ADB Grant to Help Maldives Tap Solar Power, Cut High Fuel Bill | Asian Development Bank

ADB Grant to Help Maldives Tap Solar Power, Cut High Fuel Bill

News from Country Offices | 1 October 2014

MANILA, PHILIPPINES – The Asian Development Bank (ADB) is providing a $38 million grant and allocating another $12 million grant from the ADB-administered Strategic Climate Fund to help the Maldives tap its ample renewable power sources and reduce its reliance on costly, polluting diesel oil-fuelled electricity.

“The country’s total dependence on diesel fuel imports for power generation is putting a heavy burden on its finances and its environment. The cost of electricity, the cost of subsidies, and the level of carbon emissions are among the highest in the region per unit of electricity generated,” said Priyantha Wijayatunga, Principal Energy Specialist with ADB’s South Asia Department. “Our assistance will support a project to install new hybrid electricity systems that will provide cleaner, more reliable electricity, and reduce the current cost burden.”

In 2012, the Maldives spent more than $470 million on oil imports, a major part of it for power generation. Power subsidies exceeded $40 million a year in 2012, putting a strain on the country’s balance of payments and fiscal positions. Inhabited islands each have their own electricity generating and distribution systems, which are costly to run and often not particularly efficient.

The project will install solar-diesel hybrid grids on nearly 160 islands in four phases, with five islands identified as pilot sites—S.Addu, B.Goidhoo, Th. Buruni, Ga. Vilingili, and Lh. Khurendhoo. Training and other related skills development support will also be given to staff of the Ministry of Environment and Energy and the main electricity utility companies State Electricity Company, and FENAKA Corporation Ltd. for the hybrid rollouts. Replacing inefficient diesel generators and improving distribution systems are expected to cut carbon dioxide emissions by about 40,000 tons a year, against a baseline level.

ADB, which has been a major investor in the country’s energy sector since 1985, is also considering support to private sector investments for solar power development on some larger islands including through preparing the power systems on these islands to absorb large volumes of intermittent renewable energy under the project.

The new project is designed to complement investments in the power sector planned by other donor agencies, and has drawn cofinancing support of $50 million from the European Investment Bank and $10 million from the Islamic Development Bank. The project is expected to be finished by the end of 2019.