Bringing renewable power to Solomon Islands, with a financing package worth over US$200 million

The Government of Solomon Islands and the International Finance Corporation, IFC, a member of the World Bank Group, announced the formal completion of a landmark financing agreement for the Tina River Hydropower Project, which will see the Solomon Islands move from virtual total reliance on imported diesel to majority renewable energy that will significantly cut power costs and emissions.

The 15-megawatt Tina River Hydropower Project will curb Solomon Islands’ reliance on imported diesel by almost 70 percent, lowering power prices for homes and businesses across the country, where the price of electricity is among the highest in the world and heavily exposed to global fuel price fluctuations and shocks. The project will also pave the way for the country to reduce its greenhouse gas emissions by two and half times its 2025 target.

The financing package for the project, worth over US$200 million, through loans and grants from six institutions, marks the first large-scale infrastructure project for the Solomon Islands to be developed as a public-private partnership (PPP).

Tina Hydropower Limited (THL), the Tina River Hydropower Development Project company, formed by Korea Water Resources Corporation (K-water) and Hyundai Engineering Company Ltd. (HEC) will build and operate the hydropower facility on the Tina River, 20 kilometers southeast of the capital, Honiara.

“We are pleased to have supported the government of Solomon Islands by structuring a way to bring in the private sector to help the nation’s major shift from imported diesel to renewable energy,” said IFC’s Regional Director for East Asia and the Pacific, Vivek Pathak. “With the support of Australia, New Zealand and the multi-donor facility, DevCo, the agreement now in place shows how governments and the private sector can work together on key infrastructure projects to help nations wanting a cleaner, cheaper and more reliable energy for their people.”

The cheaper renewable energy delivered through the project will ensure Solomon Power, the country’s state-owned electricity supplier, can deliver cheaper power, including outside Honiara. The total project cost is expected to reach US$240 million over the next 5 years.

Original source: World Bank
Published on 16 December 2019