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ADB Investing Over $1 Billion to Help Pacific’s Renewable Energy Transition

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The Asian Development Bank (ADB) will invest over $1 billion worth of energy projects in the Pacific from 2019 to 2021 to increase renewable energy generation and improve access to affordable and sustainable electricity in the subregion.

ADB’s Pacific Energy Update 2019 details how the bank is helping its Pacific developing member countries undertake a structural shift away from fossil fuel-based energy sources and towards renewables. The report provides a country-by-country snapshot of energy needs and opportunities, and profiles how 29 ADB-supported projects are enabling governments, communities, and the private sector improve energy security, lower the cost of power, and reduce carbon emissions.

“Between 2007 and 2018, ADB-financed projects in the Pacific installed 62 megawatts (MW) of renewable energy generation capacity, constructed or refurbished 1,600 kilometers of power lines, and connected 10,000 households to electricity grids,” said ADB Pacific Department Energy Division Director Mr. Olly Norojono. “Over 2019 to 2021, we are building on these achievements by helping install new sources of renewable power, improve supply-side efficiency, and integrate battery storage. We are also providing support to better manage and regulate countries’ energy sectors.”

The report highlights that many Pacific countries are implementing plans to run on 100% renewables, with the transition to cleaner, more efficient power reducing dependency on imported fossil fuels, increasing access to affordable and reliable electricity, and reducing carbon dioxide emissions.

ADB is helping Pacific countries make this transition by providing finance and direct technical assistance. Projects financed by ADB are developing solar, wind, and hydropower facilities; installing battery storage technology; and improving or extending transmission lines. Technical assistance provided by ADB, meanwhile, is helping utilities operate more efficiently through legal, policy, regulatory, and institutional reforms, as well as improving financial management and corporate governance.

In Papua New Guinea, the Power Sector Development Project—ADB’s biggest energy project in the Pacific—will expand the transmission and distribution network to increase the national electrification rate from 12% to 19% by 2028. Other ADB financing is extending Port Moresby’s power grid, constructing or refurbishing hydropower plants, and increasing operators’ abilities to manage and maintain power facilities.

In Solomon Islands, the 15MW Tina River Hydropower Project represents a paradigm shift in power generation. It is projected to meet 68% of the country’s needs while reducing its carbon dioxide emissions by 49,500 tons per year—more than twice what the government has committed to.

In Samoa, ADB financing has helped rehabilitate and increase the output of hydropower facilities damaged in 2012’s Cyclone Evan, as well as build a new dam that will prevent flooding, secure water supplies, and generate power. ADB is also facilitating private sector investment to expand a local solar plant.

ADB has also financed the restoration and improved storm resilience of Tonga’s electricity network following damage from two cyclones. The Outer Island Renewable Energy Project, meanwhile, is helping Tonga achieve 70% renewable energy generation by 2030 by establishing new solar power systems on the country’s eight outer islands.

Similarly, ADB financing in the Cook Islands is helping install battery-supported solar generation systems on five islands, reducing the use of diesel power and helping the country pursue its goal of 100% renewable energy generation.

Regionally, the Pacific Renewable Energy Investment Facility is enabling the rapid provision of funding for a large volume of small-scale energy projects in the smallest 11 Pacific island countries. One of the 20 projects the facility is supporting is the Tonga Renewable Energy Project, with $12 million contributing to batteries, grid improvements, and new solar farms to increase electricity access for outer-island communities. The facility is also overseeing energy sector reforms, preparing further investment channels, promoting private sector engagement, and sharing best practices and lessons.

Another regional project, the Pacific Renewable Energy Program, is working to make renewable energy projects bankable for the private sector. By offsetting risks associated with renewables investment in the Pacific, providing loans and letters of credit, and assisting with transactions, the project is enabling increased private sector participation in Pacific energy production.

ADB is currently supporting 14 active energy projects in 10 countries in the Pacific worth $371 million.

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Indonesia’s First Pumped Storage Hydropower Plant to Support Energy Transition

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The World Bank’s Board of Executive Directors today approved a US$380 million loan to develop Indonesia’s first pumped storage hydropower plant, aiming to improve power generation capacity during peak demand, while supporting the country’s energy transition and decarbonization goals.

“The Indonesian government is committed to reduce greenhouse gas emissions through, among others,  development of renewable energy, energy conservation, and use of clean energy technology. Emission reduction in the energy sector will be driven by new and renewable energy generation and application of energy efficiency,” said Arifin Tasrif, Minister of Energy and Mineral Resources of the Republic of Indonesia.

Over 80 percent of the power generated for the Java-Bali grid, which supplies electricity to 70 percent of the country’s population, comes from fossil fuels. A key measure to support Indonesia’s decarbonization agenda is the development of energy storage to enable integration of renewable energy into the grid. Pumped storage hydropower plays a crucial role in this approach.

The financing will support the construction of the Upper Cisokan pumped storage hydropower plant, to be located between Jakarta and Bandung, with an expected capacity of 1,040 MW. The facility will have significant power generation capacity to meet peak demand, provide significant storage capacity to enable a larger penetration of renewable energies and, because of its close location to two large demand centers, will alleviate increasing transmission loads on the grid. As a result, a more environmentally friendly and reliable supply of electricity will benefit consumers in Java and Bali.

“We are excited about this project as it will be the first of its kind for Indonesia. It represents a turning point for Indonesia’s decarbonization pathway. The World Bank will continue to support Indonesia in its efforts to achieve resilient, sustainable, and inclusive development that will benefit the people of Indonesia now and in the future,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste.

