Papua New Guinea has one of the lowest electrification rates in the Pacific, with only 13% of the population having access to electricity. In PNG, grid-connected power is still primarily restricted to the main urban areas.
One party driving investment in this area is the United States Agency for International Development's Papua New Guinea Electrification Partnership (USAID-PEP), as the United States is committed in contributing to the project that would connect 70 per cent of PNG’s population to electricity by the year 2030.
To help accomplish this goal, USAID-PEP is focused on facilitating at least 220,000 new on- and off grid household electricity connections, and a key part of this will be deploying renewable solutions, such as solar mini grids.
The USAID-PEP is a five-year (2020–2025) partnership with the Government of Papua New Guinea to advance the country’s journey to energy self-reliance. Their main aim is to strengthen PNG Power Limited’s a(PPL) capacity to expand connections, reduce system and commercial losses, and increase its revenues, as well as develop at least ten viable off grid electrification models in select remote communities.
US Investment Potential
According to the USAID PEP, the PNG energy sector is measured to have a K14 billion (about US$4 billion) investment potential.
USAID Chief of Party Bruce Corbet told the Port Moresby Chamber of Commerce and Industry in a meeting on 1st June 2023 that they are continuing to provide technical support to the energy sector.
Corbet said challenges in the sector were familiar in the country, but PNG is very well-suited to mini grids and micro grids, given the geography and the highly disparate populations, noting they exist already and there is a huge opportunity with the need to do a lot more.
“Challenging climate and environment, land access and cost-recovery tariffs, uncertain policy and regulatory environment, foreign currency exchange, insufficient public and private investment, and dispersed and isolated populations are some aspects that create setbacks,” he said.
Corbet said with the continuous work and studies, some of the electrification modes versus the investment potential (or capital expenditure) around the country included:
- Solar home systems (fewer than 100 households per site) – US$ 0.4 billion (about K1.4 billion);
- Small mini grids (100 to 320 households per site) – US$ 0.4 billion (K1.4 billion);
- Large mini grids (more than 320 households per site) – US$0.4 billion (K1.4 billion);
- Grid extension (PNG Power Limited’s franchise area of 1 to 10 kilometers from an existing grid) – US$2.2 billion (K7.9 billion);
- Grid densification (less than 1 km from existing grid) – US$0.3 billion (K1.07 billion); and,
- Grid connected generation capacity – more than US$0.5 billion (K1.8 billion).
Cobert added this development starts with an ‘anchor’ -- a large, financially sound company such as a telco or mining company to pledge its support with an existing pioneer company to take the majority of the power produced. Then come smaller businesses that need access to power and, lastly, a ‘community’ that is looking for reliable electricity.
Cobert said PNG should be looking to solar mini grids as part of the PEP. "We see mini grids within PNG as a way to advance access to energy, as well as energy security. The key is making these niche grids viable for investors," he said
Despite challenges, the off-grid market in PNG is at an exciting crossroads; advances are being made in solar lanterns, small solar systems, and mini grids. USAID-PEP is developing viable off-grid electrification models that will provide electricity to remote communities.
USAID-PEP Project Implementation
USAID-PEP’s project is implemented through RTI International, an independent, nonprofit research institute dedicated to improving human conditions.
As lead implementer, RTI International works with the PNG government and PNG Power Ltd to increase access to affordable and reliable electricity as an important part of advancing inclusive growth, development, and empowerment in communities throughout the country.
Currently, RTI's work has improved the financial viability and operational efficiency of PNG’s energy utility. Their goals are to enhance the regulator and regulatory environment, develop and advance off grid connections in remote communities, and promote private sector investment that will facilitate at least 200,000 new on- and off-grid household electricity connections, and institutionalize key reforms that will enable PNG to achieve its 70-percent target.
In particular, RTI is supporting PNG Power Ltd on end-to-end utility transformation of PPL by improving competitive procurement through group discussions with selected government and private sector representatives and supporting the conduct of transparency on the existing independent power producer pipeline as well as the development of measurable improvement in PNG’s energy regulator, the National Energy Authority (NEA).
RTI is currently assisting NEA with improving the national regulatory framework for off-grid electrification, and a process for stakeholder engagement to inform and implement enabling policies and regulation.
1) POMCCI Business Breakfast, Lamana Hotel Port Moresby, 1st June 2023/ Presentation by Mr Bruce Cobert, Chief of Party at the US agency on International Development on the PNG Electrification Partnership (PEP) implemented by RTI international. [Paul Oeka/PNG Business News]
2) United States Agency for International Development (.gov) https://www.usaid.gov › papua-new... Papua New Guinea | Humanitarian Assistance