Outline of Expression of Interest to Participate in SREP 1

Transcription

1 Outline of Expression of Interest to Participate in SREP 1 I. COUNTRY AND GOVERNMENT AGENCY SUBMITTING EXPRESSION OF INTEREST COUNTRY: KINGDOM OF TONGA GOVERNMENT AGENCY: TONGA ENERGY ROAD MAP (TERM) IMPLEMENTATION UNIT (IU) TERM IU BACKGROUND TERM-IU has been established since 2009 as key government energy agency and bestowed with the responsibilities for energy planning, development, policy and coordination. As part of that function it delivers to the Government Vision of providing clean, safe, sustainable and affordable energy. Given this vision the TERM document has these objectives set for itself and its stakeholders, for the country: various Renewable Energy and Energy Efficiency a) The share of Renewable Energy to meet 50% of the power demand of the Kingdom by 2020 resulting in: i. cleaner, safer, secured and sustainable supply b) Improvement in electricity network efficiency by 18%. These improvements are to come from all phases of: i. power generation, ii. power distribution, iii. the business of selling, managing, operating and maintaining power assets iv. and the usage of power by consumers c) Accessible to all 100% of Tongan consumers to access clean, secured, safe and sustainable energy d) Affordable to all. 1 The expression of interest should not exceed 10 pages, including tables, charts, and annexes.

2 Institutional and Legal Reformation e) Reforming of the Energy Sector with the aim of updating and consolidating all functions of the sector into one entity. Currently these roles and functions are spread over 7 Ministries and some Public Enterprises Petroleum Sub - Sector Reformation and Improvement f) Under e) above TERM will also be responsible for reviewing the Petroleum Sub- Sector in order to ensure safety Regulation are in place with strong institutions to monitor them. At the same time, a review of the best possible business model is to be undertaken to ensure that the best prices for the importation and distribution of fossil fuel is achieved. Overall Energy Sector Policy Development Under e) above TERM will be responsible for overseeing national energy policy and tools that are related to the deployment and commercialization of renewable energy technologies in the off-grid and on-grid energy systems. II. DESCRIPTION OF THE COUNTRY AND ENERGY SECTOR CONTEXT Please provide a summary of the country and energy sector context, including resource potential for deploying renewable energy, status of energy access (population with access to electricity), renewable energy policies, targets, and implementation measures. Tonga is a group of islands located in the South Pacific Ocean, and one of the Pacific Forum Island Developing States PIFDS 2 countries included in the UN category of (SIDS) 3. Tonga consists of five main islands, Tongatapu, Vava u, Ha apai, Eua, and Niuas with an additional 172 islands, of which 36 have permanent settlement. The total population of Tonga is estimated to be 101,000 (2006 Census) which increased to 103,000 in the provisional 2011 census. Tonga has four electricity grid-connected main island districts known as Tongatapu, Vava u, Ha apai and Eua. There are two other districts on the main island of Niuas without an electricity grid. The main island districts are isolated from each other and each surrounded by sparsely inhabited remote islands. Approximately 75% of the population live in the capital island of Tongatapu, which comprises the major share of the energy market and which therefore utilizes the highest share of energy imports. Figure 1 shows the geographical characteristics of Tonga s location in the Pacific island groups with its characteristics of separated small main islands and remote islands, thus making electricity services more costly in the geographical context. 2 PIFDS member developing states of the Pacific Islands Forum that are also classified by the UN as Small Island Developing States: Cook Islands, Fiji, Federated States of Micronesia, Marshall Islands, Kiribati, Niue, Nauru, Palau, Papua New Guinea, Solomon Islands, Western Samoa, Kingdom of Tonga and Vanuatu. 3 SIDS Countries under the United Nation s definition and category of Small Island Developing States

