PIDP Pacific Islands Development Program

RSi Resource Systems Institute

ENERGY MISSION REPORT PONAPE FEDERATED STATES

OF MICRONESIA

ENERGY PROGRAM

m East-West Center Honolulu, Hawaii

PACIFIC ENERGY PROGRAMME MISSION REPORT

PONAPE FEDERATED STATES OF MICRONESIA

1982

SOUTH PACIFIC BUREAU OF ECONOMIC CO-OPERATION

AUSTRALIAN NATIONAL UNIVERSITY

EAST-WEST CENTER

ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC

EUROPEAN ECONOMIC COMMUNITY

UNITED NATIONS DEVELOPMENT PRGRAMME

i i

Pacific Energy Programme Mission Report

PONAPE FEDERATED STATES OF MICRONESIA

Page

PREFACE i i i

EDITORIAL NOTE v

MAP v i

1 . SUMMARY AND RECOMMENDATIONS 1

2. COUNTRY BACKGROUND 6

3. PATTERNS OF ENERGY SUPPLY AND USE 7 3.1 Petroleum Fuels 7 3.2 Elec t r ic i ty 8 4. INDIGENOUS ENERGY RESOURCES: PROSPECTS FOR DEVELOPMENT . 11 4.1 Indigenous Resources 11 4.2 Medium and Large Power Systems 14 4.3 Small Power Systems 17 4.4 Industry and Commerce 18 4.5 Transportation 19 4.6 Households 20

5. PETROLEUM AND FOSSIL FUELS 22

6. ELECTRICITY 23 6.1 Insti tutional Arrangement 23 6.2 The Power System 23 6.3 Planning Issues 25 6.4 Management Issues 28 6.5 Elec t r ic i ty Pricing 29 6.6 Rural Elect r i f ica t ion 31

7. ENERGY CONSERVATION AND MANAGEMENT 32 7.1 Opportunities for Energy Savings 32 7.2 Government Measures 34

APPENDICES 35

i i i

PREFACE

This report i s one of the products of a cooperative programme in which a number of organisations have worked together i n helping Pacific countries to assess their situation and needs i n the development and management of energy resources, leading to the formulation of regional programmes for assistance to the countries i n this f i e l d .

With the South Pacific Bureau of Economic Co-operation (SPEC) acting as a general coordinator, the other bodies who generously contributed to the programme were the Australian National University (Centre for Resource and Environmental Studies), the East-West Center (EWC), the Economic and Social Commission for Asia and the Pacific (ESCAP), the European Economic Community (EEC), the United Nations Development Programme (UNDP), and the United Nations Development Advisory Team (UNDAT).

The mission to Ponape, Federated States of Micronesia, was led by Dr. Ken Newcombe, who also prepared the report, and was composed of one other member, Dr. Tony Weir of SPEC. Cindy Lowry of the EWC's Resource Systems Institute and Alison Pomroy of CRES, ANU, have made significant contributions to this report, as have the secretarial staff of ANU, CRES.

The Federated States of Micronesia was a late inclusion in the preparatory phase of the Pacific Energy Programme. Therefore, the mission was able to v i s i t only one member state, Ponape, and then for only two working days. Given this circumstance, i t was agreed with the Energy Administration of the Federated States of Micronesia that the mission's time and resources would be devoted entirely to the largest and most pressing problem, that of the Ponape power system. This single focus nevertheless has a broad context and wide implications for energy policy planning and programmes and, to that extent, i s an entry point to energy sector management both in Ponape and in other States of Micronesia. I t happens, too, that the issues raised and technologies examined i n seeking expansion of the power system on Ponape are mirrored i n other states and nations of the region; thus the report, although limited i n scope, should have s t i l l wider relevance. As an introduction

iv

to the region, sections two and three of this mission report are made up for the Federated States of Micronesia as a whole so that the wider significance of policy guidance directed at Ponape can be judged.

V

EDITORIAL NOTE

The attached report on the energy situation i n this country i s the result of a regional survey mission which vis i ted 11 Pacific nations during 1982. The findings of this mission were presented in draft form to representatives of participating governments at a meeting held i n Suva, F i j i i n September 1982. During the process of editing the reports, i t became obvious that a great deal of the information and analysis might be of general interest, but was not necessarily contained in every report. As a result, i t was decided that a single outline of topical subjects should be developed and that the individual country reports should be standardised and organised around this general structure.

The result of this reorganisation has been to resequence a few sections i n each report. In addition, where a country report omitted information about a particular subject, or where a subject had already been been merged with a related topic, the designation "N.A." may appear after a paragraph or section number (e.g. , 4.2.10 N.A. ) . The purpose of the "N.A. n

designation i s to alert the reader to the fact that there may be information of general interest on this subject available i n other country reports. A set of survey reports i s available i n your country from the planning authorities.

By the common agreement of the sponsors, the content of the country reports i s unchanged from the text agreed subsequent to the Suva meeting. No substantive changes have been made in the editing of these reports. Other than the numerical structuring of sections, the only changes have been revisions to wording and syntax designed to improve the readability of the reports.

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1. SUMMARY AND RECOMMENDATIONS

1 .1 fiiipinffpY

There are many options available to the government to reduce the cost of power generation on Ponape. These include the use of local ly available woodfuels and the more efficient use of imported diesel fuel . Demand for e lec t r ic i ty can also be displaced by the use of more economical local energy forms at the point of end-use. such as i n water heating and cooking where solar and woodfuels are more economical. E lec t r ic i ty i s wastefully used in Ponape. Quite simple and inexpensive changes i n energy management w i l l result i n substantial improvements i n the economy of power consumption.

The single most important barrier to these v i t a l reforms i n the local energy economy i s the a r t i f i c i a l l y low price of e l ec t r i c i ty . E lec t r ic i ty i s sold for l i t t l e more than one-eighth of the present cost of i t s production, i f indeed i t i s sold at a l l . A substantial increase in the se l l ing price of e lec t r ic i ty i s urgently required, leading to f u l l cost pricing within two years. Transferring the responsibility for power production to a private company under contract to the government i s a desirable means of improving the efficiency and economy of power production.

Final ly , the rationalisation of the power sector w i l l have many beneficial ramifications for economic production within Ponape ranging from large-scale industrial development for power generation from local sources to small-business act ivi ty in the production of charcoal, firewood stoves, and water heaters for the urban domestic market.

1.2 Main Recommendation and Conclusions

1.2.1 Indigenous energy resources; Prospects for development

o I t i s conceivable that hydropower can be produced from the Nanepll and Lehnmasi rivers for about the present cost of production using diesel generation. The detailed design and costing analyses prepared by the Corps of Engineers for the Nanepll i s warranted and should proceed quickly to enable the scheme to be considered together with other power supply options.

o Coconut palms s t i l l standing in plantations established early in the century represent two to four years of power supply in wood-fueled power plants.

o I t i s l ike ly that the sustained long-term fuelwood output from ecologically sound harvesting of mangrove forests exceeds that required to meet the present level of power production on Ponape.

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The production of fuelwood could be integrated with boardwood production for the local market.

o There i s excellent potential for the sustained use of native forest for fuelwood and timber production with fuelwood supplies adequately meeting the foreseeable demand for power production on Ponape.

o Having established a wood-fired steam power station on Ponape, imported coal could also be used, should power demands at a later time exceed the capacity of local fuelwood production.

1.2.2 Petroleum

o Slightly heavier diesel fuels can be used in the larger, slower running diesels at Nanpohnmal power station and in new large industrial diesels without significant change to the f u l l handling and storage f a c i l i t i e s and with some cost advantage over automotive d i s t i l l a t e .

o In the short term, "black o i l " w i l l either be more expensive than diesel o i l or insignificantly cheaper, and accompanied by measurably greater management responsibility for rel iable and cost effective supply. In the longer term, the use of "black o i l " may profitably be reconsidered. The mission therefore urges the government to buy 2 x 1 MW of industrial diesel capacity of the type designed to be adopted to "black o i l " i f desired.

1.2.3 E lec t r i c i ty

o The governent i s advised to review, as a matter of urgency, the present and future location and nature of demand as part of the development of a comprehensive distribution expansion plan. Demand on the distr ibution system must not be allowed to grow significantly unt i l this assessment i s completed.

o Comprehensive metering of sales i s the highest pr ior i ty action the state government can take. The insta l la t ion of meters for the collection of revenue and for monitoring the pattern and kind of demand i s fundamental to the control and orderly development of the power system.

Re-tender internationally for 2 x 1 MW heavy duty diesel engines designed for use of both diesel and "black o i l . "

Negotiate an option on a third 1 MW set at a fixed price i n 1982 dollars, plus agreed escalation, to be installed within 48 months i f the need arises and with the government operating the waiver. (This set i s the "insurance" against s t i l l more rapid load growth despite t a r i f f and government measures.)

Have this tendering, bid-selection, and commissioning done professionally by an independent group of consulting

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engineers of high renown, in consultation with the u t i l i t y and the State Task Force.

The Task Force should recommend to the legislature a series of parallel policies and programmes, including immediate rate reform, universal metering, and tight government control of power consumption to reduce or cancel growth in peak demand and to avoid collapse through overload in the distribution system.

o Hydropower i s unlikely to be better than marginally competitive with diesel generation, although i t w i l l offer economic benefits not available from an imported fuel power system. Should funds be available at low opportunity cost, the f u l l range of power development options for the Nanepll and Lehnmasi rivers could usefully be detailed in design and cost terms.

o A f u l l feas ib i l i ty study should proceed immediately on a 4 MW steam power plant for Ponape. This detailed study should also finalise and rank the biomass fuel sources available to the power plant.

o With diesel power, hydropower, and biomass-fueled power option defined, a comprehensive generation expansion plan should be commenced for the next 10 to 20 years. This should include the production of a paral lel financial plan to determine revenue requirements to fund the desired expansion plan.

o I t i s important to forward planning that the State debates and f ix on an agreed programme of t a r i f f increases and structural reform. The present price of e lec t r ic i ty i s so much below cost that differing and fluctuating approaches to rate reform w i l l greatly alter market condition for the promotion of the range of economical local energy resources and related conversion equipment.

o Private sector Involvement i n the production and management of power in Ponape i s strongly favoured by the mission.

o The present cost of production of power i n Ponape i s close to 24 US cents/kWh. I t i s desirable to immediately raise the price of e lec t r ic i ty to this level for a l l units sold. However, for both administrative and socio-pol i t ica l reasons, this i s not yet pract ical . The mission therefore proposes, as second best, the following steps:

Ins ta l l meters on a l l connections.

Move the marginal block to the level of the direct costs of production i n the f i r s t instance: 18 cents/kWh.

Reduce the size of the f i r s t block to 200 kWh and increase the rate to 7 cents (half the fuel cost) in the f i r s t instance.

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Mount a major public education programme with thoughtful and appealing advertising s t a t i n g the reason for price r i s e s , the future of even higher price r i s e s , and giving people adequate warning of disconnection for nonpayment.

Establish and publicise a programme whereby the f i r s t , or " l i f e - l i n e block", i s reduced to 50 kWh, and the cost i s the short-run marginal cost, that of the f u e l (currently 14 cents/kWh), and the l a s t block recovers a l l costs including the c a p i t a l charges agreed to be levied.

1.2.4 Energy conservation and management

o Air conditioning i n government o f f i c e s i n Ponape i s a source of needless and costly waste of e l e c t r i c i t y . The mission recommends two steps toward reform that could lead to as much as a 30 percent reduction i n government power use.

A committee of senior l e g i s l a t o r s and public service administrators should decide on the p r i o r i t y of use of a i r conditioning i n the government service with a view to greatly reducing the present l e v e l .

Once p r i o r i t y i s established, an i n t e r n a l design code should be drawn up by the architecture and energy div i s i o n s of government specifying suitable insulation, f u l l - g l a s s t i g h t - s e a l i ng windows, window and wall shading, and thermostatic control to a minimum temperature of 25°C. Offices to be without a i r conditioning would be opened up for v e n t i l a t i o n and have fans i n s t a l l e d . Those with a i r conditioning would be modified accordingly.

o Fluorescent lamps and bulbs and sodium vapour lamps offer considerable savings over incandescent globes and unnecessarily large f i x t u r e s of a l l kinds. The government i s encouraged to systematically i n s t a l l more e f f i c i e n t l i g h t i n g i n i t s own sector. The private sector w i l l not follow s u i t u n t i l t a r i f f s begin to r e f l e c t the cost of production.

o Refrigeration i s very l i k e l y the most energy-intensive application of power i n Ponape. Refrigeration equipment now i n use i s suboptimal and management practices are c l e a r l y d e f i c i e n t . The energy o f f i c e i s advised to accumulate and d i s t r i b u t e information on more e f f i c i e n t equipment and improved management procedures for r e f r i g e r a t i o n and freezing.

o Building codes for Ponape are i n need of reform toward a l e s s energy-intensive building environment for thermal comfort and general u t i l i t y .

o The government i s urged to r e t r o f i t solar c o l l e c t o r s to a l l - e l e c t r i c hot water syterns i n i t s own i n s t i t u t i o n s and to provide incentives for the private sector to follow s u i t .

