{BDP} - Biofuels and Rural Electrification : Second set of questions - Due Fri 7/11/2008

Pacific Island Countries face an enormous challenge in promoting rural electrification. This is demonstrated by the fact that 70% of the region’s population still lacks access to electricity, the markets in pacific island countries are small and dispersed, and that rural communities are often of low population densities and isolated. In addressing this challengers and promoting rural electrification projects in the region, Energy planners always ensure that the most cost-effective options are considered.

In 2006, SOPAC conducted an economic study to assess the economic and financial viability of a number of technologically proven renewable energy options such as biofuel-powered generators for rural electrification in Pacific Island Countries. Findings showed that Interest in using feedstocks especially coconut oil as a biofuel in Pacific Island Countries only began recently, and successful trials in Fiji, Vanuatu and New Caledonia have shown this to be technologically viable. However, experience with using coconut oil or other feed stock as a diesel substitute in rural electrification projects in the Pacific to date remains limited.

For the next set of questions, we would again appreciate if you could share your views and opinions with regard to some of the issues with biofuel and rural electrification:

Question 1: What is the current scenario regarding rural electrification projects in your country and how is the biofuel component factored in or the potentials in biofuel activities that should be included in project?

Question 2: What are some of the challengers that exist with rural electrification projects in your country and in your opinion or from your experience, what are some of the potentials, advantages, and challengers that biofuel initiated project have (or may have) with rural electrification?

Question 3: What are the mechanisms and activities implemented or that should be implemented in order to mitigate the challengers of biofuel electrification project in your country?

Summaries of Answers to Question 2

Biofuels and Rural Electrification:

Rural electrification projects in Pacific Island countries is one area of interest and an area where energy planners face a great deal of challenge considering that rural communities are often of low population densities, are isolated and lack economic income opportunities to sustain community projects. The following is a summary of opinions and experiences of rural electrification projects and biofuels in 6 Pacific Island countries and including experiences from Western Australia.

Q1: What is the current scenario regarding rural electrification projects in your country and how is the biofuel component factored in or the potentials in biofuel activities that should be included in project?

Fiji:

Rural Electrification has been an on-going activity in terms of Rural Development Projects in Fiji where most of these projects involved solar home systems and diesel generators. Experiences with biofuel for rural electrification projects has been carried out in early 2000 for the case of Welagi and Vanuabalavu project but now is not operational.

Interest in biofuel projects to outer islands is seen as feasible as the cost of fuel in the islands is always expensive and also taking into account the difficulties in shipping services. However detailed survey should be carried out before any biofuel project is implemented. These days generators for biofuel are available and diesel need not be transported into remote areas if they make their own bio fuel

Currently the Fiji Department of Energy are setting up 6 biodiesel processing plants around the rural and outer islands to produce biodiesel for their generators from coconut and sell the other downstream products, like soap, copra meal and animal feed or manure.

Kiribati:

Rural electrification projects in Kiribati to date focuses mainly on solar PV. The government in its rural electrification plans has mandated all outer islands for solar stand alone PV systems. Coconut oil for biofuel projects in rural electrification is relatively new and there are yet any known projects from the government and private sector. However there was a case in Nonouti where a mechanic was reported to have used coconut oil to fuel a small alternator powering a religious group during one fuel shortage problem.

PNG

The current scenario in biofuel for rural electrification projects in PNG is at Bouganville where coconut oil is used to run generators where power supply from this source is small and limited to individual households. The big users of bio-fuels in PNG are the agri-businesses, particularly the oil palms and PNG’s only sugar farm/factory. They use the waste product for power generation and it is limited to their own operational needs.

Samoa

It is unlikely that biofuels will play a significant role in rural electrification in Samoa, if any at all. Samoa is unusual within the Pacific in that there is a 95%+ coverage of the electricity grid, and the remaining unelectrified households that have been identified are either relatively close to the grid such that it is most cost effective to extend the power lines, or are further from the grid but are very widely dispersed. There is almost no clustering of unelectrified households in Samoa, which all but rules out biofuel, wind, pico-hydro, solar or hybrid mini-grids. This leaves stand alone renewable energy systems as the most viable option, which tends to fit the profile of Solar Home Systems most closely. A Solar PV based rural electrification project is currently being pursued for practical and financial feasibility, with results expected by the end of 2008, hopefully leading to project implementation beginning in 2009.

