Federated States of Micronesia: Energy Resources

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Roughly 55% of all households in FSM had electrification from some source in 2000.

Electricity is regulated at a state level; consequently, there are four electricity utilities, which generate and distribute electricity. The FSM uses the US voltage system, 120V/Hz. All three state utilities, except for Chuuk, have extended electrical power distribution lines to about 95% of their population on the primary islands. In Chuuk, the Chuuk Utility Power Corporation only provides power to the island of Weno.  The Yap utility is the only one that has diesel mini-grids on some of its outer islands; the other utilities operate only on the main islands. The other islands currently rely on private systems as their generators have broken down.

Energy procedure

Green Micronesia Initiative Launched in 2010, FSM is part to the “Green Micronesia Initiative.” This sub-regional initiative, spearheaded by the Chief Executives of the Micronesian governments, aims to increase energy efficiency (by 20%), increase energy conservation (by 20%), and expand renewable energy (to achieve 30% power generation from renewable technologies). The target date for achieving these targets is 2020.

North Pacific ACP Renewable Energy and Energy Efficiency Project (North-REP) The North Pacific ACP Renewable Energy and Energy Efficiency Project (North-REP) launched in 2010 aims to improve the overall efficiency of the energy sector through energy efficiency and grid-connected renewable energy in three island member countries of the Secretariat of the Pacific Community (SPC); Federated States of Micronesia (FSM), Palau and Republic of Marshall Islands (RMI). The EUR14.4 million project aims to improve the quality of life on the outer islands (RMI, FSM) and to reduce dependency on fossil fuels (RMI, FSM, Palau).

Energy debates

Some people advocate for the setting up of a nation-wide utility system. In such a system, all the state power utilities would come under one national umbrella body operating along the same set of regulations and regulatory regime.

Another topic of discussion is that oil companies are currently taking advantage of the absence of a regulating authority and as a result prices are pegged on what the oil companies proposed.

The FSM has been included in the UNDP Human Development Index (HDI) for the first time in 2011, ranked 116th and categorised as a medium human development country. The HDI report highlights that environmental degradation and climate change will have adverse effects across the Pacific Island nations.

Energy sources

The largest use of fuel in the FSM is diesel fuel for electric power generation. There is local demand for 1200 gallons of coconut oil per week. The coconut oil is mixed with diesel and used as a fuel for electricity generation and transportation.

Solar energy provides less than 1% of the total FSM energy requirements.  

Pohnpei has a hydro-electric plant, but technical problems prevent it from reaching its full 2.000 kW capacity.

Biomass is the primary energy source; and wood and coconut husk products are used for local cooking and in most outer islands communities. While Kerosene is used for lighting and cooking, its consumption at the national level has dropped mostly in rural areas and replaced by traditional wood and charcoal fuel sources, largely due to the increase in fuel costs and the decrease in rural household incomes.

Regulatory roles

NA

Competition

There is no competition in FSM as power generation is controlled by state owned corporations.

Energy efficiency

In general, the high cost of energy and the sluggish economy of FSM have resulted in electricity use patterns that minimise energy waste, but there are many areas for improvement in energy equipment efficiency, particularly lighting and refrigeration services for air-conditioning and food storage.

Electricity use can be divided into five main categories: residential use (39%), commercial and industrial use (22%), use by the government (17%), use for utilities (10%) and losses of the system (12%). The largest amount of electricity is used for air conditioning and lighting; and the government in particular use the bulk of its energy consumption for air conditioning.

A recently completed report has estimated that it is possible to reduce projected fossil fuel use only by 14%, with about 70% of the saving coming from renewable energy and 30% from energy efficiency measures in the FSM by the year 2011.

Capacity concerns

In FSM, there is a lack of safe, clean and affordable electricity in outer island communities. On the few islands where diesel generators exist, the high cost of fuel and the unreliability of supply are major problems leading to limited hours of service and frequent shutdowns.

