Vanuatu (2012)

Degree of reliance on imported energy: 

<p>
Vanuatu is overwhelmingly dependent on imported petroleum, and is affected by its volatile prices for commercial energy. The entirety of the country&rsquo;s oil supply needs to be imported, and this has lead to a high dependence, due to the country&rsquo;s almost-entirely diesel-fuelled power generation infrastructure. In 2008, Vanuatu imported 676 barrels of oil per day. This had risen to an estimated 761 bbl/day in 2009. The country&rsquo;s biomass resource is produced indigenously, and roughly 85% of the population still regularly use some form of solid fuel.</p>

Main sources of Energy: 

<p>
Total installed electricity capacity (2009): 0.01 GWe<br />
<br />
Total Primary Energy Supply (2008): 64.3 ktoe<br />
Oil and oil products: 64%<br />
Biomass: 36%<br />
<br />
Traditional biomass use in the country is still significant, with other renewable energy resources accounting for less than 1% of total production.<br />
<br />
In 2007, the private electricity company UNELCO had a peak demand of 8.2MW, generated 46 GWh, of which the majority was sold in the capital city Port Vila, which accounts for 85% of demand and 70% of customers. Diesel accounted for 93% of generation, and hydro for the remainder. As of 2008, generation in total had risen to 55 GWh.<br />
<br />
About 106 kilo tonnes of fuel wood are consumed per annum for cooking.</p>

Country: 

Vanuatu

Extent of the network: 

<p>
A private company, UNELCO, operates concessions that supply power to Port Vila, Malekula, and Tanna. Another private company, Vanuatu Utilities and Infrastructure Ltd (VUI), has operated the Luganville concession since January 2011. VUI is a wholly-owned subsidiary of the international Pernix Group.<br />
<br />
Electricity elsewhere in Vanuatu is extremely limited, as about 73% of the population in Vanuatu is not connected to grid electricity. Some grid extension work is currently being carried out in urban areas through the Sarakata Special Reserve Fund. The very low electrification rates for rural areas have been attributed to the geographical isolation of many villages, the absence of sustainable operational and maintenance models, and high up-front costs on low rates of return on investment.<br />
<br />
Overall, approximately 61% of urban households and only 7% of rural households are electrified. There are a range of historical reasons for the low electrification rates, including a lack of historical government focus on increasing access. The concession contracts also play a role because concessionaires are prohibited from making connections outside their concession area without first receiving permission from the Government.</p>

Capacity concerns: 

<p>
Unlike most Pacific Islands, the electricity generation and distribution is provided by the private sector through concessions. The service is good, but there is limited supply of electricity to rural areas. Moreover, electricity prices are high, as they are not subsidised by the government and the concessionaries effectively hold a monopoly position. The Luganville power system in particular has been the victim of poor maintenance, with assessments conducted after the transfer to the new concessionary finding a number of issues with the generation and distribution infrastructure, including an inoperable diesel plant, and issues with the Sarataka hydropower station leading to a 50% drop in its capacity. These issues were resolved through extensive maintenance in February 2011.</p>

Potential for Renewable Energy: 