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o Where solar water heating i s not p r a c t i c a l , solid-fueled water boilers are l i k e l y to be acceptable and may prove even cheaper. Hot water available as a by-product of cooking with slow-combustion stoves i s the cheapest of a l l alternatives.

o The government-owned and operated i n s t i t u t i o n s with kitchens should have t h e i r cooking system converted to slow-combustion s o l i d - f u e l stoves as soon as possible,

o Through the use of modern slow-combustion stoves, wood i s one-eighth, and charcoal one-quarter, of the cost of e l e c t r i c i t y i n Ponape as a cooking f u e l . The government i s urged to I n s t a l l wood stoves and water heaters i n a l l new government homes and to create design standards for kitchens using wood-fueled stoves. Where water cannot be heated with wood during the process of cooking on slow-combustion stoves, solar water heaters are s t i l l a favourable alternative to e l e c t r i c or gas water heating despite the low leve l s of sunshine i n Ponape. The government i s urged to r e t r o f i t a l l i t s own housing with solar c o l l e c t o r s i n t h i s circumstance.

1.2.5 Energy administration and Planning. N.A.

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2. COUNTRY BACKGROUND 2.1 Land. The Federated States of Micronesia (FSM) consists of the numerous a t o l l s and islands that form the Caroline Islands. The FSM extends over 2,000 km from Yap i n the west to Kosrae i n the east. Total land area i s 832 sq. km.: Ponape, 488 sq. km; Yap, 121 sq. km; Truk, 118 sq. km; and Kosrae, 105 sq. km.

2.2 People. The population of the FSM i n 1980 was estimated at 76,000. The d i s t r i b u t i o n of t h i s population i s : Truk, 38,650; Ponape, 23.140; Yap, 9,320; and Kosrae, 4,940. About 20 percent of the population l i v e s on outer islands, while the rest are generally within a day's journey of the state c a p i t a l s . The net population growth rate i s estimated at 2.3 percent per annum. There i s some emigration to the United States.

2.3 Government. Although the FSM i s s t i l l part of the UN Trust Territory of the P a c i f i c Islands under the administration of the United States, progress i s being made toward self-government. In July 19791 the four states

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established t h e i r respective con s t i t u t i o n a l governments, and i n 198O the FSM i n i t i a l e d a Compact of Free Association with the United States which would allow the FSM to r e t a i n complete sovereignty over i t s islands. The FSM government, seated i n Ponape, i s headed by a President elected by the National Congress. The government i s largely dependent upon U.S. appropriations for i t s operations. 2.4 Economy. The present state of FSM economy can f a i r l y be characterised as one of heavy dependence upon the United States. Among the l o c a l population, subsistence gardening and f i s h i n g are s t i l l the predominant economic a c t i v i t i e s . Copra i s the only export of consequence, and t o t a l export earnings (US$2 m i l l i o n i n 1978) are f a r below import costs (US$19 m i l l i o n i n 1978). Tourism provides a modest amount of income into the FSM economy.

2.5 Relevant Economic Conditions. N.A.

2.6 The Role of Energy jiflpQrt 5- S t a t i s t i c s on trends i n petroleum f u e l imports are rather sketchy. In 1978, mineral f u e l imports amounted to US$2.3 m i l l i o n , equal to 12 percent of t o t a l imports and more than the t o t a l export earnings. In f i s c a l year 1980, mineral f u e l imports were up to about US$7.7 m i l l i o n , nearly 20 precent of the t o t a l government operating budget and over double the t o t a l export earnings.

2.7 Development Plans. N.A.

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3. PATTERNS OF ENERGY SUPPLY AND USE

3-1 Petroleum Fuels

3.1-1 Overview, N.A.

3.1.2 Prices. Bulk prices (at Mobil plant, exclusive of taxes) per U.S. barrel as of February 1981 ranged from US$52 (Yap, Ponape) to US$54 (Kosrae) for gasoline, US$54 to US$55 (Kosrae) for diesel f u e l , and US$63 to US$64 (Kosrae) for kerosene.

3.1.3 Trends i n demand. A l l petroleum fuels are presently supplied to the FSM by Mobil O i l . Total sales i n 1981 were 38,220 k i l o l i t r e s , close to 500 l i t r e s per person. Demand was apparently up i n 1981 after having declined i n 1980 (see Table 3.1). The average growth rate from 1973 through 1981 was 2.7 percent per year. Most of t h i s growth was due to increasing use of diesel f u e l . Sales of both gasoline and kerosene i n 1981 were below 1973 sales i n absolute terms and well below 1973 i n per capita terms.

Table 3.1 FSM Demand for Petroleum Fuels

1973 1974 1975 1976 1977 1978 1979 1980 1981

( k i l o l i t r e s ) Gasoline 8299 7528 7944 8402 8686 8576 8238 7643 7719 Diesel 14892 14668 17739 17743 19442 20600 21820 21633 24425 Kerosene 1279 1139 1172 1335 1332 1400 1424 1281 1144 Jet f u e l 6441 6305 6506 6350 5461 5041 5468 5111 4885 Avgas 49 27 67 69 130 163 192 206 227 TOTAL 30961 29668 33428 33910 35050 35780 37144 35875 38220

Note: Data are annual sales as reported by Mobil.

3.1.4 Patterns of use. Product demand i n the FSM i s heavily weighted toward diesel f u e l , which accounted for 63 percent of t o t a l 1981 sales. Approximately one-half of the diesel fuel consumption i s i n e l e c t r i c i t y generation, which accounts for about 30 percent of t o t a l FSM energy use (see Table 3*2). Ground transportation accounts for about 20 percent of t o t a l energy use.

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Table 3-2 Use of Petroleum Fuel i n the FSM, 1979/80

Household uses Transportation

E l e c t r i c i t y generation Other Total

(terajoules) Gasoline — 259 a — 259 Diesel fuel — 78 382 349° 809 Kerosene 45 — — 45 Jet f u e l — 192 — 192 Avgas — 6 — 6 TOTAL 45 535 392 349 1311

a A small amount of gasoline i s used i n small engines. b Mainly construction.

Source: Based on data i n DOE T e r r i t o r i a l Energy Assessment.

3-1-5 Transportation sector. N.A.

3-1.6 E l e c t r i c i t y sector. N.A.

3-1-7 Household sector. N.A.

3-1.8 Heat and steam raising- N.A.

3-2 E l e c t r i c i t y

3-2.1 Supply. E l e c t r i c i t y i s supplied i n the capitals of a l l four states and on some outer islands, although the extent and quality of supply varies. A l l generation i s by diesel f u e l i n generating stations ranging i n siz e from 1.4 MW (in s t a l l e d ) i n Kosrae to 5.4 MW i n Ponape. Of the t o t a l rated capacity of 18.2 MW, an average of only 12.6 MW was operating i n 1980. Approximately 20 percent of the t o t a l FSM population i s provided with e l e c t r i c a l services. Some s t a t i s t i c s for 1980 are shown i n Table 3.3.

I

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Table 3.3 FSM E l e c t r i c Power S t a t i s t i c s

Yap Truk Ponape Kosrae Total

I n s t a l l e d capacity (MW)a 3.1 4.8 5.4 1.4 14.7 Peak demand (MW) 1.4 2.0 2.3 0.3 6.0 Generation (GWh) 7.6 11.3 14.8 2.3 36.0 No. of consumersb 400 450 800 175 1825

a Actual operating capacity as percentage of t o t a l rated capacity i s as follows: Yap, 85$; Truk, 84$; Ponape, 46$; Kosrae, 37$.

b Metered consumers; not a l l consumers have meters.

3.2.2 Households connected to the g r i d . N.A.

3.2.3 T a r i f f s . E l e c t r i c i t y prices are far below even the operating cost of generation. As of I960, t a r i f f s were as follows:

1st 1000 kWh/mo

1001-2000 kWh/mo

Over 2000 kWh/mo

(cents/kWh) Yap 11 11 11 Truk

govt. free 6 9 commercial 10 10 10 r e s i d e n t i a l 6 9 9

Ponape 3 8 8 Kosrae 5 5 5

A substantial proportion of the amount b i l l e d , ranging from about one-third i n Truk to 70 percent i n Kosrae to 80 percent i n Ponape, i s not collected. In Ponape, the government, the major consumer, i s not metered and does not pay di r e c t l y for power consumed.

3.2.4 Trends i n e l e c t r i c i t y demand. N.A.

3.2.5 Patterns of use. Government departments accounted for 57 percent of t o t a l 1,980 e l e c t r i c i t y consumption of 36.3 m i l l i o n kWh. This share ranged from 49 percent i n Yap to 64 percent i n Ponape.

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3.2.6 Rural and urban use. N.A. 3.2.7 Largest consumers. N.A.

3-2.8 Peak demand. N.A.

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4. INDIGENOUS ENERGY RESOURCES: PROSPECTS FOR DEVELOPMENT

4.1 Indigenous Resources 4.1.1 Overview. Ponape i s a mountainous, heavily forested, and wet island state. Although the density of standing biomass has not been assessed, there i s reason to believe that i t i s high by regional standards and that good y i e l d s can be expected from short-rotation fuelwood plantations. R a i n f a l l i s very high, over 200 inches p.a., which provides, on the one hand, for s i g n i f i c a n t hydropower potential and, on the other, for heavy nutrient run-off, supporting about 5,500 ha of mangrove forest s k i r t i n g the Island. Thus biomass and hydropower are the two major power sources that present to Ponape a potentially economic alternative to imported d i e s e l .

4.1.2 Biomass resources. During the course of fieldwork, the mission reviewed the a v a i l a b i l i t y of biomass for fuelwood production and held talks with the forest o f f i c e about the potential for short-rotation fuelwood plantations i n the wake of selected c l e a r - f e l l i n g . Three resources are i d e n t i f i e d : senile coconuts, mangrove swamps, and native forest cleared for intensive fuelwood and timber production. In the Metalanim area of Ponape, some 800 ha of coconut plantation were established early In the century. Elsewhere In Ponape, there i s said to be a further 200 ha of dispersed plots. The coconut plantations have since been subdivided into smallholder plots and i t i s not known how many trees have already been cleared. From the a i r , i t i s obvious that a substantial part of the plantation at Metalanim s t i l l e x i s t s . These senile coconut trees constitute a f u e l resource and could be harvested for delivery to a wood steam power plantation established i n the Pats-Metalanim d i s t r i c t , with a haulage distance of no more than 5 kms. In Appendix 4.1.2(a), we have derived the useful power production at a range of a v a i l a b i l i t y of the coconut resource. Between 50 and 100 percent a v a i l a b i l i t y , the net power i s 22 to 44 GWh.

Mangrove i s a superior fuelwood used either i n direct combustion systems or for the production of charcoal to be used domestically. In areas of high nutrient run-off, and with no s i g n i f i c a n t t r a d i t i o n a l use of mangrove forests for f u e l or timber, planned use of the resource can r e s u l t i n an ecologically sound sustained harvest. The Ponape mangrove forest has been assessed as covering about 55 km2 with about 740,000 mi11able trees. The standing volume of merchantable timber i s 19 to 20 m3/ha and the rotation to

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f u l l recovery i s believed conservatively to be about 30 years. There i s , however, no doubt that the volumes available for managed harvesting for fuel on a c l e a r - f e l l basis are vastly greater than t h i s . Applying a rule of thumb of 100 m3/ha for t o t a l biomass and a mean annual increment of 15 m3/ha/yr, there are more than 400,000 oven dry tonnes (ODte) standing and 66,000 ODte available annually. I f i t i s assumed that t h i s mangrove timber i s fed to a boiler as received at 45 percent m.c.w.b., the annual net e l e c t r i c i t y production would be 38.7 GWh. The most conservative assessment of the resource i s simply to take the waste from a proposed sawmill cutting one m i l l i o n board feet. This waste equals about 2,300 m3/year. Recovery as sawn timber w i l l be 40 percent, leaving 60 percent waste for power production: the equivalent of 0.65 GWhr p.a. Clearly, these estimates are the extremes, and i n between l i e s a manageable sustained y i e l d which needs further detailed study. I t i s obvious, though, that 10 to 20 GWh p.a. sustained production from mangrove i s not inconceivable and that t h i s i s very s i g n i f i c a n t i n r e l a t i o n to present national power production.

The minimum standing biomass available from a c l e a r - f e l l of Ponape forests would be 200 m3/ha, and a sustained annual y i e l d of 30 m3/ha from fuelwood plantations established i n the wake of c l e a r - f e l l i n g i s again not an unreasonable expectation where moisture and nutrients are not l i m i t i n g . The present power demands of 15 GWh p.a. could be met with 1,245 ha of hardwood f u e l plantations i n these circumstances. In a combined fuelwood and timber forest, where selected trees are allowed to grow to sawlog s i z e , and also to cater for growth i n demand, an area of about 2,000 ha should be surveyed for plantation development i n the region of the proposed steam power station. In the process of establishing the fuelwood plantation over the area c i t e d above of 1,245 ha, about 100 GWh i s available from the present standing biomass, or seven years of 1981 power demand, f a c i l i t a t i n g a f i v e - to seven-year rotation on a fast-growing fuelwood species. The mission believes that excellent potential exists for integrated fuelwood and timber development using the native forest resource and that t h i s option should be refined immediately.

