Ministry of Economy Republic of Fiji Reaching 100% Renewable Electricity Generation on Ovalau and Taveuni Islands in Fiji Pre-feasibility Study Results December 2017
Context of National Policy and Nationally Determined Contribution Fiji s Intended Nationally Determined Contribution (INDC) calls for a 30% reduction in GHG emissions from BAU; o 10% GHG reduction achieved via the National Green Growth Framework (unconditional), and 2030 BAU GHG Emissions -30% INDC -10% -20% Unconditional Conditional -20% via RE o 20% GHG with external funding (conditional); Reach 100% share of Renewable Energy (RE) in electricity generation by 2035 will contribute to 20% GHG reduction, Energy Efficiency (EE) will contribute to 10% GHG reduction; -10% via EE Study Outputs should focus on contributing to the 100% RE target
Scope of the Pre-Feasibility Study OBJECTIVE: To investigate the technically and economically feasible options to reach 100% RE power generation on Ovalau and Taveuni islands, and needs for grid improvement / expansion. SCOPE OF STUDY: Current situation / consultations Elec. demand analysis (to 2035) Renewable energy options analysis Environmental and social impacts Grid improvement needs Financial analysis Recommendations and international development support needs TIMELINE: Completed March 2017 Ovalau Island Taveuni Island Areal image of Ovalau and Taveuni island (bing maps)
Stakeholder Consultation Process Stakeholder consultations were held at the national and local levels to address the objectives of the study, including multi-days field visits to both Ovalau and Taveuni islands. NATIONAL Ministry of Economy Schools LOCAL Gov. Stations Ministry of Infrastructure & Transport Fiji Electricity Authority & Assets Province / District Office Industry Bureau of Statistics Ministry of Agriculture, Rural and Maritime Development & National Disaster Management Hotels & Resorts Department of Energy Consultations during Ovalau field visit
Current Situation on Ovalau Sixth largest island in Fiji (with a population of 8,135) Levuka-UNESCO World Heritage Site Main income is fishing and tourism Installed diesel capacity of 2.98 MW Demand peaks at about 1.8 MW, where 70-75% is consumed by PAFCO (factory) Island is electrified with an FEA grid 11 kv transmission system of 40 km (with 1 km gap) 98% of households are connected to the grid
Current Situation on Taveuni Third largest island in Fiji (with a population of 13,283) Bouma National Heritage Park Main income is tourism and agriculture Installed diesel capacity of 3.0 MW and 700 kw of mini-hydro Island is electrified with an FEA grid 11 kv transmission system of 20 km (11 km is new), however a total is 99 km is needed. 34% of households do not have electricity access, these is a large portion of off-grid generation and minor part connected to the grid
Approach to Options Analysis 1. Define a technical baseline and demand in 2035 2. Review of renewable energy resources available 3. Exclude what is not realistically feasible or not fully investigated resource 4. Perform an End Target Quantitative Analysis by preparing a financial analysis based on RE technology/solution and a private sector business model (PPP) to meet the 100% RE generation target in 2035 as a single investment 5. Identify the least (unit) cost RE technology with focus on the future Roof-solar PV, Grounded-Wind Turbine, Grounded-solar PV, battery grid storage, diesel genset, mini-hydro, geothermal, biomass
Review of RE Resources and Exclusion INCLUDED Solar PV via. ground mounted and rooftop (Ovalau only) systems Wind turbines (mast tilting only) Battery storage Diesel generation EXCLUDED Large and small hydro (> 10 MW and 1-10 MW) Not enough resources Mini and Micro hydro (<1 MW) Resource too small on Ovalau, One potential location ontaveuni is not fully investigated Wave energy (power generation) Technology not mature Geothermal electricity generation Resource not fully investigated Biomass electricity generation Not enough resources
Options Analysis Results Ovalau Tavenui DEMAND in 2035 (100% RE Target) 1 12,260 MWh/yr 4,960 MWh/yr 2 Technology Options FEA Average Consumer Tariff (2016) 0.37 FJD/kWh 0.37 FJD/kWh Diesel Fuel Cost (baseline) 3 0.44 FJD/kWh 0.44 FJD/kWh Ground Mounted Solar PV 0.34-0.41 FJD/kWh 0.40 0.48 FJD/kWh Roof Mounted Solar PV (1MWP) 0.42 0.51 FJD/kWh NA Ground Mounted Wind 0.41 0.52 FJD/kWh 0.48 0.59 FJD/kWh Combined Options Ground Mounted Solar PV + Storage 0.97 1.13 FJD/kWh 0.99 1.22 FJD/kWh Ground Mounted Wind + Storage 0.90 1.11 FJD/kWh 0.97 1.18 FJD/kWh 1 Includes grid losses, 2 is for RE portion needed above existing hydro generation, 3 2016 cost projected to 2035 based on World Bank forecast CONCLUSION: Ground Mounted Solar PV generation is the cheapest RE option for a single investment. Ground Mounted Solar PV and Wind are equal when factoring in battery storage, but future cost savings in Solar PV is expected to be better than Wind.
