Purpose The purpose of this article is to analyse electricity supply in the Solomon Islands face extraordinarily expensive electricity tariffs – currently set at 96 c/kWh – making them amongst the highest in the world. Power is supplied by a fleet of diesel generators reliant on imported liquid fuels. In this article, the authors model the 14,100 kW power system on the island of Guadalcanal and demonstrate that by investing in a combination of hydroelectric and solar photovoltaic generating capacity, power system costs and reliability can be improved marginally. However, when the authors model a 3-Party Covenant (3PC) Financing structure involving a credit wrap by the Commonwealth of Australia, electricity production costs fall by 50 per cent, thus resulting in meaningful increases in consumer welfare. Design/methodology/approach This study’s approach uses an integrated levelised cost of electricity model and dynamic partial equilibrium power system model. Doing so enables the authors to quickly analyse the rich blend of fixed, variable and sunk costs of generating technology options. The authors also focus on the cost of capital that is likely to be achieved under various policy settings. Findings The authors find that a 3PC Financing policy can substantially reduce the production costs associated with capital-intensive power projects in an unrated sovereign nation. Such a policy and associated prescriptions are not specific to the Solomon Islands or power generation. The conceptual framework and associated financial logic that underpins the initiative can be generalised to other “user pays” infrastructure projects and to other developing nations. The broad applicability of 3PC financing means that it is not country specific, project specific or asset class specific. Research Limitations/implications It is important to note that the analysis in this paper has a number of limitations in that the authors do not deal with rural electrification or distribution network costs. The focus of this paper is to identify policy interventions that are capable of making profound changes to the cost and the reliability of wholesale electricity production. Originality/value The focus of this paper is to identify a policy intervention capable of making profound changes to the cost and the reliability of wholesale electricity production. While there is nothing novel associated with a 3PC Financing per se, the authors are unaware of its direct use as a form of delivering foreign aid. A 3PC Financing has the effect of shifting the source of aid funding from fiscal account surplus/deficit (i.e. cash outlays) to balance sheet (i.e. credit wrap). However, this is not a “magic pudding” – 3PC Financing creates an asset-backed contingent liability and will have the effect of reducing the donor country’s own debt capacity by a commensurate amount, holding the nation’s credit rating constant.

The Clean Development Mechanism (CDM) is the principal source of carbon offsets in the global market, and is intended to be a key driver of sustainable development and technical transformation in developing countries. The distribution of CDM projects by country has been skewed, with over 75% of registered projects having taken place in just four countries, namely China, India, Brazil and Mexico. A change in this pattern of development may be occurring, however, as smaller developing countries become increasingly active in the carbon market. An example of this is the rapid rise in the number of CDM projects based in Vietnam since early 2009. This paper investigates factors contributing to the growth of CDM projects in Vietnam and describes some of the key features of the projects that have been developed. Hydropower projects are found to dominate new CDM project development in Vietnam. It is suggested that CDM project development in Vietnam may be a tool to support domestic energy security rather than being primarily driven by the intended climate change mitigation and sustainable development objectives of the CDM. It is also possible that Vietnam is emulating the development strategy of China, and may serve as a model for other members of the Least Developed Countries group. A country’s domestic policy choices are critical in determining its attractiveness as a host country for offset projects, and Vietnam’s policy strategies are successfully harnessing synergies between domestic agendas and regulated foreign markets.

The Solomon Islands, a nation rich in natural resources with a large and rapidly expanding youth population, has recently experienced severe social unrest predicated upon ethnic rivalry and property rights. In the actual fighting during the 'tensions' on both sides, the Isatabu Freedom Movement and the Malaita Eagle Force youth provided leadership and fighters. As youth numbers grow and educational outcomes decline their livelihood prospects are severely impacted in the nation. These outcomes could be viewed as social manifestations catalysed by a type of 'resource curse', which has been widely researched. However, much of this literature is macroeconomic in character and does not deal with the socioeconomic dynamics involved. In this thesis these dynamics are analysed in detail by examining the experiences of a youth cohort in the capital city of Honiara. It is there that youths are impacted in the greatest number and