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2015

PACIFICENERGYUPDATE

Energy Operations in the Pacifi c

Timor-Leste

Federated States of Micronesia

MarshallIslands

Nauru

Palau

Papua New Guinea

Solomon Islands

Vanuatu

Yap Renewable Energy Development Project

$11.16 million

Strengthening the Energy Sector Regulatory Framework

$0.50 million

Electricity Supply Security and Sustainability Project

$5.54 million

Electricity Supply Security and Sustainability Project Tariff and Subsidy Policy Reform

$0.23 million

Institutional Strengthening of the Nauru Utilities Corporation

$0.30 million

Improved Energy Access for Rural Communities Project

$6.00 million

Port Moresby Power Grid Development Project

$83.00 million

Town Electrifi cation Investment Program—Tranche 1

$71.60 million

Implementation of the Electricity Industry Policy

$1.00 million

Town Electrifi cation Invest-ment Program—Tranche 1 (additional fi nancing)

$5.40 million

Provincial Renewable Energy Project

$15.00 million

Solar Development Project

$10.00 million

Improved Energy Supply for Poor Households Project

$1.76 million

Energy Access Project $14.90 million

3 Pacifi c Energy Update 20153 Pacifi c Energy Update 2015

Biofuel (Coconut)

Diesel Generation

Energy Effi ciency

Hydropower

Solar

Transmission and Distribution

Wind

Regulatory

Capacity Building

Ongoing

Completed in 2014

Proposed

Legend

Fiji

Kiribati

Samoa

Tonga

Tuvalu

CookIslands

Renewable Energy Sector Project

$24.28 million

Power Sector Expansion Project

$230.95 million

Renewable Energy Development and Power Sector Rehabilitation Project

$23.83 million

Cyclone Ian Recovery Project

$10.70 million

Outer Island Renewable Energy Project

$6.80 million

Promoting Energy Effi ciency in the Pacifi c Phase 2

$12.42 million

Promoting Access to Renewable Energy in the Pacifi c

$3.60 million

Support for Energy Sector Regulatory Capacity and Electrifi cation Investment Planning

$1.00 million

Regional

4 Pacifi c Energy Update 2015

Energy Project Portfolio (Ongoing, Completed in 2014, and Proposed)

Country Project Implementation Period

ADB Funding

($ million)Cofi nancing

($ million)Total

($ million)

ONGOINGCook Islands Renewable Energy Sector Project November 2014–November

2017 11.19 13.09 24.28

Subtotal 11.19 13.09 24.28


Yap Renewable Energy Development Project June 2013–December 2017 9.04 2.12 11.16

Subtotal 9.04 2.12 11.16

NauruElectricity Supply Security and Sustainability Project November 2014–December

2016 2.00 3.54 5.54

Subtotal 2.00 3.54 5.54

Papua New Guinea

Improved Energy Access for Rural Communities Project April 2012–June 2015 0.00 6.00 6.00

Port Moresby Power Grid Development Project April 2013–July 2017 66.70 16.30 83.00

Town Electrifi cation Investment Program—Tranche 1 December 2010–June 2016 57.30 14.30 71.60

Subtotal 124.00 36.60 160.60

SamoaPower Sector Expansion Project November 2007–December

2016 42.00 188.95 230.95

Renewable Energy Development and Power Sector Rehabilitation Project November 2013–June 2019 18.21 5.62 23.83

Subtotal 60.21 47.00 254.78

Solomon Islands

Provincial Renewable Energy Project May 2014–March 2022 12.00 3.00 15.00

Subtotal 12.00 3.00 15.00

Tonga Cyclone Ian Recovery Project May 2014–June 2018 4.52 6.18 10.70

Outer Island Renewable Energy Project June 2013–June 2020 2.00 4.80 6.80

Subtotal 6.52 10.98 17.50

Total loans and grants for ongoing projects 224.96 263.90 488.86COMPLETED 2014

Marshall Islands

Improved Energy Supply for Poor Households Project August 2010–June 2014 0.00 1.76 1.76

Subtotal 0.00 1.76 1.76

Total loans and grants for completed projects 0.00 1.76 1.76

PROPOSED

Papua New Guinea

Town Electrifi cation Investment Program—Tranche 1 (additional fi nancing) 5.00 0.4 5.4

Subtotal 5.00 0.4 5.4

Solomon Islands

Solar Development Project 3.00 7.00 10.00

Subtotal 3.00 7.00 10.00

Vanuatu Energy Access Project 5.00 9.90 14.90

Subtotal 5.00 9.90 14.90

Total proposed loans and grants 13.00 17.30 30.30

Pacifi c Energy Update 2015 5

Energy Technical Assistance Portfolio (Ongoing, Completed in 2014, and Proposed)

Country Project Implementation Period

ADB Funding

($ million)Cofi nancing

($ million)Total

($ million)ONGOING

Nauru Electricity Supply Security and Sustainability Project Tariff and Subsidy Policy Reform July 2015–December 2015 0.23 0.00 0.23

Institutional Strengthening of the Nauru Utilities Corporation April 2014-March 2016 0.22 0.08 0.30

Subtotal 0.45 0.08 0.53

Papua New Guinea Implementation of the Electricity Industry Policy December 2012–December

2015 1.00 0.00 1.00

Subtotal 1.00 0.00 1.00

Total ongoing technical assistance 1.45 0.08 1.53

COMPLETED 2014–2015Federated States of Micronesia

Strengthening the Energy Sector Regulatory Framework December 2012–August 2014 0.50 0.00 0.50

Subtotal 0.50 0.00 0.50

Regional Promoting Energy Effi ciency in the Pacifi c Phase 2 March 2011–April 2015 1.00 11.42 12.42

Promoting Access to Renewable Energy in the Pacifi c May 2013–October 2014 0.00 3.60 3.60

Subtotal 1.00 15.02 16.02

Total completed technical assistance in 2014 1.50 15.02 16.52PROPOSED

Fiji Support for Energy Sector Regulatory Capacity and Electrifi cation Investment Planning 1.00 0.00 1.00

Subtotal 1.00 0.00 1.00

Total proposed technical assistance 1.00 0.00 1.00

Total ongoing loans, grants and technical assistance 226.41 263.98 490.39

Total completed loans, grants and technical assistance in 2014 1.50 16.78 18.28

Total proposed loans, grants and technical assistance 14.00 17.30 31.30

TOTAL INVESTMENT 241.91 298.06 539.97


OverviewThe Asian Development Bank (ADB) supports the eff orts of its developing member countries (DMCs) to secure reliable, adequate, and aff ordable energy for economic growth in socially, economically, and environmentally sustainable ways. ADB’s energy operations aim to achieve energy security, facilitate a transition to a low-carbon economy, and increase universal access to modern energy services to support ADB’s vision of a region free of poverty. ADB’s energy policy rests on three pillars: promoting energy effi ciency and renewable energy; maximizing access to energy for all; and promoting energy sector reform, capacity building, and good governance.

The heavy reliance of Pacifi c DMCs on imported fossil fuel for power generation exposes their economies to foreign exchange fl uctuations and fuel price rises. Electricity tariff s are typically high, even though service quality, reliability, and access levels are poor. In countries where electricity utilities are subsidized, the high cost of imported fossil fuels weakens the fi scal position of the governments. This diverts resources away from productive social and infrastructure investments.

