The World Bank Solar PV Demonstration & Scale Up Project (P153404) REPORT NO.: RES34134 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING FOR A SOLAR PV DEMONSTRATION & SCALE UP PROJECT APPROVED ON MARCH 11, 2016 TO THE GOVERNMENTS OF GRENADA, SAINT LUCIA, AND SAINT VINCENT AND THE GRENADINES ENERGY AND EXTRACTIVES LATIN AMERICA AND CARIBBEAN Regional Vice President: Jorge Familiar Calderon Country Director: Tahseen Sayed Khan Senior Global Practice Director: Riccardo Puliti Practice Manager/Manager: Antonio Alexandre Rodrigues Barbalho Task Team Leaders: Megan Meyer, Koffi Ekouevi The World Bank Solar PV Demonstration & Scale Up Project (P153404) ABBREVIATIONS AND ACRONYMS BETF Bank-Executed Trust Fund DTVE Division of Technical and Vocational Education EA Environmental Analysis GHG Greenhouse Gas PDO Project Development Objective PIU Project Implementation Unit PV Photovoltaics RETF Recipient-Executed Trust Fund Small Island Developing States Sustainable Energy and Climate Resilience SIDS-DOCK Initiative SVG Saint Vincent and the Grenadines TAMCC T. A. Marryshow Community College The World Bank Solar PV Demonstration & Scale Up Project (P153404) BASIC DATA Product Information Project ID Financing Instrument P153404 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 11-Mar-2016 31-Dec-2018 Organizations Borrower Responsible Agency Saint Vincent and the Grenadines Project Coordination The Government of Saint Vincent and Grenadines, Unit,Saint Lucia Project Coordination Unit,Grenada Government of Saint Lucia, Government of Grenada Project Coordination Unit Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 2.30 Total Financing 0.00 Financing Gap 0.00 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The Grant Development Objectives of the project are to demonstrate the use of commercial scale PV systems in the Caribbean through pilot projects, and disseminate the results throughout the region. OPS_TABLE_PDO_CURRENTPDO The World Bank Solar PV Demonstration & Scale Up Project (P153404) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A1671 25-May-2016 30-May-2016 30-May-2016 31-Dec-2018 .60 .59 .01 TF-A1673 25-May-2016 16-Jun-2016 16-Jun-2016 31-Dec-2018 .60 .59 .01 TF-A1674 25-May-2016 03-Jun-2016 03-Jun-2016 31-Dec-2018 .60 .25 .35 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Overview 1. The Solar Photovoltaic (PV) Demonstration and Scale-up Project (P153404, “Project”) was approved on March 11, 2016 and became effective on June 03, 2016. The project development objective (PDO) of the Project is to demonstrate the use of commercial-scale PV systems in the Caribbean through pilot projects and disseminate the results throughout the region. The Project contributes to the low carbon agenda of Eastern Caribbean countries by piloting innovative PV implementation models and financial schemes for rooftop commercial applications that can be replicated and scaled up. Through deploying PV systems on public buildings, the government can demonstrate distributed solar PV systems in a controlled environment, build trust among the stakeholders, and demonstrate their commitment to renewable energy and GHG emission reductions. 2. The Project is fully funded from the Support Program for Small Island Developing States (SIDS-DOCK), a Multi-Donor Trust Fund within the World Bank’s Energy Sector Management Assistance Program (ESMAP) dedicated to creating an enabling regulatory and institutional environment to remove barriers on the implementation of renewable energy and energy efficiency policy reforms, based on international best practices, and implementation of renewable and energy efficiency projects that demonstrate the potential for scale-up through climate finance and other sources of funding. 3. The total Project value is USD 2.3 million1. The Project includes one Bank-Executed Trust Fund (BETF) – TF-A1672 - and three Recipient-Executed Trust Funds (RETFs) - TF-A1671 for Saint Lucia; TF-A1673 for Saint 1 Note: this total does not include the USD 200,000 of BETF funds under Component 1. The World Bank Solar PV Demonstration & Scale Up Project (P153404) Vincent and the Grenadines (SVG); and TF-A1674 for Grenada. The BETF’s value is USD 200,000, whereas the RETF’s value is USD 500,000 per country. Activities covered by the RETFs are implemented through three separate grant agreements, one with each participating country. Counterpart funds for a total of USD 500,000 were apportioned (USD 100,000 to Component 1 and USD 400,000 to Component 2). Component 1’s cost is USD 400,0002; Component 2’s cost is USD 1.9 million. 4. The Project includes two components: a. Component 1: Technical assistance to support each of the three participating countries (Saint Lucia, SVG, and Grenada) to establish one grid-tied commercial-scale rooftop PV pilot project in each of the countries. Financing for component 1 included: i. USD 300,000 total (USD 100,000 per country as RETF) – plus USD 100,000 counterpart funds – to support technical training on solar PV installation and maintenance; and, ii. USD 200,000 total (as BETF) to support (i) quality assurance activities, including hiring solar experts to support the countries in preparing the project, (ii) preparation of a report on recommendations to scale up solar PV based on the lessons learned from this project, and (iii) dissemination activities. b. Component 2: Investment in at least three grid-tied commercial-scale rooftop PV systems, one in each participating country. Financing for Component 2 comprised USD 1.5 million total (USD 500,000 per country as RETF) - plus US$400,000 in counterpart funds – for procuring the rooftop solar PV systems. B. Project status and results. 