CONTENTS

APPENDIX A - Provincial Renewable Energy Options                                                                       35

APPENDIX B – Barrier Analysis                                                                                                         45

1. Minister’s Foreword

The Renewable Energy Strategy and Investment Plan (RE-SIP) lays out the Solomon Island’s renewable energy targets and policy outcome and strategies and financial requirements for achieving a sustainable energy future for all Solomon Islanders.

The Solomon Islands is blessed with potential renewable energy resources however most of these resources have not been exploited due to a number of barriers and challenges including the geographical locations of these resources which are far away from available demand. In addition, there have been limited opportunities in terms of financial and technical resources and capacities, our cultural and social issues to enhance the use of these resources. These challenges have contributed to a low percentage of total populations having access to electricity.

The government realised the potential that the energy sector will contribute to the economic growth and therefore has included the energy sector as its priority list for investment. In 2009 through its foreign investment reform, the government has created better enabling environment for private sectors and investment through the amendment of its Foreign Investment Act 2005 and Regulation 2006. The government is looking well ahead to the contribution of the two renewable energy developments being supported for private investments; the Tina Hydro Power Development and the Savo Geothermal Project.

The targets that have been assessed and adopted in the 2014 National Energy Policy for utilising the renewable energy potentials are promising for all Solomon Islanders. The potential for renewable energy use and technologies for power generation has been assessed through the Asian Development Bank Renewable Energy Investment Plan and has identified renewable energy targets for the short term (2020), the medium term (2030) and long term (2050). There is expectation that the 100% renewable energy share in the power generation can be achieved by 2050. The RE-SIP is a five years strategy, therefore will provide guidance to meeting the short term renewable energy target of 50% renewable energy by 2020.

The Energy Division of the Ministry of Mines, Energy and Rural Electrification is to coordinate the effective deliverables of the RE-SIP and the SINEP policy outcomes for rural electrification while the state owned utility, the Solomon Islands Electricity Authority will coordinate the implementation of renewable energy options for the urban areas, including its outstations in the provinces.

Again I need to reiterate the need for the activation of a national Energy Advisory Committee , comprised of high –level multi-sectoral members tasked with assessing, monitoring the progress of  the RE-SIP including other energy strategies and investment plans and to achieve the overarching focus area of our National Development Strategy; building better lives for all Solomon Islands.

It is with great pleasure to know that this RE –SIP when implemented effectively will contribute to improving the livelihoods of all the people of the Solomon Islands through the access to sustainable, appropriate and affordable energy services and therefore I urge all stakeholders and those that have interest in this RE –S IP to provide support, guidance and advice throughout its implementation and  its future continuation.

I wish to thank all national stakeholders including the communities and the development partners that have contributed toward developing this renewable energy strategy and investment plan.

Hon. Moses Garu

Minister for Mines, Energy and Rural Electrification

2.    Executive summary

The Renewable energy strategy and investment plan (RE –SIP) provides a way forward for strengthening the renewable energy sector in the Solomon Islands, highlighting the potentials and investments for  the renewable energy options,  resources and technologies.

The RE-SIP has three main objectives;

1. Provides guidance including funding requirement in utilising the renewable energy potentials and therefore increasing the access to appropriate, reliable, sustainable and affordable energy services. In both the urban and rural areas.
2. To identify and provides plans on how each of the un-electrified rural and urban households of the Solomon Islands will be served with an appropriate and affordable renewable energy technology.

1. Provides policy guidance and instruments (standards, regulations, net –metering policies) to enhance the use of renewable energy resources and their potentials.

The Solomon Islands government has set a 50% renewable energy use for power generation by 2020 to be achieved through its Tina Hydro Development Project and the Savo Geothermal projects, both developments to be commissioned by the end of 2017.

The RE –SIP includes both renewable energy options and investments for solar and hydro resources for both rural and urban areas. The RE-SIP proposed rural electrifications to all households, provincial centres and institutions, through micro grid solar and hydro and solar home systems for rural households.

The RE-SIP has one policy outcomes which is aligned to the 2014 Solomon Islands National Energy Policy (SINEP); the use of renewable energy sources for power generation in urban and rural areas increased to 50% by 2020.

There are three policy statements which are aligned to the strategies;

1. Establish an appropriate, reliable, affordable and sustainable energy-based power supply systems
2. Assess, cost, promote and enhance the potential for renewable energy resources
3. Facilitate partnerships in development of renewable energy development

The RE-SIP is based on achieving the SIG 2020 target of 50% of energy being supplied by renewables in particular the Savo Geothermal, Tina Hydro Development, micro grid hydro where  there is water resources available and sola PV for SIEA outstations and standalone solar PV systems of 100Wp for rural households. Land issues are still key challenges in particular for the use of hydro resources and therefore solar home systems can be considered the best option for rural areas, when land issues, population density and access are taken into account.

The RE-SIP will require a total investment of $75.00 million to 2020 to achieve a 44% country wide household electrification rate and a total investment of $234.15 million to 2030 to achieve a 71% household electrification rate.

3.    Introduction

The REIP Report prepared under the Asian Development Bank technical assistance through its Provincial Renewable Energy Project provided much needed information for the development of the RE-SIP. The final report was presented to the Energy Division of the Ministry of Mines, Energy and Rural Electrification in June 2013. The REIP findings and recommendations was adopted as part of this RE –SIP while the policy outcomes and strategies were identified during the review of the 2009 SINEP and at the National Energy Forum conducted in Honiara in November 2013.

