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2013

Roadmap to Carbon Neutrality of the Maldives

On behalf of

2013 Roadmap to Carbon Neutrality of the Maldives On behalf of Detlef Loy Loy Energy Consulting
Detlef Loy Loy Energy Consulting May 2013
Detlef Loy
Loy Energy Consulting
May 2013

Roadmap to Carbon Neutrality

Content

Acronyms and Abbreviations ..............................................................................................................3

  • 1. Preface ........................................................................................................................................4

  • 2. Introduction ................................................................................................................................5

  • 3. Public Electricity generation and supply .......................................................................................6 Electricity supply in the Great Male Region ..................................................................................6 STELCO ........................................................................................................................................6 Interconnection ...........................................................................................................................6

  • 4. Electricity supply on the Outer Islands .........................................................................................7

  • 5. Electricity tariffs and subsidies.....................................................................................................7

  • 6. Renewable Energy

10

PV

in Male

10

PV

11

Hybrid wind/solar systems

12

PV on new buildings

13

Waste-to-Energy

13

  • 7. ..................................................................................................................................

Transport

14

Air transport

14

14

16

16

......................................................................................................................

17

  • 8. Tourism and Resorts

17

18

Energy saving potential und use of RE

19

Leasing and operation of resorts islands

19

Taxation in the tourism sector

20

Awarding Sustainable

21

  • 9. Energy Efficiency in the residential, commercial and public sector

22

Building Code

23

Example of

24

Standards and Labelling of electrical appliances

25

GEF Project

26

27

Roadmap to Carbon Neutrality

  • 10. Targets for a low-carbon economy

............................................................................................

28

Institutional strengthening

  • 11. ........................................................................................................ Maldives Energy Authority (MEA) Climate Change Advisory Council References

..............................................................................................

...............................................................................................

........................................................................................................................................

28

29

30

31

Appendices

Cover photo: Photovoltaic system at the Soneva-Fushi Resort on the island Kunfunadhoo (BELECTRIC GmbH).

Roadmap to Carbon Neutrality

Acronyms and Abbreviations

BMU

Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety)

CCAC

Climate Change Advisory Council

CCD

Climate Change Department (in the Ministry of Environment and Energy of the Maldives)

EE

Energy Efficiency

FENAKA

FENAKA Corporation Limited

FIT

Feed-in Tariff

GDP

Gross Domestic Product

GEF

Global Environment Facility

GHG

Greenhouse Gas

GIZ

Deutsche Gesellschaft für Internationale Zusammenarbeit

GoM

Government of Maldives

GWh

Gigawatt-hour

MEA

Maldives Energy Authority

MEE

Ministry of Environment and Energy of the Maldives

MGF

Maldives Green Fund

POISED

Preparing Outer Islands for Sustainable Energy Development

PPA

Power Purchase Agreement

PV

Photovoltaic

RE

Renewable Energy

SCNS

Support for the Climate Neutrality Strategy of the Maldives

SREP

Scaling up Renewable Energy Program in Low Income Countries

STELCO

State Electric Company Limited

toe

Tonne of oil equivalent

UNOPS

United Nations Office for Project Services

Roadmap to Carbon Neutrality

1.

Preface

The present report has been elaborated in the context of the project “Support for the Climate Neutrality Strategy of the Maldives” (SCNS), executed between 2011 and 2014 by the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) with financial support of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). Primary objective of this project is to build up capacity and increase expertise of public institutions as well as the private sector. In doing so, the GIZ project supports the Maldivian Government, the private sector and local authorities in developing their own comprehensive strategies for minimizing greenhouse gas emissions harmful to the climate.

One component of the SCNS project is the advisory service and support to the Ministry of Environment and Energy (MEE) of the Maldives on the development and implementation of essential elements for a coherent climate neutrality strategy. The main policy objective is to contribute to the advancement of adequate framework conditions as well as administrative and decision making structures on the national level.

The Government of the Maldives had announced in 2010 its ambition to become a carbon neutral country, setting a signal for carbon intense countries to strengthen their efforts in lowering greenhouse gas (GHG) emissions. The German government with its agency for international cooperation GIZ supports this objective and agreed with the Climate Change Department (CCD) of the MEE to formulate a Roadmap to reach Carbon Neutrality of the Maldives (see Terms of Reference in Annex A). For this purpose the consultant and climate change expert Detlef Loy has been contracted who went on a mission to the Maldives between April 6 and 18, 2013. During this mission, discussions were held with a number of relevant stakeholders in Male and Hulhumale (see Annex D). Preliminary findings and recommendations were presented during a stakeholder meeting on April 16, 2013 (see Annex E). Furthermore, the consultant attended a preparation workshop for a Global Environment Facility (GEF) project on energy-efficient buildings and appliances 1 and a national investors conference in the frame of the Scaling-up Renewable Energy Program (SREP) 2 . Relevant figures on which this report has been based on are compiled in Annex B.

The roadmap outlined in this report is primarily based on previous energy and climate change reports and studies for the Maldives, on statistical, legal and economic publications, on results of discussions with stakeholders from the public and private sector, on best practice cases in other countries and on observations and conclusions of the consultant. The roadmap can be considered as a follow-up or update to the energy policy strategies as outlined in the Strategic Action Plan 2009- 2013 (GoM, 2009). It is obvious that not all aspects of a future roadmap for carbon neutrality could be targeted in detail and with precision during the relatively short mission in the country. A number of open questions remain and need to be further examined at a later stage. The present report is therefore considered to initiate a dialogue within the Government and the civil society of Maldives how the objective of carbon neutrality could be achieved, by proposing a number of steps and initiatives that may not have been under consideration before.

The author would like to thank all those who contributed with their knowledge and ideas to this report and spent time and efforts to provide valuable input. In particular, he is most grateful for the assistance provided by the Climate Change Department of the MEE and the local team of the GIZ.

  • 1 Stakeholder Validation Workshop on „Strengthening Low-Carbon Energy Island Strategies“ on April 15, 2013

  • 2 National Dialogue on Renewable Energy Investments on April 17, 2013

Roadmap to Carbon Neutrality

2.

Introduction

In March 2009, a first paper on carbon neutrality of the Maldives had been published by the British author Chris Goodall. The then President of the Maldives took up this message and pledged that the country would strive for carbon neutrality by 2020. This pledge was announced during the UN General Assembly in 2009 and repeated at the Climate Conference in Copenhagen in the same year. In 2010, a first energy policy strategy was elaborated by the Maldivian Government (Ministry of Housing and Environment, 2010).

From the current point of knowledge, both the paper and the public announcement appear somewhat overambitious and unrealistic. The trend for an ever-growing energy demand and subsequent increased consumption of fossil fuels cannot immediately be revoked, as can fossil fuels not be replaced from one day to the other by renewable energy sources. All this needs time, in particular in a more than difficult environment like the Maldives with a dispersed geographical landscape of about 300 inhabited and tourist islands, a growing economy and a particular strong dependence on just one economic sector tourism- that by itself is one of the major energy consumers.

Nevertheless, the original far-reaching objective has contributed to a number of activities and initiatives in the past years which combined will all support to move forward on the road to carbon neutrality. Certainly, this will be a longer way than expected and it will not be concluded by 2020, but the initial steps have been taken and the willingness to proceed at all fronts is more than visible.

Still there are major obstacles on the road that need to be removed. Potentials for energy efficiency have to be explored and tapped. Investments in solar electricity need to be made possible by adequate framework conditions. Moreover, Government decisions need to be streamlined and coherent in order to achieve the general goal. Interim or medium-term targets can help to evaluate the success of any policy and should therefore be established to measure the results of the different instruments and activities put in place. Taking the general public on board and motivating the private business sector is essential for any climate change and energy policy. It is therefore necessary to communicate constantly and on all levels about the national objective of striving towards carbon neutrality and integrate all sectors of the civil society into the dialogue on how this goal can be best achieved without distorting the economy or negatively affecting individual living conditions.

As has already been noted in (USAID, 2010), a precondition for designing a national action plan for carbon neutrality is that the GoM undertakes a detailed forecast, analysis and planning of the technical, economic, financial, and environmental implications for generation and transmission as well as use and replacement of fossil fuels for the next 20 years. This would enable the government to develop mechanisms and incentives for promoting elements of the plan, in particular regarding the tapping of renewable energy sources and the implementation of energy efficiency activities.

This roadmap presents some elements that could be considered when paving the road to carbon neutrality. First and above all, it would like to introduce a more realistic perspective in terms of the distance from the starting point towards reaching the final goal. This may help to define future priorities and concentrate on activities that are effective and relatively easy to implement, always keeping in mind that the human, financial and institutional resources of the Maldives are limited.

Roadmap to Carbon Neutrality

  • 3. Public Electricity generation and supply

It is forecast that in the business-as-usual scenario the peak load for electricity demand in the public supply sector (includes utilities, island council power supply and private supply on inhabited islands, but excludes all tourist resorts) will increase from about 79 MW in 2010 to 146 MW in 2030 (USAID, 2010). This increase will primarily occur in the Greater Male region. Taking into account that all currently existing genset units need to be replaced by 2030, this would mean the installation of 8-10 MW annually from now on.

Electricity supply in the Great Male Region

STELCO

The State Electric Company (STELCO) is currently 3 serving 27 islands around Male from an equal number of power plants, serving about 43% of Maldives’ population (see Annex G). Each power system is completely independent with its own power generation and distribution infrastructure. The system in Male has an installed capacity of 61.4 MW and provides electricity to 33,430 mainly domestic and commercial customers (August 2012). The installed capacity outside of Male totals 17.8 MW and serves 8,310 customers, mainly centered in Hulhumale. Due to the rapid development of this island and the continued migration to the Greater Male Region, it can be expected that the customer base outside of Male will grow significantly in the near future. Most systems, with the exception of those on Male, Hulhumale and a few other islands are very small with capacities of not more than 100 kW.

