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Study and Establishment of a Renewable Energy & Energy Efficiency Unit at the Tuvalu Electricity Corporation

Introduction:

The PIGGAREP is a continuation of the close collaboration between SPREP, UNDP and the GEF to build the capacity of the PICs to deal with the challenges of Climate Change.

The global environment and development goal of PIGGAREP is the reduction of the growth rate of GHG emissions from fossil fuel use in the Pacific Island Countries (PICs) through the removal of the barriers to the widespread and cost effective use of feasible renewable energy (RE) technologies. The specific objective of the project is the promotion of the productive use of RE to reduce GHG emission by removing the major barriers to the widespread and cost-effective use of commercially viable RE technologies (RETs). PIGGAREP consists of various activities whose outputs will contribute to the removal of the major barriers to the widespread utilization of RE technologies (RETs). The project is expected to bring about in the PICs: (1) Increased number of successful commercial RE applications; (2) Expanded market for RET applications; (3) Enhanced institutional capacity to design, implement and monitor RE projects; (4) Availability and accessibility of financing to existing and new RE projects; (5) Strengthened legal and regulatory structures in the energy and environmental sectors; and, (6) Increased awareness and knowledge on RE and RETs among key stakeholders.

Tuvalu is one of the participating PICs in the PIGGAREP and one of the activities in its 2008 Work Plan and Budget is a TV5 - Study and Establishment of a RE & EE Unit at the Tuvalu Electricity Corporation.

This study is a follow-up to a SOPAC/PIEPSAP-funded Review of the Tuvalu Electricity Corporation’s Base Tariff , which was conducted in October 2007. The study revealed that in 2006 the utility made an operating loss of over AUD 1,100,000 when Government of Tuvalu (GoT) operating subsidies are considered. To break even on an operational basis (i.e. before allowance for capital expenditure and depreciation) and without a subsidy from the GoT would have required a tariff averaging AUD 80 c/kWh, which is almost twice the current average tariff AUD 44 c/kWh.

The study noted that while a higher tariff is necessary, a tariff averaging AUD 80 c/kWh is not recommended for two reasons. The first is that the willingness of Tuvaluans to pay for electricity is around AUD 30 c/kWh, which is significantly lower than this breakeven cost. The second reason is that the breakeven cost is higher than necessary due to two major challenges that cause it to have costs of operation that exceed its average retail tariff. The first is a Fuel Challenge and the other an Operational Challenge.

To address the Fuel Challenge, the study report suggested that the GoT consider changing TEC’s emphasis toward it becoming an energy management company that has limits imposed on the level of diesel it may consume in each year. TEC could meet those limits in the following two ways:-

1. Identifying and Developing Alternative Forms of Generation

While it is not realistic for diesel to be replaced as the primary form of electricity generation in Tuvalu, wind and solar generation are viable options as supplementary sources of generation that could displace meaningful amounts of diesel generation. Data from the first three months of monitoring wind speeds on Fogafale suggest that one or more wind turbines might be technically feasible. If so, it is possible that potential diesel offsets of over AUD 100,000 per turbine per annum could be realised. Savings of this level would potentially reduce the average tariff by over AUD 2 c/kWh for every turbine installed. Consequently it recommended that the current wind testing in Fogafale be accelerated with the installation of a second hand, donor funded turbine to feed the TEC grid. This generation alternative could well be viable for the outer islands as well.

With almost 2,400 hours of sunshine per annum, Tuvalu is an excellent candidate for solar generation provided the high capital costs of solar generation can be offset with donor assistance and users become well versed in the use of the technology. Roof mounted, photovoltaic panels are an excellent means of reducing the load on TEC’s system as the trend toward increased air-conditioning usage increases.

2. Encouraging the Conservation of Energy

As an energy management company TEC would also be incentivised to reduce diesel consumption by encouraging lower consumption of electricity. Usually utilities try to maximise consumption to maximise profit but TEC is State owned and at this stage it is simply aiming to cover its operating costs. As diesel is TEC’s largest operating cost, TEC and the GoT should have a common interest to encourage energy conservation.

