Accelerating Renewable Energy Integration and Sustainable Energy (ARISE)
Maldives is a country highly dependent on fossil fuels for its electricity needs. Out of the major fuel imports, around 80% constitute of diesel of which more than 65% is used for production of electricity, with the rest going into the transport sector. Thus Maldives is highly vulnerable to fuel price shocks in the international oil market.
Mainstreaming of RE technologies and the increasing demand for RE globally had driven the markets resulting in rapid reduction of RE costs, especially over the last few years. Among this solar PV technology is now the most mature and the most commercially viable technology in the World, thus the most suitable in the context of Maldives.
Over the past ten years, solar PV installations in the Maldives have increased dramatically. However, in order to maintain the net economic and environmental benefit, renewable energy must be scaled up due to keep up with the rapid growth in electricity demand of the country.
Project Summary
Accelerating Renewable Energy Integration and Sustainable Energy (ARISE) project was launched to further accelerate the Maldives' energy transition, by leveraging private investments in Solar PV technology.
The project structure achieves this through addressing the renewable energy absorption limits of island mini-grids by means of investments in Battery Energy Storage Systems (BESS) and modernizing the grid infrastructure, thereby enabling potential scale-up of solar PV via the private sector investments over long term (typically 15-20 years)
The project initially undertook the necessary activities to develop a pipeline of Solar PV subprojects and ensured that proper sizing and technical specifications are developed for hybrid Solar PV–BESS operations in candidate islands. This was followed by the simultaneous tendering and implementation of infrastructure investment works in the selected islands, with the Solar PV component following a private-sector model and the BESS and grid components being delivered through EPC contracts.
With a total project value of US$ 107.4 million, ARISE Project adopts the Power Purchase Agreement (PPA) model framework, leveraging on the success of the Accelerating Sustainable Private investments in Renewable Energy (ASPIRE) project, offering a robust risk mitigation package including tariff buy-downs, payment securities, and guarantee mechanisms to private investments in Solar PV.
The project is expected to support private sector IPPs to install 36 MW of solar PV across Maldives, through a pipeline developed under the Project.
Project Components
- Component 1: Solar PV Risk Mitigation: Solar PV Risk Mitigation package to cater for private sector investments in solar PV of up to 36MW. This includes Tariff Buy Down, Payment Guarantees and Termination Risk Guarantees.
- Component 2: Battery Energy Storage Systems (BESS): Public sector investments in Battery Energy Storage Systems (BESS) and Energy Management Systems (EMS) needed to increase solar PV absorption capacity of island grids to facilitate the investments in Component 1.
- Component 3: Grid Modernization: Public sector investments to enable island grids to absorb and utilize Solar PV generation through the installation and upgrading of critical grid infrastructure, including cabling and optical fiber networks, substations, automation systems, and other related assets. These investments will optimize the integration of BESS and Solar PV systems into the grid. The component will also address accessibility and power quality constraints in selected islands through the development of new medium-voltage (MV) networks, rehabilitation of existing networks, and extension of networks to underserved areas.
- Component 4: Technical Assistance: A wide range of technical assistance to support Component 1,2,3 including (but not limited to) project pipeline development, techno-economic assessments, project management and implementation support, capacity building and addressing gender gaps.
Objectives
- The overarching goal of the project is to enhance the financial and environmental sustainability of the Maldivian power sector by reducing reliance on costly diesel-based electricity generation and advancing the country toward its national energy policy targets.
- This is expected to be achieved through increased renewable energy generation capacity, resulting in reduced greenhouse gas (GHG) emissions, lower annual diesel consumption, and reduced renewable energy costs through competitive procurement processes.
- The project will make a significant contribution toward the Government's target of meeting 33 per cent of the country's energy needs from renewable energy sources by 2028.
Expected Outcomes
- Increase in Renewable Generation: Increasing the generation capacity from renewable energy sources by deploying up to 36 MW of new solar PV installations across the Maldives.
- Financial Sustainability: Enhancing the financial sustainability of the Maldivian power sector by reducing reliance on costly diesel generation. The project, through the installation of 36MW, is expected to save 15 million liters in of diesel annually, valued at MVR 180 Million
- Environmental Sustainability: Advancing the nation toward its 2030 carbon neutrality and net-zero targets by significantly scaling up clean energy generation.
- Solar PV Risk Mitigation: Mobilization of $45 Million in private capital through provision of risk mitigation instruments.
- Energy Storage Integration: Deploying approximately 40 MWh of BESS to act as a spinning reserve, enabling high penetration of solar PV without grid disruption.
- Grid Modernization: Installation of 140 km of medium- and low-voltage (MV and LV) transmission and distribution lines, together with reinforcement of selected grid systems, including network capacity upgrades, deployment of SCADA systems, and establishment of substations.
- Promotion of RE Job Creation and Training: Facilitation of RE Job creating and training with focus on addressing gender gaps in the energy sector.