Maldives progresses funding for renewable energy scheme
The debt package backing a $107 million renewable energy project in the Maldives is progressing. The project involves four components, including the procurement of IPPs to develop 36MW installed capacity in solar PV and 50MWh of energy storage solutions on five islands: Addu, Fuvahmulah, Greater Male, Hulhumeedhoo and Thimarafushi.
AIIB approved its 24-year $20 million fixed-spread sovereign loan to the Ministry of Finance last month. The World Bank Group’s International Development Association (IDA) and Clean Technology Fund (CTF) are also project financiers.
The government of Canada dropped out as a project financier, having been part of the proposed financing last year. At that time, the project financing was about 25% smaller at roughly $86 million.
DFIs are structuring the financing to de-risk the project as much as possible to crowd in $45 million from the solar IPPs. IDA is providing a $6.2 tariff buydown grant for the IPPs, especially floating solar PV applications. IDA will link the amount to each IPP’s performance.
The $4 million CTF grant will provide liquidity coverage by funding escrow accounts to backstop ongoing payments by the two major state-owned utilities – Stelco and Fenaka – under fixed-term PPAs to cover a predetermined number of months of payments.
Masdar’s Nur Navoi – Uzbekistan’s first solar IPP to reach financial close – had a similar backstop. A $40 million MIGA guarantee will also be included as part of the IPP bidding package.
The Ministry of Environment, the implementing agency, will select the IPPs through competitive tendering to design, finance, construct, and operate the solar power generation facilities. Assets may include rooftop solar PV, ground-mounted solar PV and floating solar PV applications.
Out of the first two lots totalling 21MW, the environmental ministry received 24 prequalification applications for the floating solar PV and 34 applications for ground-mounted solar PV projects, AIIB said. The government aims to issue RFPs in Q2 2021.