Due to non-operational turbines being in maintenance, Male has a dependable (available) generation capacity of only about 52.2 MW 4 , while the peak load in 2012 has been in the range of 45 MW (estimated). Power demand is increasing in Male at a rate of about 10% annually in the business-as- usual scenario. Currently there is hardly any reserve capacity available in case of failure of the largest genset so that the risk of blackouts is extremely high. According to STELCO, there is only space available for another generator of 8 MW capacity. If demand further increases at past growth rates, STELCO will very soon reach its technical and logistical limits. Demand would then increasingly have to be covered by self-producers operating own individual diesel gensets for their power needs.

STELCO’s generation performance is relatively good with efficiencies of about 38%, most probably due to the young age of most gensets that in majority have been acquired in the last decade 5 .

Interconnection

Most important and to be targeted with priority is the interconnection of islands in the region, in particular between Male and Huhule (International Airport) and further onwards to Hulhumale. The issue has been in discussion for some time (USAID, 2010). It would also provide additional chances for feeding a higher share of RE capacity into the extended grid. In (USAID, 2010) it was estimated that a connection with two 132 kV submarine and land cables between Male and Hulhumale would cost about US$ 26.4m.

  • 3 After reorganisation of the national electricity system in 2012.

  • 4 85% of the installed capacity according to (ECFA, 2011)

  • 5 Only five generation units on Male have been installed before 2002 (ECFA, 2011)

Roadmap to Carbon Neutrality

A feasibility study for interconnecting Male and Hulhumale should be started as soon as possible. The interconnection should be complete by 2015 at the latest to avoid shortages of supply on both islands and cope with the increasing population in the new developments of Hulhumale.

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It should also be examined if connecting Male with Villingili (estimated costs US$ 16m) and Villingili with Thilafushi (US$ 10.9) at the same time could save costs and avoid power shortages.

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  • 4. Electricity supply on the Outer Islands

As outlined in (USAID, 2010), with demand not expected to grow significantly, the existing installed capacity of diesel gensets is sufficient to cover the peak load on most of the Outer Islands over the next 20 years, except in the Southern Province, where it needs an additional 1,000 kW to achieve a satisfactory reserve margin. Some capacity shifting between islands may be needed as population tend to settle more and more in regional centers, followed by an anticipated higher than average electric load growth in those new urban developments 6 . It is also expected that replacement of some gensets on the islands will be necessary due to reaching the end of their lifetime, while others will need to be downsized because of a mismatch between generation capacity and average load.

The Outer Islands contribute only marginally to national CO 2 emissions; therefore, any measures to curb carbon emissions on those islands through replacing diesel fuel by renewable energy will only have a minor effect on GHG reduction at country level. All activities in this direction should therefore be seen primarily from a social, economic and security perspective as renewable energy may help to prevent further increases of electricity generation costs or even lead to a downward trend of costs compared to a system relying completely on fossil fuels. They may further assist in providing a more reliable electricity supply with fewer outages, reduce the volume of fuel transports and improve local environmental conditions by reducing noise and air pollution.

Electricity supply plans for the Outer Island with a 10-15 year forecast period

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have to be set up based on future population development, expected capacity needs, age of existing gensets and potential for RE electricity.

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  • 5. Electricity tariffs and subsidies

The current Maldives Electricity tariff rates have been approved by MEA in 2009 and were not revised in the meantime. The tariff scheme shows a progressive increase with growing energy consumption and is based on a fixed energy charge and an additional variable fuel surcharge. The latter is related directly to fuel prices exceeding a margin of 8.0 (Greater Male Region) to 8.50 Rf (per

  • 6 On most smaller islands the population has been declining between 2000 and 2006, probably due to decreasing job opportunities in the fishery sector and only limited income generating alternatives.

Roadmap to Carbon Neutrality

Liter of diesel oil, depending on the region of electricity consumption, (Mercados, 2012)) 7 . As can be seen from Figure 1, the diesel price was constantly above 8.0 Rf/Litre since the last quarter of 2009, with prices are currently in the range of Rf 15.5 per Litre (or about Rf 4.0 per produced kWh electricity in the case of Male 8 ). Accordingly the fuel surcharge increased from 0.08 Rf/kWh (US$-ct 0.5 per kWh) at the end of 2009 to 2.27 Rf/kWh (US$ 0.15 per kWh) in March 2013 (website of STELCO, retrieved on April 23, 2013, see Figure 1). The fuel surcharge therefore became an important cost item of the electricity bill. The energy charge varies significantly between the Greater Male Region and the outer islands by partly more than 50%. Households in the Greater Male Region with a consumption of 500 kWh/month had to pay about 4.9 Rf/kWh (US$ 0.33 per kWh) in March 2013. This price was still well below the generation costs that are estimated at 5.25 Rf/kWh (US$ 0.35 per kWh), not to forget distribution and metering costs that need to be added.

In 2010, a fuel surcharge subsidy was introduced, which became the most important part of overall electricity subsidies due to increasing fuel prices and devaluation of the national currency. Subsidy on fuel surchage now accounts for about Rf 35m (US$ 2.3m) per month. While in 2009 only several hundred households benefitted from subsidies, there are now over 50,000 customers that have appealed for being exempted from paying any fuel surcharge. In 2012, approximately 43,000 meters received a fuel surcharge subsidy.

In addition to this, many low-income households have applied for support for the energy charge under the Social Welfare program. Since the subsidy applies to all tariffs below the first 400 kWh consumption per months, independent from the total amount of consumption, it benefits all consumers, also those with sufficient financial resources. The so-called „usage“ subsidy on the fixed energy charge has remained relatively stable at Rf 10-15m per month.

All electricity subsidies increased between 2010 and 2012 from Rf 90m (US$ 6m, 0.33% of GDP) to an estimated Rf 458m (US$ 30.5m, 1.44% of GDP). (Trimble, 2012). 29% of the subsidies has been received by the most consuming quintile of households. In Male alone, the state financed about Rf 13.5m per month in 2011, most of this amount (Rf 10.9m) for subsidizing the fuel surcharge portion of the domestic tariffs (Statistical Yearbook 2012).

  • 7 Fuel surcharge subsidy is Rf 0.03 for each increase of Rf 0.1 per litre diesel above the threshold level of Rf 8-8.5.

  • 8 STELCO has an efficiency of 3.85 kWh/litre). According to (Trimble, 2012), diesel represents around 70-80% of total generations costs. Therefore, it will exceed Rf 6.0/kWh.

Roadmap to Carbon Neutrality

Roadmap to Carbon Neutrality Figure 1: Diesel price for electricity generation The cost of electricity generation

Figure 1: Diesel price for electricity generation

The cost of electricity generation in Male increased from about Rf 3.0 (US$ 0.20) at the beginning of 2010 to Rf 5.4 (US$ 0.36) per kWh at the end of 2011, while the tariffs remained stable within this period (Trimble, 2012). When comparing with the current tariff level of about US$ 0.30/kWh on average (USAID, 2010), it becomes obvious that the tariff rates are far from being cost covering, not to speak of making any profit. Subsidies in real terms have about doubled between late 2009 and late

2011.

The average monthly electricity consumption per household in Male was just above 500 kWh in 2009, according to HIES estimates 9 . 68% of households accounted for 85% of electricity consumption in 2009.

Keeping electricity prices artificially low across different consumption levels, gives the wrong signal for a responsible electricity use and makes a number of energy efficiency measures non-economic.

If subsidies could be cut by half through abolishing the privileges for consumers with a high level of electricity consumption would therefore release the amount of US$ 15m per year that could be dedicated for energy efficiency measures instead.

It is therefore suggested that a national task force under the leadership of

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MEA will be established to revise the existing tariff and subsidy scheme. The tariffs should reflect the cost situation and subsidies only provided for those in social need. Financial resources released by reducing the current level of subsidies should be redirected into energy efficiency measures.

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  • 9 It has to be noted that some meters serve several households at a time.

Roadmap to Carbon Neutrality

  • 6. Renewable Energy

The Maldives‘ renewable energy sources are limited and consist mainly of solar energy that can be tapped. Wind speeds are low and sites for larger wind turbines not easily available. Biomass residues are scarce and consist mainly of organic material in domestic waste. Ocean thermal energy sources and wave energy could be an option for the future, but technologies are still under development and not yet commercially available. Also for solar energy use, the limited land area sets close boundaries. With 1% of the total land area (300 km²) covered with solar PV panels (mainly placed on rooftops), about 720 GWh could be generated annually. This would be in the range of two thirds of the current electricity consumption (including resorts).

The Maldives Energy Authority (MEA) has recently published a draft for a Standard Power Purchasing Agreement (PPA) that forms the basis for contracts between Independent Power Producers using renewable energy sources and the incumbent utilities (MEA, 2012).

This draft Standard PPA is in first place addressing operators of larger plants that supply significant shares of the electricity demand on an island. It is not appropriate for the supply of excess electricity from small-scale renewable energy facilities. It is therefore recommended to design standard contracts also for such systems, which generate only a few kilowatts.

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The MEA has further published in February 2013 guidelines for the approval process of grid- connected PV applications and for the technical interconnection provisions of such systems (MEA, 2013b). The proposed administrative procedures can have a significant impact on the so-called soft costs associated with the realization of PV installations and reduce the competitiveness of such systems substantially.

For small-scale systems it is highly recommended that fast-track procedures are put in place which are not creating additional administrative burdens and are simple and cost-effective to enforce.

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It is further recommended that MEA acts as a neutral body for solving conflicts between utilities and independent RE operators and provides staff for such task.

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PV in Male

The Scaling-up Renewable Energy Program (SREP) intents to install 11 MW of solar PV on the island of Male (approx. 80,000 m²) (MEE, 2012a). As there is hardly any open ground space available, most of those installations need to be placed on the roofs of existing or newly constructed buildings. This space is as well limited due to the type of roofs, their use for competing purposes, shading by neighbouring buildings etc. However, even with 11 MW made available, they will contribute only a fraction (less than 10%) to the current and expected electricity demand, unless extensive energy efficiency and conservation measures are carried out.

Roadmap to Carbon Neutrality

Further investigation (mapping) will need to be done to assess the exact

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amount and location of available rooftop space for PV installations in Male.

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Apart from this, the problem occurs that building owners may show no interest in investing in and operating a PV system, in particular in residential buildings with multiple apartment owners. That means that rooftops may not be accessible for PV installations, although they would in theory be suitable for carrying such systems. This natural building owner PV investor conflict needs to be solved, otherwise it is most certain that the space for housing the above mentioned size of solar panels will not be available.