TEC also has a number of staff that could be redeployed into a “RE & EE” department without adversely affecting the balance of TEC’s operation. That department could take responsibility for encouraging RE generation and electricity savings through education, ensuring that larger users have appropriate power factors, employing measures to encourage lower use of non-productive electricity uses like air conditioning and other measures. This study is to assist with establishing and operationalising (i) and (ii) above within the TEC.

Prepared by Ridgway Capital Projects Limited, 6/76 Cashel Street, PO Box 1284, Christchurch, New Zealand

Objective:

The objective of the consultancy is to undertake a study to identify the best practical and cost effective way of establishing and operationalising a Renewable Energy and Energy Efficiency Unit at the TEC.

Request for Quotes (RFQ):

Quotations are kindly requested from parties that are willing and able to undertake the services as specified in the detailed TOR in Annex I.

Instructions to Offerors:

• The Quotation must cover all the objectives, outputs and activities as specified in the TOR (Annex I);
• The Quotation must clearly include the costs for the mission to Tuvalu and all related travels;
• US$ only must be used in the Quotation;
• The Quotation must include:
  • An updated CV of the individual(s) who will contribute to the consultancy and as part hereof a summary of recent work in the areas to be covered in this consultancy (including client and work produced);
  • Information on availability;
  • Total person days proposed for the work on the consultancy and daily rate in US$ for each person;
  • A preliminary work plan presented as a breakdown of major activities (specified in the TOR) into a timeline; and
  • A draft report structure and its estimated length.
• The offer must be in the English language only;
• The above-mentioned documents, information and requirements are mandatory and as such are required to form a complete tender. An offer will be rejected unless it is substantially responsive;
• The consultancy will include a mission to Tuvalu to meet with the General Manager and staff of the TEC, the Board of Directors of TEC and relevant representatives from both government and non-government agencies.
• The consultancy is expected to be undertaken in the period May – June 2008 with the mission to take place in within this time frame;
• The exact number of working days for the consultancy will be determined subsequently between the successful Contractor, SPREP and TEC;
• The final working plan for the consultancy will be determined subsequently between the successful Contractor, SPREP and TEC;
• The final report structure will be determined subsequently between the successful Contractor, SPREP and TEC;
• Travel expenses for the country mission will be provided / reimbursed from SPREP based on an agreed-to itinerary;
• If a Quotation is received prior to the closing date corrections/modifications can be made up to that date;
• The Quotation must be submitted in electronic format only (Word or PDF-format) by e-mail to the e-mail addresses specified in Section 9 below.
• Receipt of offers will be acknowledged by e-mail;
• •  Successful as well as unsuccessful offerors will be informed by e-mail as soon as possible after the submission date. Unsuccessful offerors will not be debriefed; and
• For more information on PIGGAREP please visit the following homepage: http://www.sprep.org.ws/climate_change/pirep.htm

The duration of the mission will largely be determined by the flight schedules into and out of Funafuti, Tuvalu.

Evaluation Criteria:

Quotations will be evaluated according to the following criteria:

1. Price (20%)

2. Relevant Qualifications and Experience (30%)

3. Experience with Tuvalu’s and / or SIDS energy and socio-economic environments (20%)
4. Methodology / Work Plan (30%)

Qualification and Experience:

The person/company is expected to have all or most of the following qualifications and experience:

• Relevant human resource management, energy and engineering or other relevant qualifications;
• Years of experience with power utilities;
• Significant working experience with renewable energy and energy efficiency preferably in very small Pacific and/or other Small Island Developing States (SIDS);
• Excellent working knowledge of English; and

• Cross–cultural communication skills.

Contract - Format and Conditions:

The contract for the consultancy will be between the successful Contractor and SPREP.

