Ministry of Environment aims to “transform the Maldives’ energy sector”

The International Renewable Energy Investor’s conference, focusing on the development of solar energy in the Maldives, took place yesterday (March 26) at Bandos resort.

The one-day conference – organised by the Ministry of Environment and Energy with the World Bank – aimed to transform the Maldives’ energy sector by reducing the dependency on costly fossil fuels for power generation.

The ministry reported that a total of 78 participants from government organisations, the World Bank, foreign consultants and investors discussed photovoltaic (PV) systems which could be established in Malé and Hulhumalé, as well as a framework for subsidies.

The conference came after the government last week outlined it’s strategic aims for renewable energy in a proposal named Accelerating Sustainable Private Investments in Renewable Energy programme (ASPIRE).

Published March 21 2014, this report details some of the difficulties faced by the Maldives, as well as future plans to increase the proportion of sustainable energy consumed in the country.

Submitted by the government and the International Bank of Reconstruction and Development, the proposal asks for a US$10,683 million grant in funding from the ‘Scaling Up Renewable Energy Programme’.

“The Government has no current stabilization program with the International Monetary Fund. The prior program lapsed in 2009 and most of the measures were reversed. The World Bank started a Development Policy Credit in 2010 for economic stabilization and recovery that was also cancelled due to lack of progress,” states the ASPIRE proposal.

“A major concern of foreign investors in Maldives has been their inability to reliably and consistently convert local currency to hard currency for reasonable transaction costs at the official exchange rate for repatriation of shareholder returns and foreign currency debt service.”

“The country has no conventional resources of energy. Providing electricity to the dispersed islands is overwhelmingly dependent on imported diesel fuel oil, and therefore vulnerable to fuel price volatility.”

Diesel fuel accounts for the bulk of the energy supply in the country, about 82.5% in 2009, according to ASPIRE. Therefore, the report suggests a move toward renewable energy as a means of improving “economic difficulties”.

“The development of solar PV projects is expected to improve the country’s fiscal situation by reducing both the volume of fossil fuel imports, as well as the fiscal uncertainty arising from fuel price volatility. This would also replace the expensive diesel based generation and result in significant reduction of the government subsidy,” the report confirms.

Similar reforms to the energy sector chimes were set to be rolled out two years ago, before the unstable political situation led to its  premature demise.

On the afternoon of February 7, 2012, the Maldives was set to sign in a revolutionary plan to attract an estimated US$200 million of risk-mitigated renewable energy investment.

The Scaling-Up Renewable Energy Programme (SREP) proposal was produced by the Renewable Energy Investment Office under President Mohamed Nasheed’s administration.

The World Bank team working on the project had given verbal approval for the plan, reportedly describing it as one of the most “exciting and transformative” projects of its kind in any country.

Previous awards for Clean Energy in the Maldives

Abu Dhabi media reported that in January 2014 The Abu Dhabi Fund for Development (ADFD) pledged Dh22million (US$6 million) in concessionary loans for clean energy projects in the Maldives.

The announcement came as Abu Dhabi hosted the Fourth Assembly of the International Renewable Energy Agency (IRENA) – attended by a delegation from the Maldives.

“Maldives does not have the luxury of time to sit and wait for the rest of the world to act and that Maldives has started the transition from fossil fuels to renewable energy,” Maldivian Minister for Environment and Energy Thoriq Ibrahim told the assembly.

The project will benefit 120,000 people, with a reduced need for landfills, the generation of 2MW of clean energy, and the production of 62 million litres of desalinated water per year.

Shortly after this award, the Maldives carried out a pioneering desalination project on the island of Gulhi, in Kaafu atoll, which became the first place in the world to produce desalinated drinking water using waste heat from electricity generation.

While these projects indicate advances toward renewable energy, the government has also pledged to seek crude oil as an alternative means of diversifying the economy and supplementing fuel supply.

According to local news outlet CNM, during a speech made by President Abdulla Yameen on March 16 he pledged to begin the search for crude oil. He went on to say that if the government is indeed successful in finding oil in the Maldives, the outlook for the entire country would change for the better.

However, Local NGO Bluepeace raised concerns regarding this pledge. Ali Rilwan Executive Director noted that with the large income from tourism and the spread of guest houses in local isands, the oil drilling “won’t have benefits for the people as a whole.”

“We can’t afford to go into that dirty energy,” he concluded. “When you take up the issues of drilling, we are concerned about the oil container tanks with unrefined fuel passing through.”

Minivan News was unable to contact State Ministers from the Ministry of Environment and Energy for further comment at the time of publishing.

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