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It is further proposed that a detailed mapping of all roofs suitable for PV installations in the Greater Male region takes place. Such mapping should start with a visual analysis of air-borne or satellite pictures and include building ownership and details on the roof structure wherever possible.

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Roofs on public, religious and official buildings should be offered to the extent possible for PV installations financed and operated by the private sector, under similar conditions that have been negotiated with the company

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Renewable Energy Maldives (REM) and its German partner Wirsol. 10 Legal arrangements for the “leasing” of such roofs to third parties need to be

designed.

PV on Outer Islands

Also on Outer Islands, the space for PV installations is limited. Open space is restricted due to the small size of the islands and rooftops may often be shaded by vegetation, essential for bringing down indoor temperatures through avoiding direct exposure to sunlight. It has also been reported that operators of public buildings (schools, health centers, police stations) are requesting a lease rate for using the roofs for PV installations.

It would be helpful to map the potential roof spaces, in particular on public buildings (schools, health centers, police stations etc.) of regional population centers and of potential ground spaces on less populated islands.

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A general solution needs to be found how roofs on public buildings can be made accessible for private investors, possibly through offering a compensation in terms of reducing energy consumption of the buildings by adequate investment measures.

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  • 10 Relatively large roof spaces offer e.g. the Indira Gandhi Memorial Hospital (inaugurated in 1995) and the compound of the Ministry of Defense and National Security in Male.

Roadmap to Carbon Neutrality

As part of the SREP investment plan and within its World Bank-led component ASPIRE (Accelerating Sustainable Private Investments in Renewable Energy Programme), the GoM has called in early 2013 for a pre-qualification of interested parties to design, build, finance, own, operate and transfer grid- tied solar PV systems for integration with diesel generators on 15 islands in the Upper North, North and Upper South Region of the Maldives. The GoM has been seeking for investors to install PV systems with a capacity of up to 30% of the peak load on each island, feeding solar electricity as Independent Power Producer (IPP) into the existing grid under a Power Purchase Agreement with a maximum Feed-in-Tariff of US$ 0.25/kWh. Although the specific islands in the three regions have not yet been selected, it is already certain that none of the existing powerhouses has more than 1 MW generating capacity. All of those islands are currently served by the recently formed utility FENAKA.

It is obvious that within such small operating environment the presence of two different generating parties that are in need to closely interact with each other can create heavy turbulence and carries along the potential for technical and commercial conflicts.

It is suggested that GoM (or in its place FENAKA) enters into agreement with private parties to take over the whole generation side of electricity supply on the selected islands, i.e. including the existing diesel gensets. While in this arrangement the operation of the electricity production would remain in one hand, the grid operation and distribution of electricity to the final customer could stay with FENAKA (see also the Mercados study of January 2013 on this subject, (AF-Mercados EMI, 2013a)).

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Hybrid wind/solar systems

With regard to the intention of SREP to also target wind energy investments (10 islands are thought

to be fully supplied by a mix of wind and solar electricity with about 200 kW on each island and

battery support for storage), …

…. a critical technical assessment is required why all wind/solar systems that were installed in 2007 are currently out of operation (according to MEE). Recommendations should be elaborated for the selection of adequate small wind turbines and the provision of appropriate maintenance service.

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The proposal to have FENAKA implement those systems should be reconsidered at least for the pilot projects, as FENAKA currently has neither the capacity nor the financial means to carry out such investment.

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It further needs to be assessed if such systems can be realized at generation costs lower than about US$ 0.40/kWh or any current generation cost using diesel fuel. 11

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  • 11 Solar installations for full supply of electricity demand have recently been inaugurated on three islands of Tokelau in the Pacific with a total population of 1,400 people and a combined land area of 10 km². The systems are backed up by battery storage. Tokelau is therefore the first nation to become fully independent from fossil fuels.

Roadmap to Carbon Neutrality

PV on new buildings

So far, PV systems have mainly been installed on existing buildings, although the extensive construction of new private and public buildings offers excellent opportunities for integrating PV installations into the original architectural design. This will eliminate technical barriers for the installation of such systems, reduce costs and increase the acceptance for PV systems among the developers and investors.

Instant measures should be taken with regard to new building constructions

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in the Greater Male region, in particular on the island Hulhumale, which can be a showcase for low-carbon urban development (see also chapter 9.). The state-owned Housing Development Corporation (HDC) is engaged in the urban planning and sets specifications for constructions on plots sold to private investors. Such specifications could also request to design rooftops in such a manner that they can carry a maximum amount of solar PV installations. In addition, the required minimum amount of solar electricity share (compared to the expected consumption within the building) could be defined.

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Even more direct influence could HDC play out within their own social housing projects, which are fully developed by HDC for later sale to individual apartment owners. In this case, HDC could and should decide right from the beginning on installing PV systems on all roofs of newly erected buildings. If HDC is financially not capable of doing the investment, agreements could be signed with external third parties to invest and operate the systems.

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For new high-rise buildings in the Greater Male region it is proposed that the entity in charge of issuing the construction license (island council) requests that suitable space is made available for the installation of PV systems. This should be seen as a precautionary measure, as later modifications on the building design will make solar electricity more expensive, even if the installation of the solar systems will not be done at the initial stage.

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Waste-to-Energy

Great expectations have been raised in past studies with regard to the controlled incineration of domestic solid waste and the generation of electricity as a welcome by-product. To date, most of the waste generated in the Greater Male region and on surrounding islands is dumped into the lagoon of Thilafushi and partly incinerated at open air. Plans exist for constructing a larger incineration plant on Thilafushi and some small units in regional centres of the Outer Islands. But so far, neither the composition of the waste nor the implications in terms of technical solutions (in particular with regard to limiting air pollution and finding adequate disposal sites for ashes and particles from burners and filters) have been thoroughly investigated. A high organic share in the domestic waste can significantly reduce the potential for generating excess electricity to be fed into the grid.

It

needs

investigation

if

the

proposed

utilization

of

waste-to-energy

I-II/2014

Roadmap to Carbon Neutrality

technology on outer islands is feasible, taking into account the composition of the waste, the available waste amounts, the specific costs of relatively small incinerators, the filtration of the exhaust air and the disposal of the ashes.

 

7.

Transport

Transport is one of the most important energy-consuming sectors in the Maldives, mainly due to the large extent of the country with a sizable number of dispersed small islands, local and tourism sea travel, a large fishing fleet of rather small vessels and one of the largest seaplane fleets in the world.

Use of diesel fuel in the transport sector is mainly limited to sea travel, buses, pick-ups and other larger transport vehicles for goods. Motorcycles and most passenger cars are using petrol (gasoline), planes are operated by jet kerosene.

Energy consumption in the transport sector currently makes up about 50% of all energy use in the Maldives. It is expected that the future overall quantity of energy for transport needs will increase significantly under the business-as-usual scenario.

Air transport

There is currently a strong move towards expanding the network of domestic airports which would make it attractive for local passengers to take a plane instead of the ferry and transport more goods by air.

Sea-bound planes are almost exclusively used by foreign tourists. Maldivian Air Taxi has 20 seaplanes and operates to 40 resort islands, while Trans Maldivian Airways has 25 planes and operates to 23 resorts islands (MOTAC, 2012a). It can be assumed that tourism-related air transport will further increase due to the expected growth of tourist arrivals and the tendency for expanding tourism on more remote islands

The effects of a growing domestic air transport on fuel use and associated CO 2 emissions need to be further assessed. Mechanisms need to be established how those emissions can be offset (e.g. through purchasing of CO 2 emission certificates in the tourism sector).

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Land transport

Land transport is mainly concentrated on the islands of Male and Hulhumale, both with an area of about 2 km². In particular in Male, transport is dominated by a high number of motorcycles (about 45,000 registered vehicles in 2010), while public transport has only been introduced recently and is still scarce and not too comfortable. Even the relatively huge number of family cars with often significant engine capacity is astonishing, as the longest distance to drive from one location to the other is about 2-3 km with a total length of paved roads of about 60 km (Male) and there are no ways to leave the islands by car.

Roadmap to Carbon Neutrality

From an external view, it is not easy to understand that transport is not primarily covered by an efficient and extensive public bus service with an addition of regular or electric bicycles. Such system would effectively avoid traffic congestions, lower urban pollution and noise, benefit pedestrians and lead to a substantial decrease of petrol consumption. As distances are short, buses could operate as hybrid diesel/electric vehicles. 12 Sophisticated and easy to use bicycle lending systems could support and stimulate switching from current motorcycle use to more environmental friendly transport means. 13 A model for a “motor-free” island is Villingili, where private ownership and use of motorcycles or cars is not allowed.

Roadmap to Carbon Neutrality From an external view, it is not easy to understand that transport

Sophisticated rental system for bicycles in Mexico-City

It is suggested that the City Council of Male, the Ministry of Transport, the entity in charge of public transport - Maldives Transport and Contracting Company (MTCC) - and the MEE form a joint working group that looks into options how individual traffic can be minimized or shifted to low- or no- carbon transport means and the public transport system can be further improved.

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  • 12 Hybrid diesel-electric buses are manufactured by a number of companies and operate worldwide in urban areas. The transport company of the city of London has already 368 of such buses in its fleet.

  • 13 See the excellent example from Mexico-City with a dense network of autonomous rental stations for bicycles in the city center.

Roadmap to Carbon Neutrality

Roadmap to Carbon Neutrality
Roadmap to Carbon Neutrality
Roadmap to Carbon Neutrality
Roadmap to Carbon Neutrality

In particular, the island of Hulhumale could demonstrate that the use of private motorcycles or cars is unnecessary under given conditions of very limited range of transport. Roads could be clearly marked with separate bicycle lanes and the use of public transport should be widely promoted among the inhabitants. This has to be supported by an efficient and modern bus service operating 24 hours and 7 days a week connecting major public sites (harbor, commercial area, schools etc.) on different routes with the residential sectors. For transporting larger or heavier goods, a pick-up leasing or rental services could be established.

