The Japan International Cooperation Agency (JICA) has completed the “Project for Clean Energy Promotion in Malé” with the installation of solar panels at the Ministry of Finance and Treasury today.
Some 740 solar panels were installed in 12 government buildings in the capital under the US$11.1 million (MVR141.5 million) grant aid solar energy project launched in December 2011.
In the first phase of the project, solar panels capable of generating 400 kilowatts of solar power were installed in the President’s Office, the Maldives Centre for Social Education (MCSE), the State Electricity Company (STELCO), Thaajuddeen School, and Hiriyaa School.
While solar panels were installed in the Maldives National University, Kalaafaanu School, Faculty of Health Sciences, Ghiyasuddin International School, and the Velaanaage in the second phase of the project, the Ministry of Finance and Treasury and the Hulhumalé hospital received solar panels in the third and final phase of the project.
Of the four schools, Kalaafaanu, Ghiyasuddin, and Hiriya were constructed with Japanese grant aid while Thajauddeen was reconstructed with Japanese grant aid and reopened in June 2004.
The grant aid agreement for the solar energy project was signed in March 2010.
The project was based on a feasibility study conducted by JICA – the Japanese government’s bilateral donor agency – from February to November 2009 at the request of the Maldivian government during the administration of former President Mohamed Nasheed.
The project was designed to contribute to the Nasheed administration’s goal of achieving carbon neutrality by 2020.
Nasheed had previously installed 48 solar panels on the roof of his official residence, Muleeage, provided gratis by LG Electronics Californian company Sungevity.
At the launching ceremony of the JICA-funded project, Nasheed said a transition away from fossil fuels would increase the energy efficiency of the Maldives by 20-30 percent by the end of 2013.
Low carbon development
Speaking at a function at the Finance Ministry this morning to mark the conclusion of the project, Environment Minister Thoriq Ibrahim observed that the Maldives spent US$487 million a year or 31 percent of GDP annually on importing oil.
The figure is expected to rise to US$700 million by 2020.
According to the Maldives Customs Service, of the MVR7.2 billion (US$466.9 million) worth of goods imported in the first quarter of 2014, one-third was spent on petroleum products.
As the domestic economy was adversely affected by the high cost of oil imports, Thoriq stressed the importance of reducing the country’s dependence on fossil fuels whilst increasing investment in renewable energy.
The government’s target was generating 40 kilowatts of power across the country from renewable energy sources during the next five years, the environment minister revealed.
The government will seek assistance from international partners and private parties for investment in renewable energy, he added.
Japanese Ambassador Nobuhito Hobo meanwhile pledged assistance for similar renewable energy projects in the Maldives.
At a workshop last week, Environment Minister Thoriq revealed that the government was working on a low carbon development strategy to improve energy security.
On the afternoon of February 7, 2012, the Maldives was set to sign into existence a plan that would have revolutionised the country’s energy sector, immediately attracting US$200 million of risk-mitigated renewable energy investment. It was proposed that investment would eventually reach US$2-3 billion – a gigantic step towards the country’s goal of carbon neutrality by 2020.
The Scaling-Up Renewable Energy Program (SREP) proposal was produced by the Renewable Energy Investment Office (REIO) under President Mohamed Nasheed’s administration, and driven by Nasheed’s Energy Advisor Mike Mason – an unpaid position.
Mason, a UK national, former mining engineer and expert on renewable energy, carbon finance and offsetting, collected and analysed data on energy use and the existing diesel infrastructure across the Maldives.
He discovered that the Maldives was facing an energy crisis that was as much economic as it was existential.
The greater Male’ region generates 30 MW, with a further 8-10 MW for industrial purposes, while government utilities across the island chain generate a further 18 MW. The tourist resorts privately produce and consume 70 MW.
The SREP plan reveals the scale of the problem: “If the oil price rises to $150/bbl by 2020, and consumption grows by four percent per annum, oil imports are expected to reach around US$700 million – or almost US$2,000 per head of population.
“This is clearly unsustainable. Decarbonisation is at least as much a matter of national economic security and social welfare as it is a matter of environmental concern,” the report notes.
