Palau's dependency on fossil fuel imports
Palau, an island nation in the Pacific Ocean, faces significant energy security challenges due to its complete reliance on imported fossil fuels for electricity generation. As of 2017, the population had high access to electricity, but less than 0.1% of energy consumption came from local renewable sources. In response to this dependency, the Palau government initiated a National Energy Policy aimed at promoting renewable energy (RE) and energy efficiency (EE) to mitigate economic vulnerabilities associated with fuel imports. Key initiatives include funding from the European Union to develop renewable energy projects, alongside innovative loan programs by the National Development Bank of Palau, which encourage households and businesses to adopt solar photovoltaic systems.
While solar energy contributions remain modest, efforts are being made to enhance local capacity for RE and EE implementations, supported by external partnerships. The government also seeks to reduce energy consumption through energy audits and action plans, particularly for public buildings. Despite the political challenges of reforming electricity tariffs to reflect true costs, there is a collective push towards achieving a renewable energy goal by 2050. Overall, Palau is making strides in adopting more sustainable energy practices while grappling with the complexities of transitioning away from fossil fuel dependence.
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Palau's dependency on fossil fuel imports
Official Name: Republic of Palau.
Summary: Although its national energy security is threatened by its dependence on imported fossil fuels, Palau has been able to take a number of steps forward, achieving promising results in the renewable energy and energy-efficiency sectors.
The Republic of Palau is an island nation in the Pacific Ocean, some 497 miles (800 kilometers) east of the Philippines and 1,864 miles (3,000 kilometers) south of Japan. Palau consists of six island groups comprising more than 300 islands. In 2017, the population was around 21,431 people, with as many as 99 percent having access to electricity.
However, Palau completely relies on fossil fuels for its energy consumption, since less than 0.1 percent of the country’s energy use comes from local renewable energy (RE) sources. As a consequence, the Palau government launched the development of a National Energy Policy (NEP), submitted for endorsement in October 2009, covering both RE and the energy efficiency (EE) and conservation sectors, in order to relieve the economy from its fuel dependency. Funded by the European Union’s Support to the Energy Sector in Five ACP (African, Caribbean, and Pacific Island) Countries (REP-5) program, the draft NEP also covers energy sector management, fossil fuel management, and electric power. The targets set for 2020 are to achieve a 20 percent electricity generation from RE, as well as to meet a 30 percent reduction in overall energy consumption.
Solar Photovoltaic Systems
The National Development Bank of Palau (NDBP) constitutes a major actor in both the RE and EE fields. NDBP launched an innovative loan program in 2010, directed at households and businesses, to install solar photovoltaic (PV) systems in order to minimize the impact of rising tariffs on their future energy costs. By providing loans to install solar PV panels as a source of electricity as well as solar water heating (SWH) systems, the NDBP’s Renewable Energy Fund Window (REFW) provides home and business owners the opportunity to reduce their dependency on power generation from the Palau Public Utility Corporation (PPUC). It also allows homeowners living off the grid to have their own independent sources of energy. The contribution of power generated by the solar PV arrays is small, but through a net-metering arrangement with PPUC it is demonstrating the value of such energy sources.
This solar PV program builds on experience that NDBP has gained in implementing an EE project for households, funded by the International Union for Conservation of Nature (IUCN). The Energy Efficiency Subsidy Program (EESP), launched in January 2009, has already helped numerous homeowners improve the quality and value of their homes while reducing their demand for electricity. It is expected that the total electricity consumption will be lowered by an estimated 15 percent in new homes and that a local market for EE products and services will be developed. The next step would then be to expand those EE measures in existing homes. In early May 2010, NDBP was awarded a plaque of merit by the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), based on the innovative financing and environmental value of the EESP project.
Palau’s energy security was put under further strain in 2007 upon completion of a new capitol building. Dubbed the Little White House, it consumed 234,000 kilowatt-hours of electricity in January 2007, costing $78,000. An energy audit was therefore conducted, recommending a series of behavioral and equipment changes and leading to the EE Action Plan (EEAP) in 2008. Drafted by the Energy Office with funding from REP-5, it contains short- and medium-term EE actions to be implemented in government buildings. Additionally, the REP-5 program funded a 100-kilowatt grid-connected solar-PV system installed at the capitol building at the end of 2008. It was expected to produce 120,000 kilowatt-hours per annum, which translated into electricity savings of $40,000 per year.
Thanks to these various measures, the capitol’s energy consumption was lowered to 61,200 kilowatt-hours in May 2010. Nevertheless, the building’s electricity bills still constituted a significant part of the national budget, threatening the country’s economic and energy stability. This example underlines the energy security implications that a decision made at the highest level can have.
Although Palau is in the early stages of implementing RE and EE projects, there has been limited domestic capacity to ensure their effective execution. This is being addressed through external support for NDBP’s projects; local technical skills are being upgraded, small contractors trained and supported, and the importation and sale of preapproved equipment undertaken by local retailers. Attention is also being focused on removing subsidies of the electricity tariffs, in order to reflect the true cost of energy in the country. While this is politically unpopular, it is working to encourage the uptake of renewable alternatives, such as solar PV, SWH, and the general improvement in the energy efficiency of homes and small commercial businesses. The pressure of energy costs on hotels, particularly for water heating, has seen many install large SWH arrays. However, there still remains the need for the government to provide clear and consistent policies to drive an effective national energy conservation strategy. Palau set a goal of generating all its energy from renewable sources by 2050.
Bibliography
"Palau." The World Factbook. Central Intelligence Agency, 8 Sept. 2017, www.cia.gov/library/publications/the-world-factbook/geos/ps.html. Accessed 28 Sept. 2017.
"Republic of Palau: Renewable Energy Roadmap 2022-2050." International Renewable Energy Agency, June 2022, www.irena.org/publications/2022/Jun/Republic-of-Palau-Renewable-Energy-Roadmap. Accessed 11 Aug. 2024.