The RE –SIP is presented as Volume 4 of the 2014 National Energy Policy and Strategic Plan of the Ministry of Mines, Energy and Rural Electrification.

The RE –SIP is presented into three sections; the Energy Sector Overview, Renewable Technologies and Options, Renewable energy Strategy and Investment Plan.

Preface and Acknowledgment

The formulation of the RE – SIP strategy was done as part of the review and formulation of the 2014 Solomon Islands National Energy Policy (SINEP) and the formulation of the subsequent energy sub sectors strategies and investment plan ; the energy efficiency and conservation strategies and investment Plan (EE-EC-SIP) and petroleum strategies and investment plan (PET-SIP).

The Ministry of Energy, Mines and Rural Electrification has been instrumental in directing the development of SINEP and energy sub sectors strategy and investment plans as it sees a need for a more cohesive approach to its planning and that all its efforts are aligned to the National Development Strategy key focus areas. A five years approach to budget allocations by Parliament has also been adopted by the Solomon Islands Government in 2014 and this provides a clear direction in financial resources that are available against implementation of sectoral policies and strategies.

The RE- SIP is a five year plan and is intended as a guiding document to the Solomon Islands government and development partners.

4.  Energy Sector Overview

4.1  Physical Description

There are about 996 islands in the Solomon Islands (SI), totalling 28,450 square kilometres (km2), of which land accounts for 27,540 km2, dispersed over 800,000 km2 of sea. Approximately 350 islands are inhabited including the six main islands of Guadalcanal (the largest, where the capital Honiara is located), Malaita, Makira, Isabel, Choiseul and New Georgia. The group lies between 155o 30' and 170o 30' East longitude and between 5o 10' and 12o 45' South latitude, northeast of Australia. The climate is tropical monsoon, with few extremes of temperature and weather. The islands are mostly rugged and mountainous with some low coral atolls. The Exclusive Economic Zone extends to 200 nautical miles (370 km) with an area of 1.34 million km2.

Figure 1 Solomon Islands

4.2     Population

The population of Solomon Islands on 22 November 2009 was 515,870. This means an increase of 106,828 persons (26%) compared with the population size of 409,042 reported in the Census of 21 November 1999. The annual rate of growth since 1999 was 2.3%, which is lower than the annual growth rate between 1986 and 1999 (2.8%) census. Males were 51.3% of the total, out numbering

females by 264,455 to 251,415. About 80.3% of the population (75,916 households) lived in rural villages and 19.7% were considered urban. Overall, there were 17 people per km2 and the average household size was 5.5 persons. Urban and rural population by island is shown in.

About 63.5% of the 2009 urban population lived in Honiara, accounting for 12.5% of the national total. From 1999 to 2009, the overall population increased rapidly at an average annual growth rate (AAGR) of 2.3% per annum. The urban population grew even more rapidly with an AAGR of 4.7 %.

Table 1 Population of the Solomon Islands (2009)

Source: Solomon Islands Government (SIG), Solomon Islands National Statistics Office. 2012. Statistical Bulletin No 6: 2012, Basic Tables and Census Description, 2009 Population and Housing Census. Honiara

Table 2 Growth of Urban Population 1976-2009

Source: Solomon Islands Government (SIG), Solomon Islands National Statistics Office. 2012. Statistical Bulletin No 6: 2012, Basic Tables and Census Description, 2009 Population and Housing Census. Honiara

Table 3 Honiara Population and Persons per Household 1970-2009

Source: Solomon Islands Government (SIG), Solomon Islands National Statistics Office. 2012. Statistical Bulletin No 6: 2012, Basic Tables and Census Description, 2009 Population and Housing Census. Honiara

4.3  Economic Overview

The economy of the Solomon Islands is made up of a mixed subsistence sector on which the majority of the population is dependent, and a small monetised sector dominated by large scale commercial enterprises. These sectors straddle both rural and urban space. Production in the mixed subsistence sector includes household production for self-consumption and surpluses for sale to local and urban markets as well as household production of cash crops for the export market. The monetised sector comprises commercial enterprises and organisations involved in primary production, manufacturing and the service industries. This includes the provision of public goods and services by the government and goods and services provided by statutory bodies.

The Solomon Islands dollar has performed erratically against major currencies for well over a decade with a slight appreciation in 2011. The appreciation came about as a result of a 5% revaluation of the Solomon Dollar in June 2011.

Between 2007 and 2009, GDP in real (constant dollar) terms declined by 1.2% as a result of the global economic crisis. CBSI reported in its annual 2011 report “Despite subdued growth in the global economy, Solomon Islands economic performance registered another year of record growth. The economy grew in real term by 10.7% in 2011. This growth was driven primarily by strong performance in commodities particularly logs and minerals during the year. Non-forestry & non-mining sectors also contributed to the overall growth, boosted primarily by activities in the agriculture, telecommunications & transportation, construction and fisheries sectors. Strong international commodity prices across the year, especially in the first six months, generally lifted production levels in the agriculture, fishery and other commodities. Higher trade volumes boosted growth in the transport sector, whilst investment in development infrastructure projects contributed to growth in the construction and communication sectors.”

Performance has been improved considerably for the modern monetised sectors of the Solomon Islands economy. Table 4 shows economic growth - or contraction - by sector. Some key indicators of commodity production are also provided in Error! Reference source not found..

