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Vanuatu National Energy Road Map 2013-2020

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Vanuatu National Energy Road Map 2013-2020 Vanuatu National Energy Road Map 2013-2020 _________________________________________ March 2013 Acronyms and Abbreviations ADB Asian Development Bank AusAID Australian Agency for International Development CIF Climate Investment Funds DOE Department of Energy FAESP Framework for Action on Energy Security in the Pacific GHG Greenhouse Gas GoV Government of Vanuatu GPOBA Global Partnership for Output Based Aid HDI Human Development Index LED Light Emitting Diode LPG Liquefied Petroleum Gas LV Low Voltage MEPS Minimum Energy Performance Standards MDGs Millennium Development Goals MIPU Ministry of Infrastructure and Public Utilities MV Medium Voltage OBA Output Based Aid PALS Pacific Appliance Labeling and Standards PIES Public Institutions Electrification Scheme PPAs Power Purchase Agreements PPC Pacific Petroleum Company PPPs Public Private Partnerships PV Photovoltaic RLSS Rural Lighting Subsidy Scheme SREP Scaling Up Renewable Energy Program in Low Income Countries SWAp Sector Wide Approach SWER Single Wire Earth Return UNELCO Union Electrique du Vanuatu Limited URA Utilities Regulatory Authority VERD Vanuatu Energy for Rural Development VISIP Vanuatu Infrastructure Strategic Investment Plan VUI Vanuatu Utilities & Infrastructure Limited Table of Contents Foreword ................................................................................................................................................ iv Vanuatu National Energy Road Map ....................................................................................................... 5 Executive Summary ................................................................................................................................. 7 1. Introduction .......................................................................................................................... 12 1.1. Purpose of the Road Map ................................................................................................. 12 1.2. How the Road Map has been developed .......................................................................... 14 1.3. Contents of the Road Map ................................................................................................ 17 2. Vanuatu’s Road Map—Builds on Global Experience ............................................................ 19 2.1. The Road Map Address the Essential Linkages between Energy, Poverty, and Development .................................................................................................................................. 20 2.2. Vanuatu’s Energy Sector: Context and Challenges ........................................................... 23 2.3. Strategic Directions for Action—Steering a Break from the Past, Towards a Brighter Future for all Within a Generation ................................................................................................. 39 3. Petroleum Sector Targets and Actions ................................................................................. 44 3.1. Petroleum Sector Targets ................................................................................................. 44 3.2. Achieving Government Leadership and Commitment...................................................... 45 3.3. Empowering and Holding Accountable Key Energy Sector Institutions ........................... 48 3.4. Implementing a Sector Wide Approach (SWAp) to Investment ....................................... 48 3.5. Summary of Petroleum Sector Actions ............................................................................. 51 4. Electricity Sector Targets and Actions ................................................................................... 52 4.1. Electricity Sector Targets .................................................................................................. 52 4.2. Government Leadership and Commitment – Getting the Policies Right and Staying the Course 56 4.3. Empowering Key Energy Sector Institutions and Holding Them Accountable ................. 61 4.4. Implementing a Sector Wide Approach (SWAp) to Investment – many players, one team, one plan .......................................................................................................................................... 62 5. Road Map Prospectus and Next Steps .................................................................................. 78 5.1. Prospectus – Technical Assistance, Identified Investments and Financing Requirements .. ........................................................................................................................................... 78 5.2. Project Implementation Arrangements ............................................................................ 80 5.3. Responsibilities and Deliverables for Next Steps .............................................................. 82 i Appendices Appendix A. Tariff Structure in Concessions ..................................................................................... 85 Appendix B. Output Based Aid (OBA) Subsidies ................................................................................ 87 Appendix C. Electricity Demand Forecasts ........................................................................................ 89 Appendix D. Petroleum Sector Investments ..................................................................................... 94 Appendix E. Summary of Road Map Electricity Investments ............................................................ 96 Appendix F. References .................................................................................................................... 97 Appendix G. Energy Taskforce, Technical Team and Support Teams ................................................ 98 Figures Figure 1.1: Overview of the Road Map Development Process ............................................................. 17 Figure 2.1: GDP per Capita v Electricity Use ......................................................................................... 20 Figure 2.2: Human Development and Modern Energy Access ............................................................. 21 Figure 2.3: Petroleum Imports and Use ................................................................................................ 24 Figure 2.4: Dependence on Oil.............................................................................................................. 25 Figure 2.5: Petroleum product demand forecast, by fuel type, 2012 to 2022 (‘000 litres) .................. 26 Figure 2.6: World Oil Prices – average and trading range (2002-2012)................................................ 26 Figure 2.7: Retail Diesel fuel price in Pacific ......................................................................................... 27 Figure 2.8: Overview of Energy Sector Stakeholders ............................................................................ 29 Figure 2.9: Electrification Rates by Province (excluding Efate, Tanna, Malekula, Santo islands) ......... 30 Figure 2.10: Population without electricity access and poverty prevalence ........................................ 31 Figure 2.11: Electricity Prices in the Pacific (US$/kWh)—Household 200 kWh/month and Commercial 500 kWh/month .................................................................................................................................... 33 Figure 2.12: Electricity Consumption in Vanuatu, and the Pacific (2009) ............................................ 34 Figure 2.13: Connection Rates in Concession Areas* ........................................................................... 34 Figure 2.14: Access to modern cooking fuels – selected cross-country comparison ........................... 37 Figure 2.15: Modern cooking fuels – a big urban-rural divide .............................................................. 38 Figure 2.16: Strategic Framework for Scaling up Electricity Access Nationwide by 2030 – Least Cost Energy service delivery modalities by Four Population Segments ....................................................... 42 Figure 3.1: LPG Retail Prices (including taxes), Vanuatu versus selected countries, December 2011 . 47 Figure 4.1: Forecast Demand for Electricity in Vanuatu, 2011-2030 .................................................... 54 Figure 4.2: Effective Subsidies Provided Under Rural Lighting Subsidy Scheme .................................. 65 ii Figure 4.3: Overview of rural electrification budget ............................................................................. 66 Figure 4.4: Grid Extensions on Santo and Efate .................................................................................... 68 Figure 4.5: Projected Share of Cost Competitive Renewable Energy Generation ................................ 70 Figure 4.6: Location of Geothermal Development and Existing Electricity Network ........................... 71 Figure 4.7: Financing Needs for Investments to Achieve Supply-Side Targets ..................................... 74 Figure 5.1: Reporting and Governance Arrangements for Road Map Implementation ....................... 81 Tables Table 1.1: Overview of Energy Sector Priorities ................................................................................... 13 Table 2.1 Social Facilities with No Electricity Access ........................................................................... 32 Table 2.2: Lack of Electricity Access and Human Development (Selected Island Nations) .................
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