THE MALDIVES

Energy Sector Overview

Republic of Maldives
Public-Private Sector Dialogue for Renewable Energy Development in South Asia

7th November 2011

Some basic facts

Nation of 1192 islands Population of approximately 400,000 Residing on 200 inhabited islands 100 Resort Islands Land area of approx 298 sq. km out of 859,000 sq. km of EEZ Size of the Islands range 0.2 5 sq km 85% of the inhabited islands have an area less than 1 km2.

Economy
Total GDP is $1.35 billion in 2009 Main industries: Tourism & Fisheries Major exports are tourism services, fish products Broad based taxation just introduced
General Sales Tax @ 3.5 percent Business Profit Tax @ 15 percent

Energy sector overview

Total energy demand is approx 240 MW The sector comprises a series of mini grids one for each of the 300 islands No interconnections between islands at present- high unit costs due to small scale of production Almost exclusively dependent on fossil fuel for energy generation Historical growth of energy demand is approximately 7-10% Nationally we spend >16% of GDP on paying for our import bill for diesel and it increases at a rate of about 10% per annum.

Current Energy Demand

Male The Capital Installed Capacity 62 MW Generator- STELCO

Tourist Resorts Installed Capacity - 120 MW Generator-individual resort operators

Other Inhabited Islands Installed Capacity - 55MW Generator- 6 Regional utilities

Sources of energy generation

6% 2% 5% 2%

85%

Diesel

Petrol

LPG

JET A1

Kerosene

Key Sector Policies

Key Policy Objective remains the provision of clean, affordable and reliable energy to all Maldivians Achieve carbon neutrality by 2020 Promote energy efficiency and energy conservation Enhance national energy security by moving towards Renewable Energy Technologies & reduce our dependence on diesel Providing a conducive legal and regulatory environment for private sector engagement in energy sector development. Government keen to move out of the energy generation and distribution sub-sectors

Key Policy documents on Renewable Energy Development

Renewable Energy Investment Framework endorsed by the Cabinet on 23rd August 2011. This is the first policy document on RE endorsed by the government The document sets out the road map for developing RE in view of transforming the energy sector and reaching the national goal of carbon neutrality by 2020.

Renewable Energy Investment Framework

RETs considered; 60 percent solar; wind and biomass (interim) Recognizes the technical limitations of the Utilities in the RE space and proposes the Maldives Energy Technology Support Unit (METSU) to explore the potential RETs practical for the Maldives and provide technical support to Utilities. Proposes the Maldives Energy Finance Corporation (MEFCO).
MEFCO will consolidate the financial resources made available through international donors & use these and other government resources to leverage funding through international capital markets & other private sources. These funding will be made available for the private sector for investments in RETs

Key energy stakeholders

Presidents Office and Cabinet Policy Direction Ministry of Housing and Environment- Policy Analysis Maldives Energy Authority Regulatory Environment Protection Agency Regulatory Ministry of Economic Development Renewable Energy Investments Office Investments Utility Service Providers 7 major utilities Resort Operators Private generators Development partners Bilateral and Multilateral partners

Challenges facing RE development

Natural challenges Scattered islands and population- leading to very high unit cost of production Space constraints for solar development Technical challenges- corrosion, grid stability etc Weak legal, institutional & regulatory environment Absence of an Energy Law Very limited regulations on the energy sector No regulatory framework on Renewable energy Unclear institutional setup Lack of a financing mechanisms for RE developments Under-developed financial markets Weak balance sheets in Utilities Limited implementation capacity for absorbing international donor assistance

Trends in Fuel Prices

Price of diesel in MRF
18.00 16.00 15.35 14.00 12.00 10.00 8.00 6.00 4.00 2.95 2.00 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 4.35

13.41

7.45

Electricity Prices in Capital Island

DOMESTC Tariff Bands (kWh) Tariff US$ Tariff + Fuel Surcharge US$ 0.27 0.29 0.32 0.36 0.38 BUSINESS Tariff US$ Tariff + Fuel Surcharge US$ 0.34 0.34 0.36 0.39 0.41 GOVERNMENT Tariff US$ Tariff + Fuel Surcharge US$ 0.34 0.34 0.36 0.39 0.41

0 -100 101- 300 301- 500 501 -600 Above 600

0.15 0.16 0.19 0.23 0.25

0.21 0.22 0.24 0.26 0.28

0.21 0.22 0.24 0.26 0.28

The current price of electricity in the Male region ranges from US$ 0.27 to US$ 0.41 per kWh.

Electricity Prices Other Islands

DOMESTC Tariff Bands (kWh) Tariff US$ Tariff + Fuel Surcharge US$ 0.39 0.42 0.44 0.50 BUSINESS Tariff US$ Tariff + Fuel Surcharge US$ 0.44 0.52 0.57 0.63 GOVERNMENT Tariff US$ Tariff + Fuel Surcharge US$ 0.46 0.52 0.58 0.65

0 -100 101 - 200 201- 300 Above 301

0.25 0.28 0.29 0.36

0.29 0.37 0.42 0.49

0.31 0.38 0.43 0.50

The current price of electricity in Islands ranges from US$ 0.25 to US$ 0.65 per kWh.

Map of Male Region

The possibility of expanding the power station to cater for this level of growth in the congested Mal island is also very limited as there is simply no land available.

RE resource potential
Solar Maldives is located in the Equator and receives abundant solar energy. Average Sunny Days Per Annum 280 300 Sunny Days Daily Average Global Irradiation in Maldives is 4.56 kWh/m2/day

Solar Radiation

Potential for energy generation though wind resources

Ongoing RE Projects

Way forward with renewable energy technologies

Agree on policy setting for RE- Implement REIF Operationalize METSU and develop a structured energy sector investment plan based on REIF Formulate Energy/Renewable Energy Act and necessary regulatory regime for private sector engagement in energy sector development Develop financing and incentive mechanisms for RE development Develop sustainable financial mechanisms to promote renewable energy i.e. MEFCO Duty exemption for RE and Energy Efficient technologies Introduce and refine Feed in Tariff system

Thank you