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24 - 27 March 2013 Viaduct Events Centre Auckland NZ

Summit Statement 5 April

Accelerating renewable investments in an energy efficient Pacific

Overview

The Pacific Energy Summit, co-hosted by New Zealand and the European Union (EU), was held in Auckland, New Zealand, 24-26 March 2013 following on from the Pacific Leaders’ Energy Summit in Tonga. The Summit was attended by Heads of Government from the Cook Islands, Federated States of Micronesia, French Polynesia, the Republic of Kiribati, New Caledonia, Niue, Samoa, Tokelau and Tonga as well as representatives from American Samoa, the Republic of Nauru, Fiji, Guam, Papua New Guinea, the Republic of the Marshall Islands, the Republic of Palau, Northern Marianas, Pitcairn, Solomon Islands, Tuvalu, Vanuatu, and Wallis and Futuna.

Pacific countries and territories presented 79 projects at the Summit, providing development partners and the private sector with partnership opportunities over the next 3 years to deliver on the objective of the Summit: a quantum leap forward for the use of clean, affordable and efficient energy in the Pacific and a corresponding reduction in the region’s persisting fossil fuel dependence.

At the conclusion of the Summit, the co-hosts announced a funding envelope of $NZ635 million had been secured which included commitments of $NZ255 million in grant funding and $NZ380 million in concessional loans sufficient to support over 40 of the 79 projects.

Summit discussion

Pacific Island countries and territories, development partners and the private sector confirmed at the Summit a renewed and strengthened commitment to practically advance energy security in the Pacific, as articulated by Pacific Leaders in the Pacific Islands Energy Policy and Strategic Action Plan and 2011 Waiheke Declaration on Sustainable Economic Development. They also noted global initiatives including the Sustainable Energy for All and the Barbados Declaration particularly its focus on greening the blue economy.

Participants recognised that clean, affordable and efficient modern energy services are a cornerstone for sustainable development. They recalled that currently, the Pacific region meets around 80% of its electricity energy needs from imported fossil fuels; that on average, Pacific nations spend over 10% of their GDP and 25% of their import spend on diesel; and that electricity needed to be affordable for consumers. They considered that with most Pacific countries working from a less than 10% renewable energy base and in a region with abundant renewable energy resources, including hydro, solar, wind, bio-mass and geothermal, they needed to do better.
Participants noted, in an era of increasing climate change concern, investments in renewable energy and energy efficiency should be a key part of the Pacific’s response to climate change. They called for leadership to deliver solutions, overcome process, and maximise outcomes in the shortest time possible. They agreed more effective partnerships were needed to work together, fast and holistically to close the investment gap.

Participants welcomed the proposal that if fully funded the 79 projects featured at the Summit could increase renewable generation from 23% to 37% of total supply and in most cases closer to 50%. They recognised preparations by Pacific countries, with development partners, leading up to the Summit, to ensure projects in the prospectus reflected their priorities.

Participants agreed that investment in clean, affordable and efficient energy should fit within partner country priorities, infrastructure investment plans, energy sector targets and roadmaps, and timeframes. Collectively and individually Pacific countries and development partners identified many opportunities for enhancing access to clean and affordable energy services and the proportion of energy use from renewable sources. On the basis that it had almost 100% renewable electricity generation, Tokelau was seen as a leading light and inspiration as to what can be achieved in a short time with catalytic funding.

Participants considered that partner countries have responsibility for managing, budgeting and maintaining energy sector investments including over their operating life to avoid premature deterioration and higher long term costs. They reaffirmed that the legislative, regulatory and financial environment for the energy sector is also a key factor in enabling investments to proceed and potentially be self-financing from appropriate energy tariffs. They acknowledged that safeguards to minimise negative environmental and social impacts of new energy developments are crucial.

It was noted that many Pacific countries have out-dated technology including in some cases overloaded electricity transmission and distribution systems which require modernisation and/or expansion. Participants endorsed partner countries having a critical role in providing an environment in which the local private sector can produce and maintain clean energy technology adapted to local conditions and support import substitution.

Participants considered that the private sector could play a greater role, not only in construction, but also in ownership and operation of clean energy generation, services and financing. Some countries shared experiences with power purchase agreements and feed-in tariffs that can provide powerful incentives for independent power producers to invest and operate, and a growing number of energy projects in the Pacific are commercially viable with minimal or no public sector, or development partner, funding. With optimal structures to motivate private investors, it was recognised that Pacific countries can maximise private participation and leverage limited public sector and development partner funds.

Commitments

Participants called for the commitments by development partners to the energy sector to be immediate, significant. They requested these commitments translate into tangible actions on the ground including lasting partnerships with Pacific countries to ensure long-term energy goals could be sustainably met, particularly through improved energy efficiency and access to renewable energy options.