Grid Improvement Needs OVALAU Close the 1 km gap in the existing 11 kv grid Make 15 km of existing grid more resilient by moving it inland (east coast) 40 km fiber optic lines to connect power assets (for improved syncronization, monitoring and resilience) Total for Grid Improvement: USD 665,000 More resilient 4.2 MW diesel power station (moved to higher ground) of approx. USD 4,000,000 TAVEUNI 99 km of 11 kv extension of grid with fiber optic lines (could act as backbone to new telecom system) Extension of distribution (< 1kV) and new consumer connections Existing 11kV transmission Ovalau Total for Grid Improvement: USD 7,130,000
Financial Analysis (Models & Finance) There are two business models accessed: Public Private Partnership (PPP) Build Own Operation Transfer (BOOT) Public Company (PC) state utility There are four financing options assessed: 1. Standard Finance Conditions for a PPP 2. International Development Support for a PPP 3. Standard Finance Conditions for a PC 4. International Development Support for a PC Finance Conditions SFC-PPP IDSFC-PPP SFC-PC IDSFC-PC Life Time (yr) 15 15 15 15 Loan Duration (yr) 10 10 15 15 Loan Interest Rates (%) 7.5% 5% 5% 5% Expected Equity IRR (EBTDA) (%) 15-17% 15-17% 10-11% 10-11% Debt / Equity / Grant Ratio 70/30/0 50/20/30 70/30/0 50/20/30
Ovalau - Solar PV + Grid-Storage Main Technical and Financial Characteristics Ovalau Installation of Ground Mounted Solar PV Power Station(s) 35% RE 50% RE 100% RE Total Short-Term Mid-Term Long-Term 3,100 kwp +1,600 kwp +5,100 kwp 9,800 kwp Investment Cost in Solar PV Power Station(s) 4,960,000 USD 10,416,000 FJD +2,750,000 USD +5,780,000 FJD +7,500,000 USD +15,750,000 FJD 15,210,000 USD 31,946,000 FJD Nominal Electricity Sold 4,228,000 kwh/year +1,900,000 kwh/year +6,130,000 kwh/year 12,260,000 kwh/year Installation of Battery Storage 0 kwh/day 5,700 kwh/day +18,500 kwh/day 24,200 kwh/day Investment Cost of Battery Storage 0 USD +5,800,000 USD +15,300,000 USD 21,100,000 USD 0 FJD +12,180,000 FJD +32,120,000 FJD 44,300,000 FJD Land (Solar / Storage) 6 ha / 0 ha +3 ha / +1 ha +10 ha / +0 ha 19 ha/ 1 ha To reach 35% RE requires an investment of 4,960,000 USD To reach 100% RE requires an investment of 36,310,000 USD
Taveuni - Solar PV + Grid-Storage Main Technical and Financial Characteristics Taveuni Installation of Ground Mounted Solar PV Power Station(s) 65% RE 100% RE Total Mid-Term Long-Term 1,550 kwp +2,400 kwp 3,950 kwp Investment Cost in Solar PV Power Station(s) 2,680,000 USD 5,630,000 FJD +3,830,000 USD +8,040,000 FJD 6,510,000 USD 13,670,000 FJD Nominal Electricity Sold 2,100,000 kwh/year +2,860,000 kwh/year 4,960,000 kwh/year Installation of Battery Storage 0 kwh/day +8,620 kwh/day 8,620 kwh/day Investment Cost of Battery Storage 0 USD +8,400,000 USD 8,400,000 USD 0 FJD +17,640,000 FJD +17,640,000 FJD Land (Solar / Storage) 3 ha / 0 ha +5 ha / +1 ha 8 ha / 1 ha To reach 65% RE requires an investment of 2,680,000 USD To reach 100% RE requires an investment of 14,910,000 USD
Unit Cost / Price (FJD/kWh) Incremental Finance Needs Demand / Cost Curve over 15 years What Development Support is needed to get down to the diesel fuel costs, or FEA Consumer Tariff, for the Ovalau short-term solution? (a) (b) Commercial PPP cost for Solar Generation Ovalau 35% RE = 0.48 FJD/kWh Cost of fuel for diesel generation (2035) = 0.44 FJD/kWh FEA Consumer Tariff = 0.37 FJD/kWh Daily Demand (kwh)
