Review of RESCO-based Kiribati Stand-alone PV

Program

Presented by Terubentau Akuraat

APEC Village Power WorkshopCanterbury, New Zealand

7 - 10 Nov. 2004

Overview

• Origins• Problems• Company Restructuring• The first 310 SHS• The RESCO model• Paving the way• The current EU Project• The new challenges• Reorganising Solar Energy

Company, Ltd. (SEC)• Reasons for decentralisation• Steps towards decentralisation

• Paying island technicians according to their performance setting up Solar Support Groups

• Defining the role of village technicians

• Defining a reward policy for incentives

• Amending Company’s Articles of Association

• Statement of projected cash flow

• SEC website

• Pictures

Origins

The Solar Energy Company Limited (SEC) was originally formed as a private limited company in 1984 under the auspices of the Foundation for the Peoples of the South Pacific (FSP).

Following the withdrawal of FSP in 1987, the company was restructured into a Government-owned Liability Company with the majority share being held by the Ministry of Public Works and Utilities.

A new management team was selected to implement the new policies.

Problems with aproduct-oriented approach

– Only wealthy people have access to modern technology.

– Individual users tend to buy cheap products which do not normally last long in the harsh, salt laden, humid tropical environment of Kiribati.

– Solar home systems usually break down prematurely due to users exceeding the capacity of the system, poor installation, and lack of maintenance.

As a result of all the above, sales dwindled to a point where the running costs of SEC could no longer be sustained.

Company restructuring

In 1990, the company added the utility service to the sales activities of the company.

This vital transition was made possible with the assistance of the Fiji-based United Nation Pacific Energy Development Program (PEDP), and the South Pacific Institute for Renewable Energy (SPIRE) of French Polynesia.

The first 310 SHS

The Kiribati Rural Electrification Utility concept was successfully implemented in 1993, with the aid of technical and financial assistance received from the Japanese Government (56 SHS).

Further expansion was made possible with assistance from the European Union in 1994 (+254 SHS).

The RESCO model

• Initial costs of capital for the purchase of a large volume of PV systems are subsidized by Government. This is normally achieved through projects being funded by international donors.

• The Solar Energy Company retains the ownership of all the components of a solar home systems (SHS) except the lights.

• SEC monitors and maintains the SHS.• In exchange it charges the users a service fee which is

sufficient to pay for the operating and maintenance costs of the system and the replacement of future components.

Paving the way

History has shown the utility model to be one effective way of promoting solar electrification in a systematic and practical manner. This is why in 2004 the company was in in a much stronger position financially than in 1990. Why?

1. The utility service has helped to increase understanding and awareness of renewable energy in Kiribati and has thus paved the way to a direct sales expansion,

2. The increase in direct sales allowed the company to finance the initial deficit in the utility service until it reached the minimum required size.

The current EU projectThe success of previous projects paved the way for the implementation of a much larger scale project financed by the EU and currently implemented by SEC.

The project, worth about 4 million euros, was launched in August 2001 and is scheduled to be completed in March 2005. The project provides hardware and technical assistance support to enable SEC to properly manage the operation of a solar utility.

The SEC designed the Terms of Reference for TA and has the lead role in project implementation.

The new challenges

As a result of the current EU project being implemented:

1. The installed capacity has been increased seven-fold, from the existing 310 SHS to 2,100 SHS

2. The number of islands to be electrified has been increased six-fold, from 3 to 18.

3. One hundred maneabas (community meeting places) will be electrified. As a result, the fee will need to be collected not only from individuals but from communities as well

Reorganising SEC

The Kiribati Solar Energy Company has become a world model for successful solar based rural electrification.

This has attracted new donors and new investment.

However, the increase in size could jeopardize the company’s ability to manage its newly acquired capacity. If this happened, the company would choke on its own success.