Development partners announced contributions which included the following:

  • The Asian Development Bank projects its Pacific portfolio of renewable energy and energy efficiency projects to be US$270 million (including US$49 million grant co-financing) over 2013-2015. ADB has projects planned to support hydropower plants, solar power plants, wind farms, biofuel plants and energy efficiency investments (both supply side and demand side). Support will be a combination of concessional loans and Asian Development Fund grants for eligible countries. This is a significant increase from the current ADB Pacific energy sector portfolio of US$188 million (including US$18 million in on-going technical assistance). Support for private sector investment will also be provided through the ADB Private Sector Department.
  • Over the past five years Australia has committed $A170 million to improve economic infrastructure in the Pacific islands region. This includes $A35 million in investment in support of energy initiatives which are working to improve access to clean and affordable energy in the region, including energy programs in Kiribati, Marshall Islands, Samoa, Solomon Islands, Tonga and Vanuatu. Australia’s support for the Pacific Region Infrastructure Facility has achieved three important objectives: (i) to leverage significant new investment from the Asian Development Bank and World Bank (including the International Finance Corporation)for new energy programs; (ii) more effective and coordinated assistance from the PRIF development partners, that is New Zealand, European Union, European Investment Bank, Asian Development Bank and World Bank Group; and (iii) greater access by Pacific island countries to technical assistance for energy policy and planning, such as energy road maps for Tonga and Vanuatu, advice on strengthened management and maintenance of energy assets and options for improved regulation and performance of power utility providers.
  • In the last ten years the European Union (EU) has committed more than €100 million for sustainable energy in the Pacific. This has benefitted more than 100,000 people. The EU will now make available an additional €25 million for renewable energy and energy efficiency initiatives for the Pacific. Funds will be used to boost energy access and support to rural electrification. The EU will also provide much needed technical assistance for policy reform, capacity building and investment project preparation. By blending grants and loans, the EU will also ensure the leveraging of additional capital funding. During the Summit the EU has signed an important €6.5 million Sector Budget Support programme with Tonga, to support the implementation of the Tonga Energy Roadmap (TERM). This support is comprehensive; it encompasses specific support to (i) increase the share of renewable energy generation in supply mix, (ii) reduces the level of transmission and distribution losses in the electricity grid and (iii) encourages in-depth dialogue on energy sector reform.
  • Japan will continue to extend its cooperation for the Pacific island countries to promote renewable energy and diversify energy sources based on Okinawa ‘Kizuna’ Declaration at PALM6 (Sixth Pacific Islands Leaders Forum). In the planning and implementation of such cooperation, Japan takes advantage of its technology, experience and expertise in developing clean and renewable energy, particularly those evolved in Okinawa, which has geographical and climate similarities to Pacific islands. The Pacific islands countries highly appreciate the progress in the projects of the Pacific Environment Community (PEC) Fund , initiated by Japan at PALM 5.
  • New Zealand intends to allocate NZ$65 million to the Pacific through the NZ Aid Programme over the next 3 years to dramatically boost investment in renewable energy projects, thereby reducing reliance on imported fuels and increasing access to clean, efficient and affordable energy. The focus will be on working in partnership with countries and others to further develop proposals for 18 projects in 6 countries (Cook Islands, Kiribati, Papua New Guinea, Samoa, Tonga, Tuvalu) subject to final design and feasibility. The projects include large scale investments in renewable energy to support implementation of countries energy roadmaps and to allow them to achieve the maximum levels of renewable electricity in their networks. In addition to direct infrastructure investments, New Zealand’s support will include capacity 

    building, policy and regulatory support, and enabling private sector investment. New Zealand will also actively seek partnership opportunities to extend activities to other Pacific countries.

    The United Arab Emirates (UAE), as part of the March 2013 Tonga and New Zealand energy summits, announced that its previously pledged US$50 million Pacific Partnership Fund has been converted from soft loans to renewable energy grants. Starting immediately, the fund will disburse the remaining US$45 million2 to the development of fully customized projects, designed and implemented jointly by Pacific Governments and Abu Dhabi's renewable energy company, Masdar.

    The World Bank Group (WBG) in the Pacific is significantly expanding its focus on sustainable energy development. In more than 8 countries across the region, total investments, technical assistance and advisory services in the energy sector will more than double from about US$25 million to over US$50 million over the next two years including through: the International Development Association, the Global Environment Facility (GEF), the Pacific Region Infrastructure Facility (PRIF), and other multi-donor trust-funds administered by the World Bank Group such as ESMAP, ASTAE, GPOBA, PPIAF, and SREP. Through the International Finance Corporation (IFC), the WBG is committed to mobilizing and supporting private initiatives in the energy sector including through direct investments and financing to energy projects and financial institutions supporting the sector, as well as with advisory services to both governments and private investors.

Participants undertook to work in existing and new ways to increase the effectiveness of investment in the energy sector as well as to monitor and communicate progress on initiatives announced at the Summit. The Pacific Regional Infrastructure Facility was considered to be an appropriate mechanism to coordinate and report on these, in collaboration with development partners and partner countries, including to relevant regional fora.

Further background

Participants recalled that the Investment Showcase had provided an excellent opportunity for Pacific countries, development partners and the private sector to showcase plans, projects, services or technology and create new and on-going linkages.

Participants commended New Zealand and the European Union for its hosting of the Pacific Energy Summit and thanked co-sponsors AusAID, Asian Development Bank and the World Bank Group.

Other international and regional representatives attending included the Association of Small Island States, Caribbean Community, European Investment Bank, International Energy Agency, International Renewable Energy Agency, Japan, Pacific Islands Forum Secretariat, Secretariat of the Pacific Community, Secretariat of the Pacific Regional Environment Programme, United Arab Emirates, and the United Nations.