Government and private sector entities in Barbados have a new avenue through which to drive the build out of renewable energy on the island.
On Wednesday, the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) and the CARICOM Development Fund (CDF) jointly launched their Project Preparation Facility (PPF) and the Credit Risk Abatement Facility (CRAF).
The PPF is a project development resource of the CCREEE, designed to help accelerate the development and deployment of high-quality sustainable energy infrastructure projects in the region.
Meanwhile, the CRAF, an initiative of the CDF, is a targeted technical assistance programme to assist in building capacity among financial institutions and small and medium-sized enterprises and service providers and promote an ecosystem for renewable energy and energy efficiency.
During the launch ceremony on Wednesday at the Lloyd Erskine Sandiford Centre, officials stressed the importance of the expansion of the renewable energy sector in the region but agreed that the lack of financing from traditional sources continued to be a hindrance over the years.
Chief Executive Officer of the CDF Rodinald Soomer said it was for that reason that the two facilities were developed to help close the gap.
“We all recognize the typical hesitation of the financial sector to participate in this vital area of sustainable energy financing. Critical impediments they point out are the high risks – whether these are real or perceived – associated with SME’s, compounded by the lack of knowledge and experience in underwriting roles for projects related to renewable energy technologies and energy efficiency,” said Soomer.
The CRAF support pilot phase, which will begin in January 2021 and run for one year, will focus on five countries – Barbados, Belize, Guyana, St Lucia and Suriname.
Soomer said some projects in those countries have already been earmarked for CRAF support.
The new risk abatement facility, which is to be capitalized with US$13 million initially, will provide a guarantee to financial institutions of up to 80 per cent of the loan for businesses seeking to carry out renewable energy projects.
The facility will be able to underwrite guarantees in excess of an estimated 100 new loans totalling approximately $26 million for SME’s for renewable energy and energy efficiency investment during the pilot phase.
Of the total capitalization of the fund, US$3 million will be for technical assistance to build capacity of financiers to appraise and manage sustainable energy projects, to provide services to SMEs and improve the quality and bankability of the projects and build the capacity of the energy service providers.
The CRAF’s credit risk instrument and technical assistance will be primarily for SMEs in the agriculture, tourism and manufacturing sectors.
Gary Jackson, Executive Director of the CCREEE said the hope was to transform the region’s energy sector into one that was climate resilient, sustainable and focused on improving lives of residents in the region. The PPF is open to all CARICOM member states
He said the PPF will initially support five CARICOM member states – Guyana, Trinidad and Tobago, St Lucia, Belize and Jamaica.
He gave the assurance that proposed projects to get assistance would go through a series of iterations to ensure that their needs are clearly understood.
The PPF will focus on the areas of gender, water, health, food and agriculture and e-mobility, and will focus on providing technical assistance, advisory services, investor/financier matchmaking and support for capacity building of financial institutions.
Both private and public sector projects should begin by April next year.
Prime Minister Mia Mottley said she was confident the new facilities will help to solve an issue that the region has been discussing for more than a decade.
Pointing out that small and medium-sized enterprises continued to face difficulty in acting on their renewable energy plans, Mottley said: “More often than not it comes down to a combination of lack of access to capital, a lack of capacity to persuade persons that the projects are viable and regulatory arbitrage that will cause you to want to cry.
“The product being launched here this morning for the Project Preparation Facility, is welcomed because it will aid in areas where there is a clear need. Similarly, the Credit Risk Abatement Facility is intended to make pure or holy that which is neither pure nor holy for the commercial banks primarily and to a lesser extent, some of the investment banks,” said Mottley.
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