Figure 2  Change in Real GDP (2002-2011)

Source: CBSI. 2011, 2012. Annual Report. Honiara

Table 4 Real Gross Domestic Product 2002 - 2012 (1985 = 100)

Source: CBSI. 2013. Quarterly Review. Honiara

Table 5 Production by Major Commodities 2000 - 2012

Source: CBSI. 2013. Quarterly Review. Honiara

In 2011, the GDP in nominal (current dollar) terms was $5,578 million, an increase of 17% from a revised 2010 level of $4,754 million. This presented an increase by 15% to $10,332 per capita.

4.3.1                    Household Expenditure

The 2005/6 household (HH) income and expenditure studies suggest that incomes and expenditures vary considerably by province. The survey report states “In theory, household income should equal household expenditure but in practise as in most income and expenditure surveys in the pacific region, the information collected from the HIES 2005/6 recorded that a majority of the households’ income were relatively lower than their corresponding expenditures”. Households’ annual expenditure to its annual income by province Error! Reference source not found. shows that expenditure in  most cases was significantly higher than income. In Honiara expenditure was well above those of other locations. In 2005/6, Honiara residents had an annual average household expenditure of about SI$ 75,053 per household or SI$ 4,887 per capita.

Table 6 Average Annual Household Per Capita Expenditure and Household Size by Province

Source: SIG, National Statistics Office. 2006. Housing Income & Expenditure Survey (HIES) 2005/2006. Honiara

4.3.2                    Investment Climate

The ease of doing business in the Solomon Islands has improved significantly since the passage of the Companies Act and the Foreign Investment Act in 2009. It has been recognised by successive governments, the importance of overseas investment in broadening the economic base.

The 2013 ranking by World Bank and International Finance Corporation places Solomon Islands at:

• 92/185 for ease of doing business placing it 13th in the Asia Pacific region of 24 counties
• 9/185 for starting business, making it much easier to start a business, (apart from Samoa and Tonga) than most of the other Pacific Island Countries
• 18/185 for getting connected to the electricity grid, it is easy to connect to the grid in the Solomon Islands on an International basis but difficult in comparison to others in the region
• 8/185 for protecting investors and 15/185 for obtaining credit. These rankings indicate relatively high levels of investor protection.

Since the commencement of the Foreign Investment Act 2009, proposals that usually take a minimum of 30 days to approve can successfully be completed in 5 days. Approvals that are subject to exchange control approval has been relaxed which has resulted in the shorter timeframe for registration.

Land is a complex and integral part of the Solomon Islands way of life and generally communally owned by clans or tribes. Children inherit land rights through either the father or mother depending on the lineal system practised by the particular clan. Title to land is either customary or registered and means that:

• The Government recognises that all customary land is owned, usually in a lineage group; registered land has its ownership and boundaries recorded in a land registry in Honiara and these are guaranteed by law rather than by custom.
• About 88% of land is customary and 12% registered. In 1977,  an Amendment Bill to the Lands and Titles Ordinance converted perpetual estates registered and owned by non- Solomon Islanders and Solomon Islanders alike into 75 year fixed term estates (leases from government) with development conditions.

4.4 Institutional Arrangements for Energy Sector

4.4.1                    Energy Policy

A number of draft energy policies have been developed since the 1980s, including the following:

• Solomon Islands National Energy Policy and Guidelines (1995), which included an annex, titled Solomon Islands Rural Electrification Policy - Background.
• National Economic Recovery, Reform and Development Plan for 2003-2006 (NERRDP), issued in October 2003.
• National Energy Policy Framework, endorsed by Cabinet, 2007.

4.4.2                    Energy Legislation

The following acts of parliament of the Solomon Islands deal directly or indirectly with energy issues:

• Electricity Act (1969)
• Petroleum (Exploration) Act (1996)
• Petroleum Act (1939).
• Consumer Protection and Price Control Act (1995)
• Environmental Act (1998)

The Electricity Act (1969) (Chapter 128 of the Laws of the Solomon Islands) and associated regulations provides a legal framework for is the establishment of a state-owned, vertically integrated utility providing grid supply to urban and provincial centres. In 1982, the Act was amended to align  with utility practice at the time and allow the SIEA to expand its jurisdiction.

The Consumer Protection and Price Control Act (Chapter 64 of the Laws of the Solomon Islands) was revised in 1995. It establishes price control rules throughout the country including price control of petroleum products and LPG. No legislation has yet been enacted for regulating biofuels.

The Environmental Act (1998) commenced operation in September 2003 and its associated regulations were gazetted in 2008. Under the Act there are formal requirements for environmental impact assessments, and requirements for energy sector investments such as power stations or oil storage, these are specifically mentioned under the second schedule (section 16) “Prescribed Developments”.

4.4.3                    Energy Division

An Energy Division within the Ministry of Mines, Energy and Rural Electrification is responsible for energy policy, renewable energy development and project implementation. The Director of Energy is responsible to the Permanent Secretary, appointed through the normal public service mechanism, who in turn is responsible to the Minister.