<p>
<u>Hydropower</u><br />
Vanuatu has some hydro potential for supplying urban grids and small rural demands. Progress has been slow on rural hydropower use, primarily due to a lack of long-term monitoring data to support feasibility analysis, high up-front capital costs, and land access issues.<br />
<br />
<u>Geothermal energy</u><br />
Twelve islands have thermal springs and possible geothermal potential, the best probably on Efate where two prospective sites have been identified and deep drilling has been recommended. A Memorandum of Understanding has been signed between UNELCO and Kuth Energy Ltd for the development of a potential 4 MW geothermal plant in the Port Vila region, with explorations having begun in 2009, and completion of the power plant scheduled for 2015 if tests are positive.<br />
<br />
<u>Solar Energy</u><br />
Solar power has been used previously in Vanuatu in the form of Solar Home Systems (SHS) for rural electrification purposes. The dissemination of SHS is still being supported by the Japanese International Cooperation Agency (JICA) and the Global Partnership on Output-Based Aid (GPOBA). The technical potential of solar power in Vanuatu is relatively large, with annual average sunshine hours ranging from 2000 to 2300, at an average insolation of 6 kWh/m2/day.<br />
<br />
<u>Wave energy</u><br />
In the early 1990s, Oceanor of Norway monitored Vanuatu&rsquo;s sea wave potential. Data from buoys suggest an average of 14.4kW per metre of wavefront off Efate. Satellite data suggest 9-20kW/m at various sites. If seawave energy were commercially available, Vanuatu could produce much of its demand (an estimated 22MW) from a few small plants. No assessment has yet been conducted on the potential for Ocean Thermal Energy Conversion in Vanuatu.<br />
<br />
<u>Wind energy</u><br />
There is very limited data on wind energy potential. A Pacific Islands Forum Secretariat (PIFS) project monitored wind speeds at an Efate site in the mid 1990s, indicating 5.0m/s average speed in 1995 and 4.2m/s in 1996, well below the 6m/s generally considered to be necessary for economic electricity production. Despite this, UNELCO has completed the construction of a 3 MW wind farm near Devil&rsquo;s Point, connected to the Port Vila grid, with further monitoring and measurement activities being conducted for a second wind farm, also near Port Vila.<br />
<br />
<u>Biomass/biofuel</u><br />
The potential for significant wood-based power generation by sawmills, where residues are widely dispersed, is not promising.&nbsp; There is very limited practical potential for biogas (methane from animal wastes) or energy from municipal wastes at landfills. There is considerable experience at using coconut oil as biofuel, replacing diesel fuel for electricity and transport.&nbsp; In recent years before 2004, copra output was in principle sufficient to replace all diesel fuel imports. Currently, the Port Vila diesel generators are run on a 20% blend of coconut oil with diesel, and coconut oil is being used as a diesel replacement in small power grids, for example that of Port Orly. Discussions for the potential construction of a copra oil biodiesel refinery have been had, but financing for the project has been difficult to source.</p>

Potential for Energy Efficiency: 

<p>
Per-capita electricity consumption in Vanuatu is significantly below the Pacific and World average, at 236 kWh. This is predominantly due to the low rate of electricity access. High fuel costs, inefficiencies in the supply-side and high GHG emissions have been identified as issues that need to be resolved to improve the energy efficiency of the country, particularly in the use of petroleum fuels in industry, transport and the residential sector. A number of measures were proposed in the Draft National Energy Policy Framework, including capacity-building and awareness-raising in all sectors of society for EE, as well as tax incentives for the use and import of energy-efficient products and services. The widespread use of fuel wood in the residential sector is also addressed, with awareness-raising and incentives to improve the sustainability of replanting efforts.</p>

Ownership: 

<p>
A private monopoly, the Union Electrique du Vanuatu (UNELCO) has generated electricity on Vanuatu for over 70 years. Power is reliable in communities that have access to it, but rates are high, and the availability of electricity outside major urban centres is very limited. The company supplies power to three population centres through three different concession contracts. The fourth concession contract, for the Luganville power grid, changed hands after a competitive bidding procedure in January 2011, and is currently owned and operated by Vanuatu Utilities and Infrastructure Ltd, a wholly-owned subsidiary of the international Pernix Group. Full ownership of the generation assets was briefly transferred to the Government before coming into full VUI ownership in August 2011.</p>

Structure / extent of competition: 

<p>
Currently, the two major power companies in Vanuatu are highly vertically-integrated, and competition in generation, transmission and distribution does not exist in the regulated power concessions. Outside of a 15 km zone surrounding the UNELCO concessions, anyone may generate their own power or supply their own water. However, it is still necessary to apply to UNELCO for grid connection.</p>

Existence of an energy framework and programmes to promote sustainable energy: 