Incremental Finance Analysis (Support Needs to Reach first RE Generation Targets) Minimum Grant Needs to Reach the Financial Baseline To Match Diesel Fuel Charge in 2025 To Match FEA Consumer Tariff Grid Investment Under a PPP-BOOT Model (0.42 FJD/kWh) (0.37 FJD/kWh) Ovalau Short-Term investment in Grant of 10% Grant of 30% Grant up to Ground Mounted PV Power Plant - (500,000 USD) (1,490,000 USD) (660,000 USD) (4,960,000 USD) Taveuni Medium-Term investment Grant of 50% Grant of 75% Grant up to in Ground Mounted PV Power Plant - (1,340,000 USD) (2,000,000 USD) (7,130,000 USD) (2,680,000 USD) TOTAL 1,840,000 USD 3,490,000 USD 7,790,000 USD Level of RE on the Island (2035) 35% 65% CONCLUSIONS: To reach a RE electricity generation level of 35% on Ovalau and 65% on Taveuni, and be equal to the FEA consumer tariff, an incremental grant of 3,490,000 USD is needed. In addition an investment of 7,790,000 USD is needed to extended the grids and make them more resilient to climate change, the grid investment is on-top-off the RE electricity generation and would thus need a 100% grant to keep the unit cost of electricity at the level of the FEA consumer tariff.
Next Steps Ovalau 2017-2018: Short-Term Phase Preparation (Detailed feasibly studies, EIAs, local consultations, secure land rights, etc.) 2018-2020: Short-Term Phase Implementation 2020-2023: Mid-Term Phase Preparation 2024-2025: Mid-Term Phase Implementation Taveuni 2017-2020: Mid-Term Phase Preparation (Detailed feasibly studies, EIAs, local consultations, secure land rights, etc.) 2020-2023: Grid Extension Activities 2024-2025: Mid-Term Phase Implementation 2026-2035: Long-Term Phase Activities
Ministry of Economy Republic of Fiji Thank You! For Further Information Please Contact: Kamal Gounder (kamal.gounder@economy.gov.fj) Katerina Syngellakis (katerina.syngellakis@gggi.org) Kristin Deason (Kristin.deason@gggi.org) The Pre-Feasibility Study was sponsored by the Global Green Growth Institute in cooperation with the Fiji Ministry of Economy. The Pre-Feasibility Study was prepared by Grue + Hornsrtup and Glay Energy.
Electricity Demand on Ovalau Baseline average demand in 2016: 0.9 1.7 MW 756 862 MWh/month 9,811 MWh/year (deviation: 9,350-10,272 MWh) Expected future demand in 2035: 1 1.0 2.1 MW 886 975 MWh/month 11,143 MWh/year (deviation 10,619 11,667 MWh) 1 projection based on national statistics and proportional demand of households/industry/commercial demand
Electricity Demand on Taveuni SUPPRESSED DEMAND SCENARIO Baseline average demand in 2016: 0.4 1.2 MW 522 565 MWh/month 6,505 MWh/year (deviation 6,284 6,727 MWh) Expected future demand in 2035: 1 0.6 1.7 MW 624 670 MWh/month 7,936 MWh/year (deviation 7,666 8,206 MWh) 1 projection based on national statistics and proportional demand of households/industry/commercial demand
Environmental Impacts Type (impact on) Solar Wind Diesel Battery Storage Transmission Air quality N N M N N Noise L L-M M L L Water quality N N L L N Solid waste L L L M L Ecology L L L L L Fisheries N N L L N Hazards N L L L L (other) Visual N L N N N RISK LEVELS: Not Significant (N), Low Risk (L), Medium Risk (M), High Risk (H) CONCLUSION: Ground Mounted Solar PV generation has the lowest environmental risk profile of the RE technologies, and battery storage has a lower environmental risk profile than diesel generation (for backup/storage purposes)
Ovalau - 35% RE Short Term Target (Standard Financing Conditions) FEA Tariff 0.37 0.50 0.45 Reaches 35% RE target on the island 3,100 kwp Solar PV Capacity No grid storage 80% of peak demand 4,960,000 USD investment SFC-PPP unit cost is 0.45-0.50 FJD/kWh (0.21-0.24 USD/kWh) FEA Tariff 0.37 0.41 SFC-PC unit cost is 0.41 FJD/kWh (0.20 USD/kWh) Does not reach FEA Tariff of 0.37 FJD/kWh (0.18 USD/kWh) Incremental Support Still Needed
Ovalau - 35% RE Short Term Target (International Development Support Financing Conditions) Reaches 35% RE target on the island 3,100 kwp Solar PV Capacity FEA Tariff 0.37 0.38 0.34 No grid storage 80% of peak demand 4,960,000 USD investment IDSFC-PPP unit cost is 0.34-0.38 FJD/kWh (0.16-0.18 USD/kWh) IDSFC-PC unit cost is 0.33 FJD/kWh (0.16 USD/kWh) FEA Tariff 0.37 0.33 Just at or below the FEA Tariff of 0.37 FJD/kWh (0.18 USD/kWh) Support of 30% grant is needed, with at least a 10-year loan of no more than 5%
