Enabling Factors Facilitating an Increase in Access to Electricity in Rural Areas – Fiji as an Example United Nations Development Programme Climate Change.

Enabling Factors Facilitating an Increase in Access to Electricity in Rural Areas – Fiji as an Example

United Nations Development Programme

Climate Change and Energy Access in Island States - International Parliamentary Hearing for Legislators from Island States in

the ACP Regions, Port Vila, Vanuatu, 6‐8 Nov 2009

Thomas Lynge Jensen, Environment and Energy Specialist, UNDP Pacific Centre (PC)

Structure of Presentation

1. Energy Services & Human Development

2. Fiji Case3. Rural Electrification – Enabling

Factors 4. Role of Policy Makers 5. References

Energy Services & Human Development

• Energy Services – Are benefits that energy carriers produce for human well

being

• What matters Most for People in Poverty/Hardship

1. The energy service not the source2. Whether the energy services are accessible, reliable,

and affordable • Energy Services and Human Development

– Lack of access to quality energy services, including from electricity is a situation that constraints the delivery of social services, limits opportunities for people and erodes environmental sustainability

– It is clear that without access to adequate quantity and quality of modern energy services, achievement of the MDGs will not be possible

Energy Services & Human Development (#2)

• Main Areas of Policy Action to Achieve the MDGs– Energy for cooking– Electricity for lighting, ICT, and appliances – Mechanical power– Modern fuels for heating

Energy Services & Human Development (#3)

• Rural Electrification Objectives – To assist with poverty/hardship reduction – To assist in the provision of basic social services– To improve the standard of living and increase

quality of life – To address local health and safety issues– To assist with economic development including

income generation – To assist with the reduction in the number of

people migrating to urban areas– To assist with national integration

Fiji Case

• Significant Increase in Access to Electricity in Rural Areas

Fiji Case – How?

• ‘Bringing People to Electricity Supplies’– Very Little Population Growth – Increasing Urbanization

Fiji Case – How?(#2)

• ‘Brining Electricity to the People’– A consistent political goal over several decades– Supportive policies

• In particular a Rural Electrification Policy– A dedicated government institution that focuses on

rural electrification• Rural Electrification Unit at the Department of

Energy – Setting of quantitative access targets– Allocation of recurrent allocations from the national

budget• Supported by resources from development

partners

Fiji Case – Lessons Learned

• The Importance of Political Will and Long-Term Commitment

• Stand-Alone Diesel Schemes – Been a problematic approach to rural

electrification • The Main Justification for Rural Electrification is not

Income Generation – But a critical component in provision of basic

social services, improving the standard of living/quality of life, etc

• Making Electricity available in Rural Areas is a Formidable Challenge – But possible

Rural Electrification – Enabling Factors

• No Single Way of Achieving Electrification – Either from a financing, implementation or from

an technology viewpoint• Political Will

– Undertaking the challenges of rural electrification will require strong political determination

– Where progress in getting modern energy services to the poor has been made, it has usually resulted from political will and appropriate public policies

Rural Electrification – Enabling Factors (#2)

• Policy Framework– A Rural Electrification Policy (REP) is expected

to facilitate in the following ways• Defining development priorities and

standards• Establishing regulations and procedures for

guiding project implementation and management

• Developing institutional capacity and facilitating coordination

• Establishing a legal and financing framework that encourages electrification development in accordance with specified priorities

Rural Electrification – Enabling Factors (#3)

• Legal Framework– In many cases reform of the existing legal

framework is needed• Many current key laws are old and, at the

time they were drafted, rural electrification was not a government priority

– A broader framework is needed• To support rural electrification delivery

models based on state, private and community ownership

• To facilitate the development and exploitation of indigenous renewable energy sources

• To provide a platform for attracting donor support and mobilizing private investment

Rural Electrification – Enabling Factors (#4)

• Financing Framework– With a generally low willingness-to-pay and

low household savings, rural people are unable to meet the relatively high costs of rural electricity