In conclusion to t h i s review of biomass f u e l potential for power production, i t i s obvious that a substantial and a t t r a c t i v e resource e x i s t s . In Appendix 4.1.2(b), the costs of production of power from a 4 MW steam power plant ( 2 x 2 MW) are estimated at 14 cents/kWh, using a delivered cost for fuelwood of US$25 per green tonne. The l a t t e r price i s equivalent to about

13

US$32/m3 and should be readily attained In a planned fuelwood operation, and for harvesting of mangrove and coconut woodlands. This cost i s about break-even with the present cost of production for d i e s e l , but derives from a l o c a l l y produced f u e l with a long-term stable price; hence the option Is economically a t t r a c t i v e . The mission notes the intention of the U.S. Department of Energy (DOE) to f i e l d a biomass resource inventory team for Ponape during l a t e 1982 or early 1983. This w i l l provide valuable background data for a biomass f u e l production system, provided the team i s w e l l briefed. In the interim, given the urgency of the present power s i t u a t i o n , should the DOE group be unable to respond, we have arranged for a s p e c i a l i s t on fuelwood plantations, through SPEC, to examine the resource and to report on the design and costs of production of a short-rotation fuelwood plantation to feed a steam power plant i n the Metalanim-Pats region,

4.1.3 Coconut energy resources. N.A.

4.1.4 Other combustible residues. N.A.

4.1.5 Charcoal production. N.A.

4.1.6 Hydropower. There are two major hydropower resources on Ponape: the Nanepll River about 2.5 miles south of KoIonia and the Lehnmasi River i n southwestern Ponape. At least four preliminary f e a s i b i l i t y studies have been conducted on producing hydropower from various run-of-river and storage regulation conceptual designs. On the Nanepll, the schemes proposed have ranged from a 300 kW to 750 kW run-of-river, costing $800,000 to $1,000,000 (1977 dollars) and producing 1.6 to 2.5 GWh, to a dam providing i n s t a l l e d capacity of 600 to 850 kW, costing US$2.1 to US$12.2 m i l l i o n and y i e l d i n g 3-5 to 4,5 GWh. This v a r i a t i o n i s somewhat incredulous. Having reviewed the reports made available, the mission concludes that the Japanese Consulting I n s t i t u t e (JCI) report of November 1981 engenders the greatest technical and economic c r e d i b i l i t y . JCI propose a run-of-river scheme of 615 kW producing 2.6 GWh at a cost of $3.3 m i l l i o n ; about $5,400 per kW i n s t a l l e d . Allowance for contingencies and finance during construction brings t h i s cost to $4 m i l l i o n i n 1981 d o l l a r s . This cost i s analysed i n Appendix 4.1.6 where a breakdown s e l l i n g price of 22 cents/kWh i s estimated. The Lehnmasi River has also been subjected to various preliminary reviews y i e l d i n g an array of schemes, costs, and power production. Combinations of diversion weirs,

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head-ponds, and simple run-of-river schemes y i e l d 5*5 to 8 GWh p.a. at a cost of US$6.6 m i l l i o n plus. We have analysed the Engineering and Power Development Consultants Ltd. proposal of 1980 at a cost of US$9.3 m i l l i o n , arrived at by adjusting to 1982 d o l l a r s , using 10 percent for the cost of finance and US$500,000 for connection with the load. A break-even s e l l i n g price of 23 cents/kWh i s estimated i n Appendix 4.1.6.

4.1.7 Geothermal. N.A.

4.1.8 Wind energy. N.A.

4.1.9 Solar energy. N.A.

4.1.10 OTEC and wave energy. N.A.

4.2 Medium and Large Power Systems

4.2.1 Overview. Here we discuss alternative f o s s i l f uel power systems. The alternatives faced are for heavier grades of l i q u i d fuels such as No. 2, blends of 2 to 4, No. 4, No. 5 or No. 6, and coal. The l a t t e r can be disregarded i n the short term since the cost of delivery would exceed US$60/te i n such small parcels (18-20,000 te/year), rendering i t no cheaper than wood. However, once a fuelwood power station was established, coal could be supplied to supplement l o c a l fuelwood production. This would lead to a combined coal and wood-chip f u e l source with long-term f u e l costs lower than l i q u i d petroleum fuels. Thus coal should be included i n the 10- and 20-year power system development plans but need not be considered i n d e t a i l here.

4.2.2 HvdroDower. N.A.

4.2.3 Combustible resources. N.A.

4.2.4 Ga s i f i e r s . N.A.

4.2.5 £t^fim power svstems. N.A.

4.2.6 Coconut o i l i n d i e s e l engines. N.A.

4.2.7 Wind energy. N.A.

4.2.8 Geothermal. N.A.

4.2.9 Biogas. N.A.

4.2.10 Alternative Detroleum fuels. PonaDe currently uses l i g h t d i s t i l l a t e or No. 1 for power generation. With the same fue l storage and d i s t r i b u t i o n

15

system, i t i s possible to use No. 2 or a blend of a No. 2 and No. 4, although the l i m i t i n g factor i s the design of e x i s t i n g d i e s e l engines. The prices applying to these fuels w i l l vary depending on the port of o r i g i n and supplier, but a 0.5 to 1.0 c e n t / l i t r e reduction i s possible since no new storage i s required ( i . e . , one of the l i g h t d i e s e l tanks can be dedicated to the heavier f u e l ) . This option i s the simplest to adopt and ensures immediate savings of about US$30,000 p.a. with no c a p i t a l outlay. The mission urges the government to make preliminary "budget" enquiries as to the a v a i l a b i l i t y and cost of the heaviest diesel f u e l manageable i n th e i r e x i s t i n g equipment. (Appendix 4.2.10 contains the specifications of the range of diesel fuels as a guide to the government.)

I t i s inter e s t i n g that both the Federated States of Micronesia and other dependencies of the U.S. i n Micronesia have been subjected to heavy marketing pressures to convert to new and extremely expensive packages of equipment, finance, and management for a diesel engine-generator power system fueled e n t i r e l y with fuel o i l (No. 5 and No. 6) or, as i t i s known l o c a l l y , "black o i l . " The Marshall Islands have been sold a 12 MW "black o i l " system, along with a huge tank farm to hold 150,000 BBL of product at a cost of US$6 m i l l i o n . The s u p e r f i c i a l attractiveness of t h i s system i s the fu e l cost. "Black o i l " i s currently sold to the Northern Marianas for 22.2 c e n t s / l i t r e or $236/metric tonne ( t e ) , (0.55 cents/MJ), compared with 33.3 c e n t s / l i t r e for diesel (0.86 cents/MJ); a one-third reduction i n the cost of f u e l . However, the "black o i l " option i s a great deal more complex to establish and operate than a l i g h t d i e s e l system of the same size even though, for some manufacturers, the prime movers are the same. I t i s these differences that concern the mission, since i t i s important to know the extent to which the favourable margin established through a lower fuel cost i s eroded by higher c a p i t a l and operating charges applying to the supply, storage, and handling of the f u e l at the port and power house, as well as to the operation of the generation system i t s e l f . .

I t i s worth describing i n some d e t a i l the requirements that are additional to a diesel engine-generator set for a "black o i l " d i e s e l engine generation system. F i r s t , "black o i l " i s highly viscous and i s not th i n enough to pump u n t i l i t i s about 85°F or to feed into f u e l l i n e s of a diesel engine u n t i l 2700F. (Note: These temperatures apply to a fu e l with a v i s c o s i t y of 3f500 SRI at 100°F.) This means that both the day storage and pipelines and

16

the intermediate tanks and f u e l feed l i n e s must be heated, usually with either e l e c t r i c a l resistance or steam.

Second, "black o i l " i s highly variable i n terms of water, ash, and g r i t . Part of the reason for i t s lower cost i s that i t i s r e l a t i v e l y unrefined, hence more variable In i t s constitutency, as w e l l as d i r t content. A complex cleaning operation i s essential to the r e l i a b l e operation of a "black o i l " system. Fuel has f i r s t to be heated i n the power station holding tanks and then processed through centrifuges and sludge removers (see Appendix 4.2.10(a) for a detailed process description). Then the g r i t and sludge must be pumped into disposal tanks and trucked or pumped to a disposal s i t e . This process can be f u l l y automated but only at a premium i n cost. The f u e l cleaning system must also be duplicated to ensure continuous operation since i t i s just as much on the c r i t i c a l path for sustained operation as the prime mover i t s e l f . I f , however, a l i g h t f u e l system i s incorporated as a back-up to a heavy fuel system, extensive duplication of the cleaning system may not be required. In t h i s s i t u a t i o n , only those items—where recurrent repairs are needed and long delays are incurred—need to be duplicated. Larger operations of 10 MW plus with f u l l y baseloaded sets, and consequently high energy production, can readily afford the cost of expensive f u e l handling and treatment due to the economy of scale, but there i s less advantage i n owning and operating smaller "black o i l " d i e s e l systems.

The t h i r d important requirement, by implication from the f i r s t , i s the need for quite separate and duplicated f u e l storage and handling f a c i l i t i e s . There are no f u e l o i l receiving and storage f a c i l i t i e s i n the port of Kolonia, thus f u e l o i l storage f a c i l i t i e s would have to be b u i l t at the new power station. However, shipment from bulk port storage to power station would have to be by truck, just as with the present diesel f u e l . At present, i n order to reduce costs for transportation of d i e s e l , a f u e l l i n e i s being i n s t a l l e d between the bulk storage and the power station. A "black o i l " l i n e would very l i k e l y have to be heated e l e c t r i c a l l y for the whole distance (2.5 to 3 km) to obtain the same f a c i l i t y ; and of course the e x i s t i n g l i n e would have to be duplicated. Where ambient temperatures maintain a f u e l l i n e temperature of 85°F, fu e l l i n e heating i s not required. Ponape experiences cloud cover 80 percent of the year and the requisite temperatures needed for heavy f u e l cannot be guaranteed, thus l i n e heating would be necessary. This i s not deemed p r a c t i c a l . The additional f u e l handling and cleaning equipment adds both to

17

the extent and complexity of maintenance requiring additional and more broadly s k i l l e d operators. The accumulated costs of these additional requirements detract from the i n i t i a l and high f u e l saving.

We have examined and compared the costs of production of the "black o i l 1 * and standard diesel systems i n Appendix 4.2.10(c). We have used i n t h i s comparison an i n s t a l l e d capacity of 2 MW or s u f f i c i e n t to provide a firm capacity of'5.4 MW (allowing for one set unavailable and one under maintenance) u n t i l the retirement i n 1986/87 of the three 500 kW C a t e r p i l l a r sets. By t h i s time, one hydropower station and a new wood steam plant could be on-line, and the new diesel sets can be used as standby and peaking capacity.

The cost of production for a "black o i l " system i s a minimum of 8*75 cents/kWh, with a more l i k e l y cost of 10.30 cents/kWh, compared with 9.82 cents/kWh from a new diesel system [see Appendix 4.2.10(c)]. The higher fuel o i l cost i s based on the delivery of f u e l o i l i n small chartered tankers. I t i s unusual to have a larger tanker designed for white products (motor s p i r i t , d i e s e l , kerosene) with a segregated "black o i l " holding f a c i l i t y . S i m i l a r l y , building a small fuel o i l storage f a c i l i t y i s essential due to the small demand for power; however, the cost per unit storage i s higher. The penalty i s unavoidable.

F i n a l l y , there i s no doubt about the higher cost of maintenance of a f u e l o i l system. The costs we have applied may even be too low. The complexity and attention that must be applied to f u e l handling and cleaning i s a major burden for a small i n s t a l l a t i o n , although greatly reduced i n power stations of around 20 MW or above.

In summary, the mission finds that "black o i l " w i l l , i n the short term, either be more expensive than diesel o i l or i n s i g n i f i c a n t l y cheaper and accompanied by measurably greater management r e s p o n s i b i l i t y for r e l i a b l e and cost-effective supply. In the longer term, with much bigger power demands, or greater d i f f e r e n t i a l i n the price of "black o i l " and diesel delivered to Kolonia, the "black o i l " option may profitably be reconsidered. The mission therefore urges the government to buy 2 x 1 MW of i n d u s t r i a l d i esel capacity of the type designed to be adopted for "black o i l " i f desired.

4.3 Small Power Systems. N.A.

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4 ,4 Industry and Commerce

4.4.1 Overview- When compared with the true cost of e l e c t r i c i t y , Ponape has a number of s i g n i f i c a n t l y cheaper forms of energy for p a r t i c u l a r end-uses. Nevertheless, i n o u t l i n i n g these opportunities here, we must stress that no private sector i n i t i a t i v e can be expected i f , or u n t i l , the price of e l e c t r i c i t y r e f l e c t s the true cost of production. U n t i l that time, the gross d i s t o r t i o n of e l e c t r i c i t y prices against costs w i l l lead to s t i l l further dependency on e l e c t r i c i t y , and the Imported fuels from which i t i s made. This w i l l be at great cost to the l o c a l economy both as do l l a r s of foreign exchange and as opportunities foregone for l o c a l entrepreneurial a c t i v i t y i n the commercialisation of l o c a l l y available energy forms, solar and fuelwood i n par t i c u l a r . Here we w i l l discuss cooking and water heating i n the commercial and i n d u s t r i a l sector.

4.4.2 Gasifiers/hot-air generators. N.A.

4.4.3 Food industries. N.A.

4.4.4 Solar water heating- In Ponape, the prospect of heating water ent i r e l y from the sun i s not too great due to the frequency of cloudy and overcast conditions. Even so, a s i g n i f i c a n t contribution can be made by solar energy from diffuse sky radiation. Against e l e c t r i c i t y at 23.5 cents/kWh, solar hot water systems w i l l have a payback of the order of three to four years. In Ponape, solar systems would have to be backed up by none-shot n

e l e c t r i c boosters (say, 1.5 to 2.0 kW per 300 l i t r e storage capacity) whereby e l e c t r i c i t y would be used to raise the temperature to the desired l e v e l , employing a manually operated override which would be disengaged as soon as the desired temperature was reached. This method of boosting reduces the coincidence of e l e c t r i c i t y demand for solar heating with peak demand on the power system and hence i t delays the need for investment i n additional capacity. Since i t i s l i k e l y that i n the short term t a r i f f s alone w i l l not j u s t i f y a conversion to solar systems i n hotels, restaurants, and other commercial enterprises, the mission recommends the use of strong incentives for solar i n s t a l l a t i o n s combined with at least some meaningful upward movement i n e l e c t r i c i t y prices.

