MALDIVES: PRESIDENT AND AMBASSADOR LAUNCH PILOT RENEWABLE

UNCLAS SECTION 01 OF 02 COLOMBO 000056 SIPDIS SENSITIVE SIPDIS STATE FOR SCA/INS AND OES COMMERCE FOR JONATHAN STONE TREASURY FOR LESLIE HULL E.O. 12958: N/A TAGS: ETRD EINV SENV PREL MV SUBJECT: MALDIVES: PRESIDENT AND AMBASSADOR LAUNCH PILOT RENEWABLE ENERGY PROJECT USING U.S. TECHNOLOGY REF: COLOMBO 0039 ¶1. (SBU) Summary: Ambassador joined Maldives President Gayoom January 7 for the commissioning of a pilot renewable energy project that uses turbines produced by U.S. company Southwest Windpower. The hybrid wind/solar/diesel micro-grid power systems replace the inefficient generators that most Maldivian islands use to produce to power. The $3 million pilot project has been running successfully on three islands for three months, demonstrating that renewable sources are feasible for energy production in Maldives. If the project continues successfully for another three months, Maldives authorities intend to invest $90 million to install similar systems on 90 more residential islands around the Maldives -- offering the potential for $60 million in U.S. exports. The system's developer and contractor, Daily Life Renewable Energy, of Singapore, recently incorporated in the United States in order to strengthen its partnership with Southwest Windpower. End summary. ¶2. (U) On January 7, Ambassador joined Maldives President Gayoom for the formal launch of a pilot renewable energy project on the far northern residential island of Uligam. The event marked the official commissioning of a unique hybrid wind/solar/diesel energy system developed by Singapore-U.S. company Daily Life Renewable Energy. The system produces 48kw of electricity, which is distributed through a small power grid to Uligam's 200 households and public buildings. Maldives State Trading Organization, the investor in the new system, hosted island residents, three ministers (Housing and Urban Development; Planning and National Development; and Environment, Energy, and Water) and other officials for the event, at which the president officially pressed the switch turning on the new system. UNIQUE SYSTEM IDEALLY SUITED TO MALDIVES ISLANDS -------------- --- ¶3. (U) Maldives' 195 residential islands currently all depend on diesel-powered generators to produce electricity for residential and public use. Most islands are home to a few hundred households and a handful of public buildings such as schools, health centers, mosques, and local government offices. Because the islands are widely dispersed, a national electricity grid is impossible. The typical island requires only about 50 kilowatts of electricity to meet its needs. Diesel generators are inefficient for this purpose, as they often run over or under capacity. They are also loud and dirty. With rising oil prices, diesel fuel costs are high. Finally, because the fuel must be delivered by ship to individual islands in drums, delays in deliveries can leave the islands without power. ¶4. (U) Maldives' islands, with often sunny, breezy weather, are well-suited to use wind and solar power, however. Additionally, the low-lying island nation has been a vocal proponent of efforts to prevent sea-level rise, which could eventually submerge the country. The State Trading Organization, acting on President Gayoom's calls for reduced carbon emissions worldwide, determined that renewable energy made both commercial and environmental sense for Maldives. It commissioned Daily Life Renewable Energy to design and install a three-island pilot project to test the viability of renewable energy systems. ¶5. (U) Daily Life is the Asia distributor of wind turbines manufactured by U.S. company Southwest Windpower. Daily Life, which had developed renewable energy systems for a number of small Pacific islands states, approached STO subsidiary Maldive Gas in 2006 to be a partner in developing a nationwide renewable energy project. The partnership has been boosted by Southwest Windpower's participation in the American Pavilion at the annual Maldives Hotel and Trade Exhibition (reftel). ¶6. (U) The Daily Life system combines 15-30 small wind turbines, an array of solar panels, a diesel or liquid propane gas generator, and storage batteries all controlled by a computer which regulates power to the island grid. The batteries enable excess power to be stored and used when wind or sun is low. The generator supplements the renewable sources when needed. According to Daily Life, the COLOMBO 00000056 002 OF 002 "AC-coupled Micro-Grid Hybrid Distributed Generation System" is the first of its kind in use worldwide. ¶7. (U) Daily Life installed the systems on the Maldives islands of Uligam, Raimandhoo, and Kondey during 2007. The three systems have been functioning since September 2007, with a total installed renewable energy capacity of 120kW -- meeting the entire residential power requirements of all three islands. Additionally, the systems provide about half the total energy requirements of non-residential users such as hospitals, schools, government offices, and telecommunications providers. The $2.85 million pilot project includes U.S. components worth about $1.7 million. The pilot project was financed by a loan from the New York branch of Societe Generale bank to the Bank of Maldives, which lent the funds to the State Trading Organization. EXPANSION TO 90 ISLANDS COULD GENERATE $60 MILLION IN US EXPORTS -------------- ¶8. (SBU) If the pilot project continues to operate successfully for an additional three months, the State Trading Organization and the Maldives Ministry of Environment, Energy, and Water intend to install similar systems on an additional 90 residential islands around Maldives. Societe Generale has offered financing for this nearly $90 million expansion, which would be guaranteed by the U.S. Export-Import Bank. ¶9. (U) Importantly, the systems are commercially viable. Initial projections from the pilot systems indicate that revenue will cover the cost of the systems in twelve years, making the systems economically viable using fifteen-year financing. The proposed financing for the main 90-island project would involve Societe Generale lending to Maldives Ministry of Finance and Treasury on a sovereign basis. The Ministry would then finance, possibly through the Bank of Maldives, the State Trading Organization as the implementing agency. COMMENT: U.S. TECHNOLOGY DELIVERS THE FUTURE OF CLEAN ENERGY -------------- ¶10. (SBU) President Gayoom speaks frequently about the risks Maldives faces from sea-level rise, saying for example, "My message is a simple one -- take global warming and climate change more seriously. Act now, before it becomes too late to save not only the low-lying islands but the entire planet." This renewable energy project in Maldives demonstrates the future of clean energy investment in the developing world, with U.S. technology providing the solutions. It also demonstrates the enormous export potential of U.S. environmental and clean energy technology. The potential $60 million worth of U.S. exports for the Maldives-wide project would amount to about four times the current $17 million annual U.S. exports to Maldives. The Ambassador, in his remarks at the Uligam launch event stated, "I am proud that American technology is helping the Maldives become a leading example of a country shifting to clean energy sources to reduce greenhouse gas emissions." BLAKE