What progress has solar energy made in Papua New Guinea and what is its potential, particularly for business? Christian Lohberger, President and founder of the Solar Energy Association of PNG and co-founder of Astra Solar Ltd, shares his views with Business Advantage PNG.
Business Advantage PNG (BAPNG): The COVID-19 pandemic has affected businesses of all sizes. How has it affected the solar power industry in PNG?
Christian Lohberger (CL): For the small-scale lanterns and Solar Home Systems being used in rural areas, demand has dropped. Many of these are often distributed with the support of corporate social responsibility (CSR) programs, and budgets for them have been cut, as has household income. At the same time, there is an uptick of support from international NGOs, the PNG government and multilateral programs, such as the PNG Electrification Partnership (PEP), which is leaning on solar as a major contributor for its off-grid goals.
For the Commercial and Industrial market there has probably been a slight increase in interest. The COVID-19 recession means CFOs are looking to cut overheads, and installing solar can reduce energy costs considerably. Electricity in PNG is still very expensive and the cost of solar power continues to fall each year. Now we’re seeing similar price drops for batteries, and I think that will be the next stage for solar projects, as many of them will begin to include energy storage.
‘If we get to 2030 and we’re not almost completely solar and hydro, I would be surprised.’
At the utility scale, PNG has a few solar farms under development, with largely unchanged progress as most of the obstacles here are regulatory more than economic. PNG Power Ltd and the Department of Energy are supportive of these projects, but there are a lot of moving parts and all parties have worked hard to keep them on track.
The government has ambitious electrification goals through the PEP announced at APEC 2018. We had hoped the PEP would be further advanced, but the five partner countries [PNG, Japan, New Zealand, Australia and the US] haven’t developed yet a unified program to push it forward, which isn’t a showstopper, but means that we’re seeing progress in some areas faster than others.
BAPNG: What are PNG’s plans to help reach a zero emissions target?
CL: Emissions are down globally because COVID-19 has caused major disruption to the fossil fuel industry. PNG is a low-cost LNG producer and will be fairly insulated from closures, meaning our Scope 3 emissions will be unchanged but there will be economic pressure as gas prices stay low.
For domestic emissions, electricity in PNG is largely zero-emission hydropower but you also have some highly polluting diesel generators contributing to energy production in Port Moresby and most of the provincial capitals (C-Centres). In Port Moresby, we have seen two big new LNG power stations at Dirio and NiuPower, which should reduce the use of diesel at Kanudi and Moitaka with a correlating emissions reduction.
One of the main challenges for C-Centres using diesel generators is that fuel logistics don’t work: they have to ship in fuel and spare parts, which takes time, money and organisational resources. It’s increasingly apparent that self-generation through solar power will be a much easier and cheaper way to produce electricity. Solar can reliably meet day-to-day demand and a battery or diesel generator can get you through overnights and rainy periods.
‘We see tariff reform for electricity prices as an important step.’
The International Finance Corporation (IFC) is currently helping PNG Power review most of the C-Centres to determine what would be the best way to produce electricity for them, but I think the trend is going to be towards renewable energy just because it eliminates the complexity of fuel logistics and maintenance overheads.
So, by official policy the PNG government plans to be 100 per cent renewable energy by 2050, but economic trends will likely see renewable energy become the main source of generation well before then. If we get to 2030 and we’re not almost completely solar and hydro, I would be surprised.
BAPNG: Are there any policy incentives to reach that target?
CL: This is a pretty significant weak spot in the government’s energy strategy: PNG doesn’t have tax breaks or incentives for the private sector to invest in emissions reduction. There is a duty-free component to importing solar equipment but no carbon price, tax credit or renewable energy target, which could drive investment.
We see tariff reform for electricity prices as an important step. Variable pricing could be a major contributor to the PNG government’s targets for both electrification and emissions reduction. Energy Minister Kerenga Kua has confirmed the imminent launch of the National Energy Authority. This will accelerate the use of renewable energy but, without net-metering or a feed-in tariff developing, a residential solar market is challenging.
BAPNG: Is the government working with the Solar Energy Association to reach its targets?
CL: We are very happy with our relationship with PNG Power (PPL) and are working closely with them and the IFC to progress the Solar Rooftop Pilot in Port Moresby. PPL is enthusiastic about the solar industry’s development and we hope their newly-announced Managing Director will share that view when he starts next month.
The Solar Energy Association backs the Independent Power Producers of PNG (IP3) proposal to develop a dynamic model for the Port Moresby grid. This model would help PPL with high level management of grid resources and assist with future integration of solar.
‘It’s clear that solar is going to reshape the PNG economy, much like mobile phones did 15 years ago.’
We have been collaborating with the Climate Change and Development Authority (CCDA), which is a part of the Environment Ministry. CCDA recently signed an MOU for the Markham Valley Solar Farm being developed by PNG Biomass, which was negotiated with our assistance at the COP25 climate summit in Madrid last year. We share with the CCDA the common goal of more ambitious clean energy policy, particularly for carbon pricing, but it’s a slow process to enact it. PNG is still using an Electricity Industry Act that was written in 2002, I think, and that needs to be upgraded to reflect the rapid growth of solar and its impact on energy markets. This COVID pause is a good opportunity for PNG to set some long-term clean energy goals and develop a road map to reach them.
BAPNG: How are you educating the population about the benefits of solar energy?
CL: The Solar Energy Association does some media and awareness to the public but, at the moment, we’re trying to engage mainly with the commercial sector. We do a lot of outreach to private companies to help them understand the nature of solar power and how to manage the technical and financial obstacles for implementation. We get a lot of positive responses, but solar is quite a young industry in PNG and a lot of people are holding back because they want to see how it goes first.
It’s clear that solar is going to reshape the PNG economy, much like mobile phones did 15 years ago. We believe that initially focusing on commercial users will give solar a firm market base which can then be leveraged for expansion to the residential and MSME sectors. Even without incentives or feed-in tariffs, in PNG the economic advantage of solar is still overwhelming with ROI approaching 37 per cent for some projects. The first medium and large-scale solar projects will be commissioned over the next six months, which will trigger exponential growth in 2021 and likely many more players to enter the market. To repeat an industry cliché, the future of solar is looking bright!
Christian Lohberger is President and founder of the Solar Energy Association of Papua New Guinea and co-founder of Astra Solar Ltd.
Credit: Source link