In addition, the government i s urged to r e t r o f i t a l l large e l e c t r i c water heating systems i n i t s own i n s t i t u t i o n s with solar systems. Where solar

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water heating i s not possible or p r a c t i c a l , solid-fueled water boilers from household kitchen sizes to large i n d u s t r i a l sytsems are available very cheaply, A wood- or charcoal-fired water heater with 95 litre/hour capacity to 70OC costs US$290 f.o.b. Sydney* The use of e l e c t r i c i t y to heat water at t h i s rate for 12 hrs/day requires 66 kWh or $15*50 at f u l l cost, compared with 80 to 120 kg wood costing $2-3 or a payback of less than two months on the i n s t a l l e d cost of the wood-fired system. However, i t i s p r a c t i c a l to consider water heating combined with cooking i n slow-combustion stoves, as w i l l be discussed below. Produced i n that way, hot water i s available at a tr u l y i n s i g n i f i c a n t cost as a by-product of cooking since the heat used i s i n the exhaust flue gases and would otherwise be wasted.

4.4.5 Wood, and charcoal stoves. At the f u l l cost of e l e c t r i c i t y , the i n s t a l l a t i o n of i n d u s t r i a l - s i z e modern slow-combustion stoves for cooking and water heating has a payback of less than one year. The Ponape climate i s a l i t t l e more favourable than most i n the P a c i f i c to cooking with slow-combustion solid-fueled stoves i n any case. With appropriate modifications to the kitchen to ensure suitable v e n t i l a t i o n and the operation of a "heat-chimney," no discomfort would be real i s e d . (For example, Western Samoa's most modern hotel , the Tusitala, has converted to slow-combustion stoves.)

Either dry wood or charcoal can be used as fuel s for modern slow-combustion stoves. To i l l u s t r a t e : an Australian stove designed to use coal or charcoal, which caters for 100 people a meal with bulk cooking or 50 ind i v i d u a l l y and provides a l l hot water for the kitchen, costs US$2,900 f.o.b. Melbourne. The mission recommends that a l l state-owned and operated I n s t i t u t i o n s , such as hostels, prisons, and hospitals be converted to solid-fueled stoves and water systems as soon as possible. The conversion of these kitchens can provide an i n i t i a l and firm market for mangrove tree charcoal which i s the premium s o l i d f u e l of the Southeast Asian region. The difference i n f u e l costs for charcoal at $200/te, and e l e c t r i c i t y at 24 cents/kWh, after allowing for diff e r e n t f u e l e f f i c i e n c i e s , i s a factor of three to four i n favour of charcoal. Once again, strong tax incentives are warranted for the private use of solid-fueled stove as long as the price of e l e c t r i c i t y i s well below the true cost. 4.4.6 Crop drying, N.A.

4.5 Transportation. N.A.

I

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4.6 Households

4.6.1 Overview- The opportunities for economic substitution of diesel-fueled e l e c t r i c i t y with l o c a l l y available energy forms i n the household sector are similar to the i n d u s t r i a l and commercial sector. Wood and charcoal can be used i n modern a t t r a c t i v e slow-combustion stoves and ovens with b u i l t - i n water heating, or water can be heated with the assistance of solar radiation.

4.6.2 Patterns of energy use, N.A.

4.6.3 Wood and charcoal stoves. Modern slow-combustion stoves are appealing appliances with excellent controls on temperature to cooking surfaces and ovens. Also, they have insulated baked enamel surfaces other than the cooking area to avoid excessive radiation of heat into the room. Cooking surfaces can also be f u l l y damped to redirect heat to exhaust when the cooking i s complete. When these stoves double as the hot water system, t h e i r costs are not s i g n i f i c a n t l y more expensive than e l e c t r i c stoves and water heaters of the same capacity. However, as with i n d u s t r i a l stoves, the fu e l costs are negli g i b l e by comparison. In Appendix 4.6*3, we provide a table of the effi c i e n c y and costs of relevant cooking fuels using either slow-combustion or e l e c t r i c stoves. I t can be seen that wood i s about one-eighth and charcoal one-quarter of the cost of e l e c t r i c i t y i n Ponape as a cooking f u e l . Once again, i t i s obvious that no private sector i n i t i a t i v e w i l l be stimulated i n the near term by present or anticipated e l e c t r i c i t y prices. In t h i s case, the government should acknowledge the huge d i f f e r e n t i a l i n cost i n favour of s o l i d f u e l i n r e a l terms and take the i n i t i a t i v e within i t s own housing by i n s t a l l i n g wood stoves and water heaters i n a l l new houses and replacing e l e c t r i c cookers with slow-combustion systems as the opportunity arises. I t i s important to remember that the ex i s t i n g housing stock has not been designed for solid-fueled cooking. Simple redesign modifications w i l l be needed to vent heat to ensure cross-ventilation and to provide f u e l storage f a c i l i t i e s .

4.6.4 Other cooking aspects- N.A.

4.6.5 Solar water heating. I t i s recognised that insulation i s low i n Ponape, perhaps only 15 MJ/m2 per day. Nevertheless, the very high cost of e l e c t r i c i t y more than compensates for t h i s low insulation. A simple analysis of the economics of solar systems from a government perspective i s provided i n Appendix 4.6.5. I t shows that for the government to i n s t a l l a 300 1, 3m2 solar

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hot water system, the payback i s just over three years with an annual savings i n diesel imports of 861 l i t r e s per household. The unit cost of production of solar hot water i s 7.5 cents/kWh, compared with the f u l l cost of e l e c t r i c i t y of 23.5 cents/kWh. No credit has been allocated here to the savings i n installed capacity in the power station by installing solar collectors in homes, although this i s another significant benefit.

4.6.6 Charcoal irons. N.A.

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5. PETROLEUM AND FOSSIL FUELS. N.A.

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6. BfBCTHKm 6.1 I n s t i t u t i o n a l Arrangement

6-1.1 Overview- E l e c t r i c i t y generation i s supervised by the Board of Public U t i l i t i e s , although i t i s understood that the prime function of the board i s to set t a r i f f s and, i n the process, to review the f i n a n c i a l management of the u t i l i t y . The general manager of the power u t i l i t y i s a member of the board. The u t i l i t y i s a function of the government administration and i s part of the Public Works Division of the Department of Community Services. There i s no act defining the role or powers of the u t i l i t y , although one i s now being planned. There are aspirations i n some p o l i t i c a l c i r c l e s to turn power production over ent i r e l y to the private sector. The matter of the form of a future power authority i s now being debated.

6.2 The Power System

6.2.1 Generation system. Generation i s ent i r e l y fueled by l i g h t d i e s e l f u e l . There are two power stations. The Kolonia power station was b u i l t i n 1954 and the new power station at Nanpohnmal (4.5 km from Kolonia) was b u i l t i n 1975. There are eight generating sets counted as part of available capacity, although early i n 1981 the entire eight sets were o f f - l i n e at one time, most with crankshaft f a i l u r e . There are three 500 kW C a t e r p i l l a r high-speed diesels and two 750 kW low-speed white superior sets i n the Kolonia power station, and three 800 kW high speed C a t e r p i l l a r diesels now i n s t a l l e d i n the Nanpohnmal power station. By the end of 1982, an additional three sets w i l l have been transferred from Kolonia to Nanpohnmal. Eventually, a l l sets w i l l be transferred out of the old power station and i t w i l l be closed down. In June 1982, two of the C a t e r p i l l a r engines were being overhauled, leaving an available capacity of 4,400 kW to meet the peak at that time of 2,300 kW. No s i t e ratings had been applied to these sets, although a factor of 0.8 should be applied for optimum operation, leaving the t o t a l capacity of 4,320 kW. The firm capacity with the two largest units unavailable i s 3*120 kW, s t i l l comfortably meeting peak demand. I t i s believed that a further 400 kW of peak demand w i l l be generated i n commissioning the new power l i n e to the hinterland, leading to a peak of 2,700 kW. On the other hand, a sharp price increase accompanied by increased metering w i l l probably hold demand at the 2,500 kW l e v e l for at least 12 months. I f f u l l prices are charged at the margin and i f

24

a l l proposed government i n i t i a t i v e s are adopted, growth w i l l be held i n d e f i n i t e l y . I f there i s a growth i n maximum demand t h i s year of 400 kW upon connecting a l l new loads and of 5 percent p.a. thereafter, the present firm capacity w i l l be inadequate by the end of 1985. I f , however, there are 2 x 1 MW capacity diesels i n s t a l l e d i n 1983, the firm capacity w i l l be 4,320 kW which w i l l not be exceeded by demand under good p r i c i n g and load management u n t i l 1992. However, i n 1988 the three 500 kW C a t e r p i l l a r s w i l l have to be r e t i r e d , reducing firm capacity to 3,120 kW or 500 kW below the anticipated peak at that time, thus requiring a further 1 MW set to cover the peak demand through 1990.

6.2.2 Transmission and d i s t r i b u t i o n . Transmission and d i s t r i b u t i o n i s at American standard voltage and frequency for consumer supply at 110V/60 HZ. Un t i l 1982, transmission has been r e s t r i c t e d to Kolonia and the immediate peri-urban area. This year, a high voltage transmission l i n e with regular tee-offs of 29 kms has been completed to the east and south of Kolonia toward the Metalanim d i s t r i c t . This high voltage l i n e i s timely and well-placed to receive power from a wood-fueled power station i n the same area. The transmission system i s i n reasonable order; however, there are major deficiencies i n d i s t r i b u t i o n , i n terms of both substation capacity and meters.

I t i s apparent that a long period without routine review and forward planning has f i n a l l y led to erosion of a l l the supply security margins i n the d i s t r i b u t i o n system. I t i s apparent from the discussions that the mission held with u t i l i t y s t a f f that, i f the demand i s to continue growing, there w i l l need to be a major and costly replacement and expansion programme i n the d i s t r i b u t i o n system. The extraordinarily low t a r i f f now charged has encouraged demand to the point of emergency i n the capacity of the d i s t r i b u t i o n system to cope.

Two steps are urgently required. The f i r s t i s a review of the present and future location and nature of demand leading to a comprehensive d i s t r i b u t i o n expansion plan. The second step i s to sharply and quickly increase the e l e c t r i c i t y t a r i f f . Unless demand i s cu r t a i l e d immediately, the d i s t r i b u t i o n system w i l l become overloaded and l o c a l i s e d power f a i l u r e w i l l occur with increasing frequency. The 1979 Tenoria report on costs of production for the Kolonia power system referred to only 474 meters i n existence. There are, however, believed to be over 800 consumers, only 100 of which are unmetered. Of the e l e c t r i c a l energy produced i n 1981, only 46

25

percent was b i l l e d , the remainder being unaccounted as losses and unmetered and unbilled consumers. The government does not pay for or know the l e v e l or location of the power demand of i t s various agencies, including hospitals and communication centres. Power usage by various government agencies i s thought to be about 500 MW/month. Clearly, i t i s of l i t t l e use putting up the t a r i f f to check demand i f the majority of consumption i s not metered. The I n s t a l l a t i o n of meters i s therefore absolutely fundamental to control and orderly develop the power system. Comprehensive power metering should be the highest p r i o r i t y action for the State government.

6.3 Planning Issues

6.3*1 Overview. Planning i n any conventional sense does not exist for the power system i n Ponape. Both the i n s t i t u t i o n a l arrangements of power production as a department of the government (see Section 6.1) and the i m p l i c i t agreement by the U.S. government to pay the f u e l b i l l , whatever the cost, have between them not only worked against forward planning but also removed the pressure necessary for careful evaluation, design, and construction of economic major renewable power sources available within the State. There has been a formal review of hydropower resources and several speculative studies. Other than for mangrove forests, there has been no biomass resource inventory, although one i s now planned. The lack of systematic forward planning manifest i n a 10- and 20-year plan around feasible scenarios of load growth has meant that a r e a l p o s s i b i l i t y exists of grossly overinvesting i n system development, both through commissioning plants w e l l i n excess of requirements and through choosing to develop well below the optimal set of power resources. As a r e s u l t of the extensive blackouts i n power supply during 1981* the government set up a special State Task Force to review and recommend to the l e g i s l a t u r e action to a l l e v i a t e the present power c r i s i s . This section i s focused on o u t l i n i n g a plan of action for the State Task Force to consider i n i t s f i n a l deliberation for i t s report to the l e g i s l a t u r e i n September 1982 (although we raise other broader issues as w e l l ) •

6.3.2 Option and recommendations. From preceding sections, i t i s clear that, providing load does not grow faster than 5 percent p.a. i n peak demand (after allowing 400 kW new peak demand for connecting i n the new transmission-distribution network), there i s adequate capacity to meet the demand u n t i l 1985 (see Section 6.2.9). Following the recent generation c r i s i s ,

26

the State procured the services of competent s p e c i a l i s t s i n d i e s e l generation and transmission-distribution design and maintenance. These s t a f f members have r e v i t a l i s e d the production system despite the very considerable barriers to e f f i c i e n t operations i n the u t i l i t y at the time. Special repairs and spare parts w i l l soon reconstitute a l l sets as available capacity. In t h i s circumstance, there i s no need to I n s t a l l more than 2 MW (as 2 x 1 MW) of new capacity i n the short term. The proposal to purchase 6 MW of "black o i l " capacity i s completely excessive at t h i s time and would lead to a gross mlsallocation of f i n a n c i a l resources now best u t i l i s e d i n the further detailed design and costing of wood-steam power plants and the small Nanepll hydropower development. I f none of these l o c a l l y available power sources i s economically available after detailed design work, then a t h i r d d i esel set of 1 MW can be i n s t a l l e d i n 1986/87 to meet the demand at that time and through 1990.

