Fiji to spend $300 million to diversify into renewables

MANILA, Philippines, March 8, 2006 (Refocus Weekly)

Fiji is aiming to spend $300 million to significantly increase its uptake of renewable energy in the country.

Initially, a green power project in Fiji will be developed through a grant of US$650,000 from the Asian Development Bank.

Power on the islands is generated by Fiji Electric Authority, a government-owned utility, which provides electricity to half the population. Demand for power has been growing at 5% a year and is expected to increase more rapidly in coming years.

To meet growing demand, FEA increased its diesel capacity but, with higher fuel prices, consumer tariffs have increased. The government wants a cost-effective and environmentally-sustainable energy sector, and has directed FEA to develop a strategy to diversity its generation sources and promote renewables.

The financing needs for FEA's plans over the next five years will be $300 million.

“Ensuring that generation, transmission and distribution capacity is enough to meet electricity demand is a key challenge facing the power sector,” says Carol Litwin of ADB. “At the same time, the generation mix must improve to make the cost of electricity more predictable.”

The technical assistance grant will prepare a project to expand FEA's program for renewables, as well as upgrade the utility’s transmission and distribution networks. It will also assess FEA's financial performance and assess the possibility of using the Clean Development Mechanism under Kyoto for the project.

“This will reduce the exposure of FEA and, ultimately, the consumers to foreign exchange risks and global fuel price hikes,” explains Litwin. “In addition, it is consistent with the need to adapt to climate change and variability to which countries in the Pacific, including Fiji Islands, are vulnerable to.”

The government will contribute $280,000 towards the total project cost of $930,000. The Ministry of Works & Energy is the executing agency and says the work will be completed by September.

FEA serves the two main islands of Vanua Levu and Viti Levu, as well as the smaller island of Ovalau, and its total installed capacity is 186 MW, of which 90 MW is hydro-based. A 10 MW windfarm will be commissioned this year and the utility is undertaking a small pilot solar generation project that will cost F$0.40/kWh.


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