In addition to the high cost of transportation there is a considerable environmental risk of oil spillage caused by the handling of fuel close to coral reefs. Education services are hampered due to the lack of electricity and health risks are exacerbated because of accidents with kerosene and lack of refrigeration for medicines. Economic development is stagnant due in part to restrictions on income generation outside daylight hours. The lack of electricity is considered a significant cause of migration from the outer islands.

Government agencies

The Sustainable Development Council (SDC) established in the mid-1990s and chaired by the vice-president with representatives from each state plus nine national government departments and agencies, meets monthly and deals with energy issues related to sustainable development.

A National Energy Workgroup (NEW) has been established and consists of members from the key Departments in the National Government, a State Representative coming out of each State Energy Workgroup, a Representative from the Association of Micronesian Utilities (AMU), a Representative from the College of Micronesia (COM-FSM) and the Government Energy Advisor(s). The main task of NEW is to oversee and coordinate the activities in the energy sector especially in relationship to the implementation of the national energy policy.  

Energy regulation role

Each state government is responsible for the legislation installing the utility.

Ownership

Electricity market Each island state has its own government owned incorporated electric utility authority, created by the respective legislatures, governed by a Board appointed by the Governor with the advice of the Legislatures. 

   Pohnpei Utilities Corporation (PUC), established in 1977.
   Kosrae Utility Authority (KUA), established in 1993.
   Chuuk Public Utility Corporation (CPUC), established in the 1990s; and
   Yap State Public Service Corporation (YSPSC) established in 1987

Oil and gas market Mobil Oil serves Pohnpei, Chuuk and Yap.  Kosrae is served by the Micronesian Petroleum Corp. (MPC), a wholly state-owned enterprise. 

There is a small LPG service on Pohnpei and Chuuk serving the fuel requirements for restaurant cooking and some home use.

Degree of independence

Each island state has its own electric utility authority, created by the respective legislatures, governed by a Board appointed by the Governor with the advice of the legislatures. The four electricity utilities regulate electricity in the respective state, with their own tariff structures and generation and distribution networks.

Energy debates

The report of the Pacific Power Association (PPA) for the United States Ministry of Interior covers energy in general including renewables.

The Pacific Islands Energy Policy and Strategic Action Planning (PIEPSAP) project provides good insight in the development of energy conservation strategies and energy policy.

Energy framework

In 1999, the Department of Economic Affairs (DoEA) prepared a draft National Energy Policy. The development of a new National Energy Policy started in July 2008; and the policy draft was prepared by the FSM Energy Division and Energy Advisor on the request of the Secretary of Resources and Development. In late July 2009, President sent each FSM State Governor a draft copy of the National Energy Policy for review. Following the review of the policy draft by the National Government and the four State Governors, the Energy Division of the Department of Resources and Development started a new round of consultations to the four FSM states and developed the final policy with the various actions plans to be endorsed by May 2010. The policy contains two Volumes: Volume I covers the overarching policy, while Volume II contains the energy action plans.  

The FSM National Energy Policy has a framework that builds upon the National Energy Objective to “promote the sustainable social and economic development of the FSM through the provision and utilization of cost-effective, safe, reliable and sustainable energy services.” It is also based on a National Vision Statement which is to “improve the life and livelihood of all FSM citizens with affordable, reliable and environmentally sound energy.” The policy is based on four primary components of policy and planning, conventional energy (fossil fuel), energy efficiency & conservation and renewable energy. The major goal of the policy is to become less dependent on imported sources of energy by having (1) an increased share of renewable energy sources and having (2) cross-sectoral energy conservation and (3) efficiency standards in place; and therefore by 2020 the share of renewable energy sources will be at least 30% of the total energy production, while energy efficiency will increase by 50%. In addition, the following broad goals relate to energy services in the FSM:

   Provision of affordable and safe electricity to all the households in the main island centers by 2015;
   Electrification of 80% of rural public facilities by 2015;
   Electrification of 90% of rural households by 2020; and
   Enhance the supply side energy efficiency of the FSM utilities by 2015.