Furthermore, there i s only space i n the Nanpohnmal power station for two more sets, leaving the oldest peaking and standby sets i n the Kolonia power station* I t i s also a possible and feasible strategy to purchase dual f u e l sets of high quality and with no cost penalty, that i s , d i e s e l sets designed both for use of d i s t i l l a t e and "black o i l " (or any blend of heavier f u e l s ) . Whereas i t w i l l be possible to have new major diesels i n s t a l l e d and operating i n early 1983 i f fueled by d i s t i l l a t e , a "black o i l " operation would not be possible u n t i l l a t e r , pending the i n s t a l l a t i o n of special fuel handling and storage f a c i l i t i e s at the wharf and the power station. In other words, i t i s possible to quickly solve the immediate c r i s i s for an outlay of about US$600,000 without losing anv options, even though t h i s mission recommends strongly against the "black o i l " alternative.

In summary, the steps to be taken Immediately are as follows; o Re-tender internationally for 2 x 1 MW heavy-duty diesel engines

designed for use of both diesel and "black o i l . " o Negotiate an option on a t h i r d 1 MW set at a fixed price i n 1982

d o l l a r s , plus agreed escalation, to be i n s t a l l e d within 48 months i f the need arises and with the government operating the waiver. (This set i s the "insurance" against s t i l l more rapid load growth despite t a r i f f and government measures.)

o Have t h i s tendering, bid-selection, and commissioning done professionally by an independent group of consulting engineers of high renown i n consultation with the u t i l i t y and the State Task Force.

I

!

27

o The Task Force should recommend to the l e g i s l a t u r e a series of p a r a l l e l p o l i c i e s and programmes, including immediate rate' reform, universal metering, and tight government control of power consumption to reduce or cancel growth i n peak demand and to avoid collapse through overload i n the d i s t r i b u t i o n system.

In the power resource overview of Section 4, the hydropower and biomass f u e l resources are discussed and quantified to the l i m i t e d extent possible with the data at hand. There i s an in d i c a t i o n of f i n a n c i a l v i a b i l i t y for the two major hydropower plants. Given the v a r i a t i o n possible and indicated i n the costs of c i v i l works at the construction s i t e s concerned, however, there needs to be caution i n assuming that hydropower now has a firm place i n the future development of the power sector. Not only i s diesel power being currently produced i n e f f i c i e n t l y , and hydropower marginally by comparison, wood steam power appears more economical than either system. The mission notes, and welcomes, the current commitment by the Corps of Engineers to a US$250,000 detailed design and costing study for the Nanepll River development and urges the Ponape State Government to bring forward t h i s review to the e a r l i e s t possible occasion. The government should be sure to have a detailed review of the potential and the costs of staged development of the Nanepll River and must be very careful to ensure that the f i r s t development does not preclude a l a t e r enlargement of power development. I t i s also timely to undertake an equally detailed design and costing of several options for power development on the Lehnmasi River. I f t h i s work cannot be funded by the U.S. Department Of Energy (US DOE), then the State i s advised to seek alternative sources of technical assistance or, i n the ultimate, to finance such a f e a s i b i l i t y study from I t s own resources.

Between the SPEC/ADAB-funded fuelwood resource and plantation review for the wood-fired steam power plant proposal and the USDOE t o t a l biomass resource inventory, the fuelwood resources of Ponape should be w e l l established. This work was to be completed by the end of 1982 and w i l l lead naturally to a decision on further work. I f , as i s l i k e l y , the resources exist and are economically accessible, a f u l l f e a s i b i l i t y study at a cost of US$50-100,000 i s then warranted on the location, s i z e , design, and cost of a wood steam plant. This could be completed by mid-1983 i f funds were readily available.

28

6-3-3 Other planning aspects. I t i s v i t a l that, as part of, or i n p a r a l l e l with, the above studies on hydropower and wood-power, a set of detailed 10-year power system development plans be drawn up, together with matching f i n a n c i a l plans for a number of feasible scenarios of demand growth* I t i s possible to draw scenarios of load growth that are equally feasible but enormously divergent between, say, no increase i n t a r i f f and rapid movement to f u l l - c o s t economic t a r i f f s . I t i s obvious that planning with t h i s kind of uncertainty w i l l produce largely academic r e s u l t s , even though they are an improvement on the present s i t u a t i o n . In order to f a c i l i t a t e firmer and more useful plans, the government i s urged to debate, negotiate, and adopt a rate strategy defining the timing and l e v e l of movement i n t a r i f f s toward a f u l l cost t a r i f f . This agreed position can be the basis for low and high scenarios concerned mainly with estimations of e l a s t i c i t y i n demand with price and i n t e r f u e l substitution with and without heavy government involvement and promotion of economic alternatives.

6-4 Management Issues

6.4.1 Overview- The mission w i l l comment here only on the future form of the government's u t i l i t y arrangements. The present arrangement, where ef f e c t i v e l y a government department i s responsible for power production, i s c l e a r l y not successful and i s recognised as transitory. The question i s : Should the government assume f u l l ownership of the u t i l i t y established as a statutory authority under an act of the State? Or, should the power system be privatised with the only form of regulation being the contract of agreement which licenses the entrepreneur to produce the name, terms, and conditions?

Private sector involvement can be structured i n a number of ways and need not take the form of t o t a l private ownership of the u t i l i t y . For example, the State may act as a middleman, buying power from private contractors from hydropower or wood, with an agreed s e l l i n g price subjecting the contractor to certain r i s k s , although ensuring a profitable enterprise i f e f f i c i e n t l y run. Indeed, the production and sale of wood-power i s an area of entrepreneurial endeavour that may interest the State government. However, whatever form the private sector involvement takes, the advantage that accrues i s that e l e c t r i c i t y i s usually priced to r e f l e c t the f u l l economic costs of production, and the market i s then f a i r l y opened up for the alternative sources competing for p a r t i c u l a r end-uses. This can only be an advantage to Ponape at t h i s time.

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6-4.2 Financial planning- The power system expansion plan w i l l select a most l i k e l y course of development, based on the least cost c r i t e r i a for any demand scenario. I t i s v i t a l that a matching f i n a n c i a l plan i s generated i n p a r a l l e l with the expansion plan which estimates annually the funds required to finance the development plan i n terms of equity and debt, and the l e v e l of t a r i f f s required to generate the revenue to service debt, as well as to cover other costs* This f i n a n c i a l plan w i l l be useful to the State i n planning the use of i t s own funds available under the Compact i n the future and w i l l prove an important aid to economic planning for Ponape generally.

6.4-3 Other management issues. Although prices for some time may not indicate the true costs of e l e c t r i c i t y and the economic value of alternatives, many opportunities have been i d e n t i f i e d for short- and longer-term savings through the e f f i c i e n t use of e l e c t r i c a l energy and the use of l o c a l energy sources. Again, the State w i l l f a c i l i t a t e power system planning A£, through i t s energy administration, i t s o l i c i t s , debates, and agrees on the measures i t w i l l take within the government sector and at large, i n order to correct the d i s t o r t i o n i n the energy market caused by maintaining a r t i f i c i a l l y low e l e c t r i c i t y prices. Investment i n new technology and fuels at the point of end-use should be viewed i n the same way as investments i n power system expansion. Savings to be made, for example, by proceeding with a 2-3 MW power station, instead of 6 MW, could y i e l d a high rate of return i f put into solar water heating and i n s t i t u t i o n a l solid-fueled cooking.

6 .4.4 Reqopniendations. N.A.

6.5 E l e c t r i c i t y Pricing

6.5.1 Overview- In t h i s section, we estimate the f u l l marginal costs of production of power i n Ponape, comment on the implications of present p r i c i n g practices, and propose alternatives.

In Appendix 6*5.1, we have estimated the costs of production at 23*5 cents/kWh, although some parts of the c a p i t a l works have not been included for depreciation charges* The methodology applied uses the replacement value of the present plant and equipment as the basis for c a p i t a l charges—an appropriate measure i n times of high i n f l a t i o n . In effe c t , t h i s t a r i f f i s ind i c a t i n g the f u l l cost of the marginal unit of production assuming that d i e s e l generation i s s t i l l employed. In the next four to f i v e years, t h i s i s

30

very l i k e l y to s t i l l be the case. Of course, the t a r i f f actually applied may d i f f e r to s a t i s f y the system expansion plan and related f i n a n c i a l plan i n d i c a t i n g the c a p i t a l that i s required to be raised as equity to invest i n future developments. This simple method of estimating production costs can be used as the basis for setting an o v e r a l l revenue objective and t a r i f f s i n the event of no government subsidy to the power sector. Of course, the reverse i s now true: power i s extremely heavily subsidised i n Ponape.

6.5.2 Present t a r i f f s . Prior to October 1980, e l e c t r i c i t y was priced at 3 cents/kWh, and a f t e r that date, a rate of 8 cents/kWh applied. No change i n demand resulted from t h i s rate change, though t h i s i s hardly surprising: of the private consumers b i l l e d ( i . e . , a l l those with meters), only 20 percent pay. Those that do not pay do not suffer disconnection. The government uses more than one-half the e l e c t r i c i t y , i s not metered, and does not pay d i r e c t l y . The s i t u a t i o n i s one of chronic underpriclng with quite severe implications for energy management and the development of more economical alternatives. The dilemma i s that the public has become somewhat dependent on e l e c t r i c i t y which i s either cheap or free, and now many people regard t h i s service as a r i g h t . This s i t u a t i o n has arisen partly because the United States has agreed to pay the f u e l b i l l for the u t i l i t i e s , whatever the cost, and has agreed to appropriate for c a p i t a l equipment more or less as the need arises. Of course, t h i s arrangement terminates as soon as the Compact comes into force whereby budgetary support i s l i m i t e d to a set amount annually agreed i n advance and declining i n r e a l terms through time. I t i s , therefore, no longer a matter of choice for Ponape to subsidise the r e l a t i v e l y well-off with cheap or free e l e c t r i c i t y since supply cannot be afforded, at least to the same extent. This mission strongly favours the complete removal of subsidies and endorses some form of " p r i v i t i s a t i o n 1 1 of the u t i l i t y which would tend to force t h i s t r a n s i t i o n . In the meantime, the dilemma must be faced, and State l e g i s l a t o r s are w e l l aware of t h e i r r e s p o n s i b i l i t y i n t h i s regard.

6.5.3 Other t a r i f f issues. N.A.

6.5.4 Recommendations- The mission was apprised of plans to raise the t a r i f f to 8 cents, then 11 cents, and f i n a l l y 15 cents/kWh during the next year or so. The mission proposes the following steps:

o I n s t a l l meters on a l l connections. o Move the marginal block to the l e v e l of the dir e c t costs of

production i n the f i r s t instance: 18 cents/kWh.

31

o Reduce the size of the f i r s t block to 200 kWh and increase the rate to 7 cents (half the f u e l cost) i n the f i r s t instance,

o Mount a major public education programme with a thoughtful and appealing advertising campaign that states the reason for price r i s e s and the future of even higher price r i s e s , and that gives people adequate warning of disconnection for nonpayment,

o Establish and publicise a programme whereby the f i r s t , or " l i f e - l i n e block," i s reduced to 50 kWh; and the cost i s the short-run marginal cost, that of the f u e l (currently 14 cents/kWh); and the l a s t block recovers a l l costs, including the c a p i t a l charges agreed to be levied.

Principles applied i n t h i s t a r i f f reform are quite straightforward. On the one hand, the government no longer has the means, regardless of desire, to subsidise e l e c t r i c i t y . On the other hand, i t recognises that any attempt to maintain the subsidy w i l l be destructive of l o c a l economic development since there are many opportunities for both smallholders and entrepreneurs to produce for the l o c a l market indigenous sources of energy which w i l l compete with e l e c t r i c i t y priced at i t s f u l l cost, though not appreciably below i t * The government also recognises that there are both p o l i t i c a l and s o c i a l reasons why some reduction i n price below true costs might be applied to the low-income earners forced to l i v e i n an urban area for employment. For them, a " l i f e - l i n e " block i s established i n the t a r i f f encompassing the amount of e l e c t r i c i t y that i s deemed to be essential for a minimum quality of l i f e i n that setting. The l e v e l of t h i s subsidised supply i s , of course, to some

extent a subjective judgment and w i l l no doubt be influenced strongly i n Ponape by the previous history of supply and the expectations that have been created among consumers. Generally speaking, e f f i c i e n t l i g h t s , fans, and small e l e c t r i c a l appliances can be operated on 50 kWh a month* A " l i f e - l i n e " block of 200 kWh per month would also cater for r e f r i g e r a t i o n and some e l e c t r i c a l cooking or water heating.

