Developing Affordable Renewable Energy for Remote Pacific Islands

MANILA, PHILIPPINES (9 July 2003) - ADB has approved a technical assistance (TA) grant for US$600,000 to develop a renewable energy and energy efficiency program in remote areas of two Pacific island countries.

The grant comes from the Danish Cooperation Fund for Renewable Energy and Energy Efficiency in Rural Areas and Market Towns, financed by the Government of Denmark.

The TA will develop a policy, legal, and institutional framework in the Cook Islands and the Federated States of Micronesia to help establish a sustainable private sector-based energy market in developing Pacific islands.

It will also help to mobilize external financing by building a pipeline of potential renewable energy and energy efficiency projects.

"Over two years, the TA will take a systematic and in-depth approach in two countries in order to address most of the constraints to developing renewable energy and energy efficiency," says Daniele Ponzi, an ADB Senior Economist (Environment).

"But the other Pacific developing member countries will benefit in terms of sharing information, best practices, lessons learned, and innovative approaches."

An estimated 70% of Pacific islanders have no access to electricity, with remote rural areas hardest hit.

These regions tend to have a heavy dependence on expensive fossil fuels for power generation and transportation. Thus, the cost of energy in remote islands is three to four times that in capital cities, and higher than in neighboring industrialized countries such as Australia and New Zealand.

"The cost of providing energy is high in areas where consumers are dispersed and domestic markets are small," Mr. Ponzi explains.

"Renewable energy and better energy efficiency offer such remote communities a major avenue toward meeting their energy requirements."

Potential sources of renewable energy in the Pacific island countries include hydropower, wind, solar, biofuel, geothermal, ocean thermal, and wave/tidal energy.

One of the main challenges for a developing country is to increase energy availability in a cost-effective, environmentally sound and affordable way.

"The technology for renewable energy is already well developed - we now need to focus on removing barriers and allowing fair competition," Mr. Ponzi adds.

Since 2001, ADB, with cofinancing from the Government of the Netherlands, has been carrying out a technical assistance for promotion of renewable energy, energy efficiency, and greenhouse gas abatement projects (PREGA). Samoa is the PREGA participating country for the Pacific.

Other funding agencies have provided substantial technical and financial support to promote renewable energy and energy efficiency in the Pacific. But this has tended to be fragmented and uncoordinated.

The new TA in the Pacific will build on previous experience to work toward significantly increasing Pacific islands' rural community access to commercially viable energy services.

The total cost of the TA is estimated at about $750,000, of which the two participating countries will provide $150,000 equivalent. The assistance is due for completion around May 2005.

Read the full TA report.