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Taxation of vehicles

Industrialized countries have experienced a strong correlation between operational costs for transport and the use of individual transport means, i.e. whenever costs for vehicles taxes or fuels have increased there is a tendency for purchasing more efficient, less fuel consuming cars and avoiding car use by giving preference to other transport alternatives. Therefore, taxation of vehicles as well as fuels can fulfill an important function in influencing the share of different transport modes and reducing energy consumption and related GHG emissions without negatively affecting the service for moving people and goods.

It should be analyzed if a (partial) change from taxing engine capacity to CO 2 emission (i.e. fuel consumption per mileage) could support a strategy of reducing energy consumption in the transport sector.

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Differentiated sales taxes (GST) dependent on engine size or CO 2 emission could as well push the market into offering vehicles that are more efficient and provide a signal of awareness for the purchasing customer.

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Higher taxes on private motor vehicles or on petrol may also reduce the use of such transport means, as there is a strong correlation between transport costs and annual mileage.

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Marine transport

The volume of fish catch has considerably decreased over recent years. This will certainly also affect diesel consumption of fishing vessels, although at a lower rate. Based on (BeCitizen, 2010), diesel consumption for fishery has been in the range of 308.000 tons in 2009, higher than the consumption for electricity generation.

Further investigation will be needed to assess options for reducing fuel consumption in the fishery industry.

Roadmap to Carbon Neutrality

Near distance ferry transport has the potential for being partly supported by solar energy. In addition, more efficient ship designs (in particular catamarans) offer opportunities for lowering energy consumption per travelled distance.

Alternative marine transport modes, as well as options to reduce energy consumption in the existing fleet of fishing vessels and ferries should be assessed.

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Import of biofuels

Fossil based diesel fuel can be completely substituted by biodiesel derived from various organic sources, such as palm trees, coconuts, jatropha, rapeseed etc. As such sources are scarce in the Maldives, biodiesel would need to be fully imported.

In addition, bioethanol can partly replace gasoline, up to about 10% blend without modification of vehicle engines. Larger shares with up to 100% bioethanol use are possible, but need adapted engines.

For all biofuels, sustainability criteria in terms of ecological, social, agricultural and other aspects need to be closely observed and constantly controlled. With regard to GHG mitigation it needs to ascertain that overall emissions are really reduced compared to fossil fuels and the release is not simply shifted from the Maldives to the place of fuel origin.

The feasibility and implications of importing biofuels (biodiesel and bioethanol) preferably from nearby countries for blending with fossil- based fuels should be assessed. As there are only storage facilities in the Maldives for diesel and gasoline and no refinery exists, the fuels would probably have to be imported in blended form.

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  • 8. Tourism and Resorts

Tourism has become the most important industry sector of the Maldives, with bringing in more than 30% of GDP (Rf 6.1m out of 20m in 2011 14 ). Revenues from the tourism sector were more than US$ 2b in 2012 (US$ 1,868m in 2011). The tourism industry is almost exclusively limited to 105 resort islands (“one resort – one island” policy), which operate their own individual energy supply systems, and more recently - to safari boat cruise shipping. Total bed capacity of the resorts numbered about 22,800 as of September 2012 (MOTAC, 2012b). 15 In addition, the 19 hotels of the country had a combined bed capacity of 1,600 and 67 guesthouses offered almost 1,000 beds in September 2012. The resorts are predominantly concentrated in the administrative divisions of the atolls Kaafu and Alifu (North and South). Taking tourists from the international airport in Male to their destinations and back is also an important part of the transport sector.

  • 14 At constant prices of 2003.

  • 15 Due to closure of some resorts the operation bed capacity was lower at 21,130 in September 2012.

Roadmap to Carbon Neutrality

The number of tourist arrivals reached 931,000 in 2011 and 958,000 in 2012. Tourist bednights were 6.53m in 2011 and 6.45m in 2012 (resorts and hotels) with an occupancy rate of about 76% in the resorts segment.

It is planned to develop a further 50 resort islands with about 7,700 beds in the upcoming years. Leasing of those islands has already taken place and the resorts are at different stages of completion. The bed capacity of existing resorts may also further increase, as the allowed build-up area has recently been increased from 20 to 30% of the available land space on each island. 16

According to projections, tourist arrivals are expected to reach 1.24 million by 2015 (MOTAC, 2012b), while tourist bednights would increase to 7.7 million, i.e. about 60% more than in 2012. For 2021, it is even forecast that tourist arrivals could increase to 2.5 million. For the period of the current Tourism Master Plan 2013-2017 it is envisaged that the bed capacity (resorts and hotels) will increase from 25,000 beds to 35,500 beds and bednights would grow from 6.5 million to 12 million (MOTAC,

2012a).

Energy consumption in the tourism sector

Tourist resorts are a major consumption sector for energy, in particular diesel and LPG. According to the Energy Balance of 2009 (BeCitizen, 2010), electricity production and use is larger in all resort

islands combined than in Male’. It is therefore extremely important to take the tourist industry on

board in any low-carbon strategy. Estimates calculate that per bed about 4.5 tons of diesel for electricity generation are being consumed each year (BeCitizen, 2010). 17 This leads to a total consumption of about 99.000 tons of diesel in 2012 18 , responsible for the release of 280,000 tons of CO 2 . With an assumed electrical efficiency of 28% (BeCitizen, 2010), this will result in an electricity generation of about 327 GWh or an average of 340 kWh per tourist (about 50 kWh per overnight stay). According to (BeCitizen, 2010) and based on surveys, most of this consumption is used for air conditioning (around 40%), while refrigeration, desalination and lighting account for about 10% each. Air conditioning is certainly an important consumption factor as temperatures rarely drop below 25 °C at night and most accommodations are directly exposed to sunlight during the day.

In a business-as-usual scenario, electricity consumption would increase by 2017 to about 600 GWh with CO 2 emissions growing accordingly, although it can be assumed that new resorts will be somewhat more energy-efficient than the existing ones.

If only the GHG emissions from use of electricity would be offset by purchasing emission certificates on the international market, it would cost the tourism industry about US$ 1.4m annually at current prices 19 and consumption levels. Per tourist visit the extra costs would be in the range of less than US$ 1.50.

We propose to come to voluntary agreements with resort licensees and/or

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resort operators in order to achieve improved energy performance and increase the share of RE in existing resorts, in particular through use of solar energy for water heating (at least for central laundry and kitchen services) and

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  • 16 But it has also been reported that already in the past some resorts exceeded the allowed maximum of 20% built area.

  • 17 See also consumption figure in (Ministry of Housing, Transport and Environment, 2010)

  • 18 BeCitizen, page 58: Energy needs from resorts equaled 96,241 toe in 2009 (transport excluded). See also page 63, where 94,175 toe of diesel are mentioned (difference would then need to be LPG).

  • 19 Prices for Certified Emission Reductions (CER) and EU Emission Allowances are currently in the range of US$ 5 per tonne CO 2 .

Roadmap to Carbon Neutrality

for electricity generation.

 
 

GoM should consider purchasing CO 2 emission certificates on the international market from tourism tax revenues to offset energy-related GHG emissions in this sector.

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Energy saving potential und use of RE

Without knowing the existing situation in detail, it can be assumed - based on experiences from other tourist accommodations in tropical countries - that the energy saving potential is significant. 20 Appropriate building designs, proper insulation and shading and increased awareness among guests and staff could reduce the amount of air-conditioning needed. Low-flow water taps can reduce cold and hot water use with subsequent positive consequences on energy consumption. Guestroom management systems and energy-efficient refrigeration systems for accommodations and central food storage can lower electricity needs substantially, even in 5-star hotels and resorts 21 . In particular, natural ventilation and fans can assist in reducing electricity demand for air-conditioning. Modern LED lights in combination with control sensors may reduce electricity needs for lighting and can be directly fed from solar battery systems. Waste heat from diesel gensets can accommodate hot water demand, in particular for central services, such as laundries, but also be used for cooling and desalination purposes.

Some resorts in the Maldives already use RE at a minor scale, mainly in the form of solar collectors for heating fresh water, while the integration of solar electricity systems is still rare. 22

Leasing and operation of resorts islands

Resort islands are leased by the Government to either local or foreign entities or joint venture companies 23 . The resort operator can be the same entity or a different company and requires a license that will be renewed every five years. About half of the bed capacity is currently under control of local operators. The Tourism Act states that all resorts and hotels will be leased for 25 year. If the initial investments exceeds US$ 10, then the lease period can be extended for up to 35 years. New regulations since 2010 allow resorts to lease for up to 50 years against the payment of fees.

Environmental issues in the tourism sector are being covered in the “Regulation on the Protection and Conservation of Environment in the Tourism Industry24 that came into force in July 2006, pursuant to the Maldives Tourism Act of 1999. This regulation requests that an Environmental Impact Assessment is carried out and submitted to the Ministry of Tourism prior to any construction project,

  • 20 See e.g. here: http://www.caribbeanhotelandtourism.com/CASTchenact.php

  • 21 See the example of Hilton Egypt at www.seda-eg.com/sites/default/files/ sustainbility_hilton_egypt_jan_2013.pdf, where audits in 18 hotels have shown savings with an average payback period of 2.8 years.

  • 22 One of the few larger-scale PV installations in the tourism sector if not the only one of its type in the Maldives can be found at the Soneva-Fushi Resort on the island Kunfunadhoo. It has a capacity of 70 kW p , serves the spa area and was realized in 2009 by the German company Belectric.

  • 23 Leasing and taxation issues are regulated in the Maldives Tourism Act of 1999 and its amendments.

  • 24 To be downloaded from the website of Environmental Protection Agency epa.gov.mv

Roadmap to Carbon Neutrality

in accordance with the Protection and Conservation of Environment Act of 1999. The regulation targets the areas of waste and sewage treatment and sets requirements for desalination of water on each resort island, restricting the use of groundwater and setting standards for non-obstructing the shoreline, among others, but is not specifically mentioning any energy-related subjects.

MOTAC could also consider including energy-related requirements in the licensing contracts similar to those requested for waste disposal and environmental protection. But, as most licensing agreements for future development have already been signed, this proposal may not achieve adequate results.

