CARIBBEAN DEVELOPMENT BANK (CDB) is particularly focussed on bridging the existing gap of appropriate financing for the development of sustainable energy in the region. In our view, this is critical if we are to see increased investment in this area.
To achieve this, the bank recognises the need to strengthen local and regional capacity, including that of the financial sector and including CDB’s own capacity. Within the financial sector, the perception of high risk associated with sustainable energy investment remains and forms a significant barrier to project implementation, even where investment costs, compared with savings, yield a reasonable payback period.
Appropriate tools are required to analyse and support the risking process and to increase the comfort level of the financier.
While as oil importers we welcome the lower oil prices over the past year, this in itself represents a barrier that has in the past served to kill any appetite for investment in sustainable energy. However, the commitment of staying the course this time as a region is tremendous and we applaud our borrowing member countries and the CARICOM Sustainable Energy Road Map And Strategy for this. As the regional development bank, CDB has responded by giving energy security strategic focus as a cross-cutting theme in its 2015 to 2019 strategic plan, and developing a new energy sector policy and strategy on the heels of its 2012 climate resilience strategy.
CDB has seized the opportunity to perform its role as catalyst for mobilising concessional resources that would not otherwise be available to its borrowing member countries.
CDB is seeking accreditation to the Adaptation Fund and to the recently-established Green Climate Fund, both potential windows of concessional resources for supporting sustainable energy investment.CDB has recently utilised the European Investment Bank’s Climate Action Line Of Credit for partial loan financing for a utility scale solar photovoltaic plant at competitive interest rates and is seeking other such projects once declared feasible.
The line comes with an interest rate subsidy from the European Union and grant resources for technical assistance.
We have already received notice of approval of grant funding for a blended loan facility to benefit the six independent Eastern Caribbean countries in promoting energy efficiency and renewable energy, as well as some grant resources for capacity building, project development and legislative and regulatory support.
CDB is also partnering with the Inter-American Development Bank, Clean Technology Fund, the Japan International Co-operation Agency, and other potential partners to support further investment in sustainable energy in the same six countries, including for geothermal development.
It is within this context that increasing local and regional capacity for the technical, financial and economic evaluation and feasibility assessment of sustainable energy projects is critical.
Tessa Williams-Robertson is head, Renewable Energy/Energy Efficiency Unit, Office of the vice-president (operations) Caribbean Development Bank. These remarks were made last week at a workshop examining financing issues facing sustainable energy projects.