The roles and responsibilities of the Energy Division include:

• Develop and monitor a national energy work programme(s) by which energy policies will be achieved
• Coordinate activities and programmes of the energy sector participants
  • Develop and maintain a comprehensive energy sector database for policy formulation, planning and monitoring through the collection and collation of information on energy supply, demand, etc.
  • Monitor, review and provide recommendations on fuel pricing electricity tariffs, and government charges and subsidies, to ensure that the full and correct price signals are conveyed to consumers wherever possible
  • Develop and maintain the capacity to monitor and evaluate the landed price of petroleum, the petroleum company cost elements, the pricing formula, and government charges so as to negotiate and maintain equitable pricing and proper contractual arrangement for petroleum products
  • Monitor, review and provide recommendations on future developments in public and private energy sector infrastructure. In particular, encourage public sector agencies to adopt a list cost, financially and environmentally sustainable strategy to meeting energy demand
  • Formulate and secure proposals for donor assistance where appropriate, and screen out those lacking in technical maturity economic viability or environmental sustainability
  • Provide advice to government and its agencies concerning energy investment budgets and / or specific project funding
  • In conjunction with other ministries and agencies, develop, implement and monitor regulations and standards governing the energy sector, particularly concerning the safety of petroleum handling/storage facilities and environmental guidelines for the petroleum sector, such as oil spill contingency plans and waste oil disposal
  • Work closely with the relevant government and non-government organisations on the environmental aspects of energy projects and programmes
  • Develop and assist in implementing energy conservation and efficiency programmes for the government, commercial sector and the public, including education campaigns and the evaluation of energy efficient appliances and technology
  • Develop education/awareness programmes to highlight fuel substitution options
    • Monitor and review the development of new and renewable energy resources and technologies particularly with regard to photovoltaic, solar thermal technology and biomass
    • Train local staff.

4.4.4                    Solomon Islands Electricity Authority

The Solomon Islands Electricity Authority is responsible for electric power supply and distribution to Honiara, nine provincial centres, and Noro Township in the Western Province. The SIEA is a state owned enterprise a statutory body established by an act of Parliament. The Minister of Mines Energy and Rural Electrification, along with the Minister of Finance, appoints a board consisting of six members and a chair.

SIEA provides power to urban centres through diesel generators, except for Buala town on Isabel Province and Malu’u substation in Malaita which includes supply by mini-hydro (both hydropower stations were not operational at the time of report). Various boarding schools, rural training centres, health centres, rural fisheries centres, tourist resorts, private shops and residents located away from SIEA grid use their own diesel generators, micro hydropower or solar PV to generate electricity. As shown in Error! Reference source not found., SIEA’s financial position has improved in  recent years since the 2010 net loss of $65,994,811. The SIEA 2012 annual report noted a year end net profit of $62,701,365.

Figure 3SIEA Net Profit/Loss ($SI million)

Source: SIG,SIEA. 2012. Annual Reports 2006-2012. Honiara

4.4.5                    Rural Electrification Service Companies (RESCOs)

There are a number of Rural Electrification Service Companies (RESCO) in the Solomon Islands that sell solar PV equipment. One RESCO (Willies Electric Power and Solar) specialises in solar pv

systems and has pioneered the concept of accepting local products in payment for solar installations, thereby avoiding the common problem in rural areas of poor access to cash. It also provides training in solar installation and maintenance. Since 2008, the SIG through the MMERE has acted as a partial RESCO and has been implementing solar electrification projects at rural schools and clinics as well as providing infrastructure for rural communities such as solar battery-charging stations and solar water- pumping.

4.4.6                    Petroleum Supply Companies

Petroleum products are imported into the Solomon Islands by South Pacific Oil and Markwarth Oil, both Solomon Islands’ based companies. The storage depots of both companies are at the main port in central Honiara. Origin Gas Ltd. of Australia is the sole importer and distributor of liquid petroleum gas (LPG). Origin’s main LPG storage is also in Honiara. Origin operates in Honiara and Noro in the Western Province and sells LPG to private outlets, some of which distribute to customers in other locations. Major users of LPG, apart from hotels and restaurants for cooking and heating, include air conditioning in Honiara.

4.4.7                    Inter-Ministerial Energy Committees

The establishment of a national energy committee was proposed in the mid-1990s but did not eventuate. A committee was set up to oversee the feasibility study activities of the Komarindi Hydropower Scheme. A similar set up was proposed for the UNDP/GEF/SPREP Pacific Islands Climate Change Project (PICCAP), which dealt with greenhouse gas (GHG) emissions and a national GHG inventory. The committee considered energy issues, as it must deal with GHGs, and the Energy Division was represented. PICCAP formally ended in 1999, the Solomon Islands Meteorological Services (SIMS) continues to deal with climate change/GHG issues and consults with the Energy Division through a Climate Change Country team. The team consists of representatives from government departments, NGOs, and the private sector but reportedly has not met since October 2002.

The committee arrangements have become inactive over the years as confirmed by the Energy Division. The Energy Division will pursue establishment of an Energy Advisory Committee in 2014. Following Cabinet’s approval (11 July 2013) to establish a “Labelling & Standards Steering Committee” to coordinate implementation of the Australian Govt funded “Pacific Appliances Labelling & Standards project”, the Energy Division plans to have this committee play the role of Energy Advisory Committee and to eventually assume that role after the PALS project is completed.

4.5 Energy Supply and Demand

4.5.1                    Energy Supply

The Solomon Islands are almost entirely dependent on imported refined petroleum fuels for national energy needs for electricity generation, for transport by land, sea and air and for lighting. Biomass provides more than 61% of gross national energy production, petroleum products for about 38%, and hydropower and solar are estimated as one percent.