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Construction permits should include the obligation for installing solar thermal systems in new resort and hotel developments, as is now the case in Egypt. 25

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It should be considered if energy-related aspects could be made subject of a future amendment of the environment protection regulation. A legal framework could be established by extending the requirements for passing the Environmental Impact Assessment procedure 26 with standards on energy efficiency, maximum consumption per overnight stay and minimum shares of RE contributions.

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Taxation in the tourism sector

Tourism is being addressed by various taxes and is one of the main income sectors for the Government Revenue (total Rf 8,323m in 2011):

A tourism-General Sales Tax (T-GST) 27 with currently 8%, generating Rf 665m in 2011 and Rf 1,579m in 2012; this tax will increase to 15% from June 2013 on and should then generate an extra US$ 133m per year (Rf 2,847m expected for 2013). A bed tax (also referred to as tourism tax) of US$ 8 per accommodation bed and night that generated Rf 751m in 2011 (16% of total tax revenue) and Rf 813m in 2012. A land lease tax 28 that is charging US$ 8 per m² of land accumulated to Rf 1,603m in 2011. The airport service charge generated about Rf 329m in 2011. A bill to increase airport departure tax, which is currently US$ 18 and usually charged with the air ticket, failed to pass in parliament in 2009. An airport development tax of US$ 25 has been proposed, but is still not in place.

  • 25 See http://solarthermalworld.org/content/egypt-starts-green-tourism-initiative-hotel-solar-obligation….

  • 26 The Environmental Impact Assessment Regulation of 2012 is currently only available in Dhivehi language. The EIA enforcement for any activity that may have an impact on the environment began with the Environmental Protection and Conservation Act of 1993. First regulations governing the administration of the EIA process were published in 2007 by the Ministry of Environment.

  • 27 The GST is practically a Value Added Tax and was initially introduced on tourism in 2011, but was applied to all sectors of the economy since October 2011. In compensation, most import duty has been eliminated from December 2011 on, except for a few items. These include goods that would deteriorate the environment.

  • 28 Introduced in 2011 (Tourism Act, 2010). Initially it used to be a tax based on the number of tourist beds.

Roadmap to Carbon Neutrality

All taxes together have earned the GoM some Rf 1.6b (more than US$ 100m) in 2011 , out of a total government revenue from the tourism sector in the order of Rf 3.3b (40% of the total government budget), and an estimated Rf 4.3b (US$ 290m) in 2012. Over 90% of the total government tax revenue is from tourism, import duties and transportation related taxes.

Besides those taxes, it is proposed that the majority of revenues for the future Green Fund that would finance renewable energy and energy efficiency projects among others will also be earned from the tourism sector, i.e. through resorts, dive schools, reef fishing and safari boats contributions (MEE, 2012b). In comparison to the tax revenues from the tourism industry mentioned above, the proposed budget for the Green Fund of US$ 1.6m is negligible.

Reflecting the importance of the tourism sector for the energy (fossil fuel) consumption of the Maldives, it should be considered spending larger amounts of revenues earned from this sector for incentives that promote RE and EE measures or introducing partial tax waives for the application of such measures.

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Awarding Sustainable Tourism

GoM has since 1997 awarded some resorts for their strategies of complying with sustainable tourism requirements (President of Maldives Green Resort Award). Some tour operators also honor certain resorts in a similar manner, thus responding to higher awareness among their tourist clients and using such awards as marketing tools. It is recommended that the criteria for such awards give more attention to energy aspects than they have done in the past. 29 A Green Star (Eco-Label) has recently

One of the prominent awards for „Sustainable Tourism“ is the international Green Globe Award (www.greenglobe.com). It has established a number of standards and indicators as criteria in the fields of Sustainable Management, Social and Economic aspects, Cultural Heritage and Environment.

As for energy, the following criteria have been set up:

Energy consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted, while encouraging the use of renewable energy.

Energy use is one of the most damaging activities on the planet with adverse impacts degrading air, water, so quality, human and ecological health. Energy efficiency through sustainable technology and effective waste management is a key strategy to reduce the negative impact. The greatest environmental and financial benefits related to business operations are achieved by frequently monitoring utility bills, effectively training and providing incentives for staff to implement energy efficiency programs, and routine preventive maintenance of mechanical equipment. By applying energy efficient practices to the operations and investing in renewable energy technologies (e.g., solar, wind, micro-hydro, and bio-mass), the Business can help conserv natural resources, promote energy independence, and reduce greenhouse gas emissions.

It is noticeable that the criteria are formulated in a rather vague manner without really setting indicators that would need to be fulfilled.

 

29 An example for mainly ignoring the important energy issue is demonstrated by the awards provided by the international organization Travelife that is dedicated to honor Sustainability in Tourism (www.travelife.org). One of the recipient of the Travelife Gold Award is the Chaaya Reef resort on the island Ellaidhoo. The resort states as its environment policy that energy efficiency measures would be taken and that it is seeking for renewable energy sources, but does not specify, which measures have already been implemented.

Roadmap to Carbon Neutrality

been introduced in the Egyptian hotel industry with support by GIZ. 30

GoM should start an initiative for awarding specifically resorts and hotels that comply with minimum energy efficiency standards and use renewable energy sources.

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Tour operators should be made aware of the concerns associated with energy supply on resorts islands and should from their side urge resort operators and/or leasing companies to fulfill certain requirements in terms of EE and use of RE. Such requirements should include minimum shares of RE supply, installation of an adequate energy management system to avoid excessive diesel fuel consumption during low load periods, the obligation to use only solar collectors or waste heat from the gensets for hot water production, the proper insulation of buildings if air-conditioners are used and the purchase of appliances with the highest energy efficiency standard available on the market.

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It is further recommended that MOTAC in alliance with other relevant ministries forms a Green Unit to plan and monitor all activities for the sustainable transformation of the tourism industry.

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A further operational unit should be established in collaboration with the tourism association to ensure proper implementation of the different measures and sharing of experiences between the stakeholders.

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  • 9. Energy Efficiency in the residential, commercial and public sector

Electricity consumption in the residential and commercial sector absorbs a high share of total energy consumption in the Maldives. In the domestic sector, the most important areas are refrigeration of food, air-conditioning and lighting. In the commercial and public sector it is mainly air-conditioning and lighting.

  • 30 See www.greenstarhotel.net

Roadmap to Carbon Neutrality

Due to low levels of climate-adapted construction, high outdoor temperatures and increasing demand for comfort, air-conditioning is becoming more and more popular, despite relatively high electricity rates. The penetration of refrigerators and freezers (or their combinations) in private households is high. With regard to lighting, the use of energy- efficient light bulbs (CFLs) or fluorescent tubes is already widespread and has practically replaced inefficient incandescent light bulbs in recent years. But still there is significant potential for reducing lighting energy by using more daylight without allowing direct solar radiation to enter the building.

Most existing buildings have no wall or roof

insulation against transfer

of

heat

from

the

outside to the indoor environment. New roof

constructions

are

sometimes

insulated,

but

there are no specific legal or technical requirements to do so.

Roadmap to Carbon Neutrality Due to low levels of climate-adapted construction, high outdoor temperatures and increasing

(Picture: Office Building with individual room air conditioners in Male)

Building Code

The Ministry of Housing has started some time ago with drafting a Building Act and a Building Code (Ministry of Housing, Transport and Environment, 2010). While the first is mainly regulating the construction permission and execution process and the licensing of building practitioners, the second is thought to prescribe functional requirements for buildings and the performance criteria with which buildings have to comply in their intended use. So far, the draft of the building code is mainly looking at structural, functional (e.g. sanitary) and safety issues, but has not incorporated any specific energy-related requirements.

From our point of view, a building code can be beneficial on the background of a well functioning and sufficiently equipped public administration that is capable of supervising the construction process and can enforce sanctions in case of non-compliance. Such administrative structures can certainly be established in the Greater Male region (using the existing island councils or the Housing Development Corporation, see below), but it is doubtful that such control can effectively be set up on the smaller Outer Islands.

It is therefore proposed that other instruments will be developed for making constructions on the smaller islands become more energy-efficient, in particular for such houses that are being constructed informally by the owners themselves. This could be done by providing adequate information about building designs, construction material etc. and making such material (e.g. for insulation of roofs and walls) available on the local market.

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Roadmap to Carbon Neutrality

For all local public or Government buildings, the Ministry of Housing should establish guidelines for minimum energy performance standards and the purchasing of energy-efficient appliances and devices (in particular for air- conditioning and lighting).

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Example of Hulhumale

The most extensive development in building construction is currently taking place on the island of Hulhumale. It is planned that housing is provided for up to 60,000 residents by 2020 on this reclaimed land area. All of the residential and commercial buildings have been erected in the past nine years (since 2004), either by private investors or state-owned institutions. The government owned Housing Development Corporation (HDC) 31 has taken over the central role for overseeing the urban planning and developing own projects.

In the case of the development of Hulhumale, HDC occupies three different roles: acting as master developer, engaging as builder of infrastructure and social housing projects and serving as regulator with oversight of planning, architectural guidelines and building regulations. In this regard, HDC plays a central role in determining criteria for constructions of the private sector as well as for own developments, in particular in the social housing sector for low-income families.

So far, energy efficiency and use of renewable energy has not been a focal issue that HDC has dealt with. Despite of the enormous construction volume, none of the already existing buildings carries solar installations or has been specifically designed to cope with tropical climate conditions in an energy-efficient way. In particular, the practice of window shading and wall insulation is not very common.

Roadmap to Carbon Neutrality For all local public or Government buildings, the Ministry of Housing should

Social housing development on Hulhumale with financial assistance of China

Roadmap to Carbon Neutrality For all local public or Government buildings, the Ministry of Housing should

Private housing investment on Hulhumale

Hulhumale could serve as a showcase model for energy-efficient building construction and a low-carbon urban development for the whole country and beyond. Since HDC can directly guide the process of architectural designs and use of energy-efficiency and renewable energy technologies, it

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  • 31 Formerly Hulhumale Development Corporation. The name was changed in 2009 with the extended mandate to develop government housing projects not only in Hulhumale but also elsewhere in the Maldives.