ADB operation identifi es energy as one of the top four operational priorities for the region; in particular the role of renewable energy and energy effi ciency in cutting energy costs, reducing reliance on fossil fuels, and lowering greenhouse gas emissions in the Pacifi c. ADB facilitates clean energy development in Pacifi c DMCs by providing fi nancial and technical support.

ADB’s program in the Pacifi c includes support for higher end-use effi ciency, greater access to renewable energy, and improvements in demand-side energy management. ADB measures its contribution to outcomes in the energy sector using a range of indicators that gauge improvements in energy security (proportion of energy imported), deployment of renewable energy, and the availability and aff ordability of energy services, as well as reductions in greenhouse gas emissions from the power sector.

ADB’s program supports its Pacifi c DMCs’ ambitious renewable energy targets and eff orts to cut their energy costs. ADB continues to provide energy sector assistance to support electricity sector expansion programs, training and capacity building of government energy agencies, power sector reforms, improved sector governance, and effi ciency improvements.

ADB’s energy operations in the Pacifi c focus on:• installing new generation capacity from renewable

sources;• expanding electricity access;• increasing power generation capacity;• upgrading and rehabilitating transmission and

distribution networks;• promoting more effi cient use of energy;• training and building the capacity of government energy

agencies and benefi ciary communities; and• strengthening energy regulatory frameworks.

Will Lower Oil Prices Derail Renewable Energy Investment?

World oil prices have declined steeply over the past year, and as of June 2015, are hovering at around $60 per barrel—a level that has not been seen for over a decade (with the exception of a brief period in 2009–2010 in the wake of the global fi nancial crisis). Understandably, this raises doubt as to the future of investments in renewable energy generation as a viable alternative to diesel-fi red generation. But the impact of lower oil prices is not likely to be as great as one might intuitively expect, for a variety of reasons. First, there is a great deal of uncertainty regarding where oil prices will be a year from now. One thing that is certain is that oil is a fi nite resource. While some hedging strategies can be used to shield small island utilities from short-term price volatility, the long-term trend in oil prices is not in question: prices will inevitably rise. Second, over the past 5 years, the cost of wind and solar power has been plummeting, by about 60% and 80% respectively. Investment decisions are thus becoming increasingly driven less by the price of oil, and more by the cost of renewable generation technologies themselves. And once installed, price volatility from wind and solar generation all but disappears completely. Investment in renewable generation is its own hedging strategy. Third, as battery storage technology improves and costs decline as the industry comes to scale, renewable generation will increasingly become a viable alternative to diesel for the baseload requirements of power systems in small island states, and not just for marginal displacement of diesel-fi red generation. These trends are real and observable, and not likely to be reversed, irrespective of the recent dip in the price of oil.


Regional Initiatives

Regional Capacity Development Technical AssistancePromoting Energy Effi ciency in the Pacifi c Phase 2

Implementing energy effi ciency projects to reduce the use and importation of fossil fuels in the Cook Islands, Papua New Guinea, Samoa, Tonga, and Vanuatu

Technical assistance amount $12.42 millionFunding sources

ADB (Technical Assistance Special Fund)

Global Environment FacilityAsian Clean Energy FundGovernment of AustraliaPEEP-2 and DMC Governments

$1.00 million$5.25 million$1.50 million$1.00 million$3.67 million

Executing agency ADB’s Pacifi c Department

Status Completed(Implementation period:Mar 2011–Apr 2015)

In line with the Pacifi c Regional Operations Business Plan, 2010–2012, and the Pacifi c Approach, 2010–2014, the ADB approved in September 2008 a two-phased regional technical assistance (TA) project for Promoting Energy Effi ciency in the Pacifi c (PEEP). The project was developed in response to the high priority given to reducing the use and importation of fossil fuels by the fi ve Pacifi c developing member countries (DMCs) covered by the assistance—the Cook Islands, Papua New Guinea (PNG), Samoa, Tonga, and Vanuatu.

Phase 1 of PEEP, which was concluded in May 2011, identifi ed energy effi ciency projects for funding or cofi nancing. Phase 2 (PEEP-2) implemented energy effi ciency measures and established policy and implementation frameworks to help the fi ve participating DMCs reduce both their fossil fuel imports for energy consumption and their greenhouse gas emissions.

For each country the project developed a database on electricity consumption and energy effi ciency indicators by end-use sector, which was integrated into the PEEP-2 website, www.ee-pacifi c.net. The project also established several energy effi ciency guidelines and implementation models suitable for scaling up energy effi ciency implementation throughout the Pacifi c. These include the Energy Effi ciency Technology Assessment; International Best Practices for Energy Effi ciency Building Codes; the Green Hotels Rating Scheme for the Pacifi c; the Green Commercial Buildings Rating Scheme for the Pacifi c; Energy Effi ciency Guidelines Rating Scheme for the Pacifi c; Energy

for Hotels in the Pacifi c; Energy Effi ciency Guidelines for Street Lighting and Public Commercial Buildings; and Energy Effi ciency Assessment Guidelines, Framework, and Scorecard.

The project also implemented 34 energy effi ciency subprojects, resulting in annual energy savings of 3,411 megawatt-hours, annual cost savings of $1,458,922, and carbon-dioxide savings of 3,204 tons per year for the DMCs covered by the assistance.

The project included comprehensive energy audit training for government departments and power utilities, comprising four modules, and the development of a series of energy-saving tips for printing at the back of electricity bills and home energy guides. The guides provided information on the average running costs of common electrical appliances according to the electricity tariff of each of the participating DMCs.

Regional Capacity Development Technical AssistancePromoting Access to Renewable Energy in the Pacifi c

Developing renewable energy to provide rural areas in Papua New Guinea, Solomon Islands, and Vanuatu with access to electricity

Technical assistance amount $3.6 million

Funding sourcesMulti-Donor Clean Energy FundGovernments

$3.0 million$0.6 million

Executing agency ADB’s Pacifi c Department

Status Completed(Implementation period:May 2013–Oct 2014)

Much of the rural population in Pacifi c DMCs lacks access to electricity. The rural electrifi cation rate is 7% in Vanuatu and 5% in Solomon Islands. The less than 10% of PNG’s population that enjoys electricity service is predominantly urban.

ADB approved a two-phase TA project for Promoting Access to Renewable Energy in the Pacifi c. The project is in line with both ADB’s Strategy 2020 and its Energy Policy, 2009, which call for the promotion of renewable energy under the core specializations of infrastructure and environment. The project is also consistent with ADB’s Pacifi c Approach, 2010–2014, which identifi es the energy sector as one of the top four operational priorities for the region and highlights the role of renewable energy in reducing reliance on fossil


fuels and lowering greenhouse gas emissions in Pacifi c DMCs. It also supports the country partnership strategies of the participating Pacifi c DMCs, which highlight energy as strategic objective.

In PNG, the TA supported a pilot project for mini-hydropower development to supply electricity to a remote rural population center. It selected a rural population center with existing power distribution infrastructure and replaced the nonfunctioning diesel generator with hydropower generation. For the scaling-up component, the TA undertook screening studies to select ten priority sites from 14 mini hydropower sites identifi ed by the government. The project also conducted feasibility studies and fi nance planning for facilities at the ten sites.

