South Tarawa Renewable Energy Project

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South Tarawa Renewable Energy Project Project Number: 49450-021 November 2020 Pacific Renewable Energy Investment Facility Republic of Kiribati: South Tarawa Renewable Energy Project This document is being disclosed to the public in accordance with ADB's Access to Information Policy. CURRENCY EQUIVALENTS (as of 9 November 2020) Currency unit – Australian dollar/s (A$) A$1.00 = $0.73 $1.00 = A$1.37 ABBREVIATIONS ADB – Asian Development Bank BESS – battery energy storage system COVID-19 – coronavirus disease GHG – greenhouse gas GWh – gigawatt-hour km2 – square kilometer kWh – kilowatt-hour MFED – Ministry of Finance and Economic Development MW – megawatt MWh – megawatt-hour MWp – megawatt-peak O&M – operation and maintenance PAM – project administration manual PUB – Public Utilities Board TA – technical assistance tCO2e – ton of carbon dioxide equivalent NOTE In this report, "$" refers to United States dollars, unless otherwise stated. Vice-President Ahmed M. Saeed, Operations Group 2 Director General Leah Gutierrez, Pacific Department (PARD) Deputy Director Emma Veve, PARD General Director Olly Norojono, Energy Division (PAEN), PARD Team leader Cinderella Tiangco, Principal Energy Specialist, PAEN, PARD Team members Rafayil Abbasov, Energy Specialist, PAEN, PARD Cynthia Ambe, Operations Assistant, PAEN, PARD Chandra Arora, Procurement Specialist; Procurement Division 2, Procurement, Portfolio and Financial Management Department Cindy Bryson, Safeguards Specialist, Portfolio, Results, and Quality Control Unit (PAOD-PRQ), PARD Faith Joy Buentipo, Senior Operations Assistant, PAEN, PARD Christian Ellerman, Senior Climate Change Specialist, Climate Change & Disaster Risk Management Division, Sustainable Development and Climate Change Department (SDCC) Jane Fantilanan, Associate Project Analyst, PAEN, PARD Lily Anne Homasi, Senior Economics Officer, Pacific Subregional Office (SPSO), PARD Roshan Ouseph, Senior Counsel, Office of the General Counsel Eun Young So, Energy Specialist, PAEN, PARD Ritu Verma, Principal Social Development Specialist (Gender and Development), PARD Jean Williams, Principal Environment Specialist, PAOD-PRQ, PARDa Peer reviewer David Elzinga, Senior Energy Specialist, Energy Sector Group, SDCC a Outposted to Pacific Subregional Office in Suva, Fiji In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page PROJECT AT A GLANCE MAP I. BACKGROUND 1 II. THE PROJECT 1 A. Rationale 1 B. Project Description 4 C. Value Added by ADB 5 D. Summary Cost Estimates and Financing Plan 5 E. Implementation Arrangements 6 III. DUE DILIGENCE 7 A. Technical 7 B. Economic and Financial Viability 8 C. Sustainability 8 D. Governance 9 E. Poverty, Social, and Gender 10 F. Safeguards 10 G. Summary of Risk Assessment and Risk Management Plan 11 IV. ASSURANCES 12 V. THE PRESIDENT’S DECISION 12 APPENDIXES 1. Design and Monitoring Framework 13 2. List of Linked Documents 16 Project Classification Information Status: Complete PROJECT AT A GLANCE 1. Basic Data Project Number: 49450-021 Project Name South Tarawa Renewable Energy Project Department/Division PARD/PAEN Country Kiribati Executing Agency Ministry of Finance and Recipient Government of Kiribati Economic Development Country Economic https://www.adb.org/Documents/LinkedDocs/ Indicators ?id=49450-021-CEI Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/ ?id=49450-021-PortAtaGlance 2. Sector Subsector(s) ADB Financing ($ million) Energy Energy sector development and institutional reform 0.20 Renewable energy generation - solar 7.80 Total 8.00 3. Operational Priorities Climate Change Information Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 4,633 Accelerating progress in gender equality Climate Change impact on the Medium Tackling climate change, building climate and disaster resilience, and Project enhancing environmental sustainability Strengthening governance and institutional capacity ADB Financing Adaptation ($ million) 0.22 Mitigation ($ million) 5.61 Cofinancing Adaptation ($ million) 0.18 Mitigation ($ million) 4.52 Sustainable Development Goals Gender Equity and Mainstreaming SDG 1.4, 1.5 Effective gender mainstreaming (EGM) SDG 5.5 SDG 7.2 Poverty Targeting SDG 10.3 General Intervention on Poverty SDG 13.a 4. Risk Categorization: Low . 5. Safeguard Categorization Environment: B Involuntary Resettlement: B Indigenous Peoples: C . 