Energy / Conventional energy generation - Renewable energy generation - solar - Renewable energy generation - wind

Yap (population 11,400) is one of four states within FSM (population 107,000). Yap State is nearly entirely dependent on imported diesel for power generation on the main island (Yap Proper). Power generation is supplied by Yap State Public Service Corporation (YSPSC) which is a 100% state owned corporatized utility. Approximately 65% of the population lives on the main island (Yap Proper), while the remainder lives on outer islands. There is a single power grid on Yap Proper with an installed capacity of 8.3MW (peak load 2.4MW) and about 1,500 residential customers. Access to electricity is high on Yap Proper (estimated 97%). Each state in FSM has a separate utility corporation with separate tariff structures. Due to remoteness and high diesel transportation costs, power tariffs are high and the Yap economy is highly vulnerable to fuel price shocks. In 2010 average power tariff was $0.45/kWh (generation cost $0.32/kWh). Power tariffs allow for full cost recovery for YSPSC; however, tariff reform is required to ensure YSPSC can continue to operate on a sustainable basis, while reduction in generation costs is needed to moderate the impact on YSPSC's customers. In Yap, about half of all imported fuel is used for power generation. In 2005 and 2006, the value of diesel imported to Yap for power generation exceeded the total value of exports. In 2008, diesel imported for power generation represented 17.6% of all imports by value to Yap.

The power supply in Yap is relatively stable, with adequate capacity, however oversized diesel generators have resulted in low generation efficiencies. Due to low terrain and small catchments, Yap does not have potential for hydropower, however initial assessments indicate financially viable wind and solar resources . There is currently no wind power generation in Yap, however there are a number of community solar power mini-grids established in the outer islands which are managed by YSPSC. While household consumption is low due to predominance of traditional buildings, power usage by Government offices is relatively high . Through improved supply side energy efficiency and conversion to renewable energy under the Project, it is estimated that Yap can convert 28% of power generation to renewable energy and reduce diesel consumption for power generation by 32%. The Project is supporting (i) development of grid-connected wind power generation (originally about 1.5MW, but now revised down to 875kW) on Yap Proper, (ii) development of grid-connected solar power (about 0.3MW) on Yap Proper, (iii) improved generation efficiencies of the existing diesel generation through a modernized integration and control system appropriately-sized diesel generators to be operated during low demand periods, and (iv) capacity building within YSPSC, through targeted training and development of required systems, tentatively to include procurement, financial management, fiduciary controls, asset management and system operation management.

The project is in line with the (i) ADB''s country operations business plan for FSM, which prioritizes energy as a key area of support, and (ii) FSM''s energy policies that set a national renewable energy generation target of 30% by 2020. All components of the Project are listed in the Yap State Energy Action Plan as priority activities.

--Contracts for all packages under Loan 3004-3005-FSM, viz (i) design/supervision consultants; (ii) supply of solar panels; (iii) supply and installation of diesel generators; (iv) wind and integration & control system have all been awarded and project is closing on 31 December 2018. Safeguards Monitoring Reports and Audited Project Financial and Audited Financial Statements are complied with. Final commissioning of both wind and integration control packages was successful and completed in first quarter of 2018.

Project is on-track.

PCR mission is proposed to be fielded first or 2nd quarter of 2019.

1. YSPSC installs wind power generation

2. YSPSC expands solar power generation

3. YSPSC improves efficiencies of diesel power generation

4. Efficient project management services

1. Complied.

2. Complied.

3. Complied.

4. Complied.

The project has been classified as category B for involuntary resettlement and category C for indigenous peoples following ADB's

Safeguard Policy Statement. The project does not involve physical displacement of people or structures. There will be no impact on distinct and vulnerable indigenous peoples. The wind farm to be built on Kabul and Madeqdeq ridges, however, requires acquisition of 7.5 hectares of land. A resettlement plan has been prepared. YSPSC will update and finalize the plan during project implementation after detailed design and survey of the wind farm. YSPSC will coordinate with the state government, the Division of Land Resources, and other relevant government and nongovernment agencies to implement and monitor the land acquisition and compensation

activities.