Description: 

$12.7 million in SREP grant funding to modernize Maldivian energy grids to operate with solar/diesel hybrids; alleviating national dependence on fossil fuel imports and achieving climate goals.

Background:

While the Maldives has the unique distinction of being the first and the only country in South Asia with 100% access to electricity, this achievement has come at an economic and environmental cost. Given the geographic location of islands, each island is electrified with its own diesel powered mini grid system, resulting in an expensive and unreliable energy supply as diesel is transported and distributed to each outer island.

The cost of diesel power is unaffordable at 30-70 cents/kWh and requires government subsidies in excess of $40 million annually.

The Project utilizes $12.7 million in SREP grant funding to replace inefficient fossil fuel-based power generation grids on the islands with renewable energy hybrid systems. The program is expected to reduce the cost of electricity, the subsidy burden on the government budget, and national greenhouse gas emissions. $400,000 will also be dispersed for technical assistance.

Objectives and Outputs:

The impact of the proposed project would be enhanced renewable energy sector in the Maldives to be achieved by 2022. The outcome would be the reduction of diesel usage for electricity generation in outer islands of the Maldives to be achieved by 2019.

The project is comprised of two expected outputs.  The first output is renewable energy-ready mini grid systems developed for outer islands. It includes detailed design and procurement of equipment for solar diesel hybrid mini-grids for about 160 medium and small outer islands. These include the islands of S. Addu, B. Goidhoo, Th. Buruni, Ga. Vilingili and Lh. Khurendoo. Further islands would be selected for installations using a defined eligibility criterion and with co-financing from additional sources. The second output is enhanced capacity of Ministry of Environment and Energy, STELCO, to implement renewable energy mini-grids.

The 100% diesel dependence makes the country’s carbon emissions per unit of electricity among the highest in the region. The proposed hybrid mini-grids system will displace large portion of diesel and gasoline used in generator sets. The diesel consumption in outer islands is around 0.45-0.70 liters/kWh (2012 baseline). With the implementation of the project, consumption will be reduced to 0.1-0.3 liters/kWh. The reduced diesel consumption will translate to greenhouse gas reduction estimated at 40,000 tons carbon dioxide equivalent per year (tCO2e/y) or 1.0 million tCO2e over 25 years of project lifetime.

The program is anticipated to result in 21 MW of new solar capacity with 27.6 GWh/yr output and 7 MWh of energy storage. Additionally, 4,600 households are expected to have increased access to electricity in the first 5 sub-projects.

This project summary is drawn from draft project proposals [such as the PAD, PID, SAR, and country investment plan] and may not contain the most up-to-date information.

Project Details
Cover Note | MDB Project Implementation Services (MPIS)TA Cover Note | TA Memo | Report and RecommendationProposed Decision
Approved on July 7, 2014 (Approved Decision)
Approved amount(s):
USD 12.0 million (grant funding)
USD 430,000 (MPIS Second tranche)

Comments and Responses:
Japan (June 9, 2014)
United Kingdom (June 10, 2014) 
Switzerland (June 10, 2014) 
ADB Response to Japan, UK, and Switzerland (June 28, 2014)