6.6 Rural E l e c t r i f i c a t i o n . N.A.

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7. ENERGY CONSERVATION AND MANAGEMENT 7.1 Opportunities for Energy Savings.

There are many opportunities for saving e l e c t r i c i t y by using i t to perform the same functions more e f f i c i e n t l y . I t i s also possible, i n some circumstances, through careful design to avoid the need for e l e c t r i c i t y altogether. Here we w i l l address some of the more cost-effective opportunities available to Ponape.

7-1.1 Households- N.A.

7.1.2 Lighting. Lighting i s a r e l a t i v e l y small but s i g n i f i c a n t load on the power system (ca. 10 to 15 percent). I t i s . however, a load which can be quickly and cheaply reduced. There are three important categories warranting p r i o r i t y treatment: o f f i c e s and commercial centres, street l i g h t i n g , and housing. In o f f i c e s , the particular problem i s overdesign, with l i g h t i n g just as intense beside windows as away from them. Banks of fluorescent tubes i n areas of adequate natural illumination should be removed or reduced (ensuring a reduction i n e l e c t r i c a l demand). In larger o f f i c e s , design codes should be altered to ensure not only that l i g h t i n g i s reduced to appropriate l e v e l s (North American standards are too high for the tropics) but also that fluorescent l i g h t s are Inst a l l e d for which the l i g h t i n t e n s i t y and current drawn can be automatically adjusted i n response to the photoelectric sensors in d i c a t i n g the amount of l i g h t needed to compensate for deficiencies i n natural illumination. For street l i g h t i n g , new 18 W low-pressure sodium vapour lamps are much more e f f i c i e n t than fluorescent and incandescent f i t t i n g s . To replace e x i s t i n g 40 W fluorescent f i t t i n g s with 18 W sodium vapour lamps, including labour, w i l l cost US$50 to $60 and w i l l have a payback of three years, whereas replacing a 100 W incandescent l i g h t w i l l have a payback of nine months for equivalent or superior l i g h t output. In restaurants and hotels with incandescent screw-in f i t t i n g s , the new P h i l i p s SL18 fluorescent bulbs, costing US$12 replacing a 75 W incandescent with a usage rate of 10 hours/day, w i l l have a payback time of 3*5 months. In addition, the f i t t i n g l a s t s f i v e times as long. These screw-in fluorescent bulbs are also applicable i n e x i s t i n g housing wired for incandescent bulbs and, for more frequently l i t locations, w i l l have a payback period of within a year. For housing which i s to be established, wiring codes should be changed to ensure the use of fluorescent f i t t i n g s i n heavily l i t locations. Of course, a l l of these savings are rea l i n

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economic terms but almost nonexistent i n f i n a n c i a l terms at current prices for e l e c t r i c i t y . I t w i l l be for the government to respond with economic i n s t a l l a t i o n s i n i t s sector f i r s t and to adjust t a r i f f s so that the benefit of e f f i c i e n t l i g h t i n g can be perceived by the private sector.

7.1.3 Refrigeration and cooling. The use of window a i r conditioners i n o f f i c e buildings i s . no doubt, the most energy-intensive practice i n the government sector, accounting for the majority of energy use i n o f f i c e s . At the time of the mission's v i s i t , there were signs of some useful constraint being applied to the extent of o f f i c e a i r conditioning. New o f f i c e s just opened had deliberately not been a i r conditioned at the request of the State energy o f f i c e . However, for the e x i s t i n g stock of o f f i c e s , I t i s common for poorly insulated o f f i c e s with louvered windows to be c h i l l e d to 20°C or less with window a i r conditioning units. This i s an extremely wasteful practice which can be a l l e v i a t e d with a l i t t l e planning and modification. The mission recommends two steps:

o A committee of senior l e g i s l a t o r s and public service administrators should be formed to decide on the p r i o r i t y of use of a i r conditioning i n the government service with a view to greatly reducing the present l e v e l s ,

o Once p r i o r i t y i s established, an i n t e r n a l design code should be drawn up by the architecture and energy d i v i s i o n s of government specifying suitable i n s u l a t i o n , f u l l - g l a s s t i g h t - s e a l i ng windows, window and w a l l shading, and thermostatic control to a minimum temperature of 25°C. Offices to be without a i r conditioning would be opened up for v e n t i l a t i o n and have fans i n s t a l l e d . Those with a i r conditioning would be modified accordingly.

The mission believes that as much as 30 percent of government e l e c t r i c i t y use can be avoided without reducing thermal comfort i n o f f i c e s , and with the added advantages of reducing the peak demand on the power system and of delaying the need for further investment i n generating capacity.

Refrigeration i s commonly the largest consumer of e l e c t r i c i t y i n a t r o p i c a l environment with housing and industry combined. I t was not obvious to the mission, having inspected some r e f r i g e r a t i o n i n s t a l l a t i o n s , that Ponape had adopted the most e f f i c i e n t r e f r i g e r a t i o n equipment and management possible. The v a r i a t i o n i n r e f r i g e r a t i o n e f f i c i e n c i e s i s four-fold for domestic and

34

larger refrigerators and freezers marketed i n the l a t e 1970s so that very considerable savings can be made i n being selective i n procurement of r e f r i g e r a t i o n equipment. In order to improve and encourage the vigilance of the government supply authority i n Ponape and elsewhere, the mission recommends funding for two p a r a l l e l consultancies, one on i n d u s t r i a l and one on domestic r e f r i g e r a t i o n , to i d e n t i f y the most e f f i c i e n t durable equipment available to the P a c i f i c region, as w e l l as to establish procurement guidelines for government and private sector importers. These are to proceed i n 1983- I t i s recommended that the energy o f f i c e publicise the outcome of these r e f r i g r a t i o n reviews l o c a l l y , with a view to import screening and regulation to include the most e f f i c i e n t equipment. P a r a l l e l advice on r e f r i g e r a t i o n management practices or ef f i c i e n c y could also be offered to consumers by the energy o f f i c e .

7.1.4 Transportation. N.A.

7.1 .5 Industry and commerce. N.A.

7.1.6 Building codes. From the foregoing discussion on a i r conditioning and l i g h t i n g , the need for many changes i n building design and management i s implied. I t i s usual i n the P a c i f i c for building codes to have been developed for safety and d u r a b i l i t y and to be much less than optimal for thermal comfort. These codes have engendered, then, a need for high l e v e l s of e l e c t r i c i t y use to ensure h a b i t a b i l i t y i n buildings. The major deficiencies of contemporary buidlng design i n Ponape are lack of systematic cross-flow v e n t i l a t i o n , or allowance for hot air-exhaust with high c e i l i n g s and c e i l i n g v e n t i l a t i o n , and the absence of roof i n s u l a t i o n and wall and window shading. A large commercial building s e n s i t i v e l y designed for comfort i n the t r o p i c a l environment may demand as l i t t l e as one-tenth per unit area of the e l e c t r i c i t y that i s required to maintain a conventional, heavily a i r conditioned and illuminated environment.

7.1.7 Energy audits. N.A.

7.2 Government Measures. N.A.

35 Annex 1

Appendix: 4.1.2(a) COCONUT WOOD BIOMASS ON PONAPE

Parameters

Coconuts were established i n Ponape early i n the twentieth century. The plantations are now aged and unproductive.

Plantation densities were 24' x 24' x 24' or 215 trees/ha. An allowance i s made, for losses of 20% of trees due to harvesting, wind and natural death. Thus 175 trees/ha are assumed to be standing on extant plantations.

I t w i l l be assumed that a l l . two-thirds, and one-half of the o r i g i n a l 'Ponape pl a n t a t i o n ' i s standing i n order to assess fuelwood a v a i l a b i l i t y .

• Trees are assumed to have the same c h a r a c t e r i s t i c s as the Western Samoan crop assessed f o r fuelwood by Ley land, Noble and Watson f o r UNDP i n 1978, i . e . recoverable colume 0.96m^ and fresh weight of recoverable volume, 1059 kg per tree average. Moisture content average in c l u d i n g bark was 56Z w.b.

Thus simply:

(a) 1000 ha x 175 trees x 1.06 te/tree - 185,500 te

(b) OR 670 ha x 175 kw x 1.06 te/tree = 124,285 te

(c) OR 500 ha x 175 trees x 1.06 te/tree - 92,750 te

The net energy value of the trees delivered to the b o i l e r at t h i s moisture content i s 7.2 MJ/kg. The net energy value of the trees can be enhanced by s p l i t t i n g and drying beforehand.

E l e c t r i c power equivalents with a steam plant of 12Z o v e r a l l e f f i c i e n c y are:

(a) 44.5 Gwhr

(b) 29.8 Gwhr

(c) 22.3 Gwhr

36 Appendix: 4.1.2(b)

Annex 2

COSTS OF PRODUCTION FROM A 4MW STEAM POWER PLANT, PONAPE

Parameters

A firm capacity of 2MW w i l l cover the 1982 demand of 15 Gwh f o r 852 of the time, and w i l l meet 902 of the energy demand, or 13.5 Gwh net of a n c i l l a r y power. Gross power production i s then 15 Gwh p.a.

. The plant i s 2 x 2 MW, with allowance for modular development.

Thus the plant factor i s 432.

Overall e f f i c i e n c y i s 12X.

Fuel w i l l be forest hardwood or mangrove at US$25/te d e l i v e r e d . Net energy value Is 9.7 MJ/kg.

Costs of the plant, which i s low pressure 450-600 p . s . i . and f r e s h water cooled, are as follows:

000 US$

(a) steam-turbine generator set ($400/kw) 1,600 (b) b o i l e r s , f u e l feeding and

a n c i l l a r i e s ($400/kw) 1,600 (c) cooling and feedwater systems ($100/kw) 400 (d) f u e l handling and storage ($200/kw) 800 (e) c i v i l works ($150/kw) 600 ( f ) engineering and commissioning

(52 of capex) 250

TOTAL US$5,250,000

L i f e of plant i s 25 years.

Maintenance and consumables are 22 p.a. or US$100,000.

Labour and s a l a r i e d s t a f f : 4 s h i f t operation.

Engineering supervisor 1 only 30,000 p.a. S h i f t supervisor 4 t o t a l 12,480 Semiskilled s t a f f (av.) 3 per s h i f t 29,952 Labourers ( i n c . for fuelyard) (av.) 4 per s h i f t 24,960

97,392

37

Costs of Production

1. C a p i t a l charges US$ p.a. c/kWh_

Discount rate i s 10Z, l i f e i s 25 years 551,000 4.08

2. Operation and maintenance

• maintenance 100,000 . labour 97,392

197,392 1.46

3. Fuel

15 GWhs production required 46,392 to wood at 45Z m.c.w.b. delivered and US$25/te delivered (or $32/m3) 1,159,794 8.59

TOTAL 1,908,186 14.13

38 Annex 3

Appendix: 4.1.6

COSTS OF PRODUCTION FROM SELECTED HYDROPOWER DEVELOPMENT SCHEMES: NANEPIL AND LEHMASI RIVER, PONAPE

(a) Nanepll River

Parameters

scheme selected for analysis i s a run - o f - r i v e r scheme of 615 kW i n s t a l l e d capacity

c a p i t a l cost including i n t e r e s t during construction i s $4.0 m i l l i o n 1982 d o l l a r s

operations and maintenance costs are Labour $38,400 p.a. and s p e c i f i c maintenance and consumables $3,250 p.a.

energy generated (net) i s 2615 OThr

annual Insurance i s 0.5Z capex or $24,000. L i f e i s 40 years

desired rate of return i s 10Z before tax.

Breakdown s e l l i n g price i s

(a) Annual cost per kW i n s t a l l e d $0S

c a p i t a l charge 10Z, 40 years,

recovery factor 0.1023) 665,37

operation and maintenance 67.72

insurance 39 • 02

772.11

(b) Breakeven s e l l i n g price

per kWh generated 18.17

per kWh sold (18.17/0.88 + (1.5)) 22.15

where 0.88 i s factor f o r d i s t r i b u t i o n l o s s e s , and 1.5 c/kWh i s cost of administration and consumer related expenses (see Appendix 5.5.1).

39

(b) Lehmasi River

Cost $US

capital cost (including interest during cons truction) 9,300,000

annual operation and maintenance (0.5Z of capital expenditure) 46,500

• annual insurance (0.6Z of capital expenditure) 55,800

Plant d e t a i l

i n s t a l l e d capacity 1,4 MW

annual generation (average) 5.5 GWh

average capacity load factor 45Z

economic l i f e 40 yrs

required return (after tax) 10Z

Therefore US$

(a) Annual cost per lcW Installed

capital charges (recovery factor

= 0.1023) 679.56

operation and maintenance 33.21

insurance 39•86

752.63

(b) Breakeven s e l l i n g price

per kWh generated 19.09

per kWh sold (19.09/0.88) + 1.15 - 23.15

40 Annex 4

Appendix: 4.2.10(a)

TECHNICAL NOTE: PACIFIC ENERGY PROGRAMME HEAVY FUEL OIL AND ITS USE IN DIESEL ENGINES;

THE SPECIAL AND ADDITIONAL REQUIREMENTS COMPARED WITH LIGHT DIESEL FUELS

"Heavy fuel" i s chat fuel l e f t after a l l , possibly useful, products have been extracted. It may be a r b i t r a r i l y defined as having a v i s c o s i t y greater than 150 S.R.I, at 100° F. This i s variable and primarily dependent on the source of crude o i l .