Mason calculated that solar photovoltaic (PV) could be supplied directly to consumers at US$0.23 per kWh during the day, but only at US$0.44 per kWh from batteries at night. However an optimum mix of solar, battery and wind could supply 80 percent of power requirements at US$0.36 per kWh. Biomass could be supplied to Male at US$0.16 per kWh, or US$0.20 a kWh including capital.
Mason compared this to the volatile cost of import-dependent diesel generation, which ranged from US$0.28 per kWh hour in Male’, and up to US$0.70 per kWh on some of the most inefficient islands.
Existing solar initiatives in the Maldives, such as the Japan International Cooperation Agency (JICA)’s 675 kWh of solar panelling on schools and other public facilities across Male’, were “stupidly priced, uneconomic, symbolic, and don’t address the problem of energy storage,” Mason noted. He also proposed that large scale wind generation suffered from extreme seasonal variability and risked impacting the stability of the grid.
Mason concluded that the most realistic and commercially-viable renewable option was to run 90 percent of the country on solar supplemented by small-scale wind power, while a 24 megawatt biomass plant could provide the baseload of the greater Male’ region at more than 40 percent less than existing rates.
The pricing was attractive, but the challenge was attracting the significant upfront capital investment required: “with renewables, on day one you buy 20 years of electricity,” Mason explained.
Attracting this capital investment was therefore crucial, however “because of its political history and economic inheritance, the Government of Maldives is poorly placed to raise capital at normal ‘sovereign’ rates of interest,” the SREP report noted.
This was to be a key innovation in Mason’s proposal: rather than pour donor funding into myriad haphazard capital-intensive renewable energy projects, Mason’s plan was to instead use the available World Bank and Asia Development Bank funding to dramatically reduce the commercial and sovereign risks for foreign investors, lowering the cost of capital to attractive levels comparable to other countries.
“In practice, the guarantees may not be needed for all projects or by all developers, and once the Maldives becomes an established destination for renewable development finance the need for guarantees is expected to diminish,” the SREP proposal notes.
“Right now the cost of capital, if you are in Germany, is very low. In a country like the Maldives, it is stupidly high,” Mason explained to Minivan News.
“If [the Maldives] wants to get somewhere it has to take out the risk – at least risks not in control of the investor. If you can do that, then the cost of capital drops to 6-7 percent – about the same as a powerplant [in the West]. The whole thing becomes economic – the sensible thing to do – rather than a matter of subsidies,” he explained.
The World Bank team working on the project had given verbal approval for the plan, describing it as one of the most “exciting and transformative” projects of its kind in any country, according to Mason.
“It was a shoo-in. But the coup happened the day we were due to submit it – later that very day, in fact,” he said.
Amid the disintegrating political situation, the decision was made to suspend the submission.
“The whole point of the plan was to take out the instability. The thing about a coup is that it takes that model and turns it upside down,” Mason told Minivan News.
As the political instability increased, so did the cost of capital. Investors who had been “queuing up” made their excuses.
In an email exchange, incoming President Dr Mohamed Waheed Hassan requested that Mason continue with the submission and remain in his current position as Energy Advisor.
Mason chose to resign.
“I don’t think Dr Waheed is a bad man – actually I like him a lot personally,” he wrote, in an email to an official in the Trade Ministry obtained by Minivan News. “However, he has done nothing to assure me that this is really a democratic process. Rather, my intelligence tells me this is a Gayoom inspired coup with Dr. Waheed as an unfortunate puppet.”
Mason added that if the new government sought political accommodation with the MDP, made “a concerted attempt to remove the corrupt judiciary”, and ceased police brutality “so that people can walk the streets freely as in any other civilised country”, “then I will be back on side in the blink of an eye.”
“I have given the best part of my life to this over the last 18 months, but I fear I have a set of democratic and moral principles that override other considerations,” Mason stated.
President Waheed responded on March 23:
“It would be nice if you listened to something other than Nasheed’s propaganda. He is free to go anywhere he wants and say what ever he wants,” Waheed wrote.
“Have you ever thought that Nasheed could have made a stupid mistake under the influence of what ever he was on and blown everything away? I thought you had more intelligence than to think that I am someone’s puppet and Maldives is another dictatorship,” the President said.
Further emails obtained by Minivan News show that Waheed’s new government was interested in continuing with the submission of the SREP plan.