Pumped storage hydropower makes use of two water reservoirs at different elevations. At times of low electricity demand or when there is abundant generation from clean power sources, such as solar energy, power from the grid is used to pump water to the upper reservoir. Power is generated during peak demand, usually evening hours, as water moves down to the lower reservoir using a turbine, when electricity generation costs are high.

The project will help enhance the system flexibility and efficiency in balancing supply and demand, and therefore improve the reliability and quality of electricity services in Java and Bali. It also aims to support the government to integrate variable renewable energy into the Java-Bali grid, and to do so in an environmentally and socially sustainable manner.

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Iran determined to boost oil exports despite sanctions

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Iranian Oil Minister Javad Oji has said the Islamic Republic is determined to increase its oil exports despite the U.S. sanctions on the country’s oil industry, adding that the use of oil sanctions as a “political tool” would harm the market.

“There is strong will in Iran to increase oil exports despite the unjust and illegal U.S. sanctions; I promise that good things will happen regarding Iran’s oil sales in the coming months,” Oji told the state TV.

As reported by IRIB, Oji noted that Iran can barter its crude oil for goods or even for services and investment not only in the oil industry but also in other sectors as well.

“Oil sales have dropped dramatically since the imposition of unjust sanctions, but this capacity exists in the Oil Ministry and all the industry’s departments to increase oil sales,” the minister said.

Iranian oil exports have plunged under U.S. sanctions, which were reimposed three years ago after Washington abandoned Tehran’s 2015 nuclear deal with six powers.

“Iran will return to its pre-sanctions crude production level as soon as U.S. sanctions on Iran are lifted,” Oji said.

“We are against using oil as a political tool that would harm the oil market.”

Since April 9, Tehran and six world powers have been in talks to revive the nuclear pact. The sixth round of the negotiations adjourned on June 20. The next round of talks has yet to be scheduled.

Oji said Iran backed a decision made by the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, on Wednesday to stick to a policy from July of phasing out record output cuts by adding 400,000 barrels per day (bpd) a month to the market.

Iran has been gradually boosting crude oil production to get ready for a strong comeback into the global market as the talks with world powers over the nuclear deal show signs of progress.

According to a Bloomberg report, National Iranian Oil Company (NIOC) officials have stated that the country’s oil fields are going through overhaul operations and connections with oil buyers are being re-established.

“In the most optimistic estimates, the country could return to pre-sanctions production levels of almost four million barrels a day in as little as three months,” the report published in May stated.

EF/MA

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IRENA and IAEA to Help African Union Develop Continental Power Master Plan

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The International Renewable Energy Agency (IRENA) and the International Atomic Energy Agency (IAEA) have been selected as modelling partners for the development of the African Continental Power Systems Master Plan (CMP). The initiative is led by the African Union Development Agency (AUDA) with the technical and financial support of the European Union (EU), and is aimed at establishing a long-term continent-wide planning process. The two agencies’ modelling tools will be the official planning models utilised in this initiative.

African energy ministers tasked the African Union Development Agency (AUDA-NEPAD) to lead the development of the master plan. Following a two-year consultation process coordinated by the EU Technical Assistance Facility (TAF) for Sustainable Energy, the five African power pools selected IRENA and the IAEA to support the continent’s modelling and capacity needs. The two organisations will lead the development of an electricity master plan that promotes access to affordable, reliable and sustainable electricity supplies across the continent.

A unified transmission network in Africa will enable inter-country trade between African countries as well as cross-continental trade with Europe and Asia, via existing links in North Africa, allowing African countries to source electricity from a wide-range of competitive, clean energy sources. It will also create beneficial socioeconomic opportunities by increasing interregional access to affordable African renewable energy resources within the continent, fostering investment opportunities, job growth and ultimately contributing to the region’s sustainable development.

The urgency of this task is underlined by the prospect of carbon lock-in. Existing plans in Eastern and Southern African countries include more than 100 GW of new coal-fired power plants by 2040 – the development of which would triple carbon dioxide (CO2) emissions to 1,200 megatonnes (Mt) per year. Under the CMP, power generation options will be reviewed and re-considered to maximise socioeconomic benefits while simultaneously minimising emissions.

IRENA and the IAEA, as modelling partners, will support African stakeholders with the development of the CMP identifying surplus and deficit regions/countries in Africa in terms of electricity generation and demand. This will help identify the most cost-effective ways of expanding clean electricity generation and transmission infrastructure across the African continent.

IRENA and IAEA will also train AUDA-NEPAD staff and Power Pool experts on the use of the modelling tools, including IRENA’s System Planning Test (SPLAT) models using the IAEA’s Model for Energy Supply System Alternatives and their General Environmental Impacts (Message) tool, and support the team in the development of the CMP, ensuring knowledge transfer and capacity building.

The MESSAGE-SPLAT capacity expansion models are a key component and product of IRENA’s support to African countries. Built using the MESSAGE software, the agency has developed SPLAT models covering 47 African countries across the five African power pools. They have been used in IRENA’s capacity building programmes on energy planning across the continent.

The IAEA and IRENA cooperate on energy planning with a view to enhancing the effectiveness and impact of capacity-building efforts by joining the complementary competencies of the two organisations. The inter-agency cooperation was formalized through a Practical Arrangement, signed by both organizations on 2 November 2016, and extended for another three years in 2019.

IRENA

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