In Solomon Islands, the TA supported the development of alternative fuels through a pilot project by (i) retrofi tting an existing provincial diesel-fueled generation system to run on alternative fuels, (ii) providing milling equipment and developing a supply chain for the sustainable provision of alternative fuel, and (iii) developing a sustainable business model. For the scaling-up component, the TA prepared feasibility studies for several small projects for generating hydropower and power from alternative fuels in provincial centers, and developed a fi nancing program to support the implementation of priority projects.

In Vanuatu, the TA assisted in the development of a solar farm to supply the Port Vila grid by undertaking feasibility studies, developing a pilot on-grid solar project, and preparing project-fi nancing options to upscale renewable energy for on-grid supply.

Cook Islands

In the Cook Islands, diesel for power generation makes up 56% of imported fuels and supplies about 99% of the total electricity generating capacity in the country. This heavy reliance on imported fuels, coupled with volatile diesel fuel prices, renders the country’s electricity generation costs among the highest in the Pacifi c.

The Cook Islands National Sustainable Development Plan, 2011–2015 includes developing renewable energy for energy security among its national development goals. The Cook Islands Renewable Energy Chart Implementation Plan, 2012–2020 targets supplying 50% of inhabited islands with power from renewable sources by 2015 and 100% by 2020.

ADB’s strategy for the Cook Islands includes energy as a priority area of support and sets a primary goal of reducing

the country’s dependence on imported fossil fuels by generating power from domestic renewable energy sources. ADB’s 2009 Energy Policy supports the deployment of clean energy in ADB DMCs, while ADB’s regional strategy for the Pacifi c includes energy and infrastructure development among its main sectors.

ADB is helping meet the government’s targets by constructing solar photovoltaic power plants under the ongoing Renewable Energy Sector Project. It is also providing institutional strengthening support to implement the Cook Islands Renewable Energy Chart Implementation Plan, 2012–2020.

Renewable Energy Sector Project

Construction of solar photovoltaic power plants and rehabilitation of the distribution network in the southern group of islands to increase energy security in an environmentally sustainable manner

Project amount $24.28 millionFunding sources

ADB (ordinary capital resources)European UnionGovernment

$11.19 million$7.26 million$5.83 million

Executing agency Ministry of Finance and Economic Management

Status Ongoing(Implementation period:Nov 2014–Nov 2017)

The Cook Islands Renewable Energy Sector Project is supporting the government’s policy of increasing power generation from renewable sources, and will enhance institutional capacity to implement the Cook Islands Renewable Energy Chart and Implementation Plan. Transforming diesel-based power generation into a system based on renewable sources has the potential to reduce generation costs by up to 40% and diesel consumption for power generation by up to 95%. This would reduce the country’s diesel import bill and allow the government to invest in social infrastructure and environmental improvements.

The project is being implemented in the southern group of islands, which is home to 92% of the population and accounts for 98% of current and projected demand. It is supporting the government’s eff orts to construct up to six 3-megawatt-peak grid-connected solar photovoltaic power plants with advanced lithium-ion battery storage. The plants will be built to climate- and disaster-resilient specifi cations.


The project will also support the rehabilitation of existing distribution networks, and will provide institutional strengthening and project management support through capacity building, as well as knowledge transfer through operation and maintenance programs.

The project will result in annual savings of 1.09 million liters of diesel consumption and an annual emissions reduction of 2,930 tons of carbon dioxide equivalent (about 75,000 tons of carbon dioxide equivalent avoided over the 25-year life of the project). It will reduce the exposure of energy tariff s to international fuel price fl uctuations and avoid system losses due to rehabilitated transmission lines, thereby increasing energy security in the country in an environmentally sustainable manner.

Fiji

Fiji’s energy sector is relatively well developed, with approximately 90% of the population enjoying formal, commercial electricity services provided by the Fiji Electricity Authority (FEA). Renewable (primarily hydroelectric) generation produces more than 60% of Fiji’s electricity.

Fiji’s National Energy Plan and Green Growth Framework target (i) achieving 100% national electrifi cation coverage by 2020; (ii) expanding the private sector’s role in grid electricity generation; (iii) increasing the contribution of non-FEA renewable energy, in particular from small-scale systems; (iv) restructuring of the regulatory arrangements to improve transparency and accountability, and remove possible confl icts of interest; and (v) generating 99% of energy from renewable sources by 2030.

Fiji’s energy policies prioritize attracting private sector investment to accelerate power sector development. ADB is helping strengthen Fiji’s energy-sector regulatory capacity and electrifi cation investment planning to support increased public and private investment in power projects.

In line with the government’s strategic priorities, ADB’s strategy for Fiji focuses on providing energy infrastructure to increase power generation from renewable energy, reduce system losses, and increase the electrifi cation rate.

Previous ADB assistance to the energy sector supported investment in generation, expansion of transmission and distribution systems, and TA for a tariff study and a rural electrifi cation study.

Technical AssistanceSupport for Energy Sector Regulatory Capacity and Electrifi cation Investment Planning

Developing regulatory and sector planning capacities within the Department of Energy for increased investments in power projects


Funding sourceADB (Technical Assistance Special Fund) $1.0 million

Executing agency Ministry of Infrastructure and Transport

Status Proposed


Fiji’s complex institutional and policy framework for the energy sector is marked by overlapping responsibilities and gaps in regulation and oversight. The weaknesses of the current institutional and regulatory framework and sector-governance arrangements, and the absence of a comprehensive and coherent long-term sector development strategy, have led to a slow pace of public and private investment. This hinders the expansion of commercial service and the increase in renewable energy generation. Investments in the order of FJD 1.5 billion ($750 million) are needed in Fiji’s electricity system over the next decade.

The Fiji Electricity Authority (FEA) operates as a self-regulating entity, administering licensing authority, developing and applying technical codes and standards, and defi ning rules and incentives for third-party generation. The government intends to expand private sector investment in the electricity sector, including divestment of a signifi cant share of the FEA itself. The envisaged sector reforms require the transfer of the FEA’s regulative functions to a separate, competent entity to regulate the sector.

The government’s energy sector policy prioritizes attracting private sector investment to accelerate the development of the power sector. It identifi es the following as impediments: (i) the lack of a clear regulatory framework for private generation and supply service; (ii) general weaknesses in Fiji’s business climate; and (iii) a lack of coherent, credible, publicly available data on investment opportunities.

The TA will have two components for capacity building within the government agencies. The fi rst component will develop capacity at the selected government agency (to be confi rmed) to perform regulatory functions currently assigned to the FEA, and other functions typically assigned to sector regulatory agencies. The second component will focus on developing planning capacity at the Department of Energy (a department within the Ministry of Infrastructure and Transport) to identify and prioritize sector investments to provide for security of supply, increased renewable generation, and expansion of electricity service to about 10% of the population that still lacks electricity services.

Marshall Islands

The Marshall Islands is heavily reliant on imported fuels for power generation. Power generation consumes more than half of the fuel imported, and fuel is the country’s largest import commodity.

Due to this extreme import dependency, the government recognizes the power sector as a priority for reform and appreciates the importance of containing the volume and cost of energy imports.