4.5.2                    Cooking Fuel

Fuel wood is by far the most common cooking fuel in the Solomon Islands, used Error! Reference source not found. by 93% of the population as their main fuel, increasing to 97% if Honiara is ignored. Even in Honiara, more than half of households primarily use wood or wood products for cooking. Malaitans, who make up nearly half of Honiara’s population, have no traditional access to land on Guadalcanal and therefore undertake illegal cutting in the outskirts of the city. A commercialised fuel wood market is well established in Honiara. Supplies come mainly from secondary forest and logged over areas of Tenaru and Mt Austin, about 10 km from Honiara. Drift wood is also used as and when available.

Table 7 Cooking Fuel, by Household and by Province (2009)

Source: SIG. 2012. 2009 Population and Housing Census. Honiara

4.5.3                    Electricity

As Table 8 shows, only 21% of households in the Solomon Islands had access to electricity in 2009, ranging from well just over 8% in Central Province to 67% in Honiara. Overall, 56% of those households electrified received power from SIEA. Away from Honiara, only 37% of electrified households had SIEA service, 28% had their own source of supply, and 23% reported that they received electricity from a private company.

As Error! Reference source not found. shows, in 2012 total consumption was about 63.5 GWh of which domestic consumers accounted for 14%, commercial 63%, industrial 1% and 8% by Government. The Honiara system accounted for 89.7% of total demand, Auki 3.3%, Noro 2.6%, Gizo 1.9% and six others less than 1% each.

SIEA has a national tariff (Error! Reference source not found.), with substantial cross-subsidies from Honiara consumers to SIEA consumers on the outer islands. In early 2013, the cost of electricity was 86 US¢/kWh for domestic consumers and 92 US¢/kWh for commercial or industrial consumers. There is an ‘automatic fuel price adjustment’ (AFPA), varying with the cost of diesel fuel the present AFPA is 27 SI¢/kWh. Many businesses have their own generator due to frequent SIEA outages. If a business generates its own power in an SIEA service area, it is charged at a rate of half of the normal SIEA charge per kWh (except in Honiara where SIEA is unable to meet demand).

Error! Reference source not found. shows the annual maximum demand in each SIEA grid (system) in kW peak from 2000 to 2012. For the past twelve years and longer, peak demand has usually exceeded firm capacity e.g. during April 2013 one unit at Lunga Generating Station in Honiara was out of commission on a 10,000 hour maintenance overhaul which resulted in rotating load shedding. The CAGR (Compound Average Growth Rate) for maximum power demand across all systems for the last 10 years, 2003 to 2012 is 3.49%.

Table 11shows annual energy demand in each SIEA grid (in GWh per annum) over the last 12 years. The table shows that energy demand growth has been mixed and has probably been constrained by the lack of significant grid extension in recent years and the relatively high tariff, pointing towards supressed demand. The CAGR for energy demand across all systems for the last 10 years, 2003 to 2012 is 4.06%.

Table 8 Households by Source of Electricity & by Province (No. 2009)

Source: SIG. 2012. 2009 Population and Housing Census. Honiara

Table 9 SIEA Annual Energy Demand by Customer Type (MWh 2012)

Source: SIG, SIEA. 2013. Customer Demand Statistics. Honiara

Table 10 SIEA Tariff April 2013 (SI$)

Source: SIG, SIEA. 2013. Customer Demand Statistics. Honiara

Table 10 SIEA Historical Maximum Power Demand by System (kW Peak)

Source: SIG, SIEA. 2013. Customer Demand Statistics. Honiara

Table 11 SIEA Historical Annual Energy Demand by System (GWh/Annum)

Source: SIG, SIEA. 2013. Customer Demand Statistics. Honiara

4.5.4                           Prospective Demand Growth

Table 12 shows prospective SIEA peak demand to 2030 assuming a CAGR of 3.5% and Table 13shows prospective SIEA energy demand to 2030 assuming a CAGR of 4.1%. Both of these figures  are based on the SIEA historical CAGR 2003 - 2012. These growth rates can be compared with PIREP 2004 which assumed a) a base case of 4% CAGR, b) a low growth case of 2%, c) a high case of 6% and also with JICA 1998 which assumed a projected average growth rate of 5.2% for power  and energy. The projected power and energy demands are no more than roughly indicative but provide a basis for estimating future generation requirements until 2016. A horizon year of 2016  should provide sufficient time for the planned rehabilitation of the diesel outstations, the Lunga and Honiara diesel upgrades and the development of smaller scale renewable generation options. The larger scale renewable generation options on Guadalcanal including Tina River Hydro and Savo Geothermal, of indicative capacity of 20 MW each, will take longer to develop and construct and should be considered for meeting demand growth in the period 2015-2020.

Table 12 SIEA Projected Maximum Power Demand by System (kW Peak)

Source: SIG, SIEA. 2013. Customer Demand Statistics & Consultant’s Estimates. Honiara

Table 13 SIEA Projected Annual Energy Demand by System (GWh/Annum)

Source: SIG, SIEA. 2013. Customer Demand Statistics & Consultant’s Estimates. Honiara

5                                  

Renewable Technologies and Options

5.1 Geothermal

There are surface manifestations of geothermal energy in West Guadalcanal, the Ngokosoli river valley of Vella Lavella, Simbo Island, and Savo Island. There is an on-going feasibility study for a 20 MW geothermal generation plant on Savo Island. In the initial stages exploration of potential sites is required to identify good sites for geothermal based power generation, which will require the drilling of trial wells. Geothermal is a good resource for future base load renewable generation but may be constrained by difficulties with land acquisition, transmission line routing and volcanic activity. The economics of geothermal generation are also sensitive to scale.