  In 2009, the FSM also approved the Nationwide Climate Change Policy to mitigate climate change especially at the international level, and adaptation at the national, state and community levels to reduce the FSM’s vulnerability to climate change adverse impacts. In the policy, the FSM reaffirms its social and cultural identity and its people’s rights and desire to continue to live sustainably on their islands.  

The Strategic Development Plan 2004-2024 includes a number of references to energy.

   Decrease the import and use of imported petroleum fuels by 50% by 2020, through improved energy efficiency, energy conservation, elimination of energy subsidies, and public education
   10% of electricity in urban centres and 50% in rural areas will be generated using renewable energy sources (solar power, wind, and/or solar/wind hybrids) by 2020, through incentives and public education
   Upgrade local capacity to carry out operation and maintenance of all renewable energy hardware
   100% of new public and 50% of private buildings in the FSM will meet US standards for energy-efficiency by 2006.

The Asian Development Bank’s Country Operations Business Plan (COBP) 2011-2013 shifts its focus from governance and social development to infrastructure to support private sector-led economic growth and self reliance. Under the COBP 2011-2013, ADB will give special attention to infrastructure development, especially power sector development and transport (Pohnpei port extension), as well as associated sector-specific strategic priorities such as the National Energy Policy 2009 and the Infrastructure Development Plan FY2004-FY2023. Support to the energy sector aims to reduce heavy reliance on fossil fuels, through implementing projects in renewable energy in Yap and Pohnpei in the form of hydropower, solar energy and wind energy. Emphasis will be placed on the need for institutional and tariff reforms supported by full cost recovery at utility and state levels. Furthermore, the COBP 2012-2014 has separated the energy sector support into the Yap Renewable Energy Development Project and the Pohnpei Power Sector Development Project.

The FSM was one of the countries supported under the Support to the Energy Sector in Five ACP Pacific Island Countries (REP-5) programme, the 9th European Development Fund (9th EDF) multi-country initiatives, which funds renewable energy and energy efficiency projects in five Pacific Island Countries. The REP-5 programme aimed at reducing these countries’ dependence on imported fossil fuel as a means of achieving fiscal balance, as well as increasing the availability of electricity services to their outer island communities. The bulk of the REP-5 funding was allocated mainly to the installation of solar PV systems in all four states. In Yap, Chuuk and Pohnpei, the focus was rural electrification of outer islands, whereas on the single-island state of Kosrae, the PV systems installed there have been connected to the main utility grid.

Under the 10th EDF, the North Pacific ACP Renewable Energy and Energy Efficiency Project (North-REP) commenced activities in mid-October 2010, in order to improve the quality of life on the outer islands (for RMI and FSM) and reduce dependency on fossil fuels in the three countries.        The FSM is a member of the Alliance of Small Island States (AOSIS) to address global warming. It ratified the UN Framework Convention on Climate Change (UNFCC) on 18 November 1993, and the Kyoto Protocol on 21 June 1999.

Reliance

Besides a 10% mix of local coconut oil with diesel, FSM has to rely on imported fossil fuels. Fuel prices in the outer islands are sometimes double the price on the main islands, when fuel is available at all.

In 2009, the FSM imported USD3,292 of mineral fuels, oils, distillation products etc.; and the growth of imports in value is 41% p.a.. The nation hence expends approximately 40 million dollars annually on imported fuel. This amount represents more than 50% of the aggregate sectoral grants that the nation receives from the US Government under the Compact II Treaty, and nearly 20% of nominal GDP for the country.

Role of the government

The Department of Transport, Infrastructure and Communication is responsible for planning and implementing energy programmes at the state level.

The Department of Economic Affairs (DoEA) is the lead organisation for climate change, petroleum imports, and legislation pertaining to utilities.

Regulatory framework

There is no national utility and no national standards, utility laws or regulation. The utilities operate semi-autonomously but rely on state governments to cover deficits.

For the Yap State Public Service Corporation (YSPSC), there is provision to encourage the efficient use of electricity.

