Technical Assistance Consultant’s Report Project Number: 42078-012 September 2011 REG: Promoting Energy Efficiency in the Pacific (Phase I) (Financed by the Asia Clean Energy Fund under the Clean Energy Financing Partnership Facility) Prepared by Econoler International Econoler International Quebec, Canada For the Asian Development Bank (Executing Agency) This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Asian Development Bank TA 6485-REG: Promoting Energy Efficiency in the Pacific - Contract No. COSO/90-492 Final Report ASIAN DEVELOPMENT BANK TA 6485-REG: PROMOTING ENERGY EFFICIENCY IN THE PACIFIC Contract No. COSO/90-492 FINAL REPORT - May 2011 - Econoler 1 Ref.: 5505 Asian Development Bank TA 6485-REG: Promoting Energy Efficiency in the Pacific - Contract No. COSO/90-492 Final Report ABBREVIATIONS AND ACRONYMS AUD Australian Dollar ADB Asian Development Bank ADO Automotive Diesel Oil or Distillate APEC Asia-Pacific Economic Cooperation CCI Chamber of Commerce and Industry CFL Compact Fluorescent Lamp CI Cook Islands CIF Cost, Insurance, Freight CO2 Carbon Dioxide COP Coefficient of Performance CSO Community Service Obligation (under PNG law) DEC Department of Environment and Conservation DF Department of Forestry (PNG) DNPM Department of National Planning and Monitoring (PNG) DPE Department of Petroleum and Energy (PNG) DPRP Diesel Power Replacement Programme (PNG) DSM Demand-Side Management ECM Energy Conservation Measure ED Energy Division (DPE, PNG) EE Energy Efficiency EESCOs Energy Efficiency Service Companies EEZ Exclusive Economic Zone EI Energy Intensity ELCOM Electricity Commission of PNG (now PPL) EPU Energy Planning Unit EPC Electric Power Corporation (Samoa) ESCO Energy Service Company GDP Gross Domestic Product GEF Global Environment Facility – a funding source for EE projects in developing countries GHG Greenhouse Gas GNP Gross National Product GoPNG Government of Papua New Guinea HPS High Pressure Sodium (lamp) ICCC Independent Consumer and Competition Commission (PNG) IGA Investment Grade Audit IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change IPP Independent Power Producer JICA Japan International Cooperation Agency Econoler International ii Ref.: 5505 Asian Development Bank TA 6485-REG: Promoting Energy Efficiency in the Pacific - Contract No. COSO/90-492 Final Report Ktoe Kilotonnes of Oil Equivalent kWe Kilowatt Electric, Output LED Light-Emitting Diode (lamp) LPG Liquefied Petroleum Gas MCA Millennium Challenge Account MDGs Millennium Development Goals MEPS Minimum Energy Performance Standards MHDP Micro-Hydro Development Programme (PNG) MLSNR Ministry of Lands, Survey, Natural Resources (Kingdom of Tonga) MNRE Ministry of Natural Resources and Environment (Samoa) MV Mercury Vapor (lamp) MT Medium Tension (medium voltage power distibution) NCD National Capital District (PNG) NEC National Energy Committee (Cook Islands) NISIT National Institute of Standards and Industrial Technology (PNG) NSO National Statistical Office NZ New Zealand NZD New Zealand Dollar, also used as Cook Islands Currency OCCES Office of Climate Change and Environmental Sustainability (PNG) PDF Project Development Facility (a project grant funding source from GEF) PDMC Pacific Developing Member Country (of ADB) PEEP Promoting Energy Efficiency in the Pacific (this RETA) PF Power Factor PFC Power Factor Correction Power Factor Correction System (e.g capacitors to correct for lagging power factor PFCS from inductive loads) PGK Kina, PNG Currency PDMC Pacific Developing Member Country (of ADB) Pacific Islands Energy Policy and Strategic Action Planning (a project under the EU PIEPSAP Energy Initiative implemented from 2004 to 2008) Pacific Islands Greenhouse Gas Abatement and Renewable Energy Project (of UNDP- PIGGAREP GEF being implemented from 2008 for a scheduled 5 years) Pacific Island Renewable Energy Project (of UNDP-GEF, implemented from 2003 to PIREP 2006 and serving as the preparatory phase of PIGGAREP) PNG Papua New Guinea POM Port Moresby (PNG) POMCCI Port Moresby Chamber of Commerce and Industry (PNG) PPL PNG Power Limited (public electric utility) PPP Purchasing Power Parity R&D Research and Development RE Renewable Energy REEEP Renewable Energy and Energy Efficiency Partnership Econoler International iii Ref.: 5505 Asian Development Bank TA 6485-REG: Promoting Energy Efficiency in the Pacific - Contract No. COSO/90-492 Final Report RETA Regional Technical Assistance (of ADB) RRP Report and Recommendation to the President (of ADB) S&L Standards and Labeling SHA Samoa Hotel Association SOPAC South Pacific Applied Geoscience Commission