5.2             Hydropower

There is substantial hydropower potential in the Solomon Islands. The total hydroelectric potential of the Solomon Islands is estimated to be 326 MW1. A feasibility study conducted by the SIG, with support from the World Bank and the Government of Australia, proposed a 15-20 MW hydropower

development on the Tina River near Honiara, with annual electricity production of 60 GWh. Feasibility studies on the Tina River hydropower scheme proposed for Honiara are continuing. The Energy Division is currently assessing 4 small-scale hydro schemes for provincial centres to reduce SIEA’s use of diesel-based power generation in outer island provincial centres2.

Table 14 Small Scale Hydro Feasibility Studies

Hydropower is attractive in the Solomon Islands for centralised power generation to supply the SIEA urban grids. Hydropower fed mini-grids can also be an option in rural areas depending on a suitable site location and water resources. As shown in Error! Reference source not found., there is a history of community rural based micro hydro plants feeding small mini-grids.

Table 15 Community Rural Based Micro Hydro Plants Feeding Small Mini-Grids

1 Japan International Cooperation Agency, Master Plan Study of Power Development in Solomon Islands, 2001, volume 1, p 5- 1.

2 Asian Development Bank, TA-8130 SOL: Provincial Renewable Energy Project, 2013

5.3             Ocean

Ocean energy would appear to be promising as an option based on extrapolating results from Fiji and Vanuatu. Annual average wave power could be roughly 14 kW/metre of wave front, with a wide range varying by site. However the technology for tidal and ocean generation is still in an early stage of development and therefore would not be an immediate option for renewable generation in the Solomon Islands.

5.4             Wind

There is little data on the Solomon Island wind energy potential derived directly from in country wind data logging. The NASA-NREL data derived from remote sensing, shows a poor wind regime in the Solomon Islands. The average wind speed is about 3.5 m/sec. On the basis of the NASA-NREL wind data, it is likely that wind power will have a higher LCOE than other renewable generation options presented.

The Energy Division is currently installing four wind monitoring systems in the provinces3. For a wind energy project it is essential to monitor and record wind speed data for minimum period of one year at potential sites. Thus in the absence of wind speed data, large wind power projects are not recommended. However small scale wind power projects may be used as independent stand-alone system or as a hybrid with solar. Small wind turbines are being used in places like hotels etc. in Honiara but they are unlikely to be financially viable. Due to the poor wind resource indicated by the NASA data and absence of actual site data, wind energy is generally not recommended as a renewable generation option.

5.5             Solar

As the Solomon Islands lies near the equator, there is considerable solar energy potential, with insolation values of 5 kWh/m2/day or higher which are among the highest levels in the region. A number of small-scale and demonstration projects are operational, including solar home systems (SHS) provided through Government funding since 2011 while Government of Republic of China (Taiwan) has supplied SHSs (2009) for all constituencies in the country and solar systems for rural schools. The respective Governments’ of Italy & Turkey have complemented the Government of Solomon Islands programme to provide solar lighting for rural-based schools including boarding schools and rural clinics. In September 2012, the Government launched a 2 year-pilot project on installation of SHSs for 2000 households in the country that requires each household to pay the cost of installation (including transportation) and operation & maintenance costs over the 2 years period. RESCOs contracted by the Government will install the SHSs and service the systems over the lifetime of the pilot phase4. Depending on the outcome of the pilot phase, the Government plans to rollout this

programme to cover rest of the rural population. There was a solar lighting scheme through SOPAC/REEEP co-operation, with tailored financing mechanisms, allowing recipients to pay for installations via non-fiscal means, for example with crop production.

3 Pacific Islands Greenhouse Gas Abatement and Renewable Energy Programme

4   This project is funded under the Pacific Environmental Fund provided by the Government of Japan

There is no data on solar radiation (direct and indirect) available in the Solomon Islands based on terrestrial measurement over an extended period of time. NREL-NASA data indicates the Solomon Islands are endowed with good year round solar radiation resource (5.1 kWh/m2/day to about 5.6 kWh/m2/day direct normal annual average). This is one of the more abundant renewable energy resources available in the Solomon Islands. The main advantages solar energy has in the Solomon Islands are as follows:

• A good solar energy resource is available in almost all provinces, even in remote inland areas and can be used in stand-alone or household applications. Stand-alone and household solar will eliminate the construction of transmission and distribution lines
• A good year round solar resource
  • During the last year the cost of solar panels have fallen by about 50%  making  it  price competitive with other sources of fossil fuel and renewable energy generation.

5.6             Biomass

There are four options for using biomass energy in the Solomon Islands.

• Biomass gasification technology can be utilised for power generation using waste from the forestry industry or coconut processing industry.
• Direct combustion for power generation where biomass waste and by products are burnt to raise steam to generate electricity via a turbo alternator.
• Direct usage of coconut oil (CNO) as a substitute for diesel fuel oil or as an admixture to the diesel fuel for existing diesel gensets.
• Biodiesel manufactured from biomass - Biodiesel consists of long chain fatty acids  derived from vegetable oils or animal fats and can be used in diesel engines. Biodiesel refers to the pure fuel before blending with diesel fuel. Biodiesel blends are denoted as, "BXX" with "XX" representing the percentage of biodiesel contained in the blend (ie: B20 is 20% biodiesel,  80% petroleum diesel).

