Project

Supporting the Implementation of the Green Growth Framework for Fiji – Phase 2

At a Glance

Start Date Q1 2017
Funding Source Core
Approved Budget USD 2 029 000
Status Active
Thematic Area
  • Sustainable Energy
Katerina Syngellakis

Country Representative - Fiji,Vanuatu, Kiribati

Rosi Banuve

Sr Associate- Administration Fiji, Van,Kir

Ulaiasi Colaiwau Butukoro

Associate - Fiji, Van, Kir

Project Rationale

Fiji is a Small Island Developing State (SIDS) where reducing vulnerability and enhancing resilience of communities to the impacts of climate change is a high priority for the government. Fiji’s energy sector is highly dependent on fossil fuels, with fossil fuel imports accounting for 25-30% of all imports, leaving it exposed to oil price increases and volatility. Energy infrastructure that can withstand climate change impacts and energy security are therefore important aspects of the country’s overall resilience.

Fiji has made commitments to renewable energy development in its Green Growth Framework, NDC and new (draft) five-year National Development Plan (NDP), and 20-year Strategic Vision. Today, while approximately 60% of electricity is derived from renewables, almost all are from hydropower which is vulnerable to droughts. Electricity access is 82% in rural areas and 96% in urban areas. However, in rural areas access to electricity is often limited to a few hours per day.

IRENA indicates that among the factors contributing to Fiji’s unique situation is the need for an overarching energy policy. While Fiji is invested in aligning with green growth objectives, capacity shortage in leveraging green growth principles for sustainable governance is resulting in gaps in tools, policies, and frameworks for guiding broader stakeholders. For example, Fiji has not articulated a standard Power Purchase Agreement template, systematized processes for tendering new power generation capacities, developed a masterplan for framing rural electrification or designed standard guidelines for encouraging small-scale investors and households to capitalize on grid-connected renewables. As such, the investment context is clouded by the lack of framework.

The IRENA Renewables Readiness Assessment (RRA) of 2015 includes recommendations to finalize a new energy policy and develop a rural electrification masterplan in order to contribute directly to an enabling environment for the development of bankable projects and the mobilization of funds for green energy projects. Establishing such a framework would set clear policy guidelines that the private sector can confidently leverage for designing investment plans.

This project has been designed to respond directly to the recommendations made by the IRENA RRA and builds on the analysis to assist the GoF to develop bankable renewable energy projects. With the new national development plan just finished, GGGI is in a very good position to pick this up, review, revise, and finalize the existing draft policy, and integrate green growth aspects. The IRENA RRA report mentions solar, hydro, and biomass as possibilities, which this project will build on.

The 2017-2018 workplan will implement a number of the IRENA recommendations, including: finalization of the energy policy, assistance in the creation of an enabling environment for investment in renewables, and development of a rural electrification masterplan. As the IRENA assessment points out, the finalization of the draft energy policy will reduce uncertainty and risk in the eyes of prospective energy sector investors and their lenders, thus contributing directly to the creation of opportunities for bankable projects and mobilization of funds for green energy projects.

Sustainable transport and greening Fiji’s economic base are also national development priorities. However, green growth is not fully integrated into urban planning, and transport policies and planning at the sectoral level, nor at provincial and local levels. Given the impact of the recent cyclone, the government needs support to introduce the intended new green economy initiatives in energy and transport. The project intends to address the problem of high and expensive fossil fuel imports and vulnerable energy security, including energy access, and the lack of information available on green growth options for cities and transportation.

Building on 2015-16 Work

In 2015-16, GGGI supported Fiji to integrate green growth into the Fiji NDP, and is currently supporting development of related infrastructure. The final infrastructure projects selected for 2015-16 are in the energy sector. The first involves assisting the Department of Energy in the preparation of a full project proposal for the rehabilitation of solar home systems in areas worst hit by Cyclone Winston, and the second involves carrying out a pre-feasibility study for 100% renewable energy electricity generation on two major islands in collaboration with government ministries and the Fiji Electricity Authority.