Reorganising SEC: avoiding failure

To avoid failure, SEC has made four major changes in the last three years:

1.Computerising the accounting and implementing RESCO Manager, a tailored application for monitoring and managing the PV systems.

2.Organising all the company activities into 15 procedures

3.Restructuring and downsizing the headquarters4.Decentralising the decision making process from

the headquarters to villages and islands

Why decentralise the decision making process?

Decentralising the decision making process is the change most relevant to this workshop.

In the past, major decisions were centralised at the headquarters. With only 3 islands electrified, this was not a major issue.

With all 18 islands of the Gilbert atoll electrified, the previous structure would have overwhelmed the headquarters. This would have occurred regardless of the efficiency of the staff, the procedures, and the computerised applications being implemented.

Steps towards decentralisation

The five steps taken to achieve successful decentralisation are:

1.Paying island technicians according to their performance

2.Creating the position of “the village technician”3.Defining a reward/demerit policy for maneaba

electrification and system transference4.Modifying the company’s articles of association

Paying island technicians according to their performance

In the previous structure, island technicians were paid a fixed salary regardless of their performance. Within the new structure their revenues have been defined according to the following criteria:

• 8 % of the fee collected from the utility service• 16% of the fee collected from the private maintenance• $1.20 for each solar system successfully monitored &

maintained.• 3 % commission on direct sales

Setting up theSolar Support Groups

The SSG represents the users of the island.

Each island has a Solar Support Group, with one member from each village.

They inform the headquarters on the performance of the island technician and the user’s satisfaction.

In islands with high levels of arrears or problems in the monitoring and maintenance of the PV systems, the SSGs are prompted to take corrective action.

Defining the role ofthe village technician

In some villages, a village technician can be appointed. He or she is appointed by the island technician, in collaboration with the unimwane (elders) and the village members of the island Solar Support Group.

The selection of a village technician depends on:1. The total number of systems installed on the island2. The total number of systems in the village3. The existence of electrified maneabas (meeting places) in

the village4. The isolation of the village and distance from the service

center

Island technicians transfer the monitoring and maintenance of the village PV systems to the village technician. This allows the island technician to manage a larger amount of PV systems. At the same time, village technicians are the best source of future island technicians.

Defining a reward/demerit policyCommunities that prove to be self organised are rewarded with:

1. SHS being transferred from other villages 2. Their maneaba being electrified

This last point is very important as the maneaba fee needs to be raised by the whole community and not just by an individual or family.

A well organised community is a village that doesn't accumulate arrears and keeps the PV systems well monitored and maintained.

Modifying the company’sarticles of association

With this changes, some of the responsibilities from the Board of Directors will be transferred to a national body representing all the Island Solar Support Groups.

With these changes, users will feel more liable and responsible for the service provided.

At the same time the General Manager will visit all the islands and hold a meeting with the Solar Support Group once a year.

Cash flow projection

Statement of cash flow projection

-$ 1,000,000

-$ 500,000

$ 0

$ 500,000

$ 1,000,000

$ 1,500,000

$ 2,000,000

Net cash f low generated (year) $ 138,452 -$ 57,116 $ 150,796 $ 186,242 $ 225,727 $ 239,871 $ 241,445 $ 287,390 $ 143,205 -$ 471,042 -$ 191,817

Closing Balance $ 172,252 $ 115,136 $ 265,932 $ 452,174 $ 677,901 $ 917,772 $ 1,159,217 $ 1,446,607 $ 1,589,812 $ 1,118,770 $ 926,953

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

www.solar.net.ki

In December 2005 the SEC plans to release a web site with all the documentation, applications, manuals, procedures and experiences gathered during the implementation of the current project “Solar energy for outer islands”.

The web site will be a contribution of SEC to the promotion of renewable energy in the region.

Meeting Hall

PV module on pole

Children have benefited from rural electrification

Typical Rural Dwelling

Solagen PL Light (11W & 7W)

Visiting Outer Islands by boat

Thank you

Kam bati n rabwa