Maldivian - German

Cooperation
Ministryof
EnvironmentandEnergy

Firstconsiderations onthe
Roadmapto Carbon Neutrality
DetlefLoy
GIZConsultant
StakeholderMeeting,Male,April16,2013

D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Energy consumption inthe Maldives

Landand sea transport is very important regarding energy use

and GHGemissions.
And electricity use inHouseholds and Resortsis relevant.
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Energy consumption inthe Maldives

D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Publicelectricity production for Male

20002010(STELCO)

Notincluded:
Fresh water supply and
sewerage (MWSCoperates
own generation)and other
selfgenerators

Annualincrease inthe past 512%a.Furthergrowth insimilar range expected for years ahead (810%/a).
Demandforecast for 2020is 54MW(peak load of STELCO)according to USAID2010.

Electricity production and consumption

inMale(2011)
D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

STELCOoperates about one third (48MW)of allcapacity

installed oninhabited and industrial islands
Totalelectricity consumption oninhabited islands was428
GWh
Electricity consumption inMale was217GWh,i.e.about 50%
About 70%of allpublic electricity inconsumed inthe Greater
Malearea

Almost 50%consumed inthe residential sector,with main

consumption areas being refrigeration and air conditioning
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Electricity consumption percapita (2009)

Source:IRENA,2012

Electricity consumption percapita relatively highcompared to other countriesinthe region

(butapparently here alsoincluding the tourism sector)
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Electric DemandForecast

D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Greater Malearea

Electricity demand expected to increase by 8%/auntil 2020

CO2eq emissions expected to increase from 1.3Mt (2009)to 2.5Mt (2020)inbusinessasusual scenario
Tourism expected to increase by more than 8%/ainthe coming years (931,000arrivals in2011;1.5m
expected for 2020)
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Energy consumption for electricity

and related CO2 emissions

D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Regionalelectricity consumption

Priority sectors
Transportsector (marine,land 51%of totalenergy consumption in2009)
Domestic sector (46%of totalelectricity consumption,excluding resorts)
Tourism sector Resortsand transport for tourism (36%of allGHG
emissions in2009,increase of 67%expected until 2020;resorts produce
and consume 60%of nationalelectricity)
Geographically:MaleGreater Area(responsible for 33%of allGHG
emissions)

Maldives emit about 4.1tCO2eq percapita,while the international

goal has to be 2tCO2eq percapita by 2050!
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Challenges Renewable Energy (I)

Limitedspace for REinstallations
Possible building owner PVoperator conflict:Suitable roofs inMaleand other islands are onprivateand
public buildings whos owners or users are notwilling or capable of making REinvestments
Energy produced by solaror windnotreflected inequivalent reduction of diesel consumption (mismatch
between electric load and generation capacity)
Concerns about disposal of batteries
Privateoperators willhave to provide financing local credits notavailable or extremely costly
Foreign banks willask for longtermguarantee of repayment or add extrarisk costs (debt situation of STELCO
is notfavourable)
Duty exemption for REequipment notclearly defined customs indoubt what belongs to REand what not.
Othertax incentives are based ondiscrete decisions of the GoM,butthere is no legalentitlement
Paralleloperation of REsystems and diesel generators by separateparties may create conflicts onsmaller
islands.
Exploitable REpotentialis limited(either dueto low resources,suchas windand biomass,or dueto
unavailable commercial technology,suchas inthe case of ocean energy);PVon1%of land area can
generate about 660GWh/a current electricity already higher
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Challenges Energy Efficiency(II)

Current building requirements donotfully target EEaspects (only minimum
window area for natural ventilation is determined)
No standards for minimum energy efficiency of appliances inplace
Consumers notaware of energyrelated aspects
Tariffs notcostcovering and subsidies across allconsumption levels reducing
incentive for lowering energy demand +highburden for MoG budget
Continuous statistics onenergy supply and demand and assessment of energy
consumption invarious sectors notyet available (MEAworking ondata collection)
Electricity generation inMalealready operating atthe upper limit highrisk of
future blackouts or unserviced demand
Highenergy consumption growth counterproductive for any efforts of increasing
REshare
Trainingof professionalsonREand EEis essential
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Subsidies for electricity

Subsidies only for Malewere Rf 13.5min2011.

Morethan 50%of this amount went to customers with amonthly bill of more than RF1000.

Onaverage 57%of domestic electricity costs is covered by subsidies.

Subsidies should be targeted atlowincome households and atregions where electricity

generation costs are excessively high.

Subsidies should notbe paid to utilities,butto people inneed.

Generalsubsidies are providing the wrong signal for energy efficiency.

Subsidies are needed where nonsupportwould lead to major economic downturns and
social conflicts.

Subsidies should notassist ingenerally maintaining lower prices for energy supply (this will
lead to increasing burdens for the nationalbudget if fuel market prices go up).
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What are realistic targets ?

Mainobjective:Climate or Carbon Neutrality ?
D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

What can be achieved within the next 1015years?