3 Source: Worldatlas,com Figure 1: Map of Tonga The last official census in Tonga in 2006 highlights a trend of slightly decreasing population in the age groups of 0-14 years and years during , but the population over 25 years of age has shown an increasing trend (Tonga Statistics Department, 2008). Table 1 indicates the growth of population in the capital island of Tongatapu during the last four censuses, while other main islands experienced decline due to migration and emigration. Main Island Census Population 1996 Households 2006 Households 2011 Households Urban Rural Urban Rural Urban Rural Tongat 63,794 66,979 72,045 75, Vava'u 15,175 15,715 15,505 14, Ha'apai 8,919 8,138 7,570 6, Eua 4,393 4,934 5,206 5, Niuas 2,368 2,018 1,665 1, Tonga 94,649 97, , , Source: Tonga Statistics Department, 2006 and 2011 Table 1: Population distribution among the main island districts of Tonga Tonga s National Renewable Energy Policy was established in 2006 with the aim of assisting renewable energy development in the Kingdom. This was followed by the Government adopting a policy target in 2009 for 50% of electricity generation to be from renewable resources by 2020, the Renewable Energy Act (2009) and subsequently the

4 Tonga Energy Roadmap However, there is sufficient evidence that most PIFDS including Tonga have an institutional system that struggles to address significant problems such as high cost fossil fuels, diseconomies of scale, remoteness and reliance on donor financial resources. There are identified capacity barriers associated with inadequate policies and institutional arrangements to promote sustainable development goals. Government organizations have already been empowered to deal with policy and institutional capacity barriers through the establishment of the Tonga Energy Road Map in Government has also introduced institutional arrangements and merging of TERM and the Energy Department of Ministry of Lands to form TERM-IU and bring about whole sector policy coordination for all national energy development. Many small island developing countries have focused on improving the ability of organizations to improve governance in policy and institutional arrangements. It has been identified by many regional energy sector assessments that governance issues are common weaknesses and remain a challenge for the small Pacific Islands and the region, including Tonga, suggesting continuous assessments of national policies and processes are needed to ensure good governance. Figure 2 below shows the fluctuating levels of GNI/capita and Net ODA/capita in the six selected countries of the Pacific including Tonga. The highest GNI/capita and Net ODA/capita in Tonga, reflect the differing nature of governance in the country, implies the improve policy environment and greatest potential in the country to effectively use SREP funding for capacity building on renewable energy policy development.

5 Figure 2: GNI/capita & Net ODA/capita (in USD) by country by year III. RATIONALE FOR SELECTED SECTORS FOR SREP FINANCING Please identify barriers for the deployment of renewable energy, potential sector, subsubsectors, and technologies for possible SREP financing as well as the rationale for prioritizing them for SREP interventions. a) Electrification Rate The Tonga Census of 2006 stated that about 2% of the total population had SHS while 89% had grid electricity supply (Tonga Statistics Department, 2008). In the off-grid electrification, solar home systems have been installed in Tonga since 1988 to provide basic electricity supply to less than 10% of Tonga s population who live in the unelectrified remote islands. Upon completion of donor funded SHS projects in Tonga in 2013, it expected that less than 1% of the population will lack access to either SHS or grid electricity supply, due mainly to the far north un-electrified main island of Niuatoputapu. Figure 3 shows the increasing electrification rates for grid-connected and off-grid solar applications in Tonga.

6 Figure 3: Ratio of total household in Tonga by main source of lighting b) Share of Renewable Energy in the country s total power consumption The total renewable share of generated electricity as of June 2013, is 4.84%. This has been achieved as a result of the following projects; Project Capacity Location Commissioning date Maama Mai solar farm 1MW Tongatapu August 2012 Third Party Solar grid 62kW Tongatapu July 2012-Jan 2013 Micro-wind Turbine 11kW Tongatapu May 2013 Off-grid Solar Home Systems TOTAL 240kW Outer islands Jan MW Source : Tonga Power Limited, 2014; Tonga Energy Road Map, 2014 Table 2: Share of RE in 2012/2013 Other significant project(s) commissioned after June 2013 is shown below; Project Capacity Location Commissioning date La a Lahi (Vava u) Solar farm 0.5MW Vava u November 2013 Source : Tonga Power Limited, 2014; Tonga Energy Road Map, 2014 Table 3: Share of RE in 2013/2014

