Additional $71.5 million funding for Eastern Caribbean sustainable energy program
MIAMI, USA -- Additional funding has been put in place to facilitate the growth of the renewable energy sector in the Eastern Caribbean.
As part of the Sustainable Energy Facility (SEF) for the Eastern Caribbean, a US$71.5 million loan and grant package was signed on Tuesday by Dr William Warren Smith, president of the Caribbean Development Bank (CDB), and Luis Alberto Moreno, president of the Inter-American Development Bank (IDB).
The signing took place in Miami ahead of the start of the annual Caribbean Renewable Energy Conference.
The six independent countries of the Organization of Eastern Caribbean States (OECS) – Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines – are island states with small and isolated electricity markets, lacking the scale necessary to import cheaper fossil fuels, such as natural gas, and inadequate development of renewable energy potential.
SEF has the potential to move these Eastern Caribbean countries closer to energy security; a more diversified energy matrix; and increased competitiveness.
“Energy security is a critical dimension of economic development in CDB’s borrowing member countries (BMCs). For each of them, economic vulnerability represents an overarching challenge that is linked to the structure of these economies. In the case of the Eastern Caribbean countries, several of their economies rely on tourism. Tourism is an energy intensive sector, primarily due to the need for air-conditioning services, which makes the energy cost an important factor affecting competitiveness of the sector. The sector is, therefore, quite vulnerable to volatility in oil prices. Since I spoke to a CREF audience a year ago, oil prices have fallen by more than 40%. We are still encouraged by the commitment being shown to a sustainable energy future by our region, in spite of a prolonged period of relatively low oil prices. We can, therefore, show no less commitment in our support to the energy sector and our member countries,” Smith said.
A component of this facility is concessional financing from the Clean Technology Fund. The availability of these resources will catalyze the private sector capital and expertise required for developing sustainable energy projects in the region.
Moreno said it was crucial for countries capitalize on the window of opportunity presented by the declining oil prices.
“We have a window of opportunity for Eastern Caribbean countries and the Caribbean as a whole; which are largely importers of oil and have been largely dependent on fossil fuel; to change that energy mix and to do it in a way that leverages the resources available across the institutions like the IDB and the CDB. I look forward to working together with the CDB and the countries to realize the dream that has existed in the Eastern Caribbean around changing their energy matrix and significantly making energy more affordable to the people of these countries,” Moreno said.
SEF Financing comprises:
• a contribution of US$29,435,000 from the CDB to finance projects that meet SEF objectives, including for private sector electric utilities, and at least one energy sector/policy loan for at least one of the beneficiary countries
• a Global Credit Loan (GCL) from IDB’s Ordinary Capital Resources (OCR) to CDB of up to US$20 million
• a grant to CDB of up to US$19,050,000 from the Clean Technology Fund (CTF)
• a grant to CDB of up to US$3,013,698 from the Global Environment Facility Trust Fund (GEF Grant)
The SEF follows on the establishment of the Sustainable Energy for the Eastern Caribbean (SEEC) program also available through the CDB. SEEC has been designed as a blended loan/grant facility, with partners UK’s Department for International Development (DFID) and the European Union’s Caribbean Investment Facility (EU-CIF).
The resources available under the SEEC for investment loans and grants, technical assistance, lines of credit, and a pilot guarantee scheme, are: approximately US$16 million from CDB, £2.5 million from DFID/UKAid, €4.45 EU-CIF.
Photo: Dr William Warren Smith (L), President of the Caribbean Development Bank (CDB) and Luis Alberto Moreno, President of the Inter-American Development Bank (IDB)