The WPB 2017-18 builds on this work by continuing to support the implementation of the NDP and its policies, priorities and programs with a focus on the energy sector. The pre-feasibility study to be carried out in 2016 will be developed into a full proposal and the development of a rural electrification masterplan will build on the experience gained from the solar home system project. The 2017-18 project also builds on key issues identified during the NDP work in the transport and sustainable cities sectors, where GGGI experience from other countries, such as Cambodia and Rwanda, can provide valuable insight in developing options and opportunities for green urban growth in Fiji.

Delivery Strategy

PROJECT OUTPUTS FOR 2017-18:

Energy:

  • Develop 1 national green energy policy and action plan aligned to the new National Development Plan and submit to government
  • Prepare project design and financing proposal for 1 bankable project in green energy and submit to financier
  • Develop 1 green rural electrification master plan aligned to the new National Development Plan and submit to government
  • Deliver training on planning and implementation of green energy sector policies

Transport:

  • Develop policy recommendations on urban green transport systems and submit to government

PROJECT OUTCOMES FOR 2017-18:

  • Funding approved for 1 green energy project
  • Government adopts policy recommendations on renewable energy and energy efficiency, green rural electrification and green urban transport for implementation
  • At least 70% of training participants gain improved knowledge or skills relating to green growth or green energy

Planned Results

The project is aimed at mobilizing investment by equipping the government with implementable green growth policy recommendations, while building capacity to adopt and implement the policy. This project will support the government of Fiji cultivate a vibrant business environment through clear policy signals for reducing barriers and encouraging private sector investments. GGGI will achieve this by delivering the following outputs:

National green energy policy and action plan developed and aligned to the National Development Plan. GGGI will review and revise Fiji’s draft energy policy and draft energy action plan through a participatory approach involving a wide range of stakeholders, including vulnerable groups. Following the revision of the policy and action plan, GGGI, in partnership with the Ministry of Industry, Trade and Tourism, will design a program to promote the implementation of renewables and energy efficiency in the tourism, manufacturing, and commercial sectors, including incentives to stimulate private investments in low carbon development. This will support the creation of an enabling environment to attract investment, by overcoming market barriers.

This national policy and action plan will ensure a fertile environment for implementing bankable projects in the private sector. Strong policies will reduce investor’s uncertainty by providing clear policy directions and laying the foundation for more grid-connected renewables and strategic planning for rural electrification, including involving the private sector.

Project design and financing proposal for green energy bankable project prepared. GGGI will assess the investment and green growth potential of project concept notes developed in the energy sector in 2016 that build on the recommendations of the IRENA study and the GGGI pre-feasibility study carried out in 2016. GGGI will also conduct further pre-feasibility or preparatory studies as needed for selected priority projects. Based on a consultation workshop with key stakeholders, GGGI will analyze available funding options for potential projects and design a feasible business case for the identified project, as well as provide access to relevant funding entities. This will result in a full funding proposal, term sheets, or project agreement for at least one project. In addition, GGGI will provide support to the National Development Bank in the design of distinct financial instruments for green energy.

Green electrification master plan developed and aligned to the National Development Plan. Building on previous work, GGGI will assess least-cost options for rural electrification of all un-electrified areas of Fiji, and design a Renewable Energy Service Company (RESCO)/PPP model for rural electrification in collaboration with private sector companies and the Ministry of Infrastructure and Transport. GGGI will prepare and deliver a rural electrification masterplan integrating least-cost approach, public and private sector business models, and a time-bound action plan for achieving the goal of 100% rural electrification by 2020.

Training on planning and implementation of policies delivered. GGGI will prepare and deliver a customized energy training module for Fijian government stakeholders. The training module will be based on the results derived from the national green energy policy and action plan, and the green rural electrification masterplan. The training will incorporate recommendations for scaling up investment in renewable energy and address training needs identified.

Policy recommendations on urban green transport systems developed. GGGI will conduct analysis and provide options to decision-makers and planners to support green growth in cities and towns through the transport sector. A study on green urban development and cleaner transport options for public transport and inter-island transport will be carried out. GGGI will then provide support to the government for the development of a green public transport plan for a selected municipality.

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