Pacific Private Sector Development Initiative
September 14, 2026
Sydney — The strength of the enabling environment is critical to attracting the private investment needed to meet ambitious renewable energy targets, according to a study just published by the Asian Development Bank’s Pacific Private Sector Development Initiative (PSDI).
The study, Enabling Renewable Investment: Lessons from Independent Power Producers in the Pacific, examines the experiences of Fiji, Palau, Papua New Guinea, Samoa, and Tonga against a benchmark of Hawaii’s much faster transition to renewable energy. It sets out country-specific reform priorities and practical guidance for Pacific policymakers and utilities seeking to accelerate private investment in renewable energy.
Many Pacific island countries are aiming to generate between 70% and 100% of their electricity from renewable sources by the early 2030s. With diesel costs now surging, this transition has become a commercial as well as an environmental imperative. For example, in July 2026, the levelized cost of solar generation with battery storage averaged less than half the marginal cost of diesel generation in the Pacific. However, over the past decade, the five countries included in the study commissioned only 8 new renewable energy generation plants with independent power producers (IPPs).
“With the cost of fuel rising, renewable energy investment is becoming an increasingly important commercial imperative for Pacific utilities,” said Laure Darcy, PSDI’s State-Owned Enterprise Reform Expert and co-author of the study. “To speed up the transition and attract private investment, the enabling environment has to allow private investors to assess and price risk with confidence.”
The study identifies a series of characteristics of an effective enabling environment. These comprise (i) clear, consistent, and durable government and utility commitment to increasing renewable energy through IPPs with accountability for meeting targets, (ii) coherent sector planning and grid readiness based on robust demand forecasts, (iii) a commercially governed and financially viable utility and an independent body that oversees licensing and tariff setting, and (iv) robust competitive procurement processes, bankable contract terms, and project sites procured in advance of IPP tenders.
When these conditions are in place, IPP tenders have traditionally attracted strong international interest and delivered competitive offtake tariffs.
The study was launched 10 September 2026 at a Community of Practice webinar, Enabling Renewable Investment: Lessons from Independent Power Producers in the Pacific, hosted by the Pacific Region Infrastructure Facility (PRIF), and featuring a panel representing IPP partners active in the region.
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