Solomon Islands : Provincial Renewable Energy Project

Project Name

Provincial Renewable Energy Project

Project Number

46014-002

Country / Economy

• Solomon Islands

Project Status

Closed

Project Type / Modality of Assistance

• Grant
• Loan

Source of Funding / Amount

Grant 0386-SOL: Provincial Renewable Energy Project

Source	Amount
Asian Development Fund	US$ 6.00 million

Loan 3127-SOL: Provincial Renewable Energy Project

Source	Amount
Asian Development Fund	US$ 6.00 million

Strategic Agendas

• Environmentally sustainable growth
• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming
• Governance and capacity development
• Private sector development

Sector / Subsector

• Energy / Renewable energy generation - small hydro

Gender

Effective gender mainstreaming

Description

The impact of the Project will be improved economic conditions in provincial centers. The outcome of the Project will be an increased supply of reliable, cleaner power to provincial centers by SIEA. The outputs of the Project will be (i) hydropower plants put into operation by SIEA, (ii) extension of distribution by SIEA , (iii) capacity building undertaken for implementing agency and project beneficiaries, and (iv) the Project Management Unit (PMU) renders efficient project management services.

Project Rationale and Linkage to Country/Regional Strategy

The proposed Outer Island Renewable Energy Project (Project) will support development of renewable energy in the Solomon Islands. It focuses on the outer islands where it will decrease the cost of power supply and increase access to power. This will be achieved through the development of low cost hydropower generation in provincial centers and through expansion of existing distribution grids .

Electricity is generated and supplied by the Solomon Islands Electricity Authority (SIEA), which is a state-owned electricity utility that has the sole mandate to provide power across the country, including the national capital (Honiara) and eight outstations (Auki, Buala, Gizo, Kirakira, Lata, Malu'u, Noro-Munda, and Tulagi). Installed capacity in Honiara is 26 MW (peak load 14.3 MW) and combined installed generation capacity in the outer islands is 4MW. Provision of electricity services is concentrated on Honiara in Guadalcanal. While 87% of the installed power generation is located in Honiara, Guadalcanal accounts for only 12% of the population (total population 553,000). Electricity in the outstations is 100% diesel generated with the exception of mini-hydropower operated in Malu'u (0.04 MW) and Buala (0.15 MW). There is currently no private sector participation in power generation.

Due to the reliance on diesel generation, power tariffs in Solomon Islands are high. SIEA charges a national uniform tariff, which in 2010 was $0.59 c/kWh to residential customers and $0.63/kWh to commercial customers. Due to the high cost of transporting diesel to the outstations, generation costs in the outer islands are considerably higher than Honiara. Generation costs in the outer islands are significantly higher than in Honiara ($0.53 in Honiara compared to $0.94 in Lata). The high cost of power generation in the outer islands has a negative financial impact to SIEA's operations and provides a disincentive to the corporatized SIEA to expand the distribution network. Nationwide electricity is supplied to approximately 14% of the population . With few exceptions, electrification is confined to Honiara and eight provincial centers. Outside of these urban centers, less than 5% of the rural population has access to electricity through a small number of off grid and individual household solar systems. Access rates in Guadalcanal (Honiara) is 20% and Western Province is 17%, however access rates in the remaining provinces is extremely low, for example Malaita 3%, Temotu 3%, Choiseul 2%. The current electricity tariff does not allow full cost recovery for SIEA. As a result investment in maintenance and expansion of core power infrastructure has been lacking. Revenue collection is relatively low (estimated 80-90%), however SIEA is undertaking an ambitious effort to install prepayment meters on all consumers in parallel with an overhaul of the billing, accounting, and data management systems.

Existing off-grid renewable energy projects in Solomon Islands include a range of household solar system programs and a small number of community based pico-hydropower schemes operating located in remote villages. Wind monitoring is also proposed at target sites. Grid connected renewable energy is limited to mini-hydropower at Buala and Malu'u and a SIEA trial to replace diesel with coconut oil in the second largest outstation (Auki, Malaita). The Tina River Hydropower Project (14 MW) is currently being assessed to supply the Honiara grid. Previous technical analysis has identified excellent hydropower resources in the outer islands near demand load centers. It is estimated that hydropower could deliver levelized cost of energy generation of 6-12 c/kWh to a number of outstations.