The National Energy Policy and Energy Action Plan identify for immediate implementation the following priority reforms of state-owned Marshalls Energy Company: (i) adoption of a new electricity tariff template, (ii) conversion to prepayment meters to support the reconnection of the poor and improve collection rates, (iii) better utility management, (iv) use of domestic fuels or indigenous energy sources to reduce reliance on imported fuels, and (v) reduction of avoidable power system losses through infrastructure upgrades and improvements.

Consistent with this policy and action plan, ADB recently concluded the Improved Energy Supply for Poor Households Project, which increased access to power and improved the livelihoods of the poor.

Improved Energy Supply for Poor Households Project

Delivery of sustainable electricity services for increased access to power and improved livelihoods of the poor

Project amount $1.76 million

Funding sourceJapan Fund for Poverty Reduction $1.76 million

Executing agency Ministry of Resources and Development

Status Completed(Implementation period:Aug 2010–Jun 2014)

ADB’s strategy for the Marshall Islands supports energy initiatives to respond to the economic and social impacts of high power tariff s caused by escalating fuel prices, and to develop renewable energy to help address climate change. The strategy also prioritizes assistance to improve access to aff ordable basic services including energy and to reform the power sector to improve service and reduce reliance on imported fossil fuels.

The project provided assistance to poor households by (i) installing prepayment meters to help them manage their power consumption; (ii) rehabilitating and extending the distribution systems to improve power supply to the poor; (iii) connecting free of charge unserved households and those disconnected during the crises; and (iv) blending diesel with locally produced coconut oil to fuel diesel-fi red power generators, thereby generating additional income for poor copra producers.


The economy of the Federated States of Micronesia (FSM) is particularly vulnerable to fuel-price volatility because of the almost complete reliance on fossil fuels for electricity generation for the main grids in the four autonomous states of Chuuk, Kosrae, Pohnpei, and Yap. Oil imports averaged 10.7% of gross domestic product during 2005–2009.

The government’s development priority for the energy sector, as set out in its National Energy Policy, is to “improve the life and livelihood of all FSM citizens with aff ordable, reliable, and environmentally sound energy.” The policy sets a national renewable energy generation target of 30% by 2020 to reduce dependence on imported fuel.

Each of the four states has a separate utility corporation with its own tariff structure. None of the utilities is able to generate enough revenue to support large-scale infrastructure rehabilitation or new investments in renewable energy. The four utilities are therefore expanding renewable generation capacity solely through external assistance. An ADB loan will convert part of Yap State’s diesel-based generation to solar and wind generation.

The government of FSM sees private sector participation as one of the major drivers for the long-term development of renewable energy investment. ADB has supported this vision through a TA to strengthen the energy sector regulatory framework and enable long-term investments in renewable energy.

Technical AssistanceStrengthening the Energy Sector Regulatory Framework

Strengthened energy sector regulatory framework enabling long-term investments in renewable energy


Funding sourceADB (Technical Assistance

Special Fund) $0.50 millionExecuting agency Department of Resources

and DevelopmentStatus Completed

(Implementation period:Dec 2012–Aug 2014)


The government understands that a transparent and enforceable regulatory framework for the energy sector is indispensable for the creation of an enabling environment to attract private sector investment.

The TA project developed options to improve the existing regulatory framework and increase investments in renewable energy under new regulatory models, and designed model contracts for independent power generation.

In particular, the TA established a framework providing investment incentives for the expansion of electricity access in Chuuk State, and supported the implementation in Pohnpei State of the new legal framework for contracting with independent power producers.

Yap Renewable Energy Development Project

Reducing fossil fuel consumption in Yap State through the development of renewable energy and stronger supply-side energy effi ciency of the current electricity grid


ADB (ordinary capital resources)ADB (Asian Development Fund)Government


Executing agency Yap State Public Services Corporation

Status Ongoing(Implementation period:Jun 2013–Dec 2017)

At the time of this project’s inception, Yap State was 100% dependent on imported diesel for power generation on the main island where 65% of the population lives and an estimated 97% of households have access to electricity. In 2008, imported diesel fuel was Yap’s highest single import cost item, representing about 15% of Yap’s gross domestic product. More than 80% of the diesel fuel was used for power generation. This dependence makes Yap’s economy very vulnerable to fuel price shocks.

The Yap Renewable Energy Development Project is assisting the Yap State Public Utilities Corporation to develop renewable energy and strengthen the supply-side energy effi ciency of the current electricity grid. Fossil fuel

consumption will be reduced through the construction of about 1.4 megawatts of wind power and 300 kilowatts of grid-connected solar power, and the installation of a 1.8-megawatt diesel generator to improve the effi ciency of the current power generation facilities.

It is estimated that the project will enable Yap State to convert 22% of its power generation to renewable energy and reduce diesel consumption for power generation by 25%. This will reduce the transient impact of fl uctuating diesel prices, and thus allow power tariff s to be stabilized.

Nauru

Access to grid electricity in Nauru is universal but unreliable because the generation and distribution system of its only electric utility, the state-owned Nauru Utilities Corporation (NUC), is poorly maintained, ineffi cient, aging, and inadequate. Although ambitious targets for renewable generation have been established, Nauru remains reliant on diesel for power generation.

The NUC was established to provide “reliable, aff ordable, and sustainable energy, enabling the socioeconomic development of Nauru.” The government subsidizes the cost of diesel fuel, making Nauru’s electricity tariff s the lowest in the Pacifi c.

Previous ADB TA supported the reform of the energy sector by developing legislation for the NUC in 2011, preparing an inventory of assets, assisting in preparing a corporate strategy, and introducing a performance-management system for senior management.

ADB is implementing a TA project to support the NUC in (i) developing and implementing an asset management and maintenance plan, (ii) improving accounting systems through integration of the asset registry and the fi nancial management information system, (iii) implementing performance management systems for lower-level staff , and (iv) reviewing the organization’s corporate governance arrangements.

ADB’s program for Nauru includes a planned expansion of energy infrastructure activities, with priority given to improving the security and sustainability of the energy supply.


Electricity Supply Security and Sustainability Project

Installation of new diesel-fi red generation assets for increased reliability, security, and sustainability of power generation


ADB (Asian Development Fund)European UnionGovernment


Executing agency Ministry of Finance

Status Ongoing(Implementation period:Nov 2014–Dec 2016)

The unreliable generation and distribution system of the NUC, Nauru’s only electricity utility, results in frequent and often prolonged scheduled and unscheduled service outages, and the diversion of government funds away from more productive social and infrastructure investments toward government fuel subsidies and capital investments to support the NUC’s operations.

The Electricity Supply Security and Sustainability Project is assisting the government’s eff orts to improve the quality and reliability of electricity service by delivering and installing new diesel-fi red generators to provide reliable base-load power, and rehabilitating the structure housing the NUC’s generators.

The project is expected to result in a 20% improvement in generation effi ciency and a 50% reduction in the incidence of unscheduled power outages. This will increase the reliability, security, and sustainability of power generation in Nauru.

Technical AssistanceElectricity Supply Security and Sustainability Project Tariff and Subsidy Policy Reform

Developing recommendations in the tariff and subsidy policy reform in support of the Nauru Electricity Supply Security and Sustainability Project



Special Fund) $0.23 millionStatus Ongoing

(Implementation period:Jul 2015–Dec 2015)

The TA to the Government of Nauru will develop recommendations for tariff and subsidy policy reform for NUC. More specifi cally, it will prepare a practical policy framework and implementation schedule for tariff adjustments and subsidy delivery. The TA complements the Nauru Electricity Supply Security and Sustainability Project’s investments in the


NUC’s generation facilities and will enhance the long-term sustainability and viability of the NUC.