Biomass Power- Biomass Gasification

The first option for biomass based renewable generation is biomass gasification.  The  Solomon Islands have large palm oil plantations and the waste product from these plantations could be used as a feedstock for biomass gasification for power generation. The biogas produced by the biomass

gasification process can be used in dual fuel engines mixed with diesel (20% diesel and 80% biomass gas) and also alone in 100% gas engines.

The main disadvantage of biomass gasification based power plant is that it is a complex process requiring additional mechanical plant as well as diesel or gas engine genset to generate electricity. Due to the difficulty and cost of transporting biomass feedstock biomass gasification generation is  best located adjacent to processing industries which have an abundant biomass by product. The other disadvantage of this form of generation is that the gasification process involves a complex chemical and mechanical process and the capacity for managing this may not be available in rural areas.

Biomass Power- Direct Combustion

A direct combustion steam electric power system is for the most part indistinguishable from other steam electric power systems (for example, oil and coal) that combust fuel in a boiler to generate steam for power production. A biomass-fired boiler generates high-pressure steam by direct combustion of biomass in a boiler. There are two major types of biomass combustion boilers - pile burners utilising stationary or traveling grate combustors and fluidised-bed combustors. Current biomass combustor designs utilise high efficiency boilers and stationary or traveling grate combustors with automatic feeders that distribute the fuel onto a grate to burn. Fluidised-bed combustors are the most advanced biomass combustors. In a fluidised-bed combustor, the biomass fuel is in a small granular form (for example, rice husk) and is mixed and burned in a hot bed of sand. Injection of air into the bed creates turbulence, which distributes and suspends the fuel while increasing the heat transfer and allowing for combustion below the temperature that normally creates nitrogen oxides (NOx ) emissions. This form of biomass power generation is a complex process and relies on good operation and maintenance practices when running and maintaining the steam raising boiler and steam turbine.

Biomass Power - Coconut Oil

Most compression engines will run on coconut oil (CNO). The chemical and physical characteristics of CNO vary considerably from diesel which provides challenges for trouble free operation. The use of CNO as a substitute for diesel is technically feasible but as a minimum requires water free oil filtered to 2 micron and generally fuel heating and a higher degree of operator attention. The technical feasibility of CNO use in diesel engines requires the following fuel system and engine modifications to

avoid problems:5

• Fuel heating
• Blending fuel
• Additional filtration
• Dual fuel tanks for diesel and CNO
• Fuel pump replacement
• Injector replacement
• Conditioning of CNO prior to use
• Additional monitoring of engine and lubrication system
• Earlier replacement of filters
• Earlier oil changes.

The conclusion of a recent CNO blending trial in Auki noted that there are no technical issues which would stop the use of CNO in SIEA outstation generators provided the CNO used meet the required standards. There is however an increased capital and operating cost associated with this. It was also noted that using CNO derived from small existing milling facilities will not financially benefit SIEA to any significant degree when compared with diesel.

5           ADB. 2013. Final Project Workshop - ADB TA 7329 Access to Renewable Energy in the Pacific, CNO Use in SIEA Outstations. Consultant's Presentation. Honiara.

Biomass Power- Biodiesel

Biodiesel is a high-cetane fuel, which can be fully blended with fossil diesel to run compression  ignition engines. It offers low emissions of GHG, sulphur compounds and particulate matter compared with fossil diesel. In current practice, a 5-20% (B5, to B20) 1st generation biodiesel (fatty acid methyl ester, FAME) is blended with fossil diesel. A full blending (up to B100) is also possible with advanced processing methods6

Commercial production of biodiesel is based on trans-esterification of vegetable oils (chemically or mechanically extracted). In the Solomon Islands this would principally be palm oil, coconut oil, animal fats and waste oil through the addition of methanol (also bio methanol or other alcohols)  and catalysts, with glycerine as a by-product. Biodiesel production from animal fats and waste oils is cheaper and more efficient, but the basic feedstock is limited. The production of biodiesel in the Solomon Islands would require setting up a processing plant and importing the methanol, bio methanol and catalysts for use in the production process.

5.7 Renewable Energy Technology Assessment

5.7.1                    Levelized Cost of Energy

The LCOE is the constant unit cost (per kWh or MWh) of a payment stream that has the same present value and represents the total cost of building and operating a generating plant over its life. It can be used for comparing differing RET technologies with different operating characteristics.

A conservative approach has been used for the determination of LCOE for various technologies. The range of capital costs and O&M costs assumed were principally sourced from International  Renewable Energy Agency (IRENA), ESMAP and the consultant’s estimates. These costs and their source are detailed in Error! Reference source not found.. The renewable resource data for wind and solar were based on NREL and NASA data.

Table 16 Assumptions Used for Calculating LCOE

6           IRENA, IEA-ETSAP. 2013. Production of Liquid Biofuels, Technology Brief. http://www.irena.org/Publications/ ReportsPaper.aspx?mnu=cat&PriMenuID=36&CatID=141.