Roadmap to Carbon Neutrality

should take over a leading role in this regard. Properties should be sold with the obligation to reduce the need for air-conditioning to the lowest level possible through passive measures, such as insulation of the building envelope and use of natural ventilation, and construct roofs in such a manner that sufficient space for solar panels is made available. Social housing projects 32 should be designed in a climate-friendly and adapted way and carry PV installations that are either operated and maintained by HDC or an external third party selected out of a bidding process. Most probably, HDC will initially need to be assisted in drafting regulations and specifications dealing with energy-related aspects, including legal and contractual issues. Furthermore, architects have to be made aware of options for climate-adapted designs and building-integrated use of solar energy.

 

Standards and Labelling of electrical appliances

MEA has started to work on the introduction of Standards and Labels for electrical appliances. Examples from other countries have demonstrated that the introduction of Minimum Energy Performance Standards (MEPS, i.e. setting upper limits for the specific energy consumption of a certain appliance) and the use of labels which indicate energy consumption or cost saving in comparison with other similar types of equipment on the market, can have a considerable impact on saving energy, in particular with regard to larger domestic appliances, such as refrigerators, freezers, TV sets, air-conditioners etc.

MEPS prevent that less energy-efficient appliances will enter the market, while labels can be an additional purchasing criteria by selecting a more energy-efficient appliance out of the range of products which are available on the market. Both MEPS and labels refer to testing procedures which are still not globally harmonized. Therefore, indications for a certain energy consumption might differ, even for the same product, as the criteria for executing consumption measurements can differ from country to country.

The Maldives have a rather limited purchasing capacity and are getting products from different countries of origin. Often those products will carry with them a label for a certain country of destination. As those labels are different from country to country in style, information and the way data have been retrieved, they are hardly comparable and of very limited value for uninformed consumers.

Therefore, the idea was born to introduce an own Standards and Labelling scheme for the Maldives. As this approach is in principle right and understandable, it bears a number of problems and challenges. The market size of the Maldives is rather small; therefore, the amount of pressure that Maldives can use in the direction of manufacturers is limited. Even if there is a legal requirement for attaching labels on certain products, the correctness of such labels needs to be verified from time to time. This requires the existence of certified laboratories, which can execute the test routines

  • 32 A social housing program is currently under implementation with financial assistance from China. Between 2012 and 2014, 3,000 housing units will be built, including row houses, semi-detached houses and multi-story flats (the latter for 5,000 residents have already been completed on Hulhumale). Following will be another 4,000 housing units, this time with assistance from China and India (GEF, 2011).

Roadmap to Carbon Neutrality

established by the country rules or within internationally accepted testing standards. It is evident that the Maldives do not have the capacity to do such testing for the moment. Even it tests are done on a random basis (as by far not all products on the domestic appliances market can be covered), they still need sufficiently equipped laboratories and trained personnel to conduct such tests. Critical is also the control of imports, in particular if MEPS should prohibit the sale of less efficient products.

Therefore, other solutions need to be found that look more into a regional approach, e.g. in cooperation with the much larger markets of India 33 or Sri Lanka 34 . While India has a relatively advanced mechanism for standards and labels in place, Sri Lanka has so far only established a labelling scheme for Compact Fluorescent Light bulbs, while the ruling for refrigerators and freezers is still in discussion. But even in India, labels are to date only mandatory for frost-free refrigerators´, tubular fluorescent lamps, room air conditioners and distribution transformers, while they are voluntary for appliances such as TV sets, washing machines, ceiling fans, among others. Voluntary arrangements are often ignored by manufacturers, as more energy-efficient appliances are often regarded as luxury items.

Even below requirements for standards and labels, the GoM could arrange with retailers to purchase more energy efficient appliances on the wholesale market and provide adequate information on energy consumption of appliances in their outlets. It is therefore recommendable to investigate the origin of major appliances on the Maldivian market and collect information on the energy consumption of appliances within different product categories. Wherever products are being imported with labels, those labels should be displayed in the stores, unless their message is completely dysfunctional for the consumer (e.g. labels written in Chinese). Such requirement could e.g. be incorporated in consumer protection acts.

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As the awareness for energy-efficient products is relatively low among the general public, information campaigns with support of the electric utilities should be arranged, e.g. within a regular annual energy week, by providing information with or on electricity bills or by setting up showrooms for demonstrating the difference of energy consumption of common domestic appliances on a permanent basis.

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GEF Project

Under the project title “Strengthening Low-Carbon Energy Island Strategies” a funding proposal for the Global Environment Facility (GEF) that is thought to run from 2013 until 2018 is currently in preparation with support from the UN Office for Project Services (UNOPS) (GEF, 2011). The proposal is specifically addressing energy efficiency in the building and appliance sector. It is targeted at all types of new and existing buildings and wants to promote the replacement of inefficient appliances and the market introduction of energy-efficient products through setting of standards and use of labels as well as awareness rising among retailers, customers and users.

  • 33 See Bureau of Energy Efficiency, www.beeindia.in

  • 34 See www.gic.gov.lk/gic/index.php?option=com_info&id=1700&task=info&lang=en, and the homepage of the Sri Lanka Standards Institution: www.slsi.lk

Roadmap to Carbon Neutrality

The project consists basically of six components, combining technical assistance and investment measures:

  • 1. Establish an assessment and monitoring system for the Energy Efficiency Road Maps for the building sector (focused on small island tropical environment)

  • 2. Selection and recommendation of new design parameters for EE & LCE buildings

  • 3. Developing local technical expertise

  • 4. Technology transfer and commercial-scale demonstration of EE & LCE technologies

  • 5. Policy for Transformation of Markets for EE & LCE technologies

  • 6. Financing for EE and LCE Building Technologies.

Investment activities are primarily focused on the social housing sector, targeting the soft loans provided by China and India for such new constructions (see above) as the major source of co- financing. It is therefore essential that agreements are established with the donor countries on how energy-efficiency and RE aspects can be incorporated in the future housing projects. Furthermore, the project wants to address the subject of EE standards and labelling for diverse electrical appliances (see previous chapter).

Below the level of introducing officially voluntary or mandatory labels, HDC could provide advice for new apartment owners on the purchasing of energy-efficient equipment (air conditioners, fans, washing machines, refrigerator/freezers, lighting etc.) or equip social housing projects with adequate appliances.

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As the GEF project will not start before 2014, it should be considered if the GIZ project could lay the foundation, on which the GEF project could further proceed in the future. Assistance could be provided e.g. in setting guidelines for the use of energy-efficiency technologies and designs in the (social and private) housing sector.

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Demand-side management activities

With support of the GoM, several energy audits in public buildings have been executed in the past in order to identify energy saving potentials. The private sector has also mandated energy audits, in particular within the hotel sector. Experiences from other countries show that energy audits are better accepted if their execution is financially supported by the Government and technical guidelines determine the performance of the audit.

Continuous awareness raising on energy saving issues among the general public is essential for the success of any energy policy. One way of spreading the message is by sending out specific information, e.g. on purchase and use of energy-efficient equipment, with or on the consumer bills.

Energy audits will be financially supported by the GoM for all major energy consumers and guidelines for the performance of such audits will be established.

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Roadmap to Carbon Neutrality

STELCO and FENAKA (as well as other utilities) with support of the MEE and MEA will inform their customers about energy-efficiency related issues, e.g. in combination with sending out consumer bills.

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  • 10. Targets for a low-carbon economy

Setting long-term goals and objectives is fundamental for any political process. Government decisions should be instrumental in achieving those objectives through various measures. In order to judge if the correct road is taken or political decisions need to be adjusted, a constant monitoring and evaluation process is necessary, preferably measuring the impact of the decisions in comparison with intermediate and short-term targets.

In 2009, former President Nasheed announced the objective for Maldives to become carbon neutral by 2020. This was mainly a political move giving the world a signal that the Maldives would take climate change as a serious threat for its own survival and would react consequently, although its contribution to climate change is minimal.

The third National Environment Action Plan of 2009 established a number of goals and specific targets, among those the target to submit a bill to Parliament by 2010 on reaching carbon neutrality until 2020 and the target to cover 50% of the electricity supply from renewable energy sources by 2015. Neither has such a bill been submitted to Parliament nor is it realistic that the RE goal will be achieved in the remaining time span.

In order not to loose credibility among the international community it is recommended to set new and most likely achievable targets for the next 10 to 15 years. As it is unlikely that carbon neutrality can be achieved by indigenous renewable energy sources covering all energy demands, such targets will also have to consider offsetting part of the GHG emissions (e.g. in the tourism sector) through the purchase of carbon emission certificates on the international market.

The GoM will define new short and medium targets for achieving carbon neutrality or for the Maldives to become a low-carbon economy.

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The GoM will further set up a monitoring and evaluation system for measuring the progress in achieving the targets and proposing political corrections where necessary.

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  • 11. Institutional strengthening

It is the general observation of the consultant that coordination of political activities between the Ministries as well as between the ministerial level and state-dependent entities needs to be improved. Clear guidance on political intentions and a defined sharing of responsibilities within the Government seems to be lacking to a certain extent. It was not possible to analyze the competence and strength of each institution visited during the mission. We will therefore concentrate on the

Roadmap to Carbon Neutrality

important Maldives Energy Authority (as the regulating entity) and the role of the Climate Change Advisory Council in the following.

Maldives Energy Authority (MEA)

The MEA was established in April 2006 following the abolishment of the former Maldives Electricity Bureau. The MEA is an independent regulatory body affiliated to the Ministry of Environment and Energy and operates under the guidance of a governing board. Its mandate is determined by a presidential decree and includes the following subjects:

  • 1. Providing advice to relevant government organizations regarding energy, and assisting in decision-making in this sector.

  • 2. Setting the standards and operating the regulations for the administration and monitoring of this sector according to government policy on energy.

  • 3. Developing the regulatory code and standards on the production and use of energy in the Maldivian context, and developing and administering the regulations for the provision of energy in the Maldives.

  • 4. Setting the standards for the sources of energy that are imported into or sold in the Maldives.

  • 5. Issuing permits to parties that wish to provide electricity services, setting up the system of fees for the services provided by such parties, issuing permits to parties that wish to produce electricity for their own use, and monitoring such parties to ensure adherence to relevant regulations.

  • 6. Issuing permits to electric technicians and setting the standards for consultants.