7 The above project (La a Lahi Solar) is currently contributing 1.8% of renewable generation. A second project, namely the Clean Energy Project (funded by JICA) which has installed 550 Solar Home Systems has further contributed to this renewable generation percentage 0.2%. It is therefore estimated that the renewable generation currently stands at approximately 6.84% of total power consumption in Tonga against an objective of 50% by However, small and physical isolation of electricity markets in Tonga have often determined accessibility to electricity supply services. The diversity of small electricity markets has influenced the cost of transporting fossil fuel with direct impacts on the affordability and profitability of electricity services. c) Key barriers against accessibility for RE in Tonga i. Institutional capacity barriers While the country is increasingly favoured by various donors in terms of investment on grid-connected and off-grid RE power generation, the impacts of RE on electricity tariff is still unknown and yet to be assessed in the country. Basically, most electricity tariffs were standardized to one fixed tariff for all islands of Tonga, thus failing to account for diversities of social and economic conditions throughout the islands. In turn, that suggests the need to assess how electricity investments are regulated and monitored with continuously increasing tariffs in the country. Tonga energy access and sustainable development are constrained by a range of factors including security of supply issues, notably with petroleum products, increasing energy demand and economic growth. Some electricity systems in Tonga are deploying non-fossil fuel sources of power such solar, wind to meet growing energy demand. Other energy systems are exploring opportunities for energy efficiency and other low-carbon technologies. In fact, the availability of donor technical assistance for policy and institutional reforms empowered governments and private institutions to design and implement policy changes. However, the national energy market in Tonga does not lie within an effective national energy policy or an energy efficiency policy and it impedes overall energy development activities in the country. It has been argued that some PIFDS have limited institutional capacity, which often increases the cost of services. There is insufficient data to examine these issues in greater depth, but there is a strong inference that electricity stakeholders need to improve relationships with energy users as well as with overseas experts and their skills. It has often been argued that PIFDS have limited data and skills, which should be a priority area for capacity building. Furthermore, efforts to empower energy users with effective energy saving options are weak due to skill

8 limitations and therefore lack of policy incentives. Energy demand data is also lacking, further inhibiting policy innovation. Leaders of PIFDS reaffirmed in its 2011 communique to regional and international communities that climate change remains the single greatest threat to the livelihoods, security and well-being of the peoples of the Pacific. Improving the capability of regional leaders to manage the adverse effects of climate change and transferring basic environmental knowledge to local communities is also necessary and urgently needed. Setting up the right integrated institutional arrangements for transferring basic environmental knowledge on climate changes to the local communities is also necessary and essential. ii. Economic Barriers Any economic solution initiative must take into account a small isolated and low income market. This has been the challenge. Most assessments on sustainable development in SIDS like Tonga have suggested the need to improve abilities of governments to attract foreign investment; and the policy conditions for obtaining reasonable returns on investment for the private sector investor. Government of Tonga particularly encourages policies to improve the environment for energy investment through public-private partnerships. It is therefore recommended that Tonga is to provide clear and stable policies to reduce regulatory risks that affect profitable energy investment. Most energy assessments in developing countries have emphasized the need for sustainable electricity pricing and have encouraged better regulatory relationships to provide clear, affordable and profitable energy tariffs. Furthermore, some work has focused particularly on broader economic relationships between facilitators of energy technologies and the end-users. For example, providing appropriate energy technologies to suit users socio-economic situations would introduce a general sense of responsibility on the demand side. Particular capacity building activities to address existing economic capacity barriers include improving responsibility for shareholder protection, auditing standards, and the ability of the courts to protect electricity investment and to improve assurances for profitable investment. Furthermore, more generally improving economic productivity can also provide investors with a greater level of confidence about sustainable performance and the effective utilization of renewable energy resources in Tonga. Some energy assessments in developing countries have encompassed capacity building to enhance public awareness of the benefits of energy saving and

