Case Studies

The Gazelle power grid in East New Britain is a major electricity transmission and distribution network that is supplied primarily by hydropower and diesel generators. Most of the diesel generators are aging because of a lack of maintenance, leading to high fuel consumption rates, poor supply reliability, and expensive operational costs for PPL, the state-owned utility responsible for energy generation and distribution across PNG.

In response, PPL is aiming to increasing its use of renewable energy to partially replace diesel fuel. PSDI has been supporting these efforts by working with PPL to undertake PNG’s first competitively tendered renewable energy independent power producer agreement for a solar and battery storage facility on the Gazelle grid.

At the request of PPL, PSDI commenced a public–private partnership (PPP) pre-feasibility study in 2017 to assess whether solar power could be added to the Gazelle grid. The study found that the grid could support a 5-megawatt solar facility with 2.5-megawatt-hour battery storage and recommended a public–private partnership model, where an IPP would build and operate the solar facility to save PPL from high up-front costs. As part of the study, PSDI identified a suitable plot of land owned by the East New Britain provincial government for the facility and outlined a process to establish a lease for the facility, which the government agreed to. PSDI presented these findings to the PPL board in December 2017, but following a change in PPL’s management in early 2018, all proposed IPP projects were suspended while PPL reviewed all existing IPP contracts and completed a least-cost power development plan.

Progress on the project slowed from 2018 to 2024 as PPL underwent multiple leadership changes, with five different chief executive officers bringing varied levels of interest to the project. However, PSDI continued to advocate for the project, maintaining a relationship with PPL that enabled PSDI to rapidly respond when interest was renewed.

In 2019, PPL requested that PSDI update the initial feasibility study to be in line with PPL’s new least-cost power development plan. PPL endorsed the recommendations of the updated study in early 2021 and PSDI commenced design of a competitive tender process for the 5-megawatt solar PPP agreement.

The project faced further delays when the initially secured land was reallocated because of shifting provincial government priorities. PSDI supported efforts to identify an alternative site for the solar project, including through a competitive tender process for the land. However, after a change in East New Britain’s provincial government, the original land was made available again and PSDI worked with KCH and the East New Britain government to progress the subdivision and issuance of a new title for this land.

PSDI supported PPL to undertake the competitive tender process for the PPP agreement, including the preparation of tender documents, evaluation, short-listing of bidders, and negotiations. The tender was developed using the process outlined in the PSDI-supported PPP (Amendment) Act and Regulations, which require that all PPP transactions are transparent, predictable, and competitive.

Under the agreement, the winning bidder will design, build, finance, operate, and maintain the solar facility for a 15-year term and sell the electricity to PPL at a fixed, non-escalating price. After the 15-year term, the solar facility will be transferred to PPL at no cost and have a further useful life of 10 years, resulting in significant cost savings for PPL over the 25-year period.

The competitive tender process launched by PPL with PSDI’s support attracted multiple bidders. A winning bidder was selected and PSDI supported PPL through an 18-month negotiation process, resulting in a successful power purchase agreement in September 2024.

This power purchase agreement was endorsed by the PPL board in April 2025, received KCH clearance in June 2025, and was endorsed by the minister of state enterprises in November 2025. PSDI will continue to support PPL in meeting the conditions precedent to the agreement once it is signed by both parties.

PSDI’s flexibility to step away during periods of uncertainty and return when reform appetite strengthened helped enable the project’s progression to agreed power purchase agreement terms, despite multiple setbacks. This means that new solar infrastructure will soon be operational on the Gazelle grid, at no up-front cost to PPL, reducing electricity generation costs for PPL and allowing consumers to benefit from improved supply reliability.

Representatives during the negotiations of the renewable energy power purchase agreement in Papua New Guinea.

The proposed site for the 5-megawatt solar facility in Gazelle, East New Britain.

This case study is taken from the PSDI FY2025 Annual Progress Report. Read the full report here.