5. The Project’s progress towards achievement of the PDO rating is currently Moderately Unsatisfactory. This is because the current closing date is December 31, 2018, yet the solar PV commissioning is not estimated to take place until March 2019. Thus, without an extension of the closing date, the project will not be able to achieve its PDO. The Project’s Implementation Progress is currently rated Moderately Satisfactory. The disbursement ratio for the three RETF grants (TF-A1671/TF-A1673/TF-A1674) is 80% as of November 2018. There are no overdue Interim Financial Reports (IFRs) or audit reports. The Financial Management (FM) rating for the project is Moderately Satisfactory. 6. One Level II restructuring was previously processed for this Project (approved on September 26, 2017) to extend the closing date from December 31, 2017 to December 31, 2018 due to significant delays in the early stages of project implementation, including: (i) delays in securing details required for implementation 2 Ibid. The World Bank Solar PV Demonstration & Scale Up Project (P153404) (disbursement account, authorized signatories) from each of the three client countries; and (ii) a discrepancy between final grant agreement and the closing date of the Trust Fund, which resulted in the prolonged delivery of required corrigendum letters from the clients. 7. After the first restructuring, the project finally moved into the implementation phase but continued to face challenges, including: (i) delays in onboarding the dedicated Project Managers in all three countries due to the need to launch multiple calls to find suitable candidates; and (ii) delays in the tender and contract award process, resulting in a significant amount of support needed from the World Bank procurement team. Some countries faced larger capacity constraints and delays than others. For example, Grenada struggled for months to onboard a technical expert to support the tender preparation; after a series of failed attempts, Grenada opted to hire the consultant supporting Saint Lucia. Saint Lucia prepared the first draft of the bidding documents and was the first mover in the tendering process. This process took longer than expected for a variety of reasons, including (i) the bidding templates needed to be changed from works to goods during the process due to requirements under the grant agreement, and (ii) the tenders were launched near the holiday season and the government received over 40 requests for clarifications. Although the procurement took much longer than anticipated, the templates used in Saint Lucia were then shared with SVG and Grenada, which allowed them to move faster and established a harmonized approach across all countries. 8. Over the past year, the project has made significant implementation progress. Implementation teams are now fully staffed in each beneficiary country, including the Project Managers, Directors of each Energy Unit in the respective governments (leading the technical aspects with support from specialized consultants) and the national PIUs (leading the financial/administrative aspects). The sites for each of the demonstration projects have been identified and include: the EU-Owen King Hospital in Castries, St. Lucia; the T. A. Marryshow Community College (TAMCC) in Grenada; and the SVG Community College - Division of Technical and Vocational Education (DTVE) in St. Vincent and the Grenadines. The main procurement activities under this Project – which entail three solar PV installation contracts (one for each country; including solar PV equipment, installation, training, testing, etc.) – are well underway, thanks to increased proactivity from the clients over the past year and considerable support from the World Bank. The winning bidder of these contracts, which is the same for all three countries, is initiating procurement of the goods, and installation can begin within the next three months. C. Rationale for the extension. 9. An extension of the closing date from December 31, 2018 to September 30, 2019 is requested to allow the Project to meet its PDO. The PDO cannot be achieved prior to full commissioning of the solar PV projects, which is currently not expected until March 2019 (after the current closing date of December 31, 2018). The proposed closing date of September 30, 2019 accounts for the updated implementation schedule for solar PV commissioning, the testing and training plan, plus a three-month buffer in case of unexpected delays. It will also allow sufficient time for the lessons learned from the commissioning of the solar PV pilots to be incorporated into the report being prepared under Component 1 (BETF). Figure 1 below provides a snapshot of the project’s updated implementation timeline, provided the proposed extension is approved. The World Bank Solar PV Demonstration & Scale Up Project (P153404) FIGURE 1: SOLAR PV DEMONSTRATION AND SCALE-UP PROJECT - IMPLEMENTATION TIMELINE 10. The governments of Saint Lucia, Saint Vincent and Grenadines, and Grenada sent the World Bank letters requesting an extension of the closing date to September 30, 2019 to allow the project to successfully complete the solar PV installation and commissioning. These letters were dated August 30, 2018; September 4, 2018; and August 30, 2018, respectively. II. DESCRIPTION OF PROPOSED CHANGES 11. The proposed restructuring for SIDS Grant Nos. TF-A1671/TF-A1673/TF-A1674 would extend the closing date of the project from December 31, 2018 to September 30, 2019 to ensure successful completion of all activities proposed under the project, under the new implementation schedule shown above. All indicator target end dates would be adjusted accordingly in the Results Framework, and the estimated timing of disbursements would be adjusted to reflect the updated implementation schedule. The World Bank Solar PV Demonstration & Scale Up Project (P153404) III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-A1671 Effective 31-Dec-2017 31-Dec-2018 30-Sep-2019 30-Jan-2020 TF-A1673 Effective 31-Dec-2017 31-Dec-2018 30-Sep-2019 30-Jan-2020 The World Bank Solar PV Demonstration & Scale Up Project (P153404) TF-A1674 Effective 31-Dec-2017 31-Dec-2018 30-Sep-2019 30-Jan-2020 DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 0.00 0.00 2017 150,000.00 150,000.00 2018 450,000.00 579,160.20 2019 1,200,000.00 1,070,839.80 2020 0.00 0.00