  • 7. Investigating issues between parties arising from non-compliance to the terms of agreements between providers and users of electricity.

  • 8. Monitoring the statistics on the production and usage of energy in the Maldives, ascertaining the energy requirements of the nation, and gathering data, researching and disseminating information on this issue.

The MEA is in charge of regulating the utility sector as well as the non-utility sector (e.g. operators of gensets on the resorts islands or electricity generation by island councils).

The MEA has recently received technical assistance from the World Bank and ADB for the formulation of electricity sector regulations ( (AF-Mercados EMI, 2012). In December 2012, drafts were published for public comment on Metering Scheme, on a Service Provider Code, on Installation Standards and on Licensing of Electrical Engineers.

Furthermore, in February 2013 the MEA published a technical guideline for the grid-connection of PV systems and a manual for application of PV grid-connections (MEA, 2013a) (MEA, 2013b).

In its duty to oversee the annual statistics related to energy production, distribution and use, in May 2013 the MEA has sought consultancy support for the collection of energy-related data.

In addition, the MEA has published a draft Power Purchase Agreement for contractual arrangements between renewable energy developers as supplier of electricity on one hand and the state owned utilities STELCO and FENAKA as purchasers of such electricity on the other hand (MEA, 2012).

The MEA has also started activities on Standards and Labelling of electrical appliances (see chapter 9.). A revision of the current tariff structure is still up for decision. Rules for feed-in tariffs and net-

Roadmap to Carbon Neutrality

metering schemes have been elaborated with support of consultants (AF-Mercados EMI, 2013b) under an ADB support project (ADB, 2011), but need to be further elaborated and put in place (see Annex C for comments on the proposal for feed-in tariffs).

In comparison with the huge number of tasks, the MEA is significantly understaffed. The MEA occupies a variety of functions, which in other jurisdictions are shared between statistical offices, electrical inspectorates and bureaus of standards.

Unless the MEA receives further financing, it is therefore recommended that it concentrates its efforts on essential issues that cannot be handled by other entities. In this context, the MEA should refrain from intervening in technical issues that can be solved independently by other parties, such as the approval of the interconnection of PV systems (MEA, 2013b), which is primarily an issue between the PV plant operator and the grid operator (other than expressing the permit for electricity generation which should remain with MEA).

III/2013

As already mentioned in the chapter on Standards and Labelling, the introduction of own labels is not recommended for the Maldives and the verification of standards based on international testing practice needs laboratory equipment which is currently out of reach for the country.

 

Statistical issues should be left as far as possible in the hands of the Department of National Planning, which is publishing the annual statistical yearbook.

 

Climate Change Advisory Council

In April 2009, a Climate Change Advisory Council CCAC) has been installed as expert group that was

thought to spearhead the government’s efforts to mitigate and adapt to the effects of climate

change. The council was presided by the Vice President and reported directly to the President’s office. It consisted of representatives from ministries as well as a number of experts from various

professional areas. It was also supported by a group of international climate change and energy experts.

The council has failed to meet in the recent past, although there is an urgent need to integrate external knowledge into the decision making of GoM.

It is therefore recommended that the CCAC will be reactivated. The government side should primarily be represented by technical staff, while an effective Secretariat should be established and convene for regular meetings. An adequate budget should be allocated to allow for financing of contributions which support the work of the CCAC.

III/2013 -

Roadmap to Carbon Neutrality

References

ADB. (December 2011). Republic of the Maldives: Capacity Development of the Maldives Energy Authority.

AF-Mercados EMI. (June 2012). Developing a Regulatory Framework for the Maldives Energy Sector. AF-Mercados EMI. (January 2013a). Solar PV Integration in Maldives - Phase I Report. AF-Mercados EMI. (March 2013b). Financial Incentives to Renewable Energy in Maldives, Draft Report. BeCitizen. (November 2010). The Maldives' 2009 Carbon Audit.

ECFA. (March 2011). Engineering and Consulting Firms Association Japan / Tokyo Electric Power Company (TEPCO). The Study on Upgrading the Male' Distribution System in the Republic of Maldives.

GEF. (2011). Project Identification Form: Strengthening Low-Carbon Energy Island Strategies.

GoM. (November 2009). The Government of Maldives, Stategic Action Plan 2009-2013. MEA. (2012). Maldives Energy Authority, Standard Power Purchase Agreement, Draft.

MEA.

(February

2013a).

Maldives Energy Authority, Guideline

on

Technical

Requirements

for

Photovoltaic Grid-connection.

 

MEA.

(February

2013b).

Maldives

Energy

Authority,

Manual

for Photovoltaic Grid-connection

Application. MEE. (2012a). Ministry of Environment and Energy, Maldives SREP Investment Plan 2013-2017. MEE. (December 2012b). Ministry of Environment and Energy, Establishment of the Maldives Green Fund, First Annual Operation Plan and Budget, Draft Version 2. Mercados. (2012). Capacity Development of the Maldives Energy Authority. Ministry of Housing and Environment. (2010). Maldives National Energy Policy and Strategy. Ministry of Housing, Transport and Environment. (2010). Maldives National Building Act - Second Draft. Ministry of Housing, Transport and Environment. (2010). National Assessment Report 2010. MOTAC. (2012a). Ministry of Tourism, Arts and Culture, Fourth Tourism Master Plan 2013-2017. MOTAC. (2012b). Ministry of Tourism, Arts and Culture, Tourism Yearbook 2012.

PWC. (January 2011). PriceWaterhouse Coopers, Framework for Energy Investments in the Maldives. Tourism Act. (2010). Law 20/2010, Second Amendment to the Maldives Tourism Act.

Trimble, C. (2012). An Analysis of the distribution and fiscal burden of electricity subsidies in the Maldives. World Bank.

USAID. (April 2010). Maldives Submarine Cable Interconnection, Pre-Feasibility Study.

Annex A:

Terms of Reference of consultancy service

Annex B:

Relevant Figures

1)

GHG emissions Total GHG emissions in 2009: 1.3m tons of CO 2eq , of this Power generation: 43% Transport sector: 30% (Comment: The import of 281.000 toe of diesel will lead to 784,000 tons of CO 2 ). Energy consumption accounts for GHG emissions of about 1.0m tons of CO 2eq. GHG emission per capita: about 4.2 tons CO 2eq. Emission per US$ 1000 of GDP: 0.93 tons CO 2eq. Annual increase of GHG emissions: 10-15%. Tourism directly accounts for 36% of GHG emissions (of this resorts 23%). Fishing (1,216 vessels) directly account for 11% of GHG emissions (using 36,681 tons of diesel in 2009) According to National Assessment Report 2010, industrial fishery used 6m liters of diesel. Outer Islands account for 6% of GHG emissions. Domestic sea transport accounts for 21% of GHG emissions.

2)

Fossil fuel imports 2009: US$ 193.3m (about 14% of GDP) 2010: US$ 245.0m (about 17% of GDP) 2011: US$ 340.2m (about 26% of GDP) 2012: US$ 474.6m (about 35% of GDP)

According to Maldives Customs Service:

Import of all petroleum products in 2011: US$ 366.4m, of those petrol US$ 33.4, diesel US$ 289.3 and aviation gas US$ 25.2

Import of all petroleum products in 2012: US$ 488.3, of those petrol US$ 39.0, diesel US$ 330.7 and aviation gas US$ 99.4

In 2009, 281,000 toe of diesel for US$ 153.2m were imported 35 . SREP: In 2011, US$ 261m (=20% of GDP) were spent for importing 316,000 toe of diesel.

  • 35 1 ton diesel = 1.01 toe, 1 toe = 11.63 MWh

SREP: About 81% of fuel imports is diesel (DL: would have been 321,000 toe in 2011). 44% of it is used for electricity generation.

Total imports (c.i.f.) were US$ 1,465 in 2011.

3)

Primary energy consumption Total primary energy consumption in 2009 was 340,000 toe. SREP: TPE was 224,000 toe in 2002 and 396,000 toe in 2011.

4)

Electricity generation 122,000 toe of diesel (1,419 GWh) were used for (public) electricity generation. Total installed capacity:

Types

Installed capacity (MW)

Inhabited islands

120

Tourism Resorts (estimated)

105

Industrial Islands

20

Total

245

According to (MEE, 2012a), there are no data about the installed capacity on resorts islands. Therefore, it was simply assumed that the installed capacity would be 1 MW per resort.

Installed capacity in Male is 48 MW (MEE, 2012a). Fuel efficiency varies from 0.68 litres/kWh to 0.26 litres/kWh. Subsidy in the electricity sector: about US$ 25m in 2011 (MEE, 2012a).

(MEE, 2012a): FENAKA operates electricity generation and distribution on 115 of 194 inhabited islands, STELCO operates electricity systems on 10 islands (DL: according to STELCO website now 27 islands), island councils provide electricity on 63 islands and 6 islands have a private electricity supplier.

(Ministry of Housing, Transport and Environment, 2010): MWSC produces more than 500 m³ of desalinated water und used 2,126 tons of diesel in 2004.

National Electricity generation (Energy Balance 2009, own calculation):

 

Electricity production

Diesel input

Efficiency

 

Toe

MWh

Toe

%

STELCO, Greater Male region

19,530

227,000

51,269

38.1

STELCO, Outer Islands

1,019

11,850

2,979

34.2

Regional utilities, island councils, private operators on Outer Islands

33,563

390,000

115,220

29.1

Industry, commerce, MWSC

1,453

16,900

3853

37.8

Cold stores and canning industry

1,745

20,300

6,233

28.0

Resorts

25,543

297,000

91,226

28.0

Total

82,853

963,050

270,780

30.6

5)

Electricity consumption

National public electricity consumption (excluding resorts and self-generation) in 2011 was 428 GWh. (MEE, 2012a): 225 GWh is consumed in Greater Male region (excluding Hulhule the airport island), 217 GWh is being consumed in Male.

Electricity consumption in Male in 2011: 212 GWh according to Statistical Yearbook 2012 (217 GWh according to (MEE, 2012a)). 49% of this is used in the residential sector (104 GWh), 37% in the commercial sector, 13% in Government buildings and 2% in schools and public places.

Electricity consumption on the outer islands varies from 8,000 MWh/a to less than 95 MWh/a per island.