Tariff s in Nauru are far below cost-recovery levels and are highly distortionary. As the government pursues gradual reduction of its subsidies to the NUC, the utility’s revenues from tariff s will need to become suffi cient to maintain its operations over the long term. This TA will help the government and the NUC prepare policy options and a schedule of gradual tariff adjustments, targeting 50% cost-recovery from tariff s by December 2016, and thereafter ensuring that the NUC’s revenues from power sales are suffi cient to cover the costs of power service to its customers.

The TA will build on the TA for Regulatory and Governance Reform for Improved Water and Electricity Supply, a previous ADB TA project that developed an asset registry for the NUC. It will also complement the ongoing ADB TA for Institutional Strengthening of the NUC.

Technical AssistanceInstitutional Strengthening of the Nauru Utilities Corporation

Improving the fi nancial, operational and governance performance of the national and sole electricity utility to reduce government fuel subsidies and improve the fi scal position of the government

Technical assistance amount $0.30 millionFunding sources

ADB (Technical Assistance Special Fund)

Government $0.22 million$0.08 million

Status Ongoing(Implementation period:Apr 2014–Mar 2016)

The government identifi ed the restructuring of the utilities sector as one of the key components of Nauru’s national development agenda to restore economic security of the nation. Pursuant to the Nauru National Sustainable Development Strategy 2005–2020, which includes the improvement of utility services as a key priority, the government requested ADB’s assistance in the corporatization and commercialization of NUC.

ADB is providing technical assistance to the government to develop and implement an asset management and maintenance plan, improve accounting systems through

integration of NUC’s asset registry and its fi nancial management information system, implement performance management systems for lower-level NUC staff , and review the organization’s corporate governance arrangements.

Papua New Guinea

In Papua New Guinea (PNG), only about 10% of the population has access to electricity mostly in urban areas. Because of the low reliability of on-grid supply, users in urban areas often resort to expensive high-maintenance, low-effi ciency self-generation and back-up generation.

PNG has about 580 megawatts (MW) of installed generation capacity, of which 230 MW is from hydropower (40%), 217 MW is diesel (37%), 82 MW is gas (14%), and 53 MW is geothermal (9%). State-owned PNG Power manages 300 MW; the remaining 280 MW is supplied by the self-generation systems of industrial facilities, including mining companies, and the private sector generators supplying the main grids or rural communities.

Power is a key sector in the PNG Development Strategic Plan. The government’s electricity industry policy encourages(i) private investment in the power sector, (ii) the transfer of a range of regulatory functions from PNG Power to the government,(iii) scaling up of rural electrifi cation through government assistance, and (iv) state fi nancing of community service obligations through the establishment of an electricity trust fund.

ADB has had a long-standing engagement in the PNG energy sector through TA and loans for hydropower and transmission projects. In 2009, ADB completed a TA project for preparing the national Power Sector Development Plan. ADB also recently completed two regional TA projects with components in PNG: a TA for Promoting Energy Effi ciency in the Pacifi c helped PNG Power improve the effi ciency of the Port Moresby grid, while a TA for Promoting Access to Renewable Energy in the Pacifi c helped PNG Power step up management and effi ciency of the Rouna Hydropower Cascade, which supplies most of the energy to the Port Moresby grid.

ADB is supporting (i) the rehabilitation and upgrading of the existing main grids; (ii) the expansion of the secondary urban grids and conversion to renewable energy (hydropower); (iii) better access to rural electricity supply; (iv) implementation of the electricity industry policy; and (v) capacity building, preparation of operational guidelines, and implementation of pilot projects.


Town Electrifi cation Investment Program—Tranche 1

Providing sustainable renewable energy power generation to improve power supply in provincial urban centers




Executing agency Department of Petroleum and Energy

Status Ongoing(Implementation period:Dec 2010–Jun 2016)

In PNG, power supply to provincial urban centers is unreliable and inadequate. A relatively low percentage of urban residents are connected, and many large businesses self-generate at high cost using diesel generators.

ADB approved the Town Electrifi cation Investment Program to support the government’s strategic priorities in the energy sector. In particular, it supports the proposed development of the power sector in the provinces as detailed in state-owned PNG Power’s 10-year Power Development Plan, which provides a road map of priority hydropower developments in the provinces to reduce reliance on diesel generation and improve service delivery. It also accords with the PNG Development Strategic Plan, 2010–2030 priority of replacing diesel generation with hydropower, as well as

ADB’s prioritization of energy under the country strategy and program for PNG, 2011–2015.

The program is supporting government eff orts to improve power supply in provincial urban centers by replacing high-cost diesel power generation with sustainable renewable energy power generation. This will be achieved by (i) constructing run-of-river hydropower plants to supply provincial centers,(ii) installing transmission systems to connect provincial centers, and (iii) building capacity within PNG Power and communities.

Town Electrifi cation Investment Program—Tranche 1 (additional fi nancing)

Expanding the scale in new geographical areas to additional benefi ciaries of the Town Electrifi cation Investment Program-Tranche 1 for greater social and economic benefi ts


Funding sourcesNew ZealandGovernment


Status Proposed

The proposed additional fi nancing is intended to expand the scale of the ongoing Town Electrifi cation Investment Program (TEIP)—Tranche 1 by (i) extending the distribution grid after the construction of transmission lines through


the ongoing TEIP Tranche 1, and (ii) rehabilitating the Lake Hargy Hydropower Plant.

The distribution grid extension will connect an additional 2,500 households in the three provinces of West New Britain, Northern Province, and Autonomous Region of Bougainville.

The refurbishment of the power plant control systems and mechanical equipment of the Lake Hargy Hydropower Plant will provide an additional generation capacity of 900kW to the TEIP Tranche 1 Kimbe-Bialla Interconnection and increase the number of household benefi ciaries able to be connected to the grid.

Improved Energy Access for Rural Communities Project

Increasing access of rural communities to energy for improved livelihoods


Japan Fund for Poverty ReductionNew ZealandGovernment


Executing agency PNG Power

Status Ongoing(Implementation period:Apr 2012–Jun 2015)

In provincial centers, lack of access to an aff ordable, reliable power supply limits economic growth. In rural areas, lack of electricity contributes to poverty due to high workloads in the collection of biomass, limited opportunities for income-generating activities, negative health impacts due to poor indoor air quality from the burning of biomass and limited services at medical clinics, and limited education opportunities.

During the initial design phase of the ongoing Town Electrifi cation Investment Program Tranche 1, the government recognized that there was an opportunity to expand access to energy among rural communities along the proposed transmission lines. It therefore asked ADB to support the trialing of implementation models, such as community-based civil works contracts, in three provinces to demonstrate their impact in a range of diff erent geographical and cultural settings. The successful models would be replicated.