Submission Date:

All quotations must be addressed to:

                      The Director

                      SPREP                                            Telephone: (685) 21 929

                      PO Box 240                                     Fax:   (685) 20 231

                      Apia, Samoa                                   E-mail: SPREP@sprep.org

Deadline for the submission of quotations is 31 May 2008, Samoa time.

Contact Information:

ANNEX I

TERMS OF REFERENCE

Study and Establishment of a Renewable Energy & Energy Efficiency Unit at the Tuvalu Electricity Corporation

Introduction

The PIGGAREP is a continuation of the close collaboration between SPREP, UNDP and the GEF to build the capacity of the PICs to deal with the challenges of Climate Change.

The global environment and development goal of PIGGAREP is the reduction of the growth rate of GHG emissions from fossil fuel use in the Pacific Island Countries (PICs) through the removal of the barriers to the widespread and cost effective use of feasible renewable energy (RE) technologies. The specific objective of the project is the promotion of the productive use of RE to reduce GHG emission by removing the major barriers to the widespread and cost-effective use of commercially viable RE technologies (RETs). PIGGAREP consists of various activities whose outputs will contribute to the removal of the major barriers to the widespread utilization of RE technologies (RETs). The project is expected to bring about in the PICs: (1) Increased number of successful commercial RE applications; (2) Expanded market for RET applications; (3) Enhanced institutional capacity to design, implement and monitor RE projects; (4) Availability and accessibility of financing to existing and new RE projects; (5) Strengthened legal and regulatory structures in the energy and environmental sectors; and, (6) Increased awareness and knowledge on RE and RETs among key stakeholders.

Tuvalu is one of the participating PICs in the PIGGAREP and one of the activities in its 2008 Work Plan and Budget is a TV5 - Study and Establishment of a RE & EE Unit at the Tuvalu Electricity Corporation.

Objective

The objective of the consultancy is to identify the best practical and cost effective way of establishing and operationalising a Renewable Energy and Energy Efficiency Unit at the TEC.

Outputs

The anticipated outputs from this study will be the following:

a) Inception note;

• Desk Study and review relevant background materials;
• Identity key stakeholders for the study; and

• Write-up an inception note comprising the Consultant’s understanding of the consultancy and associated tasks; identification of issues crucial to the successful completion of the consultancy; and comments on this TOR. Subsequently, if required and approved by TEC and SPREP the activities can be elaborated, modified, etc.

b) Debriefing note;

• Prepare debriefing note, based on the desk study, preliminary findings, conclusions and recommendations from the field mission to Tuvalu; and

• Discuss the debriefing note with the General Manager and staff of TEC, the Energy Planning Unit and, if appropriate, with the Board of Directors of the TEC.

c) Comprehensive Report.

• Discuss the current situation at TEC
• Prepare a comprehensive set of recommendations for the TEC to take and provide the financial, administrative and institutional implications of those recommendations.

Activities

The scope of work for the consultancy will include, but not necessarily be limited to, the following activities:

• Review the Electricity Act to ensure the establishment of a RE & EE Unit falls within the mandate of TEC and will strengthen TEC’s execution of its mandate; not to replicate activities with the Department of Energy,
• Review of the organizational structure of the TEC to ensure there is no duplication and there is a clear line of reporting for the RE & EE Unit;
• Review the TEC Corporate and Strategic Plans to identify how the RE & EE Unit can effectively contribute to TEC’s overall mission;
• Draw up the mandate for the new RE & EE Unit and the ToRs for its staff;
• Draw up a practical logframe for the objectives, strategies, outcomes, outputs and activities of the RE & EE Unit;
• Draw up a Monitoring and Evaluation Framework by which TEC Management can assess the effectiveness of RE & EE Unit;

• Assess the additional human, financial and other resources needed for the effective operation of the RE & EE Unit.DOLOGY

It is expected that in general the methodology that is to be applied will include the following tools as required:

• Documentation review/desk study.
• Mission to Tuvalu.
• Interviews and Consultations.

Reporting Requirements