”
“The World Bank is one of GCF’s key partners and with the signing of this agreement, we are accelerating the implementation of climate action projects on the ground,” said Glemarec.
GCF has nine projects with the World Bank worth USD 576.55 million in GCF funding, and USD 2.12 billion in co-financing. The first FAA signed with the World Bank was in February 2019 for the Pacific Resilience Project, which is now under implementation, in the Marshall Islands.