FINAL REPORT REVIEW OF THE OUTER ISLANDS ELECTRIFICATION PROGRAMMES IN RMI RFP Reference: SPC 11/14 September 2012 Prepared by Global Sustainable Energy Solutions Pty. Limited For NORTH‐REP North Pacific ACP Renewable Energy and Energy Efficiency Project Acknowledgments This report was written by Global Sustainable energy Solutions Pty Ltd (GSES) for the North Pacific ACP Renewable Energy and Energy Efficiency Project (North REP). The authors wish to acknowledge the following people who provided information wither through meetings or via e‐mail communications in the preparation of the report: Mr Thomas Kijiner Jnr; Secretary of Resources & Development (At time of interview) Dr Hilda Heine, Minister for Education Mr Richard Bruce and Mr Kanchi Hosia Ministry of Education Ms Angeline Heine National Energy Planner, Energy Planning Division, Ministry of Resources & Development Mr Steve Wakefield Chief Technical Officer, Marshalls Energy Company Mr Billy Schultz Solar Engineer Marshalls Energy Company Mr Charles Abraham Mayor of Mejit: Ms Rufena Elooki : Mayor of Ailuk: Mr Walter Myazoe ; Assistant Energy Planner ,Energy Planning Division, Ministry of Resources & Development Ms Katerina Syngellakis, GIZ Energy Adviser Mr Rupeni Mario; Team Leader North REP Ms Arieta Gonelevu: North REP Energy Specialist (RMI) RFP Ref: 11/14 Review of the Outer Islands Electrification Programmes in RMI and FSM‐Final Report‐RMI i Contents Acknowledgments .................................................................................................................................... i Abbreviations ......................................................................................................................................... iv 1. Executive Summary ......................................................................................................................... 1 1.1 RMI Outer islands Electrification Program .............................................................................. 1 1.2 Financial Analysis .................................................................................................................... 1 1.2.1 Solar Home systems ........................................................................................................ 1 1.2.2 School and Community systems ..................................................................................... 3 1.3 Key Issues, Findings, Conclusions and Recommendations ..................................................... 4 2.0 Introduction .............................................................................................................................. 12 3.0 Overview of the Outer Island Electrification Program .............................................................. 13 3.1 Background .......................................................................................................................... 13 3.2 Management of Programme................................................................................................. 16 3.2.1 Ministry of Resources and Development (R&D) .................................................................. 16 3.2.2 Marshall Energy Company (MEC) ................................................................................. 17 3.3 Systems Installed................................................................................................................... 21 3.4 Proposed system Installation ................................................................................................ 23 3.5 Training ................................................................................................................................. 24 4.0 Financial Analysis ...................................................................................................................... 24 4.1 Solar Home systems .............................................................................................................. 24 4.1.1 Monthly Fee analysis for ‘Fee for Service’ Model ................................................................ 24 4.1.2 Subsidy Analysis ............................................................................................................ 27 4.1.3 20 Year Expenses........................................................................................................... 28 4.1.4 ‘Rent to Own’ Model ..................................................................................................... 29 4.2 School and Community systems ........................................................................................... 30 4.2.1 Tariff for replacement and maintenance ............................................................................. 30 4.2.2 Ministry of Education‐ Replacement Fund .......................................................................... 31 4.2.3 Is the tariff being charged covering maintenance? ...................................................... 31 5.0 Findings and Conclusions .......................................................................................................... 33 5.1 Fee for Service vs Rent to Own ............................................................................................. 33 RFP Ref: 11/14 Review of the Outer Islands Electrification Programmes in RMI and FSM‐Final Report‐RMI ii 5.2 Fee Collection rate is Low. .................................................................................................... 34 5.2 Policy for non‐payment of fees. ............................................................................................ 40 5.3 Fees Must Reflect Actual Costs or Government Must pay subsidy ...................................... 41 5.4 Are Full Time Technicians required? ..................................................................................... 43 5.5 School Systems ...................................................................................................................... 49 5.6 Replacement of Batteries ..................................................................................................... 51 5.7 Product Quality ..................................................................................................................... 51 5.8 List of Equipment .................................................................................................................. 52 5.9 Transport and Communications ........................................................................................... 52 5.10 Training ................................................................................................................................. 53 5.10.1 SHS System Training ........................................................................................................... 53 5.10.2 School systems .............................................................................................................. 54 5.11 Ministry of R & D staffing levels ............................................................................................ 55 6. Recommendations ........................................................................................................................ 55 6.1 Models for System Ownership .............................................................................................. 55 6.2 Collection of Fees .................................................................................................................. 56 6.3 Fees ....................................................................................................................................... 57 6.4 Non‐payment Policy .............................................................................................................. 57 6.5 Recovery of outstanding debts ............................................................................................. 58 6.6 Subsidy .................................................................................................................................. 58 6.7 Trust Fund ............................................................................................................................. 59 6.8 Number of Technicians ......................................................................................................... 59 6.9 School Systems ...................................................................................................................... 60 6.10 Battery replacement is planned ............................................................................................ 60 6.11 Product Quality ..................................................................................................................... 60 6.12 Data base .............................................................................................................................. 60 6.13 Transport and Communications ........................................................................................... 61 6.14 Training ................................................................................................................................. 61 6.15 Ministry of R & D Staffing Levels ........................................................................................... 61 Annex 1: Data on Solar Home Systems ................................................................................................. 62 Annex 2: Data on School Systems ........................................................................................................