<p>
<i><b>Vanuatu Energy Roadmap </b></i><br />
In October 2011, the Vanuatu Energy Roadmap was launched. The Government, with the support of the World Bank, has initiated the development of the Vanuatu Energy Roadmap to lay the foundation for future energy sector policy and investment.&nbsp; The Roadmap is a planning document that identifies the investment needs of the energy sector over the next 10 years, and the policy direction needed to support the required investment. The Roadmap will serve as a guiding document providing detailed recommendations of actions for sector stakeholders to better coordinate and align resources in the energy sector.<br />
<br />
At the launch of the Energy Roadmap, the Government set out the following vision:<br />
&ldquo;<i>To energise Vanuatu&rsquo;s growth and development through the provision of secure, affordable, widely accessible, high quality, clean energy services for an Educated, Healthy, and Wealthy nation.</i>&rdquo; This vision aims to encourage investment in Vanuatu&rsquo;s energy sector to enable stronger economic growth. It also focuses on geographic equity through universal access to energy.<br />
<br />
The Roadmap will establish a timeline for achieving this vision. Sector participants will be able to use this timeline to ensure the development process is focused and coordinated with other sector studies and projects. Although the vision as a whole may be aspirational and on-going, measurable targets are useful in prioritising particular objectives and tracking progress over time. For example, Vanuatu could set a target date of 2020 to achieve certain energy sector objectives. Further development will then extend beyond 2020.<br />
<br />
Vanuatu Activities identified under the <i><b>Pacific Island Green House Gas Abatement through Renewable Energy Project</b></i> (<b>PIGGAREP</b>) will build on 4 key initiatives:</p>
<ul>
<li>
Extension and capacity building for the 600kW Sarakata Hydro Project (extension another 600kW);</li>
<li>
The joint Energy Unit and UNELCO EU ACP Energy Facility-funded projects on biofuel using copra to bring energy to 660 households, 6 primary schools and one college, 2 dispensaries;</li>
<li>
The VANREPA&#39;s EU ACP Energy Facility-funded project on wind power, benefiting 237 households, 4 schools, several kindergartens, 5 health centres (dispensaries), community governing offices, tourism, fishing and handicraft cooperatives, business centres with access to energy from this project.</li>
<li>
Pacific Islands Cooperation Programme with the Government of Italy to prepare the call for tender for the conduct of the feasibility study on the Talise Hydro Project.</li>
</ul>
<p>
<br />
The <i><b>International Union for the Conservation of Nature </b></i>(<b>IUCN</b>) has a Renewable Energy Project, which primarily focuses on expanding the use of locally available renewable energy resources. There are three components of the project:</p>
<ul>
<li>
wind monitoring and related technical assistance in all six provinces of the country;</li>
<li>
rehabilitation of Vanuatu solar PV systems on the islands of Santo and Malekula; and</li>
<li>
the development of the Talise mini-hydro scheme to serve three communities on the island of Maewo in the Penama Province.</li>
</ul>

Current energy debates or legislation: 

<p>
Since 2000, Vanuatu aims for the ambitious target of 100% renewable energy. This is fuelled by Vanuatu&rsquo;s concern about global warming and the effects of climate change on its marine life and weather conditions.&nbsp; Government and stakeholders are finishing the definitive version of&nbsp; the country&rsquo;s energy roadmap.&nbsp; It is expected to be done by June 2012.</p>

Major energy studies: 

<p>
The potential for renewable energy in Vanuatu is covered well in the Pacific Islands Renewable Energy Project (PIREP), however, the data was last updated in 2004.. The Pacific Islands Energy Policy and Strategic Action Planning (PIEPSAP) project provides good insight in the development of energy conservation strategies and energy policy. In 2009, the ADB produced its Country Partnership Strategy 2010-2014 for Vanuatu, specifically aimed at reforming the power sector, developing an institutional framework for sector planning and policy development, and detailing ADB support targets and objectives for financing. The Strategy document is available at: www.adb.org/Documents/CPSs/VAN/2010-2014/VAN-Power-Sector-Assessment.pdf...

Role of government: 

<p>
The <i><b>Energy Unit</b></i> within the <i><b>Ministry of Lands, Geology, Mines, Energy, Environment and Water Resources</b></i> formulates energy policies. However, much of the Energy Unit&rsquo;s work has been focused on the implementation of donor funded rural electrification projects.<br />
&nbsp;</p>

Government agencies in sustainable energy: 

<p>
The Energy Unit is currently responsible for all energy issues, including sustainable energy. No other government actor takes an active role in sustainable energy. The Vanuatu Renewable Energy and Power Association is an NGO based in Port Vila, and is responsible for the promotion of renewable energy systems for development needs.<br />
&nbsp;</p>

Energy planning procedures: 

<p>
A wide range of measures are detailed in the Work Plan for the Draft National Energy Policy Framework to ensure that energy planning in the country is sustainable and effective. These include; improving the institutional capacity of the Energy Unit through training, partnership development and the development of appropriate information and management systems; ensuring effective co-ordination between state and non-state actors in the energy sector; the promotion of gender equality in energy planning; ensuring that energy planning continues to comply with the international conventions ratified by the government, the mainstreaming of risks in energy planning, and ensuring that environmental concerns are taken into consideration in further energy sector development..<br />
<br />
International agencies are also active in energy planning in Vanuatu. Projects include the ADB Power Sector Development project, the World Bank Sustainable Energy Financing Initiative (also active in four other pacific island nations), and partnership projects with the Pacific Region Infrastructure Facility.<br />
<br />
The Vanuatu Energy for Rural Development Programme aims to provide the capacity and resources to deliver high quality power services to rural communities, with a target of 80% overall electrification by 2025. The Programme operates under the Energy Unit, with assistance from the URA.</p>