9 energy efficiency, and raised the value of enhancing economic awareness and the justification for energy efficiency and renewable energy innovations. Furthermore, some regional energy projects have explored opportunities to enhance energy saving by removing capacity limitations in the adoption of energy efficiency technologies. Current limitations take the form of improving economic justification, policy incentives and financial resources for energy saving options. However, the quality of the knowledge and information being transferred to community groups and end users regarding the economic justification for energy savings is questionable in some situations. While most governments express their willingness to move towards sustainable development, there are still inadequate policies and rules in place to achieve this. In fact, some researches conducted in Tonga have assessed government abilities to implement effective reforms to national fiscal as well as economic policy in order to overcome financing challenges for fuel supply. In practice, some developing governments looked at the efficacy of implementing economic policy incentives through energy pricing and at economic and fiscal incentives for energy efficiency. iii. Technical barriers The quality of energy supply system and services in Tonga place an emphasis on the ability to improve diversity of supply, energy intensity and reserve margins. The Tonga Energy Road Map also emphasizes improving the energy efficiency of existing power plants and the quality of energy infrastructure to guarantee availability of supply. It is therefore important to assess the relationships between service providers and their influence on technical supply standards, thus suggest the strengthening of connections between private investors on renewable energy, power utility and electricity regulator on supply contracts and diversification of energy supply sources. Furthermore, global technology transfer cooperation and adopting labeling standards for energy appliances can potentially improve technical efficiency and skills. Energy efficiency measures need to be carefully monitored and greater energy efficiency in general, is needed throughout the value chain. Gaining familiarity with the renewable energy technology seems to be an urgent priority for Tonga. For example, it has been suggested that the use of smart meters to provide information for utilities can be an option, but it must be well regulated. Smart meters certainly have potential to improve the availability and value of end-user data but its application requires specialist

10 knowledge. The quality of education for the general population and the availability of engineers are determined by the availability of funding. iv. Social barriers Some renewable energy assessments focus on better incorporating the social aspects of services in energy policy. For example, some expressed concerns about income levels in relation to access to services. They also note that energy poverty is still a low priority on the map of national issues and government financial supports. It has been also suggested that donors financial investment can be moved towards the importance of encouraging wide and open societal debate on the kind of energy systems required to fulfil people s energy needs. A broad discussion of all energy options should take place to improve public awareness of energy goals and technologies. Furthermore, the use of public policies to avoid social tensions on energy inequalities, and address consumers behaviour has a key role to play in the debate. Accountability to address local situation in energy services. Most national, regional and international energy institutions have highlighted the responsibility that international institutions and NGOs have in ensuring that energy objectives are appropriately placed within the broader context of sustainable development goals such as the Millennium Development Goals (MDGs). However, some specific energy assessments emphasize the importance of social coordination between energy providers and energy users to improve public awareness. Furthermore, maintaining a skilled labour force that could innovate in local community situations is seen to be important, along with ensuring that some decisions are made by local communities about their energy services. v. Environmental barriers The scale and nature of climate changes required to effectively address the adverse environmental impacts of existing energy systems poses significant challenges for key stakeholders including local communities. Insufficient data and knowledge about these environmental and climate change impacts are key issues here for institutions, organizations and the community more generally. Most regional energy assessments have suggested international cooperation on energy efficiency/renewable energy and coordination between governments and donors for enhancing technology transfer as well as the use of joint implementation

