Pacific Fuel Demand Is High But Alternatives Are in Sight - ADB

MANILA, PHILIPPINES – The Pacific region’s primary energy demand is projected to more than double from 3.6 million tons of oil equivalent in 2010 to 8.8 tons of oil equivalent in 2035 at an annual rate of 3.7%, the Asian Development Bank (ADB) says in its latest Energy Outlook for Asia and the Pacific, which notes that while these high energy demands present significant challenges, energy efficiency and renewable energy options hold great promise.

“Reliance on imported fuels for power generation hinders development in the Pacific, where electricity prices are among the highest in the world and, on average, only around 30% of households have access to electricity,” said Robert Guild, Director of the Transport, Energy and Natural Resources division in ADB’s Pacific Department.

The new ADB report aims to identify policy, social, infrastructure, and technology issues that need to be addressed to meet future energy requirements of member countries and examines the impact of taking action versus operating with “business as usual” scenarios.

It found Papua New Guinea (PNG) will account for 75.8% of total primary energy demand in the Pacific by 2035 and highlights the need for PNG to maintain its focus on hydro generation for electricity, rather than increasing fossil fuel electricity generation. PNG’s investment environment also needs to be improved, the report says, through regulatory and administrative processes that enhance accountability and transparency of the investment process.

Fiji, meanwhile, is endowed with hydro resources, but still partially relies on expensive imported fossil fuels. The Outlook warns that this dependence on imported oil makes the country vulnerable to international price fluctuations.

The report focuses on Cook Islands, Kiribati, the Marshall Islands, the Federated States of Micronesia, Nauru, Palau, Samoa, Solomon Islands, Tonga and Vanuatu as a group, as none of these islands possess proven reserves of coal, oil, and gas. Solar power development, wind energy, and in some cases hydro development are named as energy sources that may be further tapped for electricity generation. Solomon Islands has the biggest land area in the group, and the report notes this feature boosts its potential for hydro.

ADB is a major financier of renewable energy and energy efficiency improvements for the power sector in the Pacific, with an existing public sector financing portfolio in renewable energy and energy efficiency of $187.5 million ($169.5 in loans or grants and $18 million in technical assistance grants) and a projected portfolio from 2013-2015 of $270 million. This includes hydro development in Solomon Islands, solar development in Cook Islands, Samoa, and Tonga, and wind development in Micronesia.