“I am certain that this is the wrong time to press ahead with the SREP IP. It relies at its heart on getting the cost of capital down by reducing risk,” wrote Mason, to a government official.
“That is not believable in an atmosphere in which [airport developer] GMR is being attacked as an investor in infrastructure; the legal system is, frankly, corrupt so contracts cannot be relied upon; the politics are (in the most charitable possible interpretation) a major risk factor; and the President has no parliamentary party of consequence. I also doubt that the SREP sub-committee will approve funding the plan as they too will see through the plan to the problems (or at least they should if they are any good),” he wrote.
“If things clear up, and faith in democracy and the rule of law is restored than a second go at this would be worth while – but meantime I am sceptical. A much more limited and less ambitious plan – say for the smaller islands only, might fly.”
The very premise of the plan – mitigating investor risk – had been scuttled by the political upheaval and both domestic and international challenges to the legitimacy of Waheed’s government, said Mason.
“Even if I did work with Waheed, I couldn’t deliver the plan now [because of falling] investor confidence,” he told Minivan News. “[The perpetrators] have destroyed US$2-3 billion worth of investment and condemned the country to an unstable economic future based upon diesel.”
Climate of crisis
Earlier this month President’s Office Spokesperson Abbas Adil Riza said the new government would “not completely” reverse the previous government’s zero carbon strategy: “What we are aiming to do is to elaborate more on individual sustainable issues and subject them to national debate. Previously, these discussions on sustainability were not subjected to a national debate, such as through parliament,” Riza said.
President Waheed last week attended the Rio +20 summit and announced the Maldives’ intentions to become the world’s largest marine reserve in five years.
During his speech in Rio, Waheed also pledged that the Maldives would “cover 60 percent of our electricity needs with solar power, and the rest with a combination of biofuels, other clean technologies and some conventional energy.”
“Progress towards achieving these goals is slow because of the huge financial and technological investments involved. If we are, as a global community, committed to the concept of transitioning to a green economy, then developing countries will need significant financial and technical support,” the President stated, going on to appeal for financial assistance.
“A small island state like the Maldives cannot, on its own, secure the future we want. We rely on our international partners to ensure that their development paths are sustainable and don’t negatively impact on vulnerable countries like the Maldives,” Waheed said.
Former President Nasheed’s Climate Change Advisor – UK-based author, journalist and environmental activist Mark Lynas, who drew a monthly stipend of Rf10,000 (US$648) for expenses – told Minivan News that the loss of democratic legitimacy in the Maldives had destroyed its ability to make a moral stand on climate change-related issues, and be taken seriously.
“I think that the Maldives is basically a has-been in international climate circles now,” Lynas said.
“The country is no longer a key player, and is no longer on the invite list to the meetings that matter. Partly this is a reflection of the political instability – other countries no longer have a negotiating partner that they know and understand,” he said.
“Partly, I think it is because of the lack of democratic legitimacy of the current regime – in the climate negotiations the entire ask of the small island and vulnerable countries is based on their moral authority to speak on behalf of those who are most suffering from the impacts of climate change.
“Yet Waheed and his representatives have no moral authority because they were not elected, have strong connections with corrupt and violent elements of the former dictatorship, and took power in the dubious circumstances of a police coup,” Lynas argued.
The government’s high expenditure on international public firms such as Ruder Finn – also responsible for the Philip Morris campaign disputing the health hazards of smoking – had further undermined its credibility with journalists across the world, Lynas said.
“Journalists and others are aware that the Waheed regime has hired PR agencies to act on its behalf – which makes them doubly suspicious. It is widely understood that the Maldives post-coup government has no real interest in the climate issue, but is instead trying to use it as a greenwashing tool in order to buff its credentials abroad and in order to obscure its undemocratic nature at home. I don’t think this will work, as it is hardly very subtle and journalists are not stupid,” said Lynas.
“The Maldives has lost many years of work already – it has little credibility left with donors or international investors. Investors and donors alike are looking for stability and strong governance – and they will not get either of those whilst the political system is essentially deadlocked between competing parties, with regular protests and ensuing police violence.