11 finances for energy efficiency/renewable energy technologies. The relationships surrounding joint implementation do result in a transfer of renewable energy technologies but there is insufficient potential for adverse environmental outcomes due to insufficient knowledge by key stakeholders. For example, one assessment has highlighted inadequate PV waste handling at community level in Tonga. Other speculated what the cause of this, whether it is incomplete transfer of knowledge to local communities to address wastes and their impacts on ecosystems or whether the local community is also at fault. IV. ENABLING POLICY AND REGULATORY ENVIRONMENT Please provide an overview of the existing policies, legal framework, market and regulatory structure for renewable energy development and the potential impacts of public and private sector interventions in addressing the barriers. Discuss the existing regulatory environment for attracting private investments in renewable energy technologies and governance within the energy sector, including commercial performance of relevant institutions, pricing and tariff practices, competitive procurement of goods and services, the transparency and accountability of these practices and the degree to which they are subject to public oversight. There is sufficient evidence that most PIFDS like Tonga have an institutional system that struggles to address significant problems such as high cost fossil fuels, diseconomies of scale, remoteness and reliance on donor financial resources. In order to address these capacity barriers the government of Tonga is incorporating sustainable development into the national strategic development framework (NSDF). Overseas development assistance (ODA) has usually been derived from global initiatives such as climate change mitigation funds or meeting the Millennium Development Goals, private sector development initiatives, biodiversity initiatives, or bilateral partnerships. The NSDF encourages joint financial partnerships between government, private sector and development partners (donors) to address sustainable development goals. a) Transparency of regulatory roles In Tonga, there are significant capacity limitations on the ability to improve the transparency of regulatory performance (TERM, 2009). For example, the Tongan Energy Road Map in 2010 indicated the need for a more transparent regulatory framework in the country (TERM, 2010). Some researchers in developing countries have identified a lack of regulatory expertise and experience (Baker and Ramirez, 2002; Dortolina, 2006) as well as distorted information (Baker and Ramirez, 2002), both of which demonstrate stakeholder limitations. Some regional energy assessments have identified relevant electricity management expertise in the SIDS such as the ability to perform least cost planning of energy supply, and maintain effective regulatory roles. This expertise is relevant in addressing high cost electricity services and the requirement to monitor the regulated tariffs in the country.

12 b) Tariff policy. The power tariff is controlled by the Electricity Concessional Contract [ECC]. The ECC is controlled by the Tonga Power Commission who is also the regulator. The ECC is up for review in The main components are as below: Universal tariff Two main components for charging the tariff: o fuel component pass on to the consumers with no return to Tonga Power Limited o non-fuel: all other expenses including the return to Tonga Power Limited. Given the current high power tariff, the Government has initiated a number of tariff reviews [work in progress] in order to find the best solution for structuring power tariff so that all core stakeholders are benefitting. Policy development is lagging behind the development and work is on the pipeline to complete this. The Tonga Power Limited [TPL] operation is guided by the Tonga Public Enterprises Act which requires TPL to operate as profitable as similar entity in the private sector. Given the current tariff level there is a lot of capacity building work to be done in this area. c) Energy efficiency The Government of Tonga also expressed the political will to promote sustainability in its energy supplies as a means to improve overall energy security in the country. Improving operational efficiency is one way of ensuring this and efficiency is now a target for the national electricity grid network and has already been included in the electricity concession contract in Tonga. The population of the country is growing slowly so sustainable use of energy resources must incorporate growing energy demand. In Tonga, the commercial sector has contributed significantly to the growth in demand for electricity. However, a stronger policy framework and energy efficiency incentives would contribute to the sustainability objectives of energy efficiency and energy security. d) Renewables in Tonga Government and energy supplier coordination of energy services with the communities was not included in the priorities for policy revision of the Tongan electricity industry, and renewable energy development is still in the early stages. However, in some developing countries, renewable power generation is chiefly about adopting appropriate policies and legal frameworks. For example, there is a need to improve economic regulation and legislation for renewable energy in some PIFDS. In Tonga, legislative action has been suggested to introduce subsidies to support private sector electricity production from renewable sources. There is also insufficient regulatory structure for on-grid renewable energy investment.