The Improved Energy Access for Rural Communities Project is assisting government eff orts in extending the power distribution grid to rural communities. This includes trialing community-based civil works contracts for power line construction to reduce the high costs of bringing in civil works contractors from main urban centers, create employment, provide income-generating opportunities in rural communities, and improve community ownership. The project also aims to build community capacity in the productive use of electricity. Potential issues arising from connection to the power grid will be managed by conducting training on basic electricity health and safety, operation of prepayment meters, household budgeting, basic energy-effi ciency measures, income-generating options, and access to microfi nance.


Port Moresby Power Grid Development Project

Expanding renewable energy generation and accessibility to reduce fossil fuel consumption, increase access to the Port Moresby power grid, and improve network reliability




Executing agency Independent Public Business Corporation

Status Ongoing(Implementation period:Apr 2013–Jul 2017)

The largest PNG urban center, Port Moresby, has the largest stand-alone power grid, with 47% of the national installed generation capacity and 48% of the national households connected to grid-based electricity. It runs on a combination of diesel (41%) and hydropower (59%). Rapid economic growth resulting from the fl ourishing gas and mining sector and related industries has signifi cantly increased demand, which by 2018 is anticipated to rise by 30% at an annual average of 6%.

The increased load, together with the deferred but much-needed rehabilitation of the Rouna cascade, have reduced the share of hydropower from 76% in 1994–1995 to 59% at present, and increased power outages in the Port Moresby grid. To meet projected medium- to long-term demand growth, the government is in the initial stages of assessing options for public–private partnership fi nancing for additional hydropower generation for the Port Moresby grid. In the meantime, there is an urgent need for investments in the Rouna cascade to rehabilitate the hydropower infrastructure, meet immediate demand, off set the need for further short-term investment in diesel generation, and reduce reliance on high-cost imported fossil fuels. Refurbishing existing infrastructure is considered a lower-cost option than adding diesel-generating capacity in the short term.

The project is helping the government expand renewable energy generation and extend the grid to about 3,000 low-income households in urban and peri-urban areas of Port Moresby. This will increase the access rate from 69% to 74%. The quality of the electricity supply will be improved by(i) upgrading and rehabilitating two hydropower plants, which will provide 13% of renewable energy, or 3.6% of total energy, for the Port Moresby grid; (ii) constructing a new substation; (iii) upgrading existing substations, which will reduce average outage duration and improve power supply; and (iv) building project management capacity.

Technical AssistanceImplementation of the Electricity Industry Policy

Supporting the preparation of the national electrifi cation roll-out plan to implement the Electricity Industry Policy



Special Fund) $1.0 millionExecuting agency Department of Petroleum

and EnergyStatus Ongoing

(Implementation period:Dec 2012–Dec 2015)

In PNG grid-connected power is often unreliable due to regular power outages resulting from insuffi cient generation and poorly maintained transmission and distribution systems. As a result, there is considerable self-generation and back-up generation capacity in urban areas, which is maintained and operated at high cost and low effi ciencies. Lack of capacity and poor-quality supply hold back economic growth in the main urban areas, while in the provincial areas, lack of access to aff ordable and reliable power is the limiting factor.

Investment in high-cost rural and provincial centers has been disincentivized by countrywide uniform power tariff s (regardless of generation costs) and allowing the national state-owned corporatized power utility, PNG Power, full cost-recovery. Increased access and improved quality of supply are hindered by lack of sector planning and insuffi cient allocation of community service obligations in unprofi table areas by the Energy Division of the Department of Petroleum and Energy.

ADB approved the TA to assist in the implementation of PNG’s Electricity Industry Policy, which was passed in 2011 to address the three strategic government objectives of increasing access to electricity services, improving reliability of electricity supply, and ensuring power aff ordability for consumers.

The TA is supporting the preparation of the national electrifi cation roll-out plan by introducing transparent procedures for prioritizing identifi ed projects and calculating community service obligation requirements, establishing implementation capacity within the Energy Division of the Department of Petroleum and Energy, and helping to identify and implement pilot projects.


Samoa

Samoa is heavily reliant on imported fossil fuels and thus highly vulnerable to rising international oil prices. The Electricity Act, 2010 allows state-owned Electric Power Corporation (EPC) to pass on fuel costs directly to consumers. Average electricity tariff s are therefore high.

About 95% of households have access to grid electricity, while the rest are connected to small diesel generators or solar systems. In 2012, Samoa had a total installed grid-connected power capacity of about 42 MW from diesel generators (30 MW), hydropower plants (11 MW), a biofuel power plant (1 MW), and small distributed solar plants (a few kilowatts).

The EPC’s Investment Plan, 2008–2015 aims to improve the capacity of the power sector to provide sustainable and reliable electricity services by (i) improving its collection performance, (ii) removing transmission obstacles to improve reliability and quality of supply, and (iii) increasing capacity requirements to meet growing peak demands. In the longer term it aims to reduce Samoa’s reliance on imported fuels and exposure to fl uctuating international fuel prices by promoting clean and renewable energy using hydro, sun, wind, biogas, and waste-to-energy generation.

ADB has solid experience in the power sector in Samoa. In 2007, ADB approved the ongoing Power Sector Expansion Project. This project is implementing transmission generation and asset acquisition projects to assist EPC meet increasing power demand, improving the utility’s fi nancial performance and operational effi ciency, and establishing eff ective regulation of the power sector. In 2013, ADB approved the ongoing Renewable Energy Development and Power Sector Rehabilitation Project to repair cyclone-damaged hydropower plants, and construct and install additional hydropower capacity for greater energy security and sustainability.

The government’s Strategy for the Development of Samoa, 2012–2016; its Energy Sector Plan, 2013–2016; and the EPC’s Corporate Plan, 2013–2015 all emphasize developing indigenous and renewable energy resources to reduce the economy’s exposure to foreign exchange fl uctuations and fuel price increases. ADB’s country operations business plan, 2015–2017 for Samoa makes energy a priority area of support and sets a primary goal of reducing the country’s dependence on imported fossil fuels by generating power from renewable energy sources.

Power Sector Expansion Project

Improving the quality, reliability, and cost-eff ectiveness of the power supply by improving the fi nancial performance and operational effi ciency of the state-owned power utility, supporting its investment plan, and establishing eff ective regulation of the power sector


ADB (Asian Development Fund)Japan Bank for International

CooperationAustraliaGovernment

$42.00 million



Status Ongoing(Implementation period:Nov 2007–Dec 2016)

In Samoa, the poor performance of EPC, the state-owned power utility, has become a hindrance to economic growth, with high system losses and voltage drops resulting in unreliable and poor-quality electricity supply.

Peak demand is growing at about 3% annually in the medium term. EPC’s challenge is therefore to improve its operational effi ciency and fi nancial performance while ensuring availability of suffi cient generation and transmission capacity to provide a reliable and high-quality electricity supply. To meet this challenge, the EPC adopted the Investment Plan, 2008–2015, which aims to improve the sustainability and reliability of electricity services.

In support of the Investment Plan, 2008–2015, ADB approved the Power Sector Expansion Project, consisting of investment and project management components. The project is helping improve the quality, reliability, and cost-eff ectiveness of the EPC’s power supply by (i) supporting the EPC’s investment plan to meet growing demand through the implementation of 11 transmission projects, four generation projects, one system control and data acquisition project, and one voltage, current, and stream-fl ow-measurement equipment acquisition project; (ii) strengthening the operational effi ciency and fi nancial performance of EPC; (iii) establishing eff ective regulation of the power sector; (iv) developing a demand-side management strategy to promote energy effi ciency and conservation; and (v) developing clean energy resources through the establishment of a clean energy fund, a Clean Development Mechanism subfund, and a designated national authority.