Source crude o i l s can be identified by a number of characteristic properties (See Table 1 for Middle East Crudes). These determine the crude to be either primarily asphaltic-based (Mexican or Venezuelan crudes) or primarily paraffinic-based (as with Sahara and Iranian crudes).

Table 1: Characteristics of Middle East Crudes

Oi l A B C D

Pour point °F 3 -2 18 20 Viscosity at 40°F S.R.I. 101 117 85 200 Viscosity at 80°F S.R.I. 36.5 43.8 34 70 Viscosity at 100°F S.R.I. 28.5 33 26 48 Viscosity at 120°F S.R.I. 22 25 20 35 Specific gravity at 60°F 0.859 0.865 0.825 0.861 Flash point (closed P.M.) F° 42 33 45 40 Wax content Z 8.6 9.9 8.4 3.1 Gross c.v. B.T.U./lb. 19,380 19,210 19,150 19,200 Water content Z v o l . 0.1 0.12 0.09 0.08 Sediment content Z mass 0.001 N i l 0.02 0.04 Ash content Z mass 0.0054 0.0022 0.01 0.012 Sulphur content Z mass 1.90 1.96 0.85 1.60 Conradson carbon residue X mass 4.6 4.5 3.4 3.9 Vanadium content p.p.m. 6.4 2.1 43 70 Sodium content p.p.m. 1.6 0.4 0.6 0.3

Where1 A « From the Rostanura f i e l d at Jeddah. B - From the Khurais f i e l d at Rylayd. C » Murban crude from Abu Dhabi. D - Gach Seran crude from Kharg Island, Persian Gulf.

The s u i t a b i l i t y of a certain type of heavy fuel i s subject to a number of limit i n g properties. Table 2 sets out the l i m i t i n g properties pertaining to fuel used i n the Ml rr lees Blacks tone R major engine. Before i n s t i t u t i n g a heavy fuel system i t is necessary to have information about the particular properties of fuel that any one engine type can e f f i c i e n t l y operate' with. The extent to which any particular limitation is reached, or exceeded, is dependent on the source of the crude and the engine being used. If one or more of these limitations are exceeded, i t does not necessarily preclude i t from use; for example, viscosity alone does not appear to be a function of wear rates or maintenance frequencies.

41

Table 2: Limiting Individual properties

Viscosity S.R.I, at 100°F. max. 3,500 Specific gravity at 60°F. max. 0.985 Ca l o r i f i c value net B.T.U./lb min. 17,200 Carbon residue Conradson Z mass max. 13.5 Ash Z mass max. 0.2 Sulphur z mass max. 3.5 Water z mass max. 1.0 Sediment z mass max. 0.25

Heavy fu e l , as supplied to operators, cannot be delivered d i r e c t l y to the engine for usage. The abovementloned contaminants - ash, water and sediment of the untreated o i l must f i r s t be removed and viscosity must be within a specified range, before entry into the engine fuel-injection pump. This requires, f i r s t l y , heating to raise the o i l temperature, to reduce i t s viscosity, and secondly, centrifugation to remove contaminants.

The following Table (3) presents an outline of the fuel treatment and the equipment necessarily Incorporated into the system to deal with problems of handling heavy fuel as opposed to d i s t i l l a t e .

Table 3

1. ' Storage of Heavy Fuel:

It i s necessary to determine the average minimum and absolute minimum ambient temperatures of the storage s i t e . Determine what the o i l v i s c o s i t y would be at these temperatures and i f the viscosity i s greater than 9,000 sees Redwood No. 1 (2,016CSt) then heating c o l l s should be used i n the bulk storage tanks.

Note that this requirement of storage does not incorporate a time factor - i t is normal to base storage capacity on potential rate of usage.

While heating may not be required for storage, i t may be needed to f a c i l i t a t e movement from the tanks.

2. Fuel o i l Transfer pumps:

From a bulk-storage tank, a transfer pump delivers fuel to a balance tank.

Two transfer pumps are normally supplied, one acting as a standby, and the other i n use and located close to the storage tanks to reduce the suction duty.

The capacity of the pumps i s normally one and half times the treatment rate.

Transfer pumps are commonly designed to operate a t o t a l head of 45 p . s . i . though where information about length and bore of fu e l transfer piping Is specified, transfer pumps may be design accordingly.

I

42

3. Balance Tank;

A balance tank is located inside or just outside the station and between the fuel o i l transfer pumps and the centrifuges. This allows the transfer pumps to be started and stopped automatically by low and high float level switches in the balance tank. It also enables continuous running of the centrifuges even when the treated o i l or service tanks are f u l l , by allowing surplus treated o i l to be s p i l l e d back into the balance tank via a pressure-r e l i e f valve.

4. Pre-centrifuge heater

Two types of fuel heaters are used - a line heater and an immersion heater.

A line heater consists of a number of heating elements ( e l e c t r i c , steam or hot water) which are enclosed i n a lagged and cladded s h e l l . The heater i s f i t t e d into a pipeline with o i l i n l e t and outlet connections and a thermostat sensitive to o i l outlet temperature.

An immersion heater is used to maintain the o i l temperature i n a tank and i t ' s heating elements are directly immersed in the o i l . A thermostat i s also Immersed i n the o i l , but to one side of the heating elements.

It is the viscosity requirements of the system that govern temperatures, thus, temperatures should be adjusted to give the following v i s c o s i t i e s : Transfer from bulk storage tanks 9,000 sec Redwood No. 1 (max) (2,015 CSt)

Centrifuge 100-150 sec Redwood No. 1 (27-38 CSt)

Admission to engine 70-80 sec Redwood No. 1 (17-20 CSt)

The pipework associated with centrifuges and pre-centrifuge heaters, i s f a i r l y complicated but i n general, the centrifuges are mounted on a baseplate-cum-sludge tank, on which are mounted the pre-centrifuge heaters, motor driven feed pumps, sludge pump, control panel and instrumentation. These are a l l piped and cleaned up to provide terminal points for d i r t y and clean o i l . Furthermore, these assemblies can be shipped out i n one piece.

5. Centrifugal separators:

From the balance tank the fuel flows to centrifuge feed pumps, which deliver i t , via the pre-centrifuge heater, to the p u r i f i e r .

Centrifuges may operate as purifiers or as c l a r i f i e r s . A p u r i f i e r is a machine set up to separate the water from the o i l , but It also removes a large proportion of the heavier particles of sediment. A c l a r l f i e r separates sediment from o i l . A dual-purpose machine can act as either p u r i f i e r or c l a r l f i e r .

Normally, a self-cleaning p u r i f i e r i s used and a manual, dual purpose machine is set up as a c l a r l f i e r .

43

The self-cleaning machines have the sludge washed out of the periphery of the rotating bowl by water. The sequence is effected by moving a control knob and takes about half a minute. Manual machines have to be stopped every 4 - 1 2 hours to enable sludge removal - i t is time consuming and interrupts the treatment of o i l .

The bowl of the purifier must be primed with hot water before o i l admission and a small overhead tank f i t t e d with an immersion heater or steam c o i l i s normally incorporated.

The treatment rate required for centrifuging should be In excess of tota l consumption rate of the engines, that i s , 1-1/3 to 1-3/4 of the rate of station consumption rate. Treatment rate i s Influenced by, for example, the nature of the load on the station and the method of management.

Selection of size of centrifuges i s based on the frequency of bowl cleaning. This i s di r e c t l y related to the sediment content of the untreated o i l . Since this i s considerably variable, the centrifuge manufacturer recommends throughput rates which allow for average sediment contents.

Recommendations are based on untreated fuel viscosity (at 100°F)• The larger and more expensive machines are generally required to treat high-viscosity o i l s .

6. Sludge Tanks and Sludge Pump:

The water and sludge from the centrifuges gravity drain into a sludge tank from which a sludge pump of the positive displacement, eccentric vane type, removes i t for disposal.

The size of the sludge tank is related to the sludge content of the untreated o i l , the treatment rate and the frequency of centrifuge cleaning.

The sludge tank should have a heating c o l l or an immersion heater which can withstand the corrosive and abrasive action of the sludge.

7. Service Tank

The treated o i l passes from the centrifugal seporators to the service tank for storage before supplying the engine bus-rail system (see below).

Normally, one heavy o i l tank per engine or pair of engines i s in s t a l l e d .

Large multi-englned power stations work on the basis of one or two service tanks and a pumped ring main system to supply the engines*

The service tank must be lagged and heated by steam c o i l s or Immersion heaters to a constant temperature, 10-15°F below centrifuging temperature.

A bypass returns o i l from the centrifuge to the balance tank, so that when the service tank i s f u l l , the output of the centrifuge i s recirculated.

44

8. Bus-rail and Pump

From the service tank, fuel passes via an engine supply line-heater, to the engine bus-rail pump. The bus-rail pump delivers fuel to the engine via a bus-rail heater and a f i l t e r .

To supply fuel to the end fuel-injection pump at an optimal velocity, temperature and viscosity, a bus-rail i s f i t t e d round the engine supplying each fuel pump. The fuel o i l is circulated around this bus-rail at approximately four times the rate the engine consumes o i l at f u l l load.

It i s not possible to start diesel engines on heavy fuel and a 4-way cock is Incorporated to enable the heavy fuel o i l to be circulated off the engine whilst the engine i s burning diesel o i l . This system allows an automatic changeover to li g h t fuel i f there i s a drop in heavy fue l o i l pressure or temperature.

Although a l l pipes containing heavy fuel are lagged, heat loss does occur, and the system has a bus-rail line heater between the pump and the Winslow f i l t e r .

9. Winslow F i l t e r :

Although the centrifuges remove a large proportion of water and sediment, the use of a depth-type micronic f i l t e r i n the fuel l i n e before the engine, reduces maintenance on exhaust valves and atomisers. The Winslow f i l t e r i s equipped with i n l e t and outlet pressure gauges, the pressure drop with clean elements being about 5 p . s . i . and with d i r t y elements, 18-20 p . s . i . A set of elements may last thousands of hours.

Heating

The fuel o i l can be heated e l e c t r i c a l l y , with hot engine-jacket water or with steam which i s raised i n an exhaust gas boiler or in o i l - f i r e d boilers. A combination of jacket water and e l e c t r i c i t y may be used.

The deciding factors are the viscosity of the o i l , the climate in the power station area and costs involved. The higher the viscosity and the colder the climate, the greater the quantities needed for heating.

If e l e c t r i c heating i s used, the overall thermal efficiency of the heating process at the engine-driven alternator terminals i s around 352, whereas i f a packaged o i l - f i r e d boiler i s used, the efficiency i s about 752.

Exhaust gas boilers represent the u t i l i s a t i o n of a free heat supply. The Incorporation of a waste heat recovery system i s the only additional cost incurred.

Engine Design Features for operation on Residual Fuel

The existence of contaminants such as vanadium and sodium salts i n heavy fuel and the high fuel temperatures required for optimal v i s c o s i t y levels, result i n engine design problems. These relate primarily to Incomplete combustion and metal fatigue.

45

For continuous operation on heavy fuels, the following requirements should be achieved for satisfactory service l i f e of the engine:

1. Exhaust valve seat temperature* In the Mi rr lees Blacks tone K Major, valve seat temperature should not exceed 550°C (1020°F) which means that the exhaust temperature after the valves should not exceed about 820°F with uncooled valve seats and 930°F with cooled valve seats. The temperature limits of valves are engine s p e c i f i c and vary accordingly. The top piston ring temperature i n K major engines should not exceed 230°C (430°F) and the injector nozzle t i p temperature should not exceed certain l i m i t s , depending on engine type. For example, in K major engines the upper l i m i t i s 180°C (350°F).

2. the bearing loadings should be well within the carrying capacity of the l i n i n g material.

3. There should be an adequate factor of safety on the stressing of a l l the components both thermally and mechanically.

Exhaust Valves

Exhaust valve l i f e , with heavy fuels, i s generally limited by the formation of deposits on the valve seat resulting from imperfect combustion and from the Incombustible constituents in the fuel which are mainly sodium and vanadium s a l t s . As deposits build up the valve i s prevented from making proper contact with i t s seat and heat transfer i s subsequently reduced.

Adhesion of the above constituents i s minimised i f the valve seat temperature is kept below 550°C. In one particular design water Is fed Into the top of the valve cage down to the s t e l l i t e d seat and then up past the valve guide and out of the top of the cage.

Valve rotators in the top spring plates give uniform valve temperatures and assist with valve stem lubrication. One approach to lubrication is to feed o i l into d r i l l i n g s which connect with shallow f l a t s on opposite sides of the valve stem so that, when the valve i s i n the open position, there i s a passage for o i l flow down one side around a recess i n the guide and up the other side.

The o i l supply pressure to the valve guides i s of a reduced engine pressure, controlled by a pressure reducing valve.

Exhaust temperatures

It i s essential to have an adequate a i r flow to maintain low exhaust temperatures. The air delivered by the turbo-charger scavenges the cylinders of the products of combustion and cools the combustion chamber components as well as providing a trapped mass for the combustion process.

In the K major engine, the exhaust temperatures must be maintained at less than 500°C. The a b i l i t y of the a i r flow, in this engine, to perform these functions depends on:

Valve shape and seat angle;

46

• cam ramp acceleration, positive acceleration and retardation; and

valve timing, where different timings are used on engines having 3-cyclinder groups from those having 2-cyclinder groups.