13 Experience has shown that there are still governance problems associated with off-grid household PV systems in the remote islands of Tonga despite improvements in policy and legal reform in Tonga. This experience suggests that capacity building is required to improve governance systems and adoption by consumers, community leaders and community organisations. Further this experience suggests further assessments of technical design for PV electricity services are needed in order to effectively incorporate community values into designing and implementing electricity services. The acceptability of services and technologies will be determined by how the technologies meet social needs (for example, funerals, family reunions, village festivals and celebrations, night clubs, and street lights) and economic ones (such as agricultural and fishery export production) in both urban and rural areas. Despite the need for appropriate policies and institutional framework, Tonga has a target for 50% of its power demand met from renewable generation sources by The current level indicate the need to get additional capability in this area. V. INSTITUTIONAL AND TECHNICAL CAPACITY Please provide an analysis of the institutional and technical capacity for implementation, including the government s ability to effectively absorb additional funds. Please also provide a preliminary assessment of potential implementation risks. Tonga has received several assistances in the form of grant funded projects [physical] on the grounds or technical assistances for studies, surveys or researches. Tonga, as such, has mechanisms to implement these activities on a satisfactory level. Projects that are connected with the energy sector or with TERM are in two major types. Firstly, there are the national projects and secondly there are the smaller more localized projects. The National projects included such projects as the Maama Mai Solar farm or the one MWH farm funded by the Japanese Government. These projects have their own project and implementation agreements governing implementation. The implementation performance record of these projects has been excellent. Most of the implementation work are supported and guided by the funders with Tonga playing a major role in the steering committee level. The localize projects including those funded by organisation such as the IUCN, PIGGAREP or GIZ requires more local participation in their implementation. In this regard, TERM, EPU, TPL and the MOFNP play pivotal roles in their implementation. Like the national program, the localized programs have their own project agreement and implementation program, The performance record of these programs are also very satisfactory. Despite these records there are potential risks to be managed. These major risks include the followings: Resources: Staff continuity and commitment As each project would have its own implementation plan it is imperative to have the right resources to follow through this plan.

14 The local financial institution has vast experiences in applying the financial activities and requirements of these projects with high compliance results. Given the above record and performance the institutional and technical capacity for implementation of SREP funding will be in capable hands but must be e related and coordinated with the existing institutional and technical capacities of existing electricity sector and the Government Ministries in both off-grid and on-grid renewable applications For on-grid institutional arrangements, the corporatized electricity industry adopted the institutional structure shown in Figure 4, indicating that the monitoring roles for both electricity management and regulation have been given to two separate government ministries. His Majesty s Cabinet SREP Minister of Public Enterprises (Tonga Public Service Act 2002_monitoring utility finance and administration) Tonga Power Limited (Electricity Board ) Endorsed financial and management decisions TERM (Tonga Energy Road Map) Tonga Power Limited (CEO) (Tongatapu Head Office) Minister of Finance and Planning (Tonga Electricity Commission Act, 2007 monitoring regulations and tariffs) Tonga Electricity Commission (Regulator of tariffs and services) Manager of Generation Manager Administration Manager of Finance Manager Distribution &Transmission Branch Manager of Vava u Branch Manager of Ha apai Branch Manager of Eua Electricity Customers (Tongatapu, Vava u, Ha apai, Eua ) Figure 4: Institutional structure for on-grid electricity industry The government registered TPL as a state-owned enterprise in 2008 under the Tonga Public Enterprise Act of The regulator is registered under the Tonga Electricity Commission Act of 2007 and operates under the concession contract noted above. The monitoring and assessment

15 of implemented electricity services in Tonga are mandated by law, thus assigning the responsibility for monitoring and assessment to a specific government authority. Figure 5 shows the institutional structure for off-grid solar projects. The projects are administered by a community-based utility model under the Tonga Incorporated Society Act 2002, regulated by the Ministry of Labour, Commerce and Industries. The Energy Department under the Ministry of Lands, Survey and Natural Resources is responsible for regulating technical operations for SHS projects in the remote islands. SREP Ministry of Finance and Planning & TERM Minister of Lands,Natural Resources (Tonga Renewable Energy Act Regulator Services) His Majesty Cabinet District Governor Solar Electrification Society (Chairperson Minister of Labour, Commerce, Industries (Tonga Incorporated Society Act Regulator Tariff) Ha apai Energy Department office Ha apai Governor s office Ha apai Labour and Commerce office Ha apai Solar Electricity Society (HSES) District Officers/Town Officers SHS Ha apai Solar Electrification office District Government Representatives Bank & Bank Accounts Remote Households Island Solar Technician Figure 5: Institutional structure for off-grid solar electrification in Tonga. Each main island district has its own community-based solar incorporated society chaired by the district governor with members including the remote island town officers and representatives of government departments. The solar societies are responsible for policy formulation and management of solar home service (SHS) projects while the government s energy department carries the roles of technical advisor and manager of the solar society office.

