The International Finance Corporation (IFC) and Massader, a company established by the Palestine Investment Fund (PIF), signed a loan agreement to finance the construction of hundreds of rooftop solar power projects across the West Bank.
IFC noted that this is a first-of-its-kind project designed to enhance the renewable energy sector and address chronic power shortages and blackouts by harnessing a domestically available source of energy.
The package includes an $8.1 million loan from IFC and $8.1 million in financing from the Finland-IFC Blended Finance for Climate Programme and the Dutch MENA Private Sector Development Programme.
IFC will also be providing a local currency loan to Massader to develop energy and infrastructure projects in the Palestinian territories. The World Bank will provide a grant of up to $2 million from the Investment Co-Financing Facility.
The financing will help Massader build small solar installations on the roofs of approximately 500 public schools to power more than 16,000 houses across the West Bank.
In a novel arrangement, the schools will receive free electricity and, in some cases, cash payments for hosting the installations. The majority of the electricity generated from the solar panels will be fed into local distribution systems at a competitive tariff, providing clean, reliable power for residents and businesses.
“One of the main challenges facing the energy sector in the West Bank and Gaza is the shortage of electricity and local generation capacity,” said Azem Bishara, CEO of Massader.
“By developing 35MW of distributed solar systems, we will enhance the power supply through sustainable sources, create energy savings for the education system, which can free budget for schools’ improvement, and provide electricity to the grid at competitive tariffs thus lowering the overall cost of electricity and contributing to economic and job growth.”
IFC’s role in structuring the project include building local capacity by developing key project documents such as the power purchasing agreement and construction and operating contracts. This is expected to help the future development of more decentralised, low-cost private sector projects with sound financial structuring.
“There is a pressing need to create more economic opportunities in the West Bank and Gaza,” said Linda Munyengeterwa, IFC’s Regional Industry Director for Infrastructure in MENA and Africa.
Munyengeterwa added: “This process needs to begin with the restoration of basic infrastructure services, which will make it easier for businesses to function and enable the entrepreneurial spirit of Palestinians.”
Once up and running, the rooftop solar power projects will help prevent the release of 30,000 tonnes of greenhouse gas emissions a year.
The project will also help develop the electricity industry and provide electricity at a lower cost than imported electricity, which currently accounts for over 90% of power consumed in the West Bank.