• $85.7 million financing package will support Timor-Leste’s first utility-scale solar and battery storage project.
• The 73.7 MW solar plant and 80.2 MWh battery system will supply electricity equivalent to the needs of about 80,000 households.
• World Bank Group, ADB, JICA and Canada are using concessional finance and political risk guarantees to attract private capital into the market.

Timor-Leste has secured $85.7 million for its first utility-scale solar and battery storage project. The investment will help reduce its dependence on imported diesel.

The project is also Timor-Leste’s first independent power producer development. Manatuto Renewables Power will operate the facility. It has a 25-year power purchase agreement with state-owned utility Electricidade de Timor-Leste, Empresa Publica. The project was awarded to EDF power solutions, a subsidiary of EDF Group, and I-Environment Investments Pacific, a wholly owned subsidiary of ITOCHU Corporation.

The World Bank Group, Asian Development Bank, Government of Canada and Japan International Cooperation Agency are supporting the investment.

“This project is a milestone in Timor-Leste’s energy transition and a key step in delivering the vision set out in the National Strategic Development Plan 2011–2030, including the goal of meeting 50 percent of the country’s energy needs from renewable sources by 2030,” said dr. Paulo da Silva, President of the Executive Commission of state-owned utility company Electricidade de Timor-Leste, Empresa Publica (EDTL, E.P.) at the project ground breaking ceremony in Manatuto. “It will reduce energy costs, strengthen energy security, and create a cleaner, more sustainable future for the people of Timor-Leste.”

Solar and storage target diesel dependence

The development will include a 73.7 MW-AC grid-connected solar photovoltaic plant and an 80.2 MWh battery energy storage system. Transmission lines and supporting infrastructure are also included.

Annual generation will equal the typical electricity use of about 80,000 households. That represents roughly 400,000 people.

That scale gives the project strategic importance for Timor-Leste, where imported fuel exposure can raise electricity costs and create energy security risks.

ADB served as transaction advisor to EDTL and led the project’s structuring and competitive procurement.

The project was awarded to EDF power solutions, a subsidiary of EDF Group, and I-Environment Investments Pacific, a wholly owned subsidiary of ITOCHU Corporation.

Blended finance reduces investment risk

The World Bank Group acted as lead arranger for the financing package.

“This is a landmark project for Timor-Leste which supports the country’s transition to a more resilient and more affordable energy future,” said David Freedman, World Bank Group Representative for Timor-Leste. “The World Bank Group is proud to support this project by bringing together IFC financing, IDA-backed blended finance, and MIGA guarantees, to support private investment that will reduce dependence on imported diesel and create new opportunities for growth and employment in Timor-Leste.”

The package includes $19 million in senior loans from the International Finance Corporation. ADB and JICA are each providing $12.2 million.

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A further $21.2 million will come through concessional lending from ADB’s Leading Asia’s Private Infrastructure Fund 2 and the Canadian Climate and Nature Fund for the Private Sector in Asia.

Another $21.2 million will come through the International Development Association Private Sector Window and IFC Concessional Capital Window.

The IDA Private Sector Window Risk Management Facility provides political risk insurance for IFC’s loan.

MIGA has also approved a 20-year political risk guarantee covering investments by EDF power solutions and I-Environment Investments Pacific. The MIGA Guarantee Facility will provide part of the coverage through a first-loss layer.

Building a model for frontier renewable markets

The financing structure addresses risks that often limit private investment in smaller or more fragile energy markets.

“We’re proud to have helped enable Timor-Leste’s first private sector investment in the utility-scale solar and battery technology,” said ADB Country Operations Head for Timor-Leste Michael Walsh. “By mobilizing concessional financing and showing that private sector investment in the utility-scale energy sector is feasible, this project builds investor confidence in renewables in the region—particularly for countries affected by fragility and conflict, as well as small island developing nations.”

JICA is also positioning the investment within Japan’s broader development relationship with Timor-Leste.

“JICA is pleased to support Timor-Leste’s first privately financed independent power producer (IPP) solar project,” said JICA Director General, Private Sector Partnership and Finance Department Takehiro Yasui. “By participating in the Project alongside Japanese sponsors, JICA hopes to contribute to the sustainable development of Timor-Leste’s power sector and further strengthen the longstanding partnership between Japan and Timor-Leste.”

For investors and development finance institutions, the project provides a test case for combining long-term PPAs, concessional capital and political risk guarantees in frontier renewable markets.

If successful, the structure could provide a template for attracting private capital into clean energy systems across small island and developing economies, where high financing costs and political risk continue to constrain deployment.