The project is also supporting the EPC’s underground cabling program for the protection of the transmission network from cyclones, and assisting in the government’s eff orts to supply and install prepayment meters and provide effi cient project management.

Renewable Energy Development and Power Sector Rehabilitation Project

Postcyclone rehabilitation, construction, and installation of hydropower plants for greater energy security and sustainability


ADB (Asian Development Fund)Multi-Donor Clean Energy FundGovernment



Status Ongoing(Implementation period:Nov 2013–Jun 2019)

In 2012, Sanoa’s total fuel imports amounted to about 95 million liters, or 10% of its total gross domestic product. For the EPC, imported fuel costs represent 74% of total generation costs and 51% of overall costs. This results in a high average electricity tariff as EPC’s fuel costs are passed through to consumers.

Samoa is also vulnerable to natural disasters and the eff ects of climate change. On 13 December 2012, Cyclone Evan made landfall in Upolu, seriously damaging the island’s power generation and distribution systems.

The project is assisting the government’s eff orts to increase power generation from renewable sources, reduce Samoa’s reliance on imported fossil fuels for power generation, and decrease the cost of electricity or minimize fl uctuations due to diesel fuel price increases. It also includes the rehabilitation of damage to the power sector by Cyclone Evan and will strengthen the power sector’s resilience to future natural disasters by constructing, installing, and rehabilitating small hydropower plants to provide a secure, sustainable, and clean source of electricity. The EPC’s operation and maintenance programs will be enhanced with the aid of a capacity building and knowledge-transfer program that will last for up to 2 years after the hydropower plants are commissioned. The new and rehabilitated hydropower capacity will save about 3.6 million liters of diesel per year.

Solomon Islands

All grid-connected power generation in Solomon Islands is diesel-generated. The supply and maintenance of current solar household systems is unsustainable. Overreliance on diesel for power generation has resulted in one of the highest electricity tariff s in the Pacifi c.

The Solomon Islands are divided into nine provinces with approximately 80% of the population residing in rural areas. Economic development and infrastructure are concentrated in the national capital, Honiara, which has about 13% of the national population but 89% of the country’s power generation capacity.

Grid-connected electricity is generated and supplied by state-owned Solomon Islands Electricity Authority. About 12% of the population in the national capital of Honiara and eight isolated provincial centers on separate islands (Auki, Buala, Gizo, Kirakira, Lata, Malu’u, Noro-Munda, and Tulagi) has access to the grid. The overall access rate in the Honiara urban area is 64%; but in the rest of the country only 6% have access, and in fi ve of the nine provinces less than 4% have access. The dispersed nature of the population in diffi cult-to-reach locations means that extension of the power grid to provide


electricity service is often infeasible. In such circumstances, off -grid supply investments are a viable alternative.

The Solomon Islands National Development Strategy, 2011–2020 prioritizes renewable energy and increased electricity access. The Solomon Islands National Energy Policy Framework, 2007 and the Draft National Energy Policy Framework, 2013, both prioritize renewable energy. The draft Solomon Islands Renewable Energy Investment Plan, 2013 outlines key investments for renewable energy.

ADB’s country program seeks to reduce poverty in line with the government’s National Development Strategy by promoting inclusive, environmentally sustainable economic growth through assistance in four core sectors, including energy.

The program recognizes the importance of access to clean and aff ordable power to allow producers of commodities and other goods on the outer islands to diversify production and improve livelihoods. ADB support will complement the energy sector reform eff orts of other partners by developing sustainable off -grid power services. The pilot Provincial Renewable Energy Project, approved in 2014, will build a small hydropower generator and increase access to power by expanding the country’s distribution grids. A solar power development project is planned for 2016.

Provincial Renewable Energy Project

Construction of the Fiu River Hydropower Plant to replace diesel generation in Auki, and extension of the distribution grid to peri-urban households for increased supply of more reliable and cleaner power


Funding sourcesADB (Special Funds Resources) Government


Executing agency Ministry of Mines, Energy and Rural Electrifi cation

Status Ongoing(Implementation period:May 2014–Mar 2022)

The province of Malaita has about 25% of the national population, but only about 2% of total generation capacity. Auki, the main provincial center of Malaita Province, is supplied with high-cost, unreliable diesel power generation by state-owned corporatized utility, Solomon Islands Electricity Authority (SIEA). Auki is SIEA’s third-largest load center, with 274 residential customers and 335 commercial customers.

With only about 3% of the population of Malaita Province having access to grid-connected power, more than three-quarters of households use kerosene lamps for lighting and wood for cooking. The high cost of electricity and the limited reach of the distribution grid are slowing economic growth by curbing agriculture and tourism in the provincial centers, including Auki. Reasons for the poor electricity service include (i) the lack of incentives for SIEA to expand the distribution network due to high cost of diesel power generation in the provincial centers where generation and supply costs exceed the national tariff ; (ii) lack of government community service obligation funding for grid extensions; (iii) a diffi cult geography and small, dispersed pockets of population; and (iv) low capacity to pay in some areas.

The Provincial Renewable Energy Project is the fi rst utility-scale renewable energy project in Solomon Islands and a priority investment in the Solomon Islands Infrastructure Investment Plan. The project will develop renewable power generation and supply for provincial centers.

The project is helping the SIEA construct the Fiu River Hydropower Plant to displace diesel generation in Auki, and extend the distribution grid to peri-urban households to increase the supply of more reliable and cleaner power to Auki.

Solar Development Project

Constructing solar power plants and promoting private-sector-led solar household systems installation and maintenance for more secure, accessible, and sustainable power generation and supply


ADB (Asian Development Fund) Strategic Climate FundGovernment


Executing agency Ministry of Finance and Treasury

Status Proposed

The complete reliance of SIEA on diesel to fuel its grid-connected power generation results in high power tariff s. This, together with the limited reach of the distribution grid, is impeding economic growth, particularly in the agriculture and tourism sectors. Options for grid extension are limited by the dispersed nature of the population and physical access diffi culties.


A signifi cant number of solar household systems have been given to households free of charge as part of development partner supported projects or politically funded distribution schemes. The units are not maintained adequately, fail in a relatively short period, and do not deliver anticipated development impacts. Reasons for poor performance include (i) lack of private sector involvement in the supply and maintenance of the solar home system equipment, (ii) lack of standards for solar equipment, (iii) absence of a battery recycling system, (iv) lack of trained technicians for system maintenance, (v) lack of incentives for households to properly maintain equipment due to expectations of free replacement, (vi) intermittent household incomes for regular maintenance payments for household solar systems, and (vii) low economies of scale in servicing dispersed populations.

The proposed project includes (i) construction and installation of grid-connected solar plants on the SIEA grid, which will be owned and operated by SIEA; (ii) design and roll-out by competitive bidding of a private-sector-led fee-for-service model to install, own, operate, and maintain solar systems for rural households; (iii) development of solar standards; (iv) training of the private sector in business management; (v) training of households in income generation using electricity, safe use of electricity, and household budget management. SIEA staff will be trained in the operation and maintenance of solar plants, including grid integration and the preparation of a grid integration analysis. The experience gained will establish the enabling environment for subsequent scaling up of grid-connected solar power.