Fuel injection equipment;

Injector nozzles tend to form carbon around the holes when operating at high temperatures - referred to as "trumpeting"•

The process whereby "trumpets" increase in size u n t i l they break off from the nozzle produces a c y c l i c r i s e and f a l l i n exhaust temperatures. Thus, a cooled injector i s required for high ratings on heavy f u e l .

Lubricating o i l s ;

Forced lubrication i s provided to a l l crankshaft and camshaft bearings, piston pins, the valve rocker arms and a l l other running gear. In­line engines have a single pump, though separate motor driven pumps are available.

Lubricating o i l s purchased for operation i n diesel engines contain an alkaline additive which is designed to neutralise the acidic products of combustion. Specifically, those products resulting from the combustion of the sulphur component of fuels. It is important to know the percentage of sulphur present i n the fuel as this determines the grade of lubricating o i l used i n the engine. For example, Mirrlees Blackstone K major engines using fuels containing 2.5X sulphur require the lubricating o i l TBN9, whereas engines running on a fuel with 3.5% sulphur content require TBN12.

In conclusion, i t must be noted that the above outline i s based on tests carried out by manufacturers of diesel engines s p e c i f i c a l l y designed for the use of heavy f u e l . A detailed study of on-site operational problems i n collaboration with the manufacturer's assessment is needed for a more complete comprehension of the specific problems at each stage of the fuel o i l operation.

47

A p p e n d i x : 4 . 2 . 1 0 ( b )

o o

Annex 5

FLOW CHART FOR HEAVY FUEL PROCESSING PRIOR TO USE

HEAVY FUEL SYSTEM

PUMP

HEATER

VALVE

EXHAUST VALVE

LINE HEATER

THERMOSTAT

49

INDEX FOR APPENDIX: 4.2.10(b)

1- Delivery of heavy fuel to station.

2. Stores tank - heating i s required to f a c i l i t a t e handling of f u e l .

3. Transfer pump - delivers fuel to balance tank.

4. Balance Tank - heated by immersion or c o l l heaters.

5. Centrifuge feed pump - delivers the fuel to the pre-centrifuge heater and then to the centrifuges.

6. Pre-centrifuge heater heats the fuel before centrifugal separation.

7. Pur i f i e r - self-cleaning p u r i f i e r separates the water from the o i l .

8. Hot water tank enables priming of the pu r i f i e r before f u e l entry.

9. C l a r l f i e r - manual cleaning c l a r l f i e r separates sediment from the o i l and also acts as a standby p u r i f i e r .

10. Sludge tank - sludge gravity drains from the centrifuges for storage before disposal. The sludge tank i s heated.

11. ' Sludge pump - removes sludge for disposal.

12. Service tank - with heater and thermostat collects treated fuel before admission to engine.

13. Outlet valve from the service tank allows excess fuel to pass back to the balance tank in l e t for further treatment.

14. Bus Rail Pump the fuel passes via a line heater to the bus r a i l pump which delivers i t to the bus r a i l engine system.

15. Bus r a i l heater prevents dissipation of heat while the fuel passes around the engine.

16. Winslow f i l t e r - acts to further remove sediment and water from the f u e l .

17. Bus r a i l - Fuel travels through the bus r a i l , around the engine before delivery to the fuel-injection pumps.

18. Fuel pump - one for each engine.

19. Injection pumps.

50 Annex 6

Appendix: 4.2.10(c)

COMPARISON OF COSTS OF PRODUCTION BETWEEN FUEL OIL AND DIESEL OIL FUELED DIESEL ENGINES OF 2 MW (2 x 1 MW) CAPACITY, KOLONIA, PONAPE

Parameters:

The next extension to the Ponape power system is most appropriately of 2 MW by conventional and cautious planning guidelines.

The system costed here Is a duel fuel system designed for use with both diesel and fuel o i l . The manufacturer is a reputable International company which has a major share of the market for heavy duty industrial diesel generators in the Pacific. Prices are budget prices from recent quotes, and hence duplicable in the near term.

The analysis assumes the delivery of fuel o i l to Ponape four times per year in upto 1000 te. lots, and the construction of new storage and handling f a c i l i t i e s . A 1000 te fuel o i l tank at port is the appropriate size.

Pricing. We have examined the range of prices for fuel-oil depending on size of delivery tanker and present cost of refining as follows:

(a) US$236/te CIF, which is the reputed price to the Northern Marianas from the Guam Oil and Refinery Co. (GORCO). This is the maximum price (ex GORCO) as the Northern Marianas' consumption is upto 10 times that for Ponape, and delivery costs will be very much lower.

b) Current posted price ex. Singapore for medium heavy fuel-o i l is 70 US $/US gallon or $197-35/metric tonne plus delivery (1) in GP tankers prepared to take both black and white products at $34/metric tonne giving $231.35/metric tonne or as is the most likely case (11) in small 1500 te tankers at $150/te or 14 4/litre yielding a CIF price of US$347.35/te.

Thus rounded minimum and maximum prices of $235/te (CIF) and $350 per tTTciF) will be applied. Fuel o i l is 1065 litre/te, 40.7 MJ/litre. Diesel is 1209 1/te and 37.8 MJ/1.

A new bulk fuel o i l storage f a c i l i t y has been costed In discussions with o i l companies at US$400-450,000 complete. Materials cost without freight is US$150,000 for the tank alone, then construction costs, pumps, piping, foundations, electrical systems and a small laboratory to test samples of delivered product, are added.

51

Additional costs for fuel delivery will apply as above. These entail the purchase and dedicated use of a 9000 li t r e fuel o i l tanker transferring product from port bulk storage to power house storage. The estimated cost of this arrangement is $3.60 per tonne or 0.34 $/litre. This will not apply to diesel as a fuel line is being established from port to power station. This is a recent cost for diesel and will not be lowered against the diesel option in this analysis.

US$ Capital costs are: Diesel Fuel o i l

2 x 1033 kw diesel generation diesel fuel sets (CIF) 520,000 520,000

Lube-oil centrifuge (automated) and additional on-engine equipment 40,000

Fuel o i l treatment including centrifuge, heaters, pumps, pipework, lagging, electric controls etc. 50,000

Power station storage tank (100,001), balance tank (10,001), service tank (5001) and sludge dump tank for monthly clearance (3001). Estimates based on 1978 costs of 48,000 gallon tank at new power house Inflated to 1982 dollars at 10Z p.a. (installed costs) 59,000

Engineering and Installation (10Z of capital expenditure) 52,000 61,000

TOTAL 572,000 730,000

Maintenance costs for the diesel system are taken as the same for the existing generation plant in respect of labour, whereas consumables and replacements are based on 3Z of capital expenditure p.a.

Maintenance on the fuel o i l operations are taken as the above plus 0.6 .£/kWh generated on the basis of discussions with manufacturers and end users (it is alleged that as margin of A$30/te of fuel is required on a large Australian installation (e.g. 20 MW) in order to justify the additional maintenance and capital cost of fuel o i l . The additional maintenance charge here derives from this estimate). Additional maintenance is required for a l l additional equipment, for greater engine wear, and for disposal of sludge. The additional processing and equipment is given in Appendix 4.2.2.

Average plant capacity load factor will be 80Z, thus generating 14.48 GWhrs c.f. 15 OThrs production In 1982, or in excess of 95Z of total energy production.

52

Fuel efficiency provided by the manufacturer is 41.52. This will be denoted 102 for l i f e long operation: thus we asume 37.42. (Note: this is an Improvement of more than 302 on the present diesel system performance)•

Lube o i l w i l l be taken at 32 of the fuel cost of diesel for both fuel o i l and diesel operations*

Simple Annual Costs of Production

1. Capital charges

a) Fuel o i l system Generating equipment Port-based storage (at $425,000) Total

Life (yrs)

15

20

Recovery factor $p.a. (at 102 disc rate)

0.1315

0.1175

88,237

49,938 145,108

i/kWh

1.00

b) Diesel systi Generating equipment 15 Total

0.1315 75,218 75,218

0.52

2. Operations and maintenance

a) Fuel o i l system Maintenance (32 copra) Labour

15,600 65,000

0.11 0.45

Loading for additional manpower and maintenance cost 0.60

1.15

b) Diesel system Maintenance Labour

15,600 65,000

0.1 0.45

TOTAL 80,600 0.55

3. Fuel and o i l

a) Fuel o i l : At 37.42 te annual requirements is 3219te (i) Low price: $235/te; 22.06^/litre and 0.54 f/MJ at 40.7 MJ/ plus transportation port to power house of 0.34 f / l i t r e giving 0.55 /MJ: 766,588 5.29

. Plus lube o i l 0.26 Total 5.55

53

(II) High price: $350/te; 32.86 {/litre and 0.81 $/MJ. Plus transportation part power house of 0.34 {/litre giving 0.82 {/MJ 1,142,913 7.89

Plus lube o i l 0.26 Total ITTy

b) Diesel;

Current price Is 33.34 {/litre or $403.08/te; and 0.88 {/MJ: 1,229,345 8.49

Plus lube o i l 0.26 Total 8.75

Total annual costs of production*:

A. Fuel o i l 1. Lowest priced o i l 7.70 2. Anticipated o i l price 10.30

B. Diesel o i l 9.32

at the generator terminals

54 Annex 7

Appendix: 4.6.3

COMPARATIVE FUEL COSTS OF COOKING WITH ELECTRICITY AND SOLID FUELS

Price per Efficiency of MJ per Cost per Proportion unit Appliance unit MJ delivered of cost of

(av.) (cents) Electricity

Electricity 23.5{/kWh 70Z 3.6 9.33 1

Wood* $25/te at 20X 10.9 MJ/kg 1.15 0.12 40Z m.c.w.b.

Charcoal* $200/te 30Z 30 MJ/kg 2.23 0.24

* In slow combustion stove.

55 Annex 8

Appendix: 4.6.5

COST OF SOLAS. WATER HEATING: PONAPE, FEDERATED STATES OF MICRONESIA

Parameters

. New solar system of collector panels with 300 l i t r e storages cydinder i n s t a l l e d at cost of US$950.

Insolation averages 15MJ/m^/day (estimated from Lae. Papua New Guinea, with 200" r a i n f a l l , concentrated i n May-September, during which time Insolation is at a minimum mean monthly value of 15 MJ/m2).

Collector e f f i d e n c y i s 45%.

Annual c o l l e c t i o n i s therefore 3m3 x 15MK/m2 x 0.45 « 7891 MJ/yr - 2053 kWh (t)

• Annual consumption of e l e c t r i d t y for hot water In a t y p i c a l high Income household in Kolonia w i l l be about 2500 kWh p.a. (6.8 kWh/day) equating to the use of 168 l i t r e s of water per day heated from 20°C to 55°C at 100% e f f i d e n c y .

Life of solar collector i s 15 years.

. Annual maintenance i s 3% of capex.

Annual cost of solar hot water service TJS$

1. Capital charges (10% discount rate) 124.93

2. 0 & M 28.50

TOTAL 153,43

per kWh produced: 7.47 { US/kWh

Annual savings on diesel: 2053 kWh delivered to hot-water systems equals to 2333 produced'at generator terminals, and to 861 l i t r e s of d i s e l used i n generation at 25.8% thermal efficiency. Cost of diesel i s 33.3 { / l i t r e or i n US$287 p.a. Simple payback of 3.3 years.

56

Appendix: 6.5.1

Annex 9

AN ESTIMATE OF THE FULL COSTS OF ELECTRICITY PRODUCTION AT KOLONIA, PONAPE, FEDERATED STATES OF MICRONESIA

(a) Capital charges

Estimated present day replacement values of major capital equipment*

'000 US$ Life Recovery factor Annual charge (yrs) (10% discount $

rate)

Buildings 1000 40 0.1023 120,300

Generating Equip. 3240 15 0.1315 426,060

Transmission and Distribution

. Unes and poles** 847 20 0.1175 99,528

. Transformers 268 20 0.1175 31,490

. Meters 24 20 0.1195 2,820

Vehicles and tools 90 10 0.1627 14,643

$694,836

* A l l equipment annultised i s that l i s t e d i n the Senate Committee on Energy and National Resources, Publication No. 96-48. Generating equipment has been allocated US$600/kW i n s t a l l e d , and other equipment i s taken at unit rates in most recent year of purchase and estimated using 5% compound p.a. increase i n cost to bring i t to 1982 dol l a r s .

** Does not include 18 mile l i n e . This would add 0.26 {/kWh to capital charges. Using 14.7 MWhr generated (est.) for 1982, losses of 12%, thus sales of 12.95 MWhr the capital charges per kWh sold at 5.37j/te.

(b) Fuel costs

Diesel sold to the Public U t i l i t i e s Board was 33.34 { / l i t r e .

Overall fuel efficiency 25.8% (October 1981 to May 1982 Record).

LubHeating o i l is 5% of fuel cost of generation.

System losses are assumed to be 12%.

Fuel cost per unit sold is : 14.69 {kWh.

57

(c) Operations and Maintenance

Generation:

spare parts at 32 of the capital value of the generation sets i s :

$96,200 p.a.

labour is $67,000 p.a.

Total: $164,000 p.a. 1.27

Transmission and Distribution:

Labour $58,000 p.a.

Spares and consumables at 32

$34,000

Total: $92,000 p.a. 0.71

(d) Administration • The present administration does not cope with extensive meter-

reading or consumer b i l l i n g . This is normally 1.5 DS /̂kWh sold, and w i l l be charged as such here to reflect future cost

1.50 c/kWh

Full marginal cost of production: 23.54 i/kWh

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