Caribbean Resilient Renewable Energy Infrastructure Investment Facility

Introduction to the Facility

WASHINGTON, CMC—Three Caribbean Community (CARICOM) countries will benefit from a World Bank-approved bank-approved Facility that aims to accelerate the uptake of clean, resilient, and affordable energy systems. Additional countries will have the option of joining over time.

The Washington-based financial institution said the US$110 million Caribbean Resilient Renewable Energy Infrastructure Investment Facility for Grenada, St. Lucia, St. Vincent and the Grenadines has been developed with the St. Kitts-based Eastern Caribbean Central Bank (ECCB).

Statement from ECCB’s Governor

“We cannot transform our region without a transition to renewable energy,” said ECCB’s Governor, Timothy Antoine.

“This Facility is an important vehicle for our journey to build institutional and generating capacity, enhance energy security, boost competitiveness, and lower electricity prices for our families and businesses. We acknowledge the support of the World Bank Group and invite other countries and partners to join us as we accelerate our region’s transition to renewable energy,” he added.

Financing and Support

The project is financed through the World Bank’s International Development Association, an arm of the World Bank Group that supports low-income countries and small island economies.

IDA’s grants and low-interest financing help countries invest in their futures, improve lives, and create safer, more prosperous communities worldwide. The Climate Investment Fund, the Energy Sector Management Assistance Programme, and the Canada Clean Energy and Forests Climate Facility also provide additional support.

Statement from World Bank Division Director

“Across the Caribbean, residents are paying some of the highest electricity prices in the world, which places a strain on households and businesses,” said Lilia Burunciuc, World Bank Division Director for the Caribbean.

“Through this project, we want to help lower costs and improve the reliability of electricity by investing in renewable energy and resilient infrastructure. This is about creating a more secure and affordable energy future for Caribbean communities,” she added.

Challenges and Solutions

The World Bank said heavy dependence on imported fossil fuel, used for over 90 percent of power generation in the Caribbean, has long posed a major fiscal vulnerability for the region. Between 2016 and 2021, fossil fuel imports in the Eastern Caribbean averaged US$444 million per year, accounting for 15.4 percent of total imports and 17.1 percent of the trade balance.

The World Bank said Grenada, St. Lucia, St. Vincent, and the Grenadines rank among the most expensive electricity tariffs globally, noting that progress toward renewable energy has been slow.

It said that as of 2022, only 11.6 percent of electricity generation in the region came from renewable sources, and significant obstacles to increasing their adoption included small project sizes, underprepared grids, fragmented regulations, weak institutional capacity, and high vulnerability.

Approach and Activities

To confront these barriers, the multi-million dollar initiative will take a unique approach, providing solutions by bringing together stakeholders from the energy and financial sectors.

The World Bank said that at the regional level, the Facility will aggregate renewable energy projects across countries to reduce costs, increase scale, and attract private-sector developers.

“As part of its core country-level activities, the Facility will also finance the modernization and reinforcement of electricity transmission and distribution systems—including the installation of battery energy storage systems—to support the integration of renewable energy and strengthen resilience. “

Investments and Benefits

It said to help attract private investment, commercial credit up to US$120 million will also be mobilized by offering partial credit guarantees, thereby improving access to finance for renewable energy projects.

The initiative will also deliver comprehensive technical assistance and training to national and regional stakeholders, helping to streamline project preparation, regulatory compliance, and risk mitigation.

To further strengthen the region’s capacity, the project will help design and launch a new insurance product in partnership with the Caribbean Catastrophe Risk Insurance Facility to protect renewable energy infrastructure against damage from catastrophic events.

The World Bank said these investments will create short—and long-term employment opportunities in the energy sector. Further, the Facility will support the strengthening and development of energy sector skills through tailored scholarship and apprenticeship programs.

Conclusion

The Caribbean Resilient Renewable Energy Infrastructure Investment Facility is a significant step towards a more sustainable and energy-secure future for the Caribbean region. With its unique approach and comprehensive activities, the Facility is expected to have a positive impact on the region’s energy sector, economy, and communities.

Frequently Asked Questions (FAQs)

What is the Caribbean Resilient Renewable Energy Infrastructure Investment Facility?

The Caribbean Resilient Renewable Energy Infrastructure Investment Facility is a US$110 million initiative developed by the World Bank and the Eastern Caribbean Central Bank to accelerate the uptake of clean, resilient, and affordable energy systems in the Caribbean region.

Which countries will benefit from the Facility?

The Facility will initially benefit Grenada, St. Lucia, and St. Vincent and the Grenadines, with the option for other countries to join over time.

What are the main objectives of the Facility?

The main objectives of the Facility are to reduce the region’s dependence on imported fossil fuels, increase the use of renewable energy, and improve the reliability and affordability of electricity in the Caribbean.