The proposed project will not only contribute to SIEA's financial restructuring through reducing financial losses in the outstations, but also significantly increase access to electricity in the outer islands. The proposed project is also in line with the ADB's country partnership strategy (CPS) 2012-2016 for Solomon Islands, which prioritizes energy as a key area of support. The CPS supports the Solomon Islands National Development Strategy 2011-2020, which prioritizes development of reliable and affordable power supply in urban centers through renewable energy and prioritizes increasing electricity access. The proposed project supports the Solomon Islands National Energy Policy Framework, 2007 which prioritizes development of renewable energy for urban areas.

Impact

Increased economic activity in Auki, Malaita Province.

Project Outcome

Description of Outcome

SIEA has increased supply of more reliable and cleaner power to Auki, Malaita Province

Progress Toward Outcome

No further updates.

Implementation Progress

Description of Project Outputs

1. Fiu River Hydropower plant put into operation by SIEA

2. Extension of distribution grid by SIEA

3. Capacity building undertaken for implementing agency and project beneficiaries

4. The Project Management Unit (PMU) renders efficient project management services

Status of Implementation Progress (Outputs, Activities, and Issues)

Feasibility study design work has been completed and revised, however site preparation and procurement has been halted until land acquisition has been finalized.

Geographical Location

Safeguard Categories

Environment

B

Involuntary Resettlement

B

Indigenous Peoples

C

Summary of Environmental and Social Aspects

Environmental Aspects

The Project has been classified as category B for environment following ADBs Safeguard Policy Statement (2009) (SPS). An initial environmental examination (IEE) has been prepared. The main potential environmental impacts will be created by construction of the access road, installation of plant at intake and powerhouse site, and vegetation trimming with the low voltage transmission line corridor. After updating following detailed design, the results of the IEE will be integrated into the bidding documents, if there are changes to the scope of the works an updated IEE and environmental management plan (EMP) will be compiled by the Project Management Unit (PMU) and approved by ADB. As part of the assessment a climate change adaptation risk evaluation was conducted and considered in the preliminary design of the schemes, the findings of the assessment will be integrated into the detailed design. The PMU will be supported by environmental specialists (3 months international and 14 months national) to ensure capacity building to SIEA, and implementation and monitoring of the EMP.

Involuntary Resettlement

The project has been classified as category B for resettlement and category C for indigenous peoples following ADBs SPS. The project will involve land acquisition impacts that are not deemed significant. The hydropower scheme will require land acquisition and tree clearance for construction.

Indigenous Peoples

A draft resettlement plan has been prepared based on impact assessment and consultations with affected persons during the PPTA. Affected persons will be further consulted during the detailed design and implementation. Relevant information including an information brochure in local language has been disseminated to affected persons and local stakeholders. SIEA will endorse the Resettlement Plan for posting on ADB website before ADBs management review meeting.

Stakeholder Communication, Participation, and Consultation

During Project Design

During Project Implementation

Business Opportunities

Consulting Services

The TA will require 9 international consultants (23 months) and 4 national consultants (13 months) to be hired through a consulting firm. Consultants will be engaged by ADB in accordance with the Guidelines on the Use of Consultants (2010, as amended from time to time). The consulting firm will be engaged through quality and cost based selection method (quality-cost ratio of 90:10) using simplified technical proposal.

Procurement

The procurement of equipment by consultants under the TA, will follow ADB's Procurement Guidelines (2010, as amended from time to time). The proceeds of the TA will be disbursed in line with ADB's Technical Assistance Disbursement Handbook (2010, as amended from time to time). The equipment procured under the TA will be turned over to the Government upon TA completion.

Contact

Responsible ADB Officer

Maxwell, Anthony

Responsible ADB Department

Pacific Department

Responsible ADB Division

Energy Division, PARD

Executing Agencies

Ministry of Mines, Energy and Rural Electrification

Timetable

Concept Clearance

10 Aug 2012

Fact Finding

17 Jun 2013 to 28 Jun 2013

MRM

09 Aug 2013

Approval

12 May 2014

Last Review Mission

-

Last PDS Update

28 Sep 2018

Funding

Grant 0386-SOL

Loan 3127-SOL