6)

Resorts

Number of tourist resort islands: 104 (October 2012), 6 of those closed for renovation or other reasons.

About 50 more resorts could be developed with a planned capacity of 7,700 beds. About 22,800 beds in resorts.

Average diesel use for electricity generation per bed: 3,807 liters (Source: MHTE, Dept. of Climate Change and Energy, National Assessment Report 2010) would mean about 84m liters in 2012, from which about 235 GWh could have been produced.

Electricity in resorts (source: Energy Balance 2009): Average use of diesel for electricity production estimated at 4.59 toe/bed, resulting in 91,226 toe diesel in 2009. Average conversion efficiency for electricity generation is assumed to be 28%.

7)

General data

a) Population:

Total registered population, not including expatriates: 351,000 as of July 2012 (Statistical Yearbook 2012).

Greater Male region: 63,000 36 , not including expatriates (Statistical Yearbook 2012). Annual population growth rate: 1.69% (MEE, 2012a) Number of inhabited islands: 190 (was 194 in 2006). Only 4 islands besides Male have a population > 5,000. One quarter of the islands has a population < 500. On average 6.2 persons per household. Average household income: Rf 28,909 in Male and Rf 11,200 on other islands (2010).

Forecast (Dept. of National Planning): 2020 370,000; 2030 414,000 (not counting immigrant workers and their families).

  • b) GDP in 2012:

Rf 34,148m (US$ 2,214m, estimated, at current market prices). Rf 21,160m (US$ 1.653, estimated, at constant 2003 prices).

Per capita: US$ 5,273 (at current market prices, including expatriates).

based

on

a

total

population of 420,000,

By sector: Tourism 28%, Construction and Manufacturing 14%, Electricity and Water 3%, Transport & Communication 19%, Fisheries and Agriculture 3%, Other Services % (source Maldives Monetary Authority 2013).

  • 36 This figure is far lower than noted in most recent publications, but does not include foreign migrant workers and nationals who live in Male, but are still registered on their native islands.

Annex C:

Comments on draft report

„Financial Incentives to Renewable Energy in Maldives“

Some comments on the draft report

FINANCIAL INCENTIVES TO RENEWABLE ENERGY IN MALDIVES

(March 2013)

Detlef Loy, GIZ consultant (dloy@freenet.de)

Off-grid systems

How are off-grid systems defined? Apparently islands with an installed capacity of up to 500 kW are regarded as “off-grid” or as noted on page 54: “roughly 50% of the installed capacity is not grid connected”? Or is everything off-grid that is not served by either STELCO or FENAKA?

What would be the effect of FITs for such systems on the national budget? Why should such systems be paid a FIT based on generated electricity (possibly used in an inefficient way) instead of paying a one-time investment subsidy?

FITs would be paid for all sizes up to 500 kW?

Isolated/scattered consumers that are not even connected to any small island network, could relatively easily manipulate the amount of self-generated and consumed RE electricity and charge for this amount.

Another question is, if there is really potential for off-grid systems that are purchased and operated by individual owners (with presumably low income levels on remote islands).

Net-Metering

It is not further outlined how the net-metering will be applied for systems up to 50 kW (this will certainly affect the majority of all PV installations). Will banking of surplus sales be possible beyond year end? Or will a positive balance on side of the generator be reimbursed and if yes, at what conditions?

The study states that “this methodology might require some additional support for the deployment of these small installations, though actual tariffs, i.e. without subsidies would enable these facilities to

compete with retail tariffs” (page 44). This would mean that self-consumption will also receive some reimbursement that will balance the existing subsidy for conventional electricity (on page 55 it says

that the net-metering regime would be a 1:1 pricing mechanism).

For large facilities, the study notes on page 44 that they “may install RE facilities for their own supply

with considerable amount of energy surplus which may be sold to the grid…

These facilities may be

.. handled with an alternative approach between traditional FIT and net metering”. It is not clear how

this approach would manifest in practice.

Furthermore it is not clear if small systems (<50 kW) necessarily will have to be building integrated or household facilities (as mentioned on page 55).

Tendering

Why is tendering proposed in parallel to FIT for system above 50 kW? And there seems to be a contradiction with regard to the timing of tenders: on page 47 the report notes that “the Consultant recommendation would be to use tenders at least in the initial stages”, while on page 49 it says: “… it seems to be faster and simpler to kick-off the market based on a traditional FIT approach. However, once the market is moving and certain target is achieved, tenders may be an interesting alternative to fine-tune the level of tariff for future developments, and reduce costs accordingly.”

The question remains if there is any potential for large-scale projects that could be tendered (“Maldives presents a very particular power sector dominated by small systems which barely allows large-scale facilities”, page 54) and if the current administration (MEA and utilities) is really capable of designing tenders and evaluating and contracting bids.

Calculation of initial FIT

It is not quite clear, how the FIT levels have been calculated, in particular those for PV systems with storage. What is the cost basis for storage systems?

The author of the report proposes a unified tariff scheme despite possible cost differences depending on the location. What is the cost differential for systems installed in Malé and those on remote islands?

1,600 kWh/kW p energy yield appears high and should be carefully examined. Total PV system costs of between 2,510 and 2,800 US$/kW might not be realistic in an underdeveloped market (page 60). BoS costs will certainly be far higher than in developed environments with high installation rates.

Furthermore, administration costs have not been sufficiently taken into account. They can be substantial and prohibitive, in particular as the permission procedure for grid-connection of RE systems is relatively complex (see MEA guideline of February 2013).

Are “the avoided costs of conventional generation under efficient operation conditions” (page 55) for the calculation of off-grid tariffs really reflected by taking the lowest unit generation cost as benchmark? Current generation costs vary between 280 US$/MWh and about 680 US$/MWh (see page 65).

Investment subsidies

It does not become clear, why investment subsidies have been ruled out completely (page 48). We agree that output based approaches support the efficient performance of RE facilities, but this will also be the case if capital costs would be lowered through grants or low-interest loans.

Share of extra costs among consumers

The report states that “if electricity tariffs are not enough to cover RE generation costs, the extra costs should be distributed among all consumers regardless whether they are connected to the grid

where the RE energy is being injected.” This statement focusses on RE generation costs without

considering that in particular in small supply systems and without major involvement of storage systems a sufficient back-up system has to be maintained. Those costs have to be taken into consideration as well as they are directly related to the nature of intermittent RE sources. Otherwise

the incumbent utility will be increasingly burdened with high capital costs for spinning reserves and back-up that cannot be recovered through actual electricity tariffs.

Bilateral contracts with consumers

The reports mentions the option that all installations with a capacity higher than 500 kW shall market the electricity output through bilateral contracts directly with consumers (or with the corresponding Distribution Utility). The first will require the permission for wheeling of electricity between generator and the contracted consumer. And it will require the consumer to sign an additional contract with the DU for the supply of reserve capacity.

Others

The FIT rate will either have to be numerated in foreign currency (US$) or if expressed in local currency, the rates have to be regularly adjusted by the relatively high inflation rate.

Annex D:

List of stakeholder meetings during consultancy mission

Meetings held between April 8 and 17 in Male and Hulhumale:

Housing Development Corporation (HDC)

Mr. Suhail Ahmed, Managing Director; Mr. Mohamed Shahid, Dep. Managing Director

Ministry of Environment and Energy

Dr. Mariyam Shakeela, Minister

Climate Change Department of MEE

Mr. Ali Shareef, Ass. Director; Mr. Zammath Khaled (Environment Analyst); Mr. Ahmed Saleem, Permanent Secretary

Maldives Energy Authority (MEA)

Mr. Ajwad Mustafah, Deputy Director

Energy Department of MEE

Mr. Ahmed Ali, Head of Energy Dept., Ass. Director MEA

Housing Department of the Ministry of Housing and Infrastructure

Ms. Fatimah Shaufa, Ass. Architect

Consonant Solutions

Mr. Mohamed Rasheed, Consultant

Transport Authority

Mr. Abdul Nasir Mohamed, Dep. Director General; Mr. Abdul Rasheed Nafiz, Chairman

STELCO

Mr. Ahmed Iqbal, Senior Engineer; Mr. Azzam Ibrahim, Senior Engineer; Mr. Abdul Malik Thoufeeg, Engineer, Mr. Ahmed Saif, Engineer

FENAKA

Mr. Moosa Ibrahim, Ass. Managing Director and colleagues

Male Water and Sewerage Company (MWSC)

Mr. Ahmed Mujthaba, Operations Manager; Mr. Mohamed Ali, Engineer Projects

Ministry of Economic Development (MED)

Ms. Saeeda Umar, Coordinator

Ministry of Tourism, Arts and Culture (MOTAC)

Ms. Aishath Ali, Director General; Mr. Farooq Mohamed Hassan, Consultant/Project Manager for Tourism Adaptation Project; Mr. Moosa Zameer Hassan, Dep. Director General

Annex E:

Presentation of preliminary findings and recommendations in Stakeholder meeting, April 16, 2013

Annex F:

Attendance list in stakeholder meeting, April 16, 2013

Annex G:

Power Generation System of STELCO

 

Island

Installed Capacity (kW)

Peak Load (kW)

 

Male

61,420

40,000

 

Villingili

2,800

1,470

Hulhumalé

4,000

2,410

Thilafushi

1,660

580

Kaashidhoo

610

220

K.

Gaafaru

390

105

K.

Thulusdhoo

940

280

K.

Himmafushi

1,020

320

K.

Gulhifalhu

163

32

 

Gulhi

360

110

Maafushi

1,660

520

Guraidhoo

618

235

AA. Ukulhas

380

110

AA. Bodhufulhadhoo

320

67

Mathiveri

390

102

AA. Feridhoo

224

61

AA. Maalhos

160

53

AA. Himandhoo

428

85

ADH. Omadhoo

370

84

ADH. Kuburudhoo

170

40

ADH. Dhigarah

202

65

ADH. Dhidhdhoo

107

17

ADH. Fenfushi

375

80

V.

Fulidhoo

260

56

V.

Thinadhoo

170

32

V.

Keyodhoo

217

66

V.

Rankeedhoo

94

24

Source: STELCO website, retrieved on May 3, 2013