Energy regulator Date of creation: 

<p>
Since 2007, there has been a <i><b>Utility Regulatory Authority Act</b></i> in place, which established a regulatory authority under the Ministry of Finance and Economic Management that is responsible for managing the concession contracts for electricity and water. The Utilities Regulatory Authority (www.ura.gov.vu) commenced operations on the 11th of February 2008.</p>

Degree of independence: 

<p>
The Regulatory Authority consists of three Commissioners who are appointed by the Minister responsible for finance on the recommendation of the Evaluation Committee. The Act established the URA as an independent body for mediation between service providers and the government. Financing for the Authority comes from governmental grants, and grants from AusAID and the World Bank.</p>

Regulatory framework for sustainable energy: 

<p>
The only reference in the Act to the environment is that in case of (risk of) serious environmental pollution, the regulatory authority can take legal action against the polluter. There are no references to sustainable energy. However, the URA is active in the field of sustainable energy, for example providing regulatory advice and information to the Government on the proposed development of geothermal power resources on Efate Island.</p>

Regulatory roles: 

<p>
Electricity bills are calculated according to the tariff in the formula which is stated in the five-year Contract the Government has signed with the electricity company. The Utilities Regulatory Authority is expected to review it approximately every three months. Functions of the Authority under the Act include the provision of reports and advice to the government on regulated entities, assistance to consumers and the public at large in terms of information regarding utilities, and the dispensation of penalties for breaching the terms of fair and effective utility supply under the Act.</p>

Role of government department in energy regulation: 

<p>
The commissioners of the regulatory authority are appointed by the Minister responsible for finance.&nbsp; Rural electrification, however, is currently still planned, implemented and operated by the Energy Unit of the government of Vanuatu. No other government department takes an active role in energy regulation.</p>

Regulatory barriers: 

<p>
There may be friction between the old Electricity Act, a legislation that was put in place to facilitate the operation of UNELCO, and the 2007 Utility Regulatory Act. It is unclear whether the act will lead to increased competition for concessions and lower prices for consumers.</p>
<p>
Vanuatu currently lacks a regulatory framework for sustainable energy.&nbsp; There is no National Energy Policy Framework that guides and directs energy sector development in Vanuatu. Moreover, the growth of the sector is inhibited by the absence of a regulatory framework to promote partnerships and private investments in the energy sector, as well as by other disincentives, such as tariffs and off-take arrangements.<br />
<br />
The provision of electricity to rural and remote areas receives only token attention, usually on an ad-hoc basis. Nevertheless, photovoltaic solar home systems are increasingly being utilized as a practical and effective means to rural electrification by government, donors and social entrepreneurs. Whilst much remains to be done for the creation of an environment that is conducive for investment in the generation and distribution of electricity, growing interest in solar home and community projects might also dwindle if the lack of a renewable energy framework. persists. On the other hand, prospects for developing coconut or jatropha bio-fuel are promising.</p>

References: 