16 SREP funding will be utilized for reviewing the institutional and technical capacities in the existing electricity industry. Identifying key barriers to the existing renewable energy development and the way forward are the key outputs for SREP financial supports, which include the assessments of roles and duties associated with the activities/tasks, operations undertaken by key stakeholders for the existing renewable energy projects in the power sector. The implementation of SREP funding may include the following technical and economic assessments, analysis and evaluations of existing renewable energy projects in Tonga. SREP funding may also be used to provide tools and hardware equipment to help remove barriers for commercialization of renewable energy technologies in Tonga. Formulation, regulation and monitoring of tariffs for on-grid renewable electricity generation and investment. Formulation, regulation and monitoring of electricity tariffs for off-grid solar power generation and investment. Implementation, regulation and monitoring of the existing and related energy/electricity policies and legislations including the Renewable Energy Act, 2009 in Tonga. Accessibility, Availability and Acceptability of national energy/electricity data especially the renewable energy data. Emphasis should be focused on improving institutional arrangements and coordination on demand side energy data focusing on renewable electricity services and performances. Identifying institutional and policy gaps against transferring basic environmental knowledge on climate changes to local communities and assessing most feasible options to address climate change and environmental impacts in the local communities. Identifying and addressing national economic policies that hinder renewable energy investment in the country. Identifying barriers and provide alternative approaches for energy saving in the demand side of the electricity sector. Assess the relationships between service providers and their influence on technical supply standards, thus suggest the strengthening of connections between private investors on renewable energy, power utility and electricity regulator on supply contracts and diversification of energy supply sources Assess energy efficiency measures (labeling and standards) need to be carefully monitored and greater energy efficiency in general, is needed throughout the value chain. Identify barriers and provide alternatives to the use of smart meters in the demand side electricity sector, as they certainly have potential to improve the availability and value of end-user data but its application requires special knowledge. Assess public policies to avoid social tensions on energy inequalities, and address consumers behaviour. Accountability to address local situation in electricity services is important and barriers to social coordination between service providers and customers must be identified and addressed for renewable applications in Tonga. Identifying barriers to the implementation of EIA recommendations for renewable energy technologies in the local communities. Increase access for modern electricity services in the un-electrified islands and rural communities in Tonga

17 VI. PROGRAMS OF MDBS AND DEVELOPMENT PARTNERS Please describe briefly the ongoing and planned programs of the relevant multilateral development banks (MDBs) and other development partners relevant to energy access and renewable energy and how the proposed interventions for SREP would link to and build upon these programs. The AusAID has endorsed 3.75m USD for reviewing the legal framework and business model for petroleum supply and businesses in Tonga. The project is year-mark for identifying/addressing unmet software policy needs for the petroleum sector in the country. In the off-grid renewable energy sector, various bilateral, multi-lateral and regional financial supports have focused on transferring renewable hardware technologies for rural and remote communities of Tonga. These donors include EU and JICA funding for remote island solar lighting electrification in the 11 remote islands of Vava u. Furthermore, financial assistances from EU, AusAID, IUCN, France have already been utilized to transfer hardware through solar electrification in the remote islands of Ha apai. For on-grid renewable applications, UAE, JICA and NZAID have already spent millions USD for transferring hardware technologies of about 2.5MW total capacity of grid-connected solar power generation in the country. Other donors like joint ADB/World Bank have also shown interests to fund hardware solar power renewable energy technologies to replace hardware damages due to cyclone Ian in Ha apai / and upgrade with hybrid systems the existing small diesel gensets in the bigger remote islands of Ha apai. It is very clear that financial assistances on renewable energy technologies in Tonga have put heavy emphasis on transferring hardware renewable energy technologies for local communities and electricity utility. However, very few donors have put emphasis on transferring software needs like building up capacities and knowledge, developing the right policy farmeworks necessary for renewable energy technologies. The GEF funding has put emphasis on transferring software policy needs for renewable energy technologies, but has not yet addressed the entire software policy needs for off-grid renewable energy applications and the grid-connected renewable energy policy frameworks are still un-touched. SREP financial assistances will be utilized to improve the capacity of the country to establish the right policy strategies and frameworks for renewable energy applications in Tonga. A hardware components under SREP funding could be proposed to improve rural electrification in the country, especially the unelectrified rural/remote communities.