6. Financing Modality and Sources Amount ($ million) ADB 8.00 Sovereign Project grant: Asian Development Fund 8.00 Cofinancing 5.70 Government of New Zealand - Project grant (Full ADB Administration) 2.00 Strategic Climate Fund - SREP - Project grant (Full ADB Administration) 3.70 Counterpart 1.00 Government 1.00 Total 14.70 Currency of ADB Financing: US Dollar Source: Asian Development Bank This document must only be generated in eOps. 25082020174634974490 Generated Date: 06-Oct-2020 11:09:36 AM o o o 180 00’ 160 00'W 173 00'E KIRIBATI Buariki SOUTH TARAWA RENEWABLE ENERGY PROJECT Tearinibai Nuatabu Tebwangaroi P A C I F I C O C E A N Taratai N O R T H T A R A W A Eretibou 1 o 30'N 1 o 30'N GILBERT GROUP Abaokoro Marenanuka Teraina Northern L A G O O N Kainaba Nabeina Makin Butaritari Tabuaeran T A R A W A A T O L L Tabiteuea Abaiang Marakei Abatao TARAWA N O R T H P A C I F I C O C E A N Kiritimati Buota Maiana Bikeman 0o Abemama 0o Bonriki Kuria Nonouti S O U T H T A R A W A Bikenibeu Aranuka Beru Betio Taborio Eita Tabiteuea Nikunau LINE GROUP Temaiku Banaba Onotoa Kanton Nanikai Banraeaba Enderbury Tamana Arorae McKean Birnie Malden Bairiki Teaoraereke Rawaki o Nikumaroro Orona 173 00'E Manra Starbuck Filippo Reef PHOENIX GROUP (RAWAKI) Millennium 10 o 00'S 10 o 00'S Vostok Southern Flint 160 o 00'W ADB'S DEVELOPING MEMBER COUNTRIES IN THE PACIFIC NORTHERN MARIANA ISLANDS HAWAII N GUAM MARSHALL ISLANDS N O R T H P A C I F I C O C E A N FEDERATED STATES 0 500 1000 REPUBLIC OF OF MICRONESIA PALAU Kilometers NAURU PAPUA K I R I B A T I NEW GUINEA SOLOMON TUVALU ISLANDS SAMOA National Capital VANUATU COOK Town ISLANDS FRENCH FIJI POLYNESIA International Airport NIUE TONGA International Boundary NEW A U S T R A L I A CALEDONIA Boundaries are not necessarily authoritative. Source: Satellite views of Bonriki, Google Earth S O U T H P A C I F I C O C E A N 200858A 20KIR ABV 20KIR 200858A (accessed 16 September 2020) This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the Asian Development N E W Z E A L A N D Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information. 180o 00’ I. BACKGROUND 1. On 22 June 2017, the Board of Directors of the Asian Development Bank (ADB) approved the Pacific Renewable Energy Investment Facility. 1 The facility finances renewable energy 2 projects in the 11 smaller Pacific island developing member countries (PIC-11).F Upon approval, the Board delegated authority to the President to approve loans and/or grants to targeted countries for qualifying projects of up to $200 million in cumulative ADB financing. 2. The facility will finance a grant to Kiribati for the South Tarawa Renewable Energy Project, ADB’s first project in the Kiribati energy sector. The Strategic Climate Fund3 and the Government of New Zealand’s Ministry of Foreign Affairs and Trade will provide grant cofinancing, to be administered by ADB. Through the installation of a solar photovoltaic and a battery energy storage system (BESS) and capacity building, the project will help the Government of Kiribati (i) expand access to clean energy; (ii) improve the reliability and climate resilience of service; (iii) reduce reliance on fossil fuels for power generation; (iv) reduce greenhouse gas emissions; (v) reduce the cost of power generation; and (vi) improve the capacity of energy sector stakeholders. II. THE PROJECT A. Rationale 3. Country context. Kiribati is a small island nation in the central Pacific. It comprises 32 atolls and a coral island with a total land area of 810 square kilometers (km2) widely dispersed over an exclusive economic zone of 3.5 million km2 and spread across three island groups and time zones. Kiribati’s remoteness from major markets and limited resources lead to high import costs, while its low elevation—averaging only 2 meters above sea level—creates severe vulnerability to sea-level rise and other climate change impacts and natural hazards. Like many other small Pacific islands, Kiribati’s electricity generation relies heavily on imported diesel fuel, transported by sea over long distances and subject to weather and climate-change-related supply disruptions. This dependence exposes Kiribati to high and fluctuating oil prices and has resulted in among the region’s highest costs of power generation. 4 The government has prioritized strengthening fuel security and reducing carbon emissions. The investments in renewable energy, energy storage, and distributed technologies are expected to improve the country’s energy security, increase grid reliability, and reduce fossil fuel consumption. 4. Sector context. Grid-connected electricity in Kiribati’s capital, South Tarawa, is generated and distributed by the Public Utilities Board (PUB), a state-owned electricity, water, and sewerage utility. The PUB’s installed capacity of 7.01 megawatts (MW) comprises several diesel generators totaling 5.45 MW and recently completed grid-connected solar photovoltaic systems totaling 1.56 megawatt-peak (MWp). These supply an annual peak demand of close to 6.0 MW to government, commercial, and residential customers. The photovoltaic systems account for 22% of installed capacity but supply only about 9% of demand on South Tarawa; diesel generation supplies the remaining 91%.
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