EIA (2012): Vanuatu. Available at: <a href="http://www.eia.gov/countries/country-data.cfm?fips=NH&amp;trk=m">http://... [Accessed 14th September 2013]<br />
<br />
Government of Vanuatu (2011) Vanuatu Energy Roadmap, last updated March 2013. Available at:&nbsp;<a href="http://www.kuthenergy.com/index.php?item=file&amp;target=nerm">http://ww... [Accessed 14th September 2013]<br />
<br />
IRENA (2010) Renewable Energy Country Profile. Available at:&nbsp;<a href="http://www.irena.org/REmaps/countryprofiles/vanuatu.pdf">http://www.iren... [Accessed 14th September 2013]<br />
<br />
U.S. Energy Information Administration (2009) Country Statistics. Available at:&nbsp;<a href="http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&amp;pid=54&amp... [Accessed 14th September 2013]<br />
<br />
IndexMundi (2009) Vanuatu Oil - Imports. Available at:&nbsp;<a href="http://www.indexmundi.com/vanuatu/oil_imports.html">http://www.indexmund... [Accessed 14th September 2013]<br />
<br />
Government of Vanuatu (2011) Vanuatu Utilities and Infrastructure Ltd. Performance Report - July 2011. Available at: <a href="http://www.ura.gov.vu/attachments/article/102/VUI_Performance_Report-Jul... [Accessed 14th September 2013]&nbsp;<br />
<br />
Vanuatu Daily Post (2011) VUI Behind Luganville&#39;s Low Electricity Rates. Available at:&nbsp;<a href="http://www.dailypost.vu/content/vui-behind-luganvilles-low-electricity-r... [Accessed 14th September 2013]<br />
<br />
ADB (2009) Vanuatu Country Partnership Strategy 2010-2014. Available at:&nbsp;<a href="http://www2.adb.org/Documents/CPSs/VAN/2010-2014/VAN-Power-Sector-Assess... [Accessed 14th September 2013]<br />
<br />
Hewitt, T.G. (2008)&nbsp;Coco-Power: Exploring Copra-Derived Biodiesel for Grid Connected Electricity in Vanuatu. Available at:&nbsp;<a href="http://researcharchive.vuw.ac.nz/handle/10063/1105">http://researcharchi... [Accessed 14th September 2013]<br />
<br />
@-Zine (2012) Promoting Renewable Energy in ACP Countries. Available at: <a href="http://acpbusinessclimate.org/pseef/Documents/Ezine-2012-10-en.pdf">http... [Accessed 14th September 2013]<br />
<br />
KUTh Energy (2009) KUTh Signs MOU with Vanuatu Electricity Provider. Available at:&nbsp;<a href="http://ss01.boardroomradio.com/files/KEN/774714.pdf">http://ss01.boardro... [Accessed 14th September 2013]<br />
<br />
Solarchoice.net (2011) South Pacific Solar Power. Available at:&nbsp;<a href="http://www.solarchoice.net.au/blog/south-pacific-solar-power/">http://ww... [Accessed 14th September 2013]<br />
<br />
Global Partnership on Output-based Aid (2011) Improved Electricity Access in Vanuatu. Available at:&nbsp;<a href="http://www.gpoba.org/gpoba/node/605">http://www.gpoba.org/gpoba/node/605... [Accessed 14th September 2013]<br />
<br />
PIREP (2004) Pacific Regional Energy Assessment 2004 - Vanuatu National Report. Available at:&nbsp;<a href="http://www.sprep.org/att/publication/000427_Vanuatu_PIREP_final.pdf">www... [Accessed 14th September 2013]<br />
<br />
SPREP (n.d.) Draft Vanuatu National Energy Policy Framework. Available at:&nbsp;<a href="http://www.sprep.org/att/irc/ecopies/countries/vanuatu/76.pdf">http://ww... [Accessed 14th September 2013]<br />
<br />
Invest in Vanuatu (n.d.) Investing in Vanuatu&#39;s Tourism Sector. Available at:&nbsp;<a href="http://www.ifc.org/wps/wcm/connect/a6f5c8004939d8d486f9ae849537832d/Inve... [Accessed 14th September 2013]<br />
<br />
SOPAC (2006) Vanuatu National Consultation - Back to Office Report. Available at:&nbsp;<a href="http://ict.sopac.org/VirLib/PI0046.pdf">http://ict.sopac.org/VirLib/PI00... [Accessed 14th September 2013]<br />
<br />
VanuatuNews.com (2011) Vanuatu Launches Energy Roadmap. Available at:&nbsp;<a href="http://www.vanuatunews.com/vanuatu-news/788-vanuatu-launches-energy-road... [Accessed 14th September 2013]<br />
<br />
SPREP (n.d.) Vanuatu National Energy Policy Framework Work Plan. Available at: <a href="http://www.sprep.org/att/irc/ecopies/countries/vanuatu/76.pdf">http://ww... [Accessed 14th September 2013]<br />
<br />
Government of Vanuatu (2007) Utilities Regulatory Authority Act No. 11 of 2007. Available at:&nbsp;<a href="http://www.ura.gov.vu/attachments/article/52/URA_Act_No11_of_2007_and_20... [Accessed 14th September 2013]<br />
<br />
Utilities Regulatory Authority (2010) Annual Report 2010. Available at:&nbsp;<a href="http://www.ura.gov.vu/attachments/article/14/URA%20Annual%20Report%20201... [Accessed 14th September 2013]