Photovoltaics

Forty renewable projects on the Pacific islands secured a total of $635m in loans and grants in a two day meet-up with international aid donors at the Pacific Energy Summit in Auckland that took place earlier this year. Along with the funding, we hear some focused advice.

By Susan Kraemer

The funding targeted to Pacific island projects means that half the energy used by most Pacific nations will come from renewable resources within five years. And given the over-performance of the first arrays deployed in the region, much of the renewable energy mix will be made up of solar projects. 

While the news is very promising, there are some roadblocks to be observed, such as fear to bureaucratic inertia - itself the result of fear. 

The issues at hand were already envisaged, therefore the summit brought together developers, governments and international donors to try and work through these problems with some focused workshops.

Once burned, twice shy

Ira Magaziner from the Clinton Climate Initiative gave some very good advice to the governments of small Pacific Island nations not accustomed to distinguishing friend from foe in dealing with energy developers. These nations have become dependent on diesel for electricity, the result of previous energy decisions, and now pay as much as 85 cents a kilowatt hour wholesale for electricity.

Leaning forward on the table conspiratorially, as if chatting over a beer with a few friends, he addressed the impressive line-up of Pacific Island heads of state arrayed in the front seats before the podium.

“Look, if you take a point of view of a government that’s trying to deal with its energy sector and its energy is very expensive using diesel: it’s eating up a lot of your foreign exchange,” he began.

“It’s dirty, it’s expensive - and what are your options? The good news is that you should be able to have projects that provide a very good economic return - because of your bad news. You’re paying so much for your electricity now that renewable projects can provide you with a much lower price.”

‘Bad guys’ protection

Magaziner offered help from the Clinton Climate Initiative in assessing what he called “fly-by-night developers” who will “come in and exploit small governments”. It was as direct a warning as possible to the hundreds of solar, wind and ocean energy developers in the audience not to pick up where the diesel industry left off.

“Because a lot of governments have been in that position of being exploited, or know of others that have been in that position; there’s a lot of suspicion on the government’s side,” he explained.

The result, he says, is that governments become hesitant about involving the private sector, even as they have set targets for the development of new clean energy projects that are among the most progressive in the world.

He said the hesitancy can be mutual. “The private sector on the other hand, looks at small nations and says ‘This is unpredictable. I don’t really know them. I’m not going to have a big business there, so do I really want to get involved? They’re too remote and difficult for me to get to.’”

A representative from Beca, an Australasian engineering and construction firm, however, disagreed with this sentiment, while acknowledging the difficulties.

“Absolutely the most success that we’ve seen is when we’ve got people on the ground, making things happen, in country,” said Beca’s Technical Director of Project Management Rob Hills. “And without that, then we tend to see things struggle to get off the ground.”

Beca is involved in a wide range of energy and industrial projects in the region, from hydrocarbon intensive to heavy industry. Asked if he would agree that the private sector is good at expanding energy markets, Magaziner was candid.

Public ownership preferable

“Frankly, in small nations, if they can afford to do it themselves as the government, I would do it as the government,” he replied promptly, while acknowledging that they might not be able to afford to self-fund. “If you can, do it yourself. Then you have more control,” he added.

An example of control might be where the donor has an effect on the choice of developer. The New Zealand government gave NZ$65m in grants for renewable projects.

PV Insider spoke with John Van Brink, CEO of Tonga Power about one of the projects funded, a solar array that was completed in August of 2012 for the Kingdom of Tonga.

“The PV was fully funded by the government of New Zealand, but through Meridian Energy. They will still own the facility for five years, and they provide a support service to Tonga Power, and they provide training for operational support,” he says. But in five years, they will turn it over to the Tonga government.

Meridian Energy is one of the big four energy generators in New Zealand, but lacks PV experience. Van Brink says they were comfortable with them anyway, despite their lack of solar development experience, because they had gained some experience when they bought into a PV project in California.

Although it is reportedly difficult to get new solar power on to the New Zealand grid (Meridian has mostly hydro and some wind) he believes they want to develop their PV skills. For them, the islands are an easier sell than the New Zealand market, which is already abundantly supplied with hydroelectric power, geothermal and more recently, wind power.

Grant funding eases decisions

But what clinched the deal for Tonga Power was the grant funding for this project, at $7.9m out of $65m in grants from New Zealand. Meridian Energy is 100% owned by the government of New Zealand, although it is one of the public assets now being partially floated for private investment, a very controversial move in New Zealand.

Tonga Power likes PV’s advantages in operations and maintenance; because with solar there are per se no moving parts. And performance to date in most cases has exceeded expectations.

“The PV is doing very well,” he says. “It’s outperforming itself about 10% better than what it was designed for. The original panel output was to be something like 285 watts each and the ones delivered were something more 304 watts each. So when we thought we might get 1.2 MW, we put 1.4 MW on the grid.”

Big future for Pacific solar once fear overcome

It is a small beginning. This first project will supply only an estimated 4% of Tonga’s electricity demand, but Tonga through its strategic development plan is actively looking for new projects to meet 50% of its electricity from renewables within 5 years.

And Tonga is not alone. The expected result of the $255m in grants and $380m in loans for renewable energy in the Pacific will signify that half of the electricity will come from renewables within five years throughout nearly all of the Pacific nations. Given the over-performance of the first arrays like this, much of this will likely be met with solar.

“There ought to be a way to sort this that allocates risk and protects everybody” Magaziner proposed at the Summit. With his direct and straightforward offer of real help from the Clinton Climate Initiative, he cut through the fear that has paralysed decisions.

“Let’s figure out how to get it all built. Let’s figure out who are reputable partners. Let’s figure out how to get the money in the door in our lifetime,” he urged. “You do not have to build gigawatts of energy, it’s just megawatts of energy, and that ought to be possible.”