“In climate terms the Maldives is well on its way to becoming a failed state – I see no prospect of it achieving Nasheed’s 2020 carbon neutral goal, even if that goal is still official policy,” Lynas said. “I think time has basically run out now – unless there are early elections quickly and a legitimate government re-established there is no real prospect of resurrecting the Maldives’ leadership on climate change. By 2013, it will certainly be too late – other countries will have overtaken it and the Maldives will essentially be left behind.”
“Solar power is not the only source, and it is not enough. We have to pursue other sources as well,” said BluePeace founder Ali Rilwan about the Maldives’ recently proposed mission to cut emissions by 60 percent, using solar energy primarily.
The government’s plan was approved by the Cabinet last month, and a recent proposal from the Renewable Energy Investment Office (REIO) was submitted for crowdsourcing on the internet last week.
Rilwan called the mission admirable but incomplete. “Proposals have been made, but we haven’t seen anything in the Maldives in years,” he said. According to Rilwan, the Maldives is overlooking one of the most significant energy-consuming functions in the country: water transport.
Over 25 percent of the Maldives’ GDP is spent on diesel used for boats.
“Wetlands and vegetation absorb carbon dioxide, and the oceans are being affected by boats’ daily diesel use. But nobody has studied the specifics of carbon sinking, to calculate that 60 percent emissions reduction we need to evaluate how much needs to be done,” he elaborated. “We don’t know, we might be carbon neutral already.”
When diesel was first introduced to boats in the Maldives in the 1970s, law required that sails be kept on boats, said Rilwan. Not only was this method energy efficient, it also had cultural value.
“The sail wasn’t just carbon-neutral, it was a cultural tradition. We also used to have sailing competitions as part of our tradition. But now the sails are no longer required, although you’d think they would be a good idea for a tourist destination like the Maldives.”
Rilwan said the Ministry for Human Resources and Sports last year supported a “not so carbon friendly” motorcycle competition last year, allegedly on Hulhumale.
In January 2010, the Maldives joined 137 countries in signing the Copenhagen Accord declaring their intention to go carbon neutral by 2020. The document is not legally binding but it recognises climate change as a leading issue worldwide.
A government official said the Maldives has since focused on decarbonising the electricity sector, which accounts for over 31 percent of industrial project expenses.
Decarbonising the Maldives over the next 10 years is expected to cost the Maldives US$3-5 million.
Earlier this week, the Maldives signed the Renewable Energy through Feed-In Tariff.
The tariff is expected to reduce electricity costs by promoting a shift from oil fuel to renewable energy sources.
Rilwan praised the government’s “political will and efforts to negotiate” renewable energy in the Maldives. But he said investment in renewable energy was expensive, and that the Maldives lacks expertise.
REIO’s crowdsourcing initiative aims to improve that shortfall.
“While we are working now on the initial production planning and development we will also be looking to use local and international expertise to develop storage capacity,” said Minister for Economic Development Mahmoud Razee.
The initial plan, which is up for debate on an on-line forum, does not account for night time energy and energy storage due to its high cost. A government official said today that limiting use of solar energy to the daytime would still reduce costs significantly. Meanwhile, storage costs are expected to drop to an affordable rate in the next five to ten years.
The official added that plans addressing land transport vehicles’ energy emissions will be announced in the coming months. He noted that not only are electricity-based motorcycles and cars affordable, but Male’s small size negates the concern of going too far from a recharge station.
Although water transport energy reductions have not yet been addressed at the government level, Renewable Energy Maldives (REM) Director Hudah Ahmed said today that the company will soon be testing one of the first hybrid dhonis.
“Solar power is a viable option for the Maldives,” said Ahmed. “But we always say that energy efficiency comes before renewable energy. Consider how to do the best with what you have and what you need before you try to reinvent the system with a whole new resource.”
The REM hybrid dhoni uses a converter, and could reduce diesel consumption by 30 percent. Ahmed said the big idea is to replace current ferries and fishing boats with hybrid dhonis.
Ahmed suggested the Maldives investigate ocean thermal energy conversation (OTEC), a method of generating energy from the temperature differences between deep and shallow waters. “It isn’t commercial yet, but REM says it shouldn’t be ruled out. I think there are some areas in this country where OTEC could be useful,” said Ahmed.