Project

Vanuatu National Green Energy Fund (NGEF)

At a Glance

Start Date Q4 2016
Funding Source Core and Green Climate Fund (GCF Readiness Project)
Approved Budget USD 10 000 000
Status Active
Thematic Area
  • Sustainable Energy
Paul Kaun

Officer- Vanuatu

Project Rationale

The aim of the Vanuatu National Green Energy Fund (NGEF) is to facilitate capital investment opportunities to improve energy access for households and businesses in rural and peri-urban areas resulting in improved livelihoods, job creation and greater opportunities for income generation through implementation of renewable energy and energy efficiency.

The Government of Vanuatu aims to create a sustainable fund, consolidating domestic resources and attracting international investment, as one of the tools for the implementation of the National Energy Road Map (NERM) which was launched in 2016. The NGEF will focus on rural electrification through renewables, energy efficiency and other renewable energy applications.

Building on 2015-2016 work

In 2015-2016, GGGI in collaboration with the World Bank provided technical assistance to the Department of Energy for the revision of the National Energy Road Map (NERM). The revised NERM has identified five strategic areas for policy intervention in the energy sector: accessible energy, affordable energy, secure and reliable energy, sustainable energy and green growth (NERM, 2016). With regards, to energy access, Vanuatu has more than 60 inhabited islands and is extremely vulnerable to climate change but has only 9% electrification in off-grid areas (outside of urban concession areas). A USD 20million financing gap to achieve national energy access targets has been identified (NERM, 2016). At the same time under the sustainable energy objective, a target of 100% renewable energy in the electricity sector has been set for the year 2030 (INDC, 2015). To contribute to achieve its energy access and sustainability targets and following analysis carried out by GGGI and the Department of Energy, in April 2016 the Government of Vanuatu approved the establishment of the National Green Energy Fund (NGEF) through a decision by the Council of Ministers. The NGEF forms part of the NERM and is one of the tools for its implementation.

Delivery Strategy

Outcome: Increased financing for energy access and green energy projects mobilized through establishment of a National Green Energy Fund (NGEF), institutional capacity building and project proposal development.

Output: National Green Energy Fund (NGEF) designed and established and operationalization documents prepared (in response to the Gov. of Vanuatu’s formal request for GGGI support in 2016 for creation of the NGEF and building on the endorsement of the creation of the NGEF by the Vanuatu Council of Ministers, Output B, WPB 2015/2016).

Planned Results

Result One: Design and prepare operations manuals, TORs, agreement templates, etc. and other preparations for operationalization of the NGEF, taking into account EIA requirements social inclusion and gender aspects

Since the Council of Minister’s endorsement of the NGEF Unit and the NGEF Taskforce in June 2017, GGGI has worked to develop a report on Financial Instrument Assessment and Recommendations which was provided to the Government of Vanuatu through the NGEF Task Force. The report outlines the recommended financial instruments for the NGEF, including a risk guarantee, loans to financial intermediaries and others, to be considered for finalization and implementation by the NGEF Task Force. A Gender and Safeguards assessment was also carried out in October 2017 through consultations with a broad range of stakeholders, in order to strengthen Gender Policy, Environmental & Social Safeguards components in the NGEF Operations Manual.

In November 2017, GGGI presented the draft consolidated Operational Manual during the 5th Monthly NGEF Taskforce Meeting, followed by a Government Training session for the NGEF and a NGEF Private Sector Information session. The workshops presented and sought feedback from the Government and selected Private Sectors on the NGEF Business Plan, NGEF Strategic Markets and Priorities, NGEF Financial Products and Revenue Models, NGEF Governance and Legal, Role of Delivery Partners and TA and NGEF Safeguards and Gender Policy. Following the workshops, Letters of Intent were received from two intermediary agencies interested in being involved in the NGEF operations.

Result Two: Operationalize the NGEF, including legal establishment, training of personnel, and initiation of projects, taking into account EIA, social inclusion and gender aspects.

For result two, the GGGI is conducting further investment analysis (including the safeguards) and project pipeline development to secure initial national funding from Government and promote the NGEF to external partners to source capital funds. The Government of Vanuatu has confirmed its commitment to the NGEF development by providing initial funding for the NGEF Unit (established within the Department of Energy). The NGEF Program Manager (PM) was hired in October 2017 using the Government initial commitment to lead the NGEF Unit and is working closely with the GGGI and NGEF Task Force to progress the establishment of the fund as an independent entity.

The NGEF PM and GGGI are also assisting a local legal expert to carry out a legal assessment and put together a new legislation for the NGEF. The new legislation will enable the establishment of the fund as an independent entity. This work will involve a national public consultation as well as in-depth consultations with key government ministries and agencies.

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