Vanuatu is an archipelago of 82 volcanic islands in the South Pacific. Its 65 inhabited islands support a population of about 270,000, 28% of which live on the main island of Efate. About 75% of the population live in rural areas. Only four of the islands have grid systems, and outside of these the vast majority of people have no access to electricity or any permanent lighting source.
On grid, electricity comes primarily from diesel, which made up 77% of electricity generation in 2012. Significant reliance on imported fuels leads to high costs of fuel, as well as significant security of supply risks.
"We believe with this funding - which will leverage further resources - we can shift the (energy) access from about 30% to 90%. This will be a transformational impact for the whole country." - Jesse Benjamin, Director, Vanuatu Energy Department
Unclear land ownership, a regulatory framework that does not strongly support independent power producers in power purchase agreements, high upfront capital costs, and constraints to equipment maintenance and fee collection at remote locations all present significant challenges to the development of renewable energy in Vanuatu. However, the Government of Vanuatu has set a target in their National Energy Roadmap of achieving 100% energy access by 2030, of which a major portion will come from renewables. Vanuatu is tapping US$14 million from CIF's Scaling Up Renewable Energy in Low Income Countries Program (SREP) to work towards achieving this target. SREP's investment strategy is centered on interventions in rural electrification that target 80% of the roughly 22,000 dispersed off-grid customers in Vanuatu, and is expected to increase access from roughly 27% to 90% -- a truly transformational impact. Furthermore, to meet growing energy demand on the islands of Malekula or Espiritu Santo, small hydropower projects are expected to initially meet 100% of base load demand and relieve reliance on imported diesel.
The $14 million SREP Investment Plan was developed by Vanuatu government, Asian Development Bank, World Bank and key stakeholders and is expected to leverage another $20.2 million from public and private sector investments.