Australia, through the Australian Infrastructure Financing Facility for the Pacific (AIFFP), is partnering with the Government of Palau to advance the country’s renewable energy transition.
The AUD16.38 million grant-funded Palau Renewable Energy Integration Project will upgrade the Palau grid, maximising its efficiency in receiving renewable energy from the Palau Solar facility financed by the AIFFP and completed in 2023. The investment will enable up to 25 per cent of Palau’s total electricity demand to be provided from renewable energy.
This project reduces Palau’s reliance on imported diesel, lowers emissions, and strengthens Palau’s energy security. It reflects Australia’s steadfast commitment to helping Pacific nations achieve ambitious clean energy goals and demonstrates Australia’s commitment to collective regional climate leadership illustrated under our bid to host COP31 with the Pacific. The project includes a funding contribution under the Pacific Climate Infrastructure Financing Partnership (PCIFP), which will open the opportunity for an overall increase in the level of renewable energy outcomes originally planned under the Palau Solar investment.
“Supporting Pacific nations’ transition to renewable energy requires steadfast commitment and partnership — we stand firmly with Palau.”
Minister Penny Wong
“Climate change is no longer an abstract concern… it’s a reality and an existential threat for Pacific nations.”
Minister Chris Bowen
Palau’s first large-scale solar facility, completed in 2023, is performing to technical specifications but has faced grid limitations that require curtailment of up to 60 per cent of its potential output. The Palau Renewable Energy Integration Project will address this technical challenge by investing in a staged introduction of network-wide equipment and settings modifications to lift renewable energy penetration, lower generation costs and improve grid stability.
To achieve this, AIFFP is capitalising on high quality engineering expertise, drawing on Australian innovation and technical expertise from leading firms such as Canberra-based ITP Renewables. By applying Australia’s proven experience in developing solutions to overcome complex renewable energy challenges, the project will also ensure ‘grid-readiness’. This foundation will enable Palau to take large strides on its renewable energy roadmap and prepare for potential future grid scale renewables projects.
Initial project activities commenced in early July 2025 with upgrades to protection equipment and settings changes at Palau’s Bus Stop Junction substation.
The investment responds to a direct request for assistance from President Surangel S. Whipps Jr. and was announced in parallel to the signing of a letter of intent for Australia and Palau to form a bilateral partnership under the Australia-Pacific Partnership for Energy Transition (APPET), during Minister Chris Bowen’s visit to Palau in July 2025
Led by the Australian Department of Climate Change, Energy, the Environment and Water, APPET will provide a parallel program of practical renewables focused energy sector support to empower Palau’s energy transition priorities, including strengthening Palau’s energy system with technical, planning and policy support, as well as providing skills and training for Palau’s renewable energy workforce.
“The approach under the Palau Renewable Energy Integration Project shows that when we work as steadfast partners, we can get the job done.”
Minister Pat Conroy
Minister Bowen and President Whipps visit Palau Solar Farm
Minister Bowen and President Whipps at signing
Minister Bowen and President Whipps with Palau government representatives