Taveuni - 65% RE Mid Term Target (Standard Financing Conditions) FEA Tariff 0.37 0.63 0.53 Reaches 65% RE target on the island 1,550 kwp Solar PV Capacity No grid storage 100% of peak demand (with hydro asset) 2,680,000 USD investment SFC-PPP unit cost is 0.53-0.63 FJD/kWh (0.25-0.30 USD/kWh) FEA Tariff 0.37 0.53 SFC-PC unit cost is 0.53 FJD/kWh (0.25 USD/kWh) Does not reach FEA Tariff of 0.37 FJD/kWh (0.18 USD/kWh) Incremental Support Still Needed
Taveuni - 65% RE Mid Term Target (International Development Support Financing Conditions) Reaches 65% RE target on the island FEA Tariff 0.37 0.49 0.42 3,100 kwp Solar PV Capacity No grid storage 80% of peak demand 2,680,000 USD investment IDSFC-PPP unit cost is 0.42-0.49 FJD/kWh (0.20-0.24 USD/kWh) IDSFC-PC unit cost is 0.44 FJD/kWh (0.21 USD/kWh) 0.44 Is above the FEA Tariff of 0.37 FJD/kWh (0.18 USD/kWh) FEA Tariff 0.37 Additional Incremental Support Still Needed
Brief on Implementation Plan Years Actions / Implementation 2017-2018 Preparatory Phase: Secure interest in support from international agencies, and integrate into national development and energy planning. Phase 1: Prepare detailed feasibly studies, EIAs, and local consultations (as required) for the shortand medium-term solutions, including securing land rights. While at the same time to undertake promotion activities and the application for financial support from bilateral- and multilateralintuitions for implementation to reach financial closure for the short-term solutions. 2019-2020 Phase 2: Implement recommended solutions for reaching the recommended short-term RE target of 35% on Ovalau, and to structure the finance and support for Phase 3 (mid-term implementation) including promotion activities and the application for financial support from bilateral- and multilateral- intuitions for implementation. (NOTE that implementation of recommended solutions to reach mid-term RE target of 65% on Taveuni could also be done here) 2021-2025 Phase 3: Reach financial closure and implement recommended solutions for reaching the mid-term RE targets of 50% on Ovalau and 65% on Taveuni. 2026-2035 Phase 4: To structure the finance and support, including promotion activities and the application for financial support from bilateral- and multilateral- intuitions for implementation, and to implement the final solutions needed to reach the long-term RE target of 100% on both Ovalau and Taveuni, and the future Sustainable operation of 100% renewable energy generation on the islands.
Sensitivity Analysis (1)
Sensitivity Analysis (2)
The Government of Fiji: Has an external central government debt of 14% of GDP, and an fiscal deficit of - 4% of GDP. 1 Holds a B1 (Moody s) crediting rating, Obligations rated B are considered speculative and are subject to high credit risk. 2 Has historically received nearly the lowest level of per-capita climate finance in the Pacific Region (only behind Papua New Guinea). 3 Has a nationally set consumer tariff scheme, which must be followed for all grid connected consumers, and is in effect a cross subsidy scheme. Has an agenda to partially divest the generation assets of the Fiji Electricity Authority, to further open up the electricity sector to private entities. Wishes to encourage private sector investment in the power generation sector, and has prepared mechanisms for IPPs, and minimum tariffs for IPPs. Has established (foreign) investment policies such a 5 year waiver for VAT on RE equipment, and 5 year tax holiday for businesses undertaking RE generation. 1 Press Release: IMF Executive Board Concludes 2015 Article IV Consultation with the Republic of Fiji IMF, Feb. 23, 2016. 2 Government of Fiji B1 Positive: Regular Update Moody s, 18 Jan. 2017. 3 Climate Finance in the Pacific Stockholm Environment Institute, 2017.