UNELCO has been a long-term supporter of the PV solar and other renewable energy development in Vanuatu.
In fact UNELCO was the first to develop and to manage hydroelectric dams, wind, copra oil generation, and PV solar in Vanuatu; well before there were any formal national or international commitments by Vanuatu to do so.
Now the Republic of Vanuatu is one of the 185 countries to have signed and ratified the Paris Agreement (CoP21 https://unfccc.int/process/the-paris-agreement/status-of-ratification)
The Government of Vanuatu and UNELCO are partnering to achieve the Nationally Determined Contributions (NDCs) and will strive to fulfill the Government’s ambitious CoP 21 100% renewable energy commitment by 2030.
The first step would be consulting the quick reference guide below.
If you are in a green arrow scenario, leading to « Yes, I can install PV Solar »:
- you do not need to contact UNELCO to install PV Solar.
- after ensuring that no other laws, regulations or local ordinances restrict your PV installation, you should be able to proceed with your PV solar project.
If you are not in a green arrow scenario, specific conditions apply (please see the following FAQs)
Despite the fact that a Feed-in-Tariff “order” may still appear online; the Republic of Vanuatu Appeals Court revoked the Feed-in-Tariff as it had been proposed.
Customers should therefore not in any way rely on that document for guidance in UNELCO concession areas.
See FAQ #4 and #5 for the conditions to sell PV solar generation to UNELCO.
Please note that under the Convention Relating to the Concession for the Generation and Public Supply of Electric Power in Port-Vila dated 15 August 1986 and the subsequent amendments to it (collectively “the Concession Contract”), UNELCO, as the Concessionaire, has the exclusive right to generate and supply electricity within the Port-Vila Concession.
Section 4(2) of the Electricity Supply Act [CAP 65] as amended (“the Act”) authorizes any person (other than the Concessionaire) to generate electricity or to produce power within the Port-Vila Concession but only for its own usage.
This means that this person is strictly prohibited under Section 4(1) of the Electricity Supply Act to supply the electricity generated to any person other UNELCO.
This offence which is punishable on conviction to a fine of up to VT1,000,000 under Section 4(1) of the Act.
The above statement identifies some of the key elements of the current status of the legal framework on this matter.
Please be also aware that due to the rapidly evolving energy sector and the energy transition requirements in Vanuatu, it is also very likely that this framework will evolve during the lifetime of the financial payback of your solar panels, thus putting some risks on your potential project and its business plan.
We strongly recommend that you seek independent legal advice if you are in this scenario, from a specialised legal professional, in order to ensure the legality of your project and to avoid unwarranted significant expenses.
Please also note that as the Concessionaire, UNELCO reserves the right to commence legal action against any person who installs a Solar-PV system or operates any of this system within its concession in breach of the relevant statutory and concession requirements.
Alternatively, should you wish to eliminate uncertainty regarding the legal framework, you should consider structuring your project so that it injects 100 percent of its PV solar generation into the grid.
In that case, UNELCO can consider offering a contractually guaranteed power purchase solution.
The utility has been granted exclusive right to generate electricity supplied to the grid in its concession areas.
As a proponent of the development of renewable energy, the utility is generally willing to consider (without obligation) purchasing power generated from customers based on specific conditions.
These conditions are derived from the technical and financial parameters of the concession.
These conditions are generally as follows:
- Customer must inform UNELCO of their willingness to install PV solar with at least 30 days notice
- Customer must imperatively request authorization from UNELCO to feed-in to the grid
- Authorization may be granted (or refused) by UNELCO and will at minimum be conditioned to the three following factors:
- The customer must feed-in 100% of the power generated from their installation into the grid (no partial re-injection)
- The customer must ensure that the power output is effectively buffered for a minimum of 20 min in order to avoid contributing to grid instability
- The customer may have to abide by certain PV solar capacity limitations depending on the area in which they are located, the installed capacity at time of request etc.
In the event that the utility provides approval, the amount paid for the energy injected into the grid would be the cost of fossil fuel that the utility did not have to purchase because of the electricity provided (less limited administration fees associated to managing this new contract).
An example of the amount is described in the following Q&A.
If UNELCO agrees to a 100% feed-in contract with a customer, per the conditions and general guidelines listed prior, the energy produced would be roughly the cost of fossil fuel avoided by the utility.
In Efaté, the purchase price per kWh fed in would be approximately: Average price per liter of diesel used for power generation of the previous month (expressed in Vatus per Liter) * 0.259 (Liters per KWh).
The purchase price would be updated every month based on the update of the evolution of price per liter of diesel (the 0.259 value remains constant).
For example, in May 2019, the purchase price would work out to 99.34 Vatus per liter of fossil fuel for power generation x 0.259 Liters per kWh = 22.5 Vatus per kWh injected.
A modest customer management fee will also be incurred to address the expenses of setting up the contract, managing the invoicing, meter reading, invoicing, customer service etc.
There are two fundamental differences between UNELCO’s electric service and what a PV solar generator is providing:
- A PV solar generator is only providing the utility with intermittent energy.
The PV solar generator is not offering the utility any guarantee as to when and how much of this solar energy they will produce (for good reason, it is unknown when a cloud will pass).
Direct-to-grid individual PV solar generation is intermittent and non-dispatchable (cannot be ramped up to meet an increase in customer demand for electricity); as opposed to the generation resources that are required by a utility to provide continuity of service to its customers.
When a customer provides only intermittent energy, UNELCO must provide the backup capacity to ensure continuity of service; the capacity guarantee is a major cost component of the electric service.
- A PV solar generator is only providing energy; (s)he is not providing any of the electric lines, wires, transformers, and all rest of the electric infrastructure required for other customers to receive that energy.
The grid and the other support functions, which make electric service possible, represent more than half of the invoice a customer pays to the utility.
Finally, the PV solar generator can rest assured that by setting the purchase price for energy as described in the previous question, the utility shall mechanically make neither profit nor margin on the energy purchased.
The amount paid to the PV solar generator will be the same amount that the utility itself receives for generating energy.
It is therefore financially neutral to the utility whether it produces energy itself or purchases power from PV solar generators.
So long as you are not located within one of the UNELCO concession areas, the status of ownership of the PV solar installation at your premises is not a concern.
If however, you are located in one of the UNELCO concession areas, it is a necessary (but not sufficient, see previous Q&A) condition that the customer must have full ownership of the PV solar installation if he wishes to consume his own power.
In particular, the UNELCO customer cannot consume energy generated from a PV solar installation that is rented or leased from a third