DAI-Led Project Wins United Nations Award for Climate Finance

October 14, 2021

Two investment projects of the World Bank-funded Finance for Jobs (F4J) program in Palestine have won an award from the United Nations Framework Convention on Climate Change Secretariat (UN Climate Change) in the category, “Financing for Climate Friendly Investment.”

The F4J activities—a solar-powered industrial park in Gaza and 500 solar-powered public schools—were praised for their “innovative financing structure, [which includes] blended concessional finance, to help de-risk the projects.”

“The F4J project demonstrates that climate finance can result in real environmental benefits while creating jobs and promoting resilient communities,” said Jette Findsen, DAI’s Vice President, Environment. “DAI is excited to partner with the World Bank and Palestinian Ministry of Finance in West Bank and Gaza on this important effort to address electricity shortages and support the transition toward a low-carbon future in Gaza.”

Solar-generated electricity produced by the Palestine Real Estate Investment Co (PRICO) will power 56 factories and warehouses that comprise the Gaza Industrial Estate, which—like most of the West Bank and Gaza—relies heavily on Israeli imports to meet electricity needs. Chronic electricity shortages have caused Gaza’s factories to shut down operations, scale back output, or incur substantial additional expenses in operating private generators. Electricity generated by PRICO is projected to supply 80 percent of the power to the 50-hectare industrial park, enabling expanded production and the creation of approximately 650 new jobs in food, wood, metals, and other business sectors.

One of the buildings at the Gaza Industrial Estate.

The financing package comprises a grant through the Ministry of Finance’s F4J project, implemented by DAI; a loan from the World Bank’s International Financial Corporation; and political risk insurance from the Multilateral Investment Guarantee Agency. The facility is the largest solar array in the West Bank and Gaza and the first privately financed infrastructure project in a decade in Gaza.

Building on the PRICO model, the school rooftop program is an investment project by local sponsor Massader for Natural Resources, a fully owned subsidiary of the Palestine Investment Fund, which also leverages 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 facilitate investment in this high-risk region.

“These two activities were supported under the Investment Co-Financing Facility of F4J to address market failures in the Palestinian energy sector, de-risk first-mover investments, stimulate environmentally friendly initiatives, and create high-quality jobs for Palestinian youth,” said Mazen Asad, DAI’s F4J Project Team Leader.

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 already completed, and an additional 80 sites are about to start construction. Not only will the project provide schools with clean, reliable, and free electricity, it should create around 600 jobs in the West Bank.

Solar panels on a school in Palestine.

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, according to UN Climate Change. Additionally, the excess energy produced goes into the West Bank distribution grid, benefitting all Palestinians across the West Bank.

“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,” reads the UN Climate Change news release.

“The winners of the 2021 UN Global Climate Action Awards provide tangible proof that solutions to tackle the climate crisis exist and that they can be replicated and quickly scaled up. This is what inspiring leadership looks like,” said UN Climate Change Executive Secretary Patricia Espinosa.