Source: IRENA, ESMAP, NREL and Consultant’s estimates as detailed

Table 17  Calculations of LCOE for Various Renewable Options

Source: Homer Energy LLC. 2013. Homer 2 v 2.81 Software. http://homerenergy.com/software.html

5.7.2                    Conclusion

The main findings of the LCOE assessment can be summarised as follows:

• Small hydropower would appear to be the best of the options considered for renewable generation in the Solomon Islands grid supply and for remote villages where there is an available water resource. The next best options for remote villages and individual households based on LCOE alone are biomass followed by solar PV plus battery.
  • Land issues are key when considering the renewable energy options available, land issues can mean that the least cost renewable generation option is excluded from consideration.
  • Renewable energy options for urban and rural electrification need a site specific solution.
    • Solar energy is widely and consistently available throughout the country and can be used for utility scale, commercial scale, village mini-grids and solar home systems. Solar home systems can be considered the best option for rural areas when land issues, population density and access are taken into account.

6   Renewable Energy Strategy and Investment Plan

6.1 Renewable Energy policy outcome, statement and strategies

Policy outcome: Use of renewable energy sources of power generation increased to 50% by 2020 7

Policy statement 1: Establish an appropriate, reliable, affordable and sustainable renewable energy- based power supply in urban and rural areas

Policy statement 2: Assess, cost, promote and enhance the potential for renewable energy resources.

Policy statement 3: Develop renewable energy policy instruments (standards and regulations, net metering policies, market-based instruments, procurement strategies) to meet the renewable energy targets.

7 35% in rural areas by 2020 and 45% of grid connected in the urban and provincial centres

8 The proposed National Energy Advisory Committee TOR is also to approve tax incentives for renewable energy technologies.

Therefore the Income Revenue Department is to be included as one of the members.

6.2 Time Bound Renewable Energy Investment Plan

This section develops a time bound renewable energy investment plan, together with renewable energy targets. The REIP is based on the SIG Energy Policy target of 50% renewable energy by 2020. The renewable energy target is an installed capacity target.

6.3 Renewable Energy Targets

The renewable energy targets are separately tabulated for rural and urban areas so that each area can be targeted with a different approach to electrification. To some extent this is historical as SIEA is active in the urban areas of each Province but has no presence in rural areas. Urban areas are more economically supplied by grid based electrification limited from centralised sources of generation whereas rural areas are more suited to individual technologies such as solar home systems or mini- grids in the case of smaller villages. The proposed electrification targets are as follows:

Table 18 Rural Households Electrification Targets

Source: Consultants estimates, 2013

The rural household electrification targets place emphasise a rapid scale up of solar home systems such as 100 WP solar systems with battery storage to supply minimum electrification requirements. Also included are hydropower based mini-grids to supply smaller groups of houses and villages.

Table 19 Urban Households Electrification Targets

Source: Consultants estimates, 2013

It is anticipated that the grid will be supplied by the following range of renewable energy technologies:

Table 20 Urban grid Connected Generation Targets

Source: Consultants estimates, 2013

The urban grid generation targets emphasise small hydropower and geothermal in the medium to long term. At this stage the 2030 grid maximum demand is projected to be 33MW of which the Honiara grid will be 28MW.

Table 21 All Households Electrification Targets

Source: Consultants estimates, 2013

The following graphs represent the electrification targets; the target for the change in the grid connected generation mix from one that is predominately based on diesel gensets to renewables is shown below:

6.4          Renewable Energy Strategies and Actions Timelines

The renewable energy strategies, actions and timelines have been collated from the REIP proposed activities as well as from the Renewable Energy Development programme developed by the Energy Division and submitted as part of the MTDS 2014 TO 2016. In addition proposed projects from development partners such as SPC, PPA, SPREP etc are included. The table below provides a timeline for the five years,  2014 to 2019.

6.5             Renewable Energy Costs

The renewable energy capital costs are separately tabulated for rural and urban areas as they represent a different approach for each area. The urban areas will be supplied by the grid. The grid in turn will be supplied by renewable generation including hydropower, geothermal, biomass and utility scale solar. Rural areas are more suited to individual technologies such as solar home systems or mini-grids in the case of smaller villages. The average capital cost to electrify an urban household will be USD 5,915 for the period 2014-2030 whereas each rural household which will cost on average USD 596 to electrify. This can be explained to a certain extent as follows:

• Rural areas will be predominately electrified by 100 Wp solar home systems and mini-grids
• Urban areas  will be supplied by the grid which will require grid extension capital costs and  new renewable generation to be installed as diesel plant is retired. In addition grid supply is planned to have greater capacity in the vicinity of 1000 W per household.

Table 22 Rural Electrification Capital Costs ($ million)

Source: Consultants estimates, 2013

Table 23 Urban Electrification Capital Costs ($ million)

Source: Consultants estimates, 2013

Table 24 Total Electrification Capital Costs ($ million)

Source: Consultants estimates, 2013

Table 25 Electrification Cost per Household ($/HH)

Source: Consultants estimates, 2013

The following graph represents the REIP capital costs:

The RE-SIP is based on achieving the SIG 2020 target of 50% of energy being supplied by renewables. The REIP will require a total investment of $75.00 million to 2020 to achieve a 44% country wide household electrification rate and a total investment of $234.15 million to 2030 to  achieve a 71% household electrification rate

APPENDIX B – Barrier Analysis

Summary of Barriers to the Implementation of Renewable Energy Technology