Maldives: Preparing Outer Islands for Sustainable Energy Development

Sovereign Project | 46122-001

Summary

The proposed Outer Islands for Sustainable Energy Development Project is part of the Scaling Up Renewable Energy Program (SREP) to reduce diesel dependence in the Maldives, improve the electricity sector, and address key macroeconomic issues through tapping into indigenous and cheaper sources of electricity.

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Project Name Preparing Outer Islands for Sustainable Energy Development
Project Number 46122-001
Country Maldives
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8268-MLD: Preparing Outer Islands for Sustainable Energy Development
Technical Assistance Special Fund US$ 400,000.00
Strategic Climate Fund US$ 700,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector Energy - Conventional energy generation - Energy efficiency and conservation
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed Outer Islands for Sustainable Energy Development Project is part of the Scaling Up Renewable Energy Program (SREP) to reduce diesel dependence in the Maldives, improve the electricity sector, and address key macroeconomic issues through tapping into indigenous and cheaper sources of electricity.
Project Rationale and Linkage to Country/Regional Strategy

The Maldives, located 750 km south west of Sri Lanka, consists of 26 atolls with a total land area of about 300 sq. km. Nearly half the country's population live on the outer islands. The Maldives has about 100 MW of installed diesel generation capacity on the inhabited islands and another 100 MW on the tourism islands. Each outer island is electrified with its own diesel powered mini grid system and while there is 100% access to electricity, supply is not reliable and expensive. The cost of diesel power is unaffordable at 30-70 cents/kWh and requires government subsidies of about $25 million annually. In 2011, Maldives spent $261 million to import 316 thousand tons of oil equivalent (toe) of diesel or nearly 7% of GDP on fuel imports for electricity generation. Electricity sector subsidies are one of four identified areas for government expenditure management. The 100% diesel dependence of Maldives also makes its carbon emissions per unit of electricity among the highest in the region.

The solution to the above problem is to develop renewable energy based generation, the cost of which is expected to be significantly lower than existing diesel based power generation. The transition to renewable energy based systems has sound economic rationale. The Government's effort to increase electricity production from indigenous sources, including solar and wind power, to enhance energy security will reduce the pressure on the balance of payments and improve the fiscal position. The development of renewable energy projects is in line with the Government's goal of going carbon neutral by 2020. To support the Government's goal, the SREP Investment Plan over 2013-2017 was endorsed by the SREP sub-committee on 31 October 2012 to initiate the transformation of the energy sector. Based on the priority requirements identified during the SREP investment planning process, the government developed an investment plan to initiate the transformation from 100% diesel based power systems to renewable energy systems by focusing on about 40 outer islands between 2013-2017 through a public-private partnership approach. SREP funds would be channeled through multi-lateral development banks and would be leveraged with financing from other sources including the private sector.

Private sector development in the renewable energy in the Maldives is constrained by investment perception, nascent regulatory structure and inadequate public sector infrastructure to suitably integrate private sector renewable energy. The electricity sector is regulated by the Maldives Energy Authority that has received support on the energy sector regulatory framework from World Bank and capacity building on technical codes and tariff mechanisms under ADB CDTA. Future areas of support include coordination on model power purchase agreements, identification of sites for private investment, structuring of business models including bundling of outer islands for scale benefits and coordinating on the private sector risk guarantees.

The Project is aligned to ADB's Strategy 2020 of supporting sustainable energy growth, Energy Policy 2009 and is included in the Maldives COBP for 2013-2015. Based on the government's investment plan for the outer islands and the characteristics of the electricity systems, a sector lending approach is proposed to be adopted. Review of policies, institutions, and coordination with other donors would be undertaken during the preparation phase including appraisal for representative sub-projects.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation The TA was completed in 31 December 2014. The final report was submitted and is being finalized. The ensuing grant was approved 29 September 2014 and was declared effective on 19 Jnauary 2015.
Responsible ADB Officer Priyantha D.C. Wijayatunga
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Ministry of Environment and EnergyAmeenee Magu, Maafannu,
Male', 20392
Republic of Maldives
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 10 Dec 2012
Last Review Mission -
Last PDS Update 19 Mar 2015

TA 8268-MLD

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Dec 2012 11 Jan 2013 11 Jan 2013 31 Mar 2014 31 Jul 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
400,000.00 700,000.00 0.00 0.00 0.00 0.00 1,100,000.00 10 Dec 2012 927,567.89
Title Document Type Document Date
Preparing Outer Islands for Sustainable Energy Development Technical Assistance Reports Jun 2013
Preparing Outer Islands for Sustainable Energy Development Initial Poverty and Social Analysis Jun 2013

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