IFC Renewable Energy Projects in the West Bank and Gaza | State of Palestine

The International Finance Corporation (IFC), a member of the World Bank Group, supported the first private sector investments in domestic power supply in the West Bank and Gaza. Two distributed generation projects, PRICO Solar and Massader Solar, are bolstering power supply to help jump-start renewables and support economic development in the region. The innovative projects are helping to address clean energy access and critical infrastructure needs in an environment where there is extremely limited domestic generation capacity and high barriers to entry for installing new capacity.

The Palestine Real Estate Investment Co’s (PRICO) rooftop solar energy facility is IFC’s first large-scale solar energy installation in Gaza and is supported by the IFC-Canada Climate Change Program. The largest of its kind in Gaza, the project involves the development, financing, construction, operation, and maintenance of a 7.3 MWp (Megawatts-peak) rooftop solar photovoltaic power plant developed by PRICO located inside the Gaza Industrial Estate.

Building on the PRICO framework and design, Massader School Rooftop PV Program is a recent IFC investment supporting cleaner, more reliable energy in the West Bank. The project (supported by local sponsor Massader, a fully-owned subsidiary of the Palestine Investment Fund, which received a loan from the European Investment Bank) also leveraged a hybrid financing structure – including blended concessional finance from the Finland-IFC Blended Finance for Climate Program and the Dutch MENA Private Sector Development Program – to enable investment in this high-risk region.

Key facts

In the West Bank’s Massader program, up to 500 schools are being outfitted with solar panel arrays to support uninterrupted clean energy while students are in class. Approximately 70 schools are completed and an additional 80 sites are about to start construction.
The PRICO solar plant will generate and distribute up to 80 percent of the Gaza Industrial Estate’s electricity needs, keeping 32 factories running, thereby providing employment to nearly 800 people.
Both projects used an innovative financing structure, including blended concessional finance, to help de-risk the projects.

The challenge

Gaza’s energy crisis is longstanding – and devastating. Power outages routinely stretch multiple hours a day, hampering factories and businesses in a region where economic activity is already under immense strain from political unrest. Gaza is racked by poverty and its unemployment rate is one of the highest in the world. Daily power outages range from 12 to 16 hours with annual supply at only one third of the peak demand. During supply interruptions in the Gaza Industrial Estate, the factories are forced to either shut down operations, scale back output and reduce paid working hours or generate their own electricity via private diesel generators at a substantially higher expense and emissions than electricity from the grid. Similarly in the West Bank, access to clean, affordable, and reliable energy is rare and blackouts are common -- a part of daily life for many students while at school.

The solution

In 2018, IFC structured an innovative debt financing package for the PRICO Solar project to promote the installation of solar panels on the rooftops of several buildings belonging to the Gaza Industrial Estate, Gaza’s largest business park. Applying learnings and the framework from Gaza, IFC followed up in 2020 with an investment in the Massader Solar rooftop program.

Helping people

PRICO is showing early signs of high development impact in a fragile economy that is afflicted by unemployment, poverty, and political instability. Gaza is particularly affected by acute power shortages. A more stable energy supply in general serves the entire population of Gaza, where power shortages affect schools, hospitals, homes, and businesses. Gaza relies heavily on diesel-fuelled generators for basic needs like cooking, further illustrating the need for clean energy solutions to the energy crisis.

Reliable electricity can be transformational for populations affected by severe outages; the GIE power plant produces surplus electricity that can be exported to the grid for use across Gaza, alleviating power shortages and putting clean, reliable, and affordable energy made in Gaza into the hands of Gazans -- reducing diesel consumption and GHG emissions in the process.

Putting solar arrays on school rooftops across the West Bank ensures that students are not subject to frequent blackouts that impede learning. Currently, schools may spend up to four-fifths of their operating budget on electricity; green energy allows them to direct those savings back into the school. The schools will benefit from free and clean electricity, and the benefits extend well beyond the students: the PV rooftops produce energy well in excess of the schools’ needs and it is supplied to the West Bank distribution grid. The integration of small PV generators in the network tend to compensate for grid overloads, improve the voltage profile across the feeders, and reduce system losses overall – a huge benefit to Palestinians across the West Bank.

Spillover effect

Innovative financing for the PRICO and Massader solar projects is part of a larger effort by IFC to create viable markets for renewable energy in developing economies. Both projects enhance capacity building of local institutions, establishing the foundation for private sector participation and long-term, self-reliant growth. PRICO is the largest solar installation in Gaza and the first one for which an ad-hoc grid integration solution has been developed with the grid operator to ensure power evacuation and 24/7 continuity of supply. This is a standard-setting benchmark that is replicable and scalable in other locations.

PRICO and Massader are a testament to how green energy can be transformational for fragile and conflict-affected areas when coupled with creativity and perseverance.