Pacific Resource Infrastructure Facility (PRIF)

Established in 2008 to provide technical assistance, research and knowledge products on key infrastructure issues to Pacific island countries

and as a coordination facility for the principal development partners in the region.

Pacific Renewable Energy and Microfinance (PREM) Project - Possibilities in renewable energy lending for microfinance institutions in the Pacific

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Pacific Island Countries (PICs) face an enormous challenge in supplying rural electricity. The conventional grid-system of supplying power is considered inappropriate for many areas due to the extreme isolation and low population. Off-grid power supplies of diesel generators, household solar photovoltaic (PV) systems, pico /micro-hydro schemes and wind-power projects are often considered expensive, unreliable and difficult to maintain. As a result, 70% of the region’s population still lacks access to electricity

Reliable access to energy is fundamental for economic and social development as stated in the Millennium Development Goals (MDG’s). Basic lighting provides educational benefits as study can be conducted at night, income benefits whereby shop-owners can extend their opening hours, communication access as mobile phones can be recharged and health benefits with the lowered risk of fires caused by kerosene lanterns or candles. Modern cooking technology addresses gender inequalities whereby women can reduce smoke inhalation and time and energy spent looking for biomass. Energy efficient products are beneficial in significantly reducing the financial strain households spend on energy bills.

The market for renewable energy in PICs has evolved. Costs are now economical when compared to conventional energy forms, institutional structures support RE and EE use and development, reliability has improved and training and maintenance is more adequate. Despite these advances, the upfront cost of renewable energy is too often outside the budget of rural households, even when the lifetime cost is comparable or less than their current energy sources. 

This baseline study explores the ability for microfinance institutions (MFIs) in PICs to finance the upfront cost of RE and EE systems. In doing so, the various types of RE and EE systems are introduced. Then, an in-country analysis of the three target countries – Fiji, Vanuatu and Samoa has been conducted to assess the RE and EE macro- and micro- economic climate, thus opportunities and constraints of MFIs offering “energy” lending.