(former GoM announced target of 60%solarcoverage of electricity demand by
2020;30%solarcapacity willlead to about 10%of totalelectricity generation in
Male)
RPStargets for islands/utilities?
(most adequate insetting up within tendering process;investor has to
demonstrate upfrontthat hewillserve acertain share from REsources;regular
RPSwillfail without adequate sanctions inplace)
EEtargets (e.g.energy intensity inMWh/US$GDPdecreased by 1%/a)or sales of
energyefficient equipment increased by .
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Renewable Energy:
Outer Islands
D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Bringing REto outer islands is important as asocial measure (if generation costs can be lowered)and for
securing energy supply,butrelatively low impact onnationalGHGmitigation.
REsupply should be tendered always with the objective to take over the complete island supply as IPP
(includes operation of diesel generator).Grid operation and distribution (including consumption metering)
should be left with FENAKA.
Within tenders,the GoM should request minimum shares of REelectricity generation;this share should be
incrementally raised over the contractual period.Sanctions need to be determined incase of non
compliance.
ThePowerPurchase Agreement(PPA)should be based onthe price offered by the bidder.If subsidies are
needed to cover costs they should notbe higher than inthe lastyear of 100%fossilfuel based generation.
Consumertariffs should be raised stepbystep to the point of full cost recovery for generation and
distribution (including profit margin).
Local administrations should be involved inany decisionmaking processes (and possibly even participate
actively inthe generation process this would raise the acceptance among the local population).

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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Renewable Energy:
Greater Malearea

Some roof space exists inMalefor PV,butit needs to be assessed if it can house 11MW(SREP).All
new highrise buildings should be obliged to reserve roof space for PVinstallations.
Newdevelopments onHulhumale offer sufficient room for PVinstallations:HDCcould sign contract
with third parties for installation and operation of PVsystems onsocial housing complexes.Private
developers could be inspired to use PV.
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Renewable Energy
Netmetering /FIT/Auctions
D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Netmetering for those REoperators that primarily produce for selfconsumption; banking possible into
future billing periods,butno reimbursement for excess electricity.Dueto space limitations options to allow
for wheeling of electricity should be considered (REgeneration remotefrom location of electricity
consumption)
FeedinTariffs (FIT)should be paid only to those inthe private,commercial or public sector inthe Greater
Malearea that are exclusively operating REplants and feed allor part of the generated electricity into the
grid.
FITshould be well below consumer tariff level and reflect costs for maintaining diesel backup and
transmission. (Thecurrent production cost of STELCOis inthe range of US$0.30perkWh.Thedifference
between full costs and FITneeds to cover transmission,administration and backup power.)
PowerPurchase Agreementfor Operatorsof hybridgeneration systems (wind/solarwith diesel)onouter
islands based onoffer inbidding process (auctions).PPAprice needs to be lower than former generation
costs inclusive of subsidies.
Acceptable price levels for FITand PPA(maximum)need to be established !
Administrativerequirements and costs for permissions should be kept atthe very minimum !
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

InterconnectioninGreater Maleregion

Cablebetween Maleand Hulhumale should be realized as soon as possible.

PreFeasibility study already existing.
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Energy Efficiency
Energy audits for largerbuildings could be undertaken
and encouraged by GoM and STELCO(starting with
public buildings),benchmarking of major buildings
Utilitiesshould provide EEinformation to their
customers (e.g.saving tips onbackof bills)
Retailers and staff should be encouraged and trained
to display and explain energy efficiency labels if they
come with imported electrical appliances and are
relevantfor the Maldives
Website/brochure with information onEEof major
domestic appliances
Comparative consumption measurements of
appliances inpublic places (stores etc.)
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Energy Efficiency
Replacement programmes for outdated
refrigerators and a/cunits (old units use up to 4
times more energy than new ones)
Indication of quality standards for CFLs
EEbuilding standards for new housing
settlements,inparticular inHulhumale (HDCin
the lead)
Guidelinesfor energyefficient buildings (GEF
Project)
Informationand Awareness campaigns for
consumers (see example of St.Vincent)
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

TransportSector
Use of imported biofuels (bioethanol and biodiesel)
for either replacing 100%conventional fuel (diesel)
or for blending with regular fuel (gasoline) integral
assessment needed
Landand sea based transport:Taxing of CO2
emission instead of engine capacity
Motorbikeand car sharing as aviable solution ?
Pilotproject with hybridsolarferry for short
distance transport (example of HongKong)
Introduction of bikerental system inMaleand
nearby islands (example of MexicoCity)
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ResortIslands

D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Within the licensing process,GoM could set criteria for

energy efficiency,minimum use of REsources and other
CCmitigation initiatives
E.g.,GoM could request that allresorts supply hot water
either from solarwater heaters or from generator waste
heat
Bilateralagreements could be signed between tour
operators,GoM and resort owners
GoM/MATIcan promoteuse of internationalGreen
Labelsor provide own Awardor Labelfor CC
commitment of resort operators/owners.Background
needs to be transmitted downto the individualtourist
(need for ecological rating)
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Financing
Carbon tax could be considered onimport of fossilfuels which would feed
into the GreenFundand finance extracosts (see example of Mauritius)
Local banks should be brought onbord;normalinterest rates could be
compensated by limitedgrants from the GreenFund
Guarantee issue needs to be solved for longtermREinvestments
Fiscal incentives need to be clear and nonnegotiable (reduction or waiving
of duties and sales taxes)
Airportdeparture tax (currently US$12included inflight ticket)could be
raised and increment used for feeding the GreenFundor direct CC
measures inthe tourism sector
Priority spending sectors from GreenFundneed to be defined
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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Education/Capacity building
Advanced training needed for professionalsonEEand RE
(electricians,architects,sales personnel etc.)
Technicaleducation institutions need to be made fitfor suchtraining
Trainingfor technical personnel should have astrongpractical
component (possibly small PVinstallation needed for demonstration)
Some training can be done through internationaloffers of distance
elearning onthe internet

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D.Loy:Roadmapto Carbon Neutrality inthe Maldives,April16,2013

Institutional capacity

Energy Agency

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