The Republic of the Maldives located in the central Indian Ocean is renowned for its thriving tourism industry that contributes to roughly 25 per cent of its national GDP. However, covid-19 has definitely outlined the limitations in the economic model of this island country that has been majorly dependent on tourism and fishing. Thus, rapid transformation and diversification of the country’s economic activities will be critical to its recovery. To address this transformation, a reliable and affordable energy supply is required as Maldives has no fossil fuel reserves of its own. The country has been relying on imports for these fossil fuels for many decades and as highlighted by the Asian Development Bank (ADB), imported fossil fuels are the primary source of energy in the country. Further, fuel imports account for approximately 10 per cent of the country’s GDP as diesel is primarily used in power generation, industrial processes, and to facilitate sea transport while gasoline is used for road transportation and liquefied petroleum gas for cooking. Hence, it is important to focus on green energy transition in the country not only for its economic well-being but also to support the global decarbonisation goals.
The Maldives has been naturally bestowed with abundant renewable energy resources that include solar, wind, and ocean. Utilisation of these renewable energy sources will offer the potential to reduce electricity generation costs, fuel imports and fiscal burden on the government in the country. According to data by the International Renewable Energy Agency, the share of renewable energy in the total energy mix of Maldives is just 6 per cent. As per 2021 statistics, out of the total renewable energy generated over the country, 95 per cent of it is made using solar energy, 1 per cent using bioenergy and 4 per cent using wind energy.
POISED Project
The Preparing Outer Islands for Sustainable Energy Development (POISED) project was launched in January 2015 to assist Maldives in transitioning towards a self-sufficient, cost-effective, clean energy by transforming existing mini grids, including physical investments in the form of solar-battery diesel hybrid systems. The goal was to reduce the country’s reliance on fossil fuels for power generation, lower electricity prices, and improve the livelihoods of the people.
The POISED emerged as a successful project and helped in saving fuel up to 28 per cent when compared to diesel-only generator sets. As reported by Climate Investment Funds, the progress because of the POISED project till December 31, 2020 has helped in achieving significant results in improving energy access and reducing emissions. POISED added 1,794 businesses with improved access to electricity between 2020 and 2021. Furthermore, the number of people with improved energy access increased from 39,939 in 2020 to 117,692 in 2021. Similarly, annual electricity production exceeded its target of 9,723 MW per year by over 17,500 MW. The annual greenhouse gases (GHGs) emissions were reduced by 34,166 tonnes.
After POISED’s successful completion, the country has been actively exploring opportunities the renewable energy space.
Other projects and initiatives
In August 2022, the Republic of Maldives reopened a tender process seeking to procure 40 MWh of battery energy storage systems (BESS) in an energy transition project supported by World Bank funding. Financing support for the project was approved from the World Bank through its Accelerating Renewable Energy Integration and Sustainable Energy (ARISE) project. The Maldives government will apply part of that funding towards the cost of making payments to the contracted BESS providers. The process of tendering was done in two lots. The first will be for 23 MW/23 MWh of BESS at seven different regions of the country, the second for 13.5 MW/17 MWh of BESS at eight locations on the Laamu Atoll islands and four other sites. The contracts will cover design, supply, installation and commissioning of BESS and energy management systems which will enable them to optimise operation of solar PV-plus-diesel generator power plants around the islands.
Further, in October 2022, Maldives Ministry of Environment, Climate Change, and Technology announced that the government is assessing community insights and feedback for a 20 MW solar power project. This capacity will be established under Asian Development Bank (ADB) supported outer islands solar public private partnership project. The ministry thereby plans to design the final tender and launch request for proposals later based on the feedback and insights received from the participants.
Additionally, the country has been collaborating strategically with its neighbouring countries to establish necessary infrastructure for renewable energy generation. India’s Ministry of Power notified that India and Maldives had planned to set up a transmission interconnection to facilitate the transport of renewable energy between the two countries. This collaboration intends to work on two memorandums of understanding, one on energy cooperation and the other on transmission interconnection under One Sun, One World, One Grid (OSOWOG). As part of the OSOWOG initiative, India and the Maldives have proposed to establish transmission interconnection for renewable power transfer to help the Maldives with its energy transition. A draft agreement on transmission interconnection is being prepared, under which an Indian technical team would visit the Maldives to assess its technical feasibility. Following that, a detailed project report will be prepared in collaboration with Indian and Maldives agencies, which would include an undersea cable route survey as well as network augmentation in Male.
Very recently in January 2023, the World Bank Group’s board of executive directors briefly discussed the new Country Partnership Framework (CPF) 2023-2027 for Maldives. It aims to support the country to achieve a green, resilient, and inclusive high-growth future. The new five year strategy is laid out on key areas for work to be done by the World Bank Group’s member organisations that includes first, the International Finance Corporation that can help in focusing on the private sector in developing countries. Second, it includes the Multilateral Investment Guarantee Agency (MIGA) which offers political risk insurance and credit enhancement guarantees.
Outlook
Clean energy transition has become an essential strategic component of bilateral equations. This is because clean energy deployment is not only an international commitment but is tied to a nation’s larger security concerns.
However, transitioning from a primarily diesel-based energy mix to renewables-led power systems is a costly investment for an island nation like Maldives. This has can be attributed to the geographical challenges in terms of land availability as well as transmission constraints. Additionally, human resource development is another issue that needs to be addressed in the Maldives. Most islands lack trained electrical engineers with the technical expertise required to deal with new technologies. Thus, skilled manpower must be increased through continuous training for long-term energy security.
Further, to promote a green energy transition, the country’s high public debt must be addressed through economic reforms. The Maldives faces numerous challenges in structuring the financing of development projects, including climate change mitigation projects. The main constraint is the country’s limited public-sector financing capacity. Sustained support from multilateral development banks, bilateral cooperation with donor countries, private sector participation, and especially alliances with foreign investors interested in introducing innovative renewable energy technologies are critical to promote renewables. Streamlined guidelines, transparent bidding processes and clear regulatory provisions will help the enable investments in the country’s nascent renewable energy sector.
Going forward, in order to accelerate the deployment of renewables on the island country, it is essential that the government learns from foreign experiences and creates a favorable ecosystem for long-term renewable energy development.