SPC South Pacific Commission SPREP Pacific Regional Environment Programme TA Technical Assistance Te Uponga Uira – the electricity utility in Rarotonga (the main population island), Cook TAU Islands TERM Tonga Energy Road Map toe Tonnes of Oil Equivalent toea Subunit of PGK, PNG Currency TOP Pa’anga, Tonga Currency TPF Third-Party Financing TPL Tonga Power Limited UNDP United Nations Development Programme UNELCO Union Electrique du Vanuatu Ltd UNEP United Nations Environment Programme UNITECH PNG University of Technology (City of Lae) USD United States Dollar VAGST Value Added Goods and Services Tax VHRA Vanuatu Hotels and Resorts Association VSD Variable Speed Drive VUV Vatu, Vanuatu Currency WST Tala, (Western) Samoa Currency Econoler International iv Ref.: 5505 Asian Development Bank TA 6485-REG: Promoting Energy Efficiency in the Pacific - Contract No. COSO/90-492 Final Report Exchange Rates Local Currency to United States Dollar (USD) at February 2011 Country Local Currency USD Cook Islands New Zealand Dollar (NZD) 0.749 Tonga Pa’anga (TOP) 0.639 Samoa Tala (WST) 0.419 Papua New Guinea Kina (PGK) 0.381 Vanuatu Vatu (VUV) 0.0108 Econoler International v Ref.: 5505 Asian Development Bank TA 6485-REG: Promoting Energy Efficiency in the Pacific - Contract No. COSO/90-492 Final Report TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................................ VII 1 PROJECT OBJECTIVES AND ENERGY EFFICIENCY OVERVIEW .....................................1 1.1 Introduction ...................................................................................................................... 1 1.2 Project Objective .............................................................................................................. 2 1.3 importance of ENERGY EFFICIENCY .............................................................................2 1.4 Energy Efficiency Definition ............................................................................................3 2 ENERGY EFFICIENCY ASSESSMENT OF PARTICIPATING COUNTRIES ......................... 5 2.1 Energy Sector Comparison .............................................................................................5 2.2 Socio-Economic Comparison .......................................................................................14 2.3 Past and Ongoing EE/DSM Experience ........................................................................20 2.4 Barriers to EE/DSM Implementation .............................................................................26 3 POLICY AND INSTITUTIONAL RECOMMENDATIONS .......................................................31 3.1 Government energy efficiency management organization ........................................31 3.2 electric utility DSM organization ...................................................................................32 3.3 General information/awareness programs ..................................................................33 3.4 Education and training ..................................................................................................34 3.5 Energy labeling and Minimum energy performance standards .................................36 3.6 Building code and enforcement ....................................................................................39 3.7 Public sector procurement ............................................................................................40 4 RECOMMENDATIONS FOR FUTURE EE PROGRAMS ...................................................... 41 4.1 Government Buildings ...................................................................................................42 4.2 Street Lighting ................................................................................................................ 44 4.3 Residential CFLs ............................................................................................................46 4.4 Hotel Sector .................................................................................................................... 47 4.5 Power Factor CORRECTION .........................................................................................49 4.6 Water Sector ................................................................................................................... 50 4.7 Energy Labeling and MEPS ...........................................................................................51 5 PILOT PROJECTS ................................................................................................................. 54 5.1 CFLs in Cook