Solomon Islands

The current scenario in the Solomon islands regarding rural electrification projects is minimal except for few donor agency projects in rural community school based on solar energy .There is no emphasis on the use of bio -fuels as yet in these projects coming in from the national government or with donor agencies though the potential is there . Coconut Oil (CNO) as a base raw material for CNO biodiesel to be used as fuel for generating electricity in rural communities is a viable prospect and should be supported and include in these rural electrification

Vanuatu

Previously, rural electrification projects were done on ad hoc basis. However, they are currently developing a Rural Electrification Master Plan (REMP) which will be ready to be submitted to the cabinet for their blessing in the near future. There are a number of sites that has been chosen for biofuel projects and is awaiting funding for implementation.

Western Australia

In Western Australia, the government supplies up to 34 remote electrification schemes of varying sizes (smallest 600 MWhr). The majority of these schemes are serviced from diesel generation which is costly particulary given the transportation and handling costs of these remote locations. Whereas local crop based biofuels may be an alternative it has not been pursued to date. Another approach however is being trialled in two communities based on firstly minimising the reliance on liquid fuel by implementing hybrid renewable energy systems ( solar/diesel and/or wind/diesel mixes). Two hybrid deep penetration solar based systems are currently under construction. What makes this project unique however is a new intergrating technology which will facilitate up to 60% penetration of the renewable component in the day time hence minimising the volume of liquid fuel, in the case diesel component. This can be further enhanced by smart metering and demand management strategies by shaving peak demand typically in the daytime. The challenge here of course is the upfront capital costs of such a system. However we found on a life cycle cost in these remote areas, RE out perform conventional diesel by far. Hence by minimising the reliance on liquid fuels, the introduction of alternative liquid biofuels may prove more manageable given the reduced volumes and reduced impact on the environment.

Q2: What are some of the challengers that exist with rural electrification projects in your country and in your opinion or from your experience, what are some of the potentials, advantages, and challengers that biofuel initiated project have (or may have) with rural electrification?

Fiji

Rural Electrification projects usually has a lot of challenges when taken on the communal basis where major issues experienced from past projects centres around the poor management of the project from the communities in not having resources and means in place to ensure the continual running of the project.

Introducing any biofuel project for rural electrification, will face similar challengers where the following issues need addressing – the skill level in the community, labour force and income generating opportunities from the project, the availability of sufficient feedstock and the cost of operations.

Apart from that the main challenge is the commercialization of the rural mindset to take on a new brand of community oil based industry in their midst. The resource utilization to realize their full benefits, socially, culturally and economically, can be harnessed and generate huge rural sector renaissance and employment opportunities.

Kiribati

Challengers faced in rural electrification projects with biofuel will require technical know-how from the production side. At present, funding problem is the main hurdle to get over. Having got over these, advantages attached to available home lighting/energy at a touch of a button will greatly improve living standards in terms of improvement to homestead chores, perhaps at a much lower cost to present operating PV system. Other spin-offs resulting from availability could be imagined in a Kiribati rural life style setting.

PNG

Not much research has been carried out in PNG regarding biofuel for rural electrification. Experiences from PNG Power Ltd with biofuels for power generation has not been seriously looked at due to lack of awareness, lack of capital and that PNG has a lot of other generation sources, such as hydropower, geothermal and LNG which are more of interest to invest in.

Samoa

For Samoa, in the case of dispersed household distribution, the only really viable electrification option is Solar Home Systems. Village-based coconut oil biofuel operations (the only biofuel with which Samoa has appreciable experience) feeding into the grid are theoretically possible, but the biggest challenge is the marginal economics of small scale coconut oil production facilities. At least in Samoa, large economies of scale are needed to compete with diesel prices to enable farmers to reap high enough coconut prices to make farming the nuts worthwhile.