– Therefore if there is to be a large uptake of rural electrification, both loan financing availability and subsidies will be needed. Mechanisms could include

• Loans to households• A Rural Electrification Fund • Provide capital subsidies• Waive import duties, etc on approved

renewable energy equipment

Rural Electrification – Enabling Factors (#5)

• Institutional Framework– A mix of rural electrification delivery models

• Conventional government owned operations• Private sector operations• Public-Private-Partnerships• Community ownership and co-operatives

– A dedicate agency to mange and promote rural electrification

• Establish electrification targets & prepare master plans for achieving the targets

• Establish rural electrification subsidy policies

• Issue and administer licenses for rural electrification supplies

• Monitor and evaluate the progress

Rural Electrification – Enabling Factors (#6)

• Electricity Pricing – Problems with a Uniform National Tariff

• Effectively prevented/slowed the development of grid systems to areas where the national utility does not maintain a subsidized grid

– Flexibility in the Setting of Tariffs is Needed• Such would better stimulate new

electrification projects, and improve the sustainability of existing systems

Rural Electrification – Enabling Factors (#7)

• Technical Framework – Three Basic Electricity Delivery Configurations • Off-grid, mini-grid and grid – Some of the Available Electrification Technologies

Generating-Types

Off-grid Mini-grid Grid-connected

Solar PV + + +

Wind + + +

PV-wind hybrids + +

Biomass Steam +

Pico/Microhydro + +

Mini-Hydro +

Large Hydro +

Geothermal +

Diesel/Gasoline Generator

+ + +

Rural Electrification – Enabling Factors (#8)

– Findings from WB Assessment (2007) • Renewable energy is more economical than

conventional generation for off-grid (less than 5 kW) applications

• Several renewable energy technologies are potentially the least-cost mini-grid (5-500 kW) generation technology

• Conventional power generation technologies remain more economical for most large grid-connected applications (even with increases in oil price forecasts)

– These Findings Suggests• Scale is a critical aspect affecting the economics

of different generation configurations • Choosing generation technologies and

electrification arrangements are becoming a more complicated process

Rural Electrification – Enabling Factors (#9)

– Technical Standards • The electricity industry in many countries has,

until now, centered on urban electrification and associated technical standards

• In rural areas, though, there are a number of situations where application of appropriate technical standards would lead to lower costs without compromising safety

– However • Developing the energy technologies needed

seem to present less of a challenge than mustering the political will and developing the human capacity to employ them effectively

Role of Policy Makers

• Role of Policy Makers in the Energy Sector – It is vital that policy-makers recognize the

contribution that modern energy services could make to sustainable development • And fund it accordingly

– The role of government is an important one • As only they can create the right policy

environment– Success depends on developing the right mix of

frameworks and mechanisms

References

• ADB, Republic of the Fiji Islands: Rural Electrification Project, April 2005• EC & UNDP, Energy as Tool for Sustainable Development for African,

Caribbean and Pacific Countries, 1999 • ESMAP, Technical and Economic Assessment of Off-grid, Mini-grid and Grid

Electrification Technologies, Technical Paper, 121/07, December 2007• Jensen, Thomas L., Energy and Poverty in the Pacific Island Countries –

Challenges and the Way Forward, Pacific Regional Energy Officials Meeting, Tonga, 20-22 April 2009

• Jensen, Thomas L., A Comparative Analysis of Experiences with Expanding Energy Services for the Poor in Asia-Pacific - Case Study of the Fiji Rural Electrification Programme, 2 Draft Version, Nov 2009

• SOPAC, Review of Solomon Islands Electricity Act and Rural Electrification Framework, 2006

• UNDP, Energy for Sustainable Development – A Policy Agenda, 2002 • UNDP, World Bank & ESMAP, Energy Services for the Millennium

Development Goals, UN Millennium Project, 2005• UNDP, Energy and Poverty in the Pacific Island Countries – Challenges and

the Way Forward, 2007• UNESCO, Solar Photovoltaic Project Development, 2003

Thank you