Tonga

In Tonga, 89% of households have access to electricity. More than 90% of grid-connected electricity demand is supplied by generators fueled by imported diesel. Electricity tariff s are high because of the high cost of petroleum-based fuels and the expense of transporting these fuels to Tonga’s remote location and between its many islands.

The government plans to improve energy effi ciency and energy conservation by reducing the use of imported fuels and promoting indigenous renewable resources for power generation. The Renewable Energy Act, 2008 promotes the use of renewable energy technologies to reduce Tonga’s high cost of electricity and extreme vulnerability to oil price increases. The 2010–2020 Tonga Energy Road Map for the general development, reform, and improvement of

the energy sector targets obtaining 50% of electricity from renewable sources by 2020 and halving diesel consumption.

Tonga Power is responsible for delivering power and operating and maintaining the country’s four main grids—one each for the four main island groups of Ha’apai, Niuas (Niuatoputapu and Niuafo’ou), Tongatapu, and Vava’u.

ADB supports the promotion of renewable energy, energy effi ciency, and climate change resilience and adaptation with the ongoing Cyclone Ian Recovery Project and the Outer Island Renewable Energy Project.

Cyclone Ian Recovery Project

Postcyclone reconstruction, upgrading, and climate- and disaster-proofi ng of the Ha’apai electricity grid network


ADB (Disaster Response Facility)New ZealandGovernment


Executing agency Ministry of Finance and National Planning

Status Ongoing(Implementation period:May 2014–Jun 2018)

Tonga is a country of 176 islands divided into four groups. It has been ranked second only to Vanuatu among the countries most at risk from natural disasters. Tonga is already experiencing the eff ects of climate change, which have increased its exposure to disasters caused by climatic events such as tropical cyclones and storm surges. On 11 January 2014, Category 5 Cyclone Ian, the most powerful storm ever recorded in Tonga’s history, passed directly over the northeast island group of Ha’apai, extensively damaging 90%–95% of its electricity network leaving it almost completely without power.

ADB’s program for Tonga promotes the use of renewable energy and the integration of environmental sustainability, disaster risk management, and climate change adaptation in national policy planning and implementation. ADB approved the Cyclone Ian Recovery Project pursuant to ADB’s Disaster and Emergency Assistance Policy to render assistance in the postcyclone reconstruction in the power and education sectors where ADB has ongoing projects that would allow the rapid inception, scaling up, and implementation of the project.


The project is supporting the government’s eff orts to reconstruct, upgrade, and climate- and disaster-proof the damaged electricity grid network and school buildings and facilities in Ha’apai. It is applying the “build back better” principle for improved climate and disaster resilience to fully restore electricity supply in Ha’apai and restore education services to pre-Cyclone Ian levels in schools.

Outer Island Renewable Energy Project

Construction of solar power systems in nine outer islands for more reliable, secure, clean, and sustainable power generation that is less dependent on imported fossil fuels


ADB (Special Funds Resources)AustraliaGovernment


Executing agency Ministry of Finance and National Planning

Status Ongoing(Implementation period:Jun 2013–Jun 2020)

In 2011, the country consumed about 15 million liters of diesel for power generation, representing about 10% of total gross domestic product and about 15% of total imports. More than 90% of Tonga’s grid-connected electricity demand supplied by generators fueled by imported diesel.

ADB’s program for Tonga sets a primary goal of reducing the country’s reliance on imported fossil fuels by implementing energy effi ciency and conservation measures, including power generation from indigenous renewable energy sources.

The project is supporting the government’s eff orts to connect a total of 1.25 megawatts of distributed solar photovoltaic capacity to existing distribution networks in nine outer islands of Tonga. The project activities also include drafting the fi nal designs of equipment, undertaking the bidding process, conducting training on the operation and maintenance of solar equipment, and providing effi cient project implementation and management services for at least 5 years after project completion. The solar power capacity to be provided by the project will save about 0.48 million liters of diesel per year.

Vanuatu

Only about 33% of households in Vanuatu have access to electricity, and most of them are in urban areas. About 64% of households are connected to the grid, while the rest rely on solar systems or diesel generators. The cost of electricity is high due to the heavy reliance on imported diesel for power generation. The quality of supply is high, partly because the electricity grids are operated by the private sector.

The government’s strategic planning for the energy sector is embodied in the Priority and Action Agenda, 2006–2015; the action document Planning Long, Acting Short, 2009–2012; and the Vanuatu National Energy Road Map, 2013–2020.

The Priority and Action Agenda, 2006–2015 prioritizes reducing the cost of services, extending rural electrifi cation, and promoting the use of renewable energy. In Planning Long, Acting Short, 2009–2012, the government aims to make electricity more widely available at a fair price, and encourage investment in renewable electricity. The National Energy Road Map, 2013–2020 sets the direction and framework, and outlines the priority objectives and activities for the development of the energy sector.

ADB’s program for Vanuatu aligns with the government’s Priorities and Action Agenda. ADB’s energy sector interventions support greater energy effi ciency and investment in renewable energy, including the proposed expansion of distribution grids and development of low-cost hydropower generation to deliver energy to more households and businesses in the provincial centers of Vanuatu.

Energy Access Project

Expanding existing distribution grids and developing low-cost renewable hydropower energy for increased access to electricity


ADB (Asian Development Fund)Strategic Climate FundGovernment


Executing agency Ministry of Finance and Economic Management

Status Proposed


The energy sector of Vanuatu is characterized by limited access to electricity and high power tariff s. The government plans to provide additional support to on-grid renewable energy to increase energy access to households and businesses in the provincial centers.

The proposed project aims to increase energy access to households and businesses in the provincial centers through

increased supply of aff ordable grid-connected electricity in targeted provincial centers. It will expand existing distribution grids and develop low-cost renewable energy generation from hydropower through the construction of the 400-kilowatt run-of-river Brenwe Hydropower Plant. The project will also establish eff ective project management through capacity building and support to the extension of electricity distribution grids and operation of the Brenwe Hydropower Plant.

For more information, contact:

Robert Guild Anthony Maxwell J. Michael Trainor Woo Yul LeeDirector Senior Energy Specialist Energy Specialist Energy [email protected] [email protected] [email protected] [email protected]

Syed Hussain Haider Jude Kohlhase Fred RamosInfrastructure Specialist Infrastructure Specialist Project Offi cer (Energy)[email protected] [email protected] [email protected]

ADB Pacifi c Department

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About the Pacifi c Energy Update 2015The Asian Development Bank (ADB) is working to assist in the development of the energy sector in 14 Pacifi c developing member countries (DMCs) through technical assistance, loan, and grant fi nancing. ADB provides support for the rehabilitation and expansion of power sector infrastructure, improvement of electricity access rates, expansion of renewable energy generation, and improvement of end-use effi ciency. ADB is currently implementing energy projects in ten Pacifi c DMCs—the Cook Islands, Fiji, the Marshall Islands, the Federated States of Micronesia, Nauru, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu. This document provides an update of ongoing, proposed, and recently completed Pacifi c energy projects and assistance for 2015.

About the Asian Development BankADB’s vision is an Asia and Pacifi c region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to the majority of the world’s poor. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

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