Solomon Islands

There are substantial challenges that exist in Solomon Islands for bio-fuel based rural electrification projects. The Solomon Tropical Product (STP) experience has been, absence of policy measures encouraging involvement of private investors, absence of necessary legislation for rural electrification injunction with the national Electricity Act and not enough awareness on the use and benefits of bio-fuels (e.g. CNO or CNO biodiesel ).

Vanuatu

In Vanuatu, small copra mills have been set up in rural areas to feed biofuel generators for supplying power to rural and remote areas. Seen as a promising project, small copra mills share advantages like farmers not having to wait for 2 – 3 months before they can sell their copra to the next shipment. They can always sell their copra to the mill at any time and receive cash instantly to pay for their electricity bills and other needs. Also the copra mill tends to pay copra at a more stable price and not affected much by the fluctuating world market prices.

The challenge that the mill may face will be on the issue of copra world market prices – where farmers may get tempted not to sell their copra to their local mill if copra prices are high.

Western Australia

The main challenges with most remote electrification scheme in Western Australia are the ongoing minor maintenance and troubleshooting, debt collection and other related customer services.

Q3: What are the mechanisms and activities implemented or that should be implemented in order to mitigate the challengers of biofuel electrification project in your country?

Fiji

Detail cost analyses is one area that’s need to be looked into and take into account the entire social and economic benefits/costing. Food security is also an area that should be seriously considered when introducing biofuel.

The policy paper on the mandation of biofuel usage to boost tradeability of biofuel has been endorsed by cabinet last year for a 10% vol by vol replacement. There are 5 projects at the moment; cassava ethanol, cane ethanol, coconut biodiesel, jatropha biodiesel and seaweed ethanol. Total project cost is around 2 billion dollars, but at the moment most of these projects are still in the implementation phase. They are all projected to commence in 2009 and in full production by 2010.

Kiribati

Misaligning mechanisms considered essential for the success achievement of any proposed activities that could be implemented, can obviously spoil development; anticipated outcomes that can lead to expected benefits to the poor rural will be negated. Exposure to such type alternative is paramount to get people support for one thing. On the other, technical support to ensure continued operations is another, but then this will hinge largely on rural people’s acceptance, those who are expected to maintain a sustainable level of raw production. Government blessing to green-light this is essential for sure before anything else could be done. A tentative 1% mix has already been accepted by KOIL during one Task Force meeting on CNO use.

Solomon Islands

Mitigating the challenges of bio-fuel electrification projects in Solomon islands must begin with the appropriate legislation in place to implement and support rural electrification .The development of strategic partnership between government , private sectors, NGO'S and donors must exist in researching, developing, promoting and supporting the provision of bio-fuel generating electricity in rural areas .Donors must be more flexible in their funding arrangements to allow the research and development of local based energy sources like coconut bio-fuel to be used in the country

Vanuatu

One of the policies or rather strategies outlined in the Vanuatu National Energy Policy Framework is to encourage farmers to work together with Agriculture Department in planting more productive coconut trees.

Currently, there a few projects on biofuel by different activist without complying to any particular standards. Vanuatu will in the near future develop its own national biofuel standards as highlighted in its national energy policy and would better shape the development of biofuels in the country.

Western Australia

A successful approach undertaken in Western Australia for community projects is through employment and training of the local people embedded within the community. Whereas costly, this has proved to be highly successful particularly with community acceptance and responsibility for maintaining systems. Another significant benefit is the social benefit arising from providing well paid jobs within the community. Debt collection has been enhanced by the provision of prepaid meters. This has had a high level of acceptance from the communities whereas intially resistance was anticipated.

Embedding this type of business model within a community creates a great foundation for other energy initiatives such as crop based fuels which will further enhance local job and training opportunities. The business model for private enterprise undertaking this type of work does however require strong government energy policies, frameworks and electricity price support mechanisms for this model to work.