For the electricity utilities on the other islands, there are no such provisions as these utilities charge a flat-rate.

Regulatory barriers

The structure of state governments and national governments can be an obstacle to the implementation of, for example, an energy policy framework. Currently, energy matters are considered to be the business of the state based power utilities. ADB also analyses that a lack of coordination between state and national governments is hampering growth in the FSM, and limits the effectiveness of reform efforts etc. Further institutional strengthening is therefore required to ensure that effective planning capacity is developed at the national and state levels and that these plans are integrated across the FSM more effectively.

Energy regulator

There is no independent energy regulator, but the public authority is responsible for the provision of utilities.

Renewable energy

Biomass Coconut has a potential production of around 6.500 tonnes per year of copra. Waste to Energy is another development that is being carefully followed by the FSM government and plans are being made to start a (solid) waste composition study in 2010.

Biofuel A very interesting source of biofuel is coconut oil. The outer islands have a large and underutilized resource that could be further developed. Until recently, there was an active coconut factory on the main island of Pohnpei that produced biofuel from coconuts. The company could produce 150 gallons of coconut oil, more than 550 liters, in an eight-hour day, but was destroyed by fire. Biofuel from coconut oil remains a socially and economically viable source of renewable energy and efforts should be strongly pursued to once again integrate it into the overall energy mix.

Biogas There are some animal farms in the FSM that produce enough waste to generate biogas in an economically viable way. Some small pilot biogas installations are being installed in Pohnpei, with the assistance of the Chinese government in 2008; and there is also independent biogas producer on the main island of Pohnpei. While there are no facilities for sewer or landfill treatment to generate biogas, a feasibility study should be carried out to investigate the economic and environmental sustainability of an add-on facility to extract biogas.

Solar energy The level of solar energy is very good with an average of 5.5kWh/m2/day, which is sufficient input for cost-effective photovoltaic and solar water heating use. Solar energy provides a particularly good source of energy for outer islands that are further away from the state centers and often have low population sizes. Stand-alone systems can provide a solution for the energy needs in these places. In the state of Pohnpei, 400 SHS were installed on several islands in the early ‘90s. In addition, 300 SHS were installed in various outer islands in Yap and 402 households in Chuuk. More recently, under the European Development Fund (EDF-9 REP5 programme), a major PV electrification was implemented in the outer islands of Pohnpei, Chuuk, and Yap. PV off-grid systems were installed in 11 outer islands with a total capacity of 120.88 kWp; and five grid-connected PV systems were installed in Kosrae with a total capacity of 52.5 kWp.

Hydro energy The hydrological potential of the FSM (mainly in Pohnpei) has been found to be 6.9 MW. There are hydropower sites on some islands. Although the hydro sites on Kosrae have limited potential and were not considered to be cost effective for development, further study could show that Kosrae might have a potential of PICO Hydro installations that can act as stand-alone systems and power some houses located close to the rivers. Yap and Chuuk have no hydro sites. On Pohnpei, there is a hydro power installation on the Nanpil River. There have been surveys that indicate other developable sites in Pohnpei that were considered to be economically unviable previously; however there is a need to review these potentials by reflecting the current fossil fuel prices.

Wind energy The wind resource has not been properly assessed in the FSM. Experts believe that it is borderline regarding the economic feasibility of energy production from wind. Meteorological measurements and low latitude location indicate moderate resource availability. Furthermore, typhoons form a risk for wind power systems. Due to the mountainous nature of some of the islands, there may be locally beneficial conditions for wind energy.

Ocean energy There are moderate wave and large Ocean Thermal Energy Conversion resources but financial costs and technical limitations stop further developments. Available resources for tidal energy are present in the FSM. The tidal range is not very large, but through certain reef passages and some man-made causeway and bridge infrastructures, high speeds and high volumes of water flows are observed locally. The FSM energy sector is following the development in ocean and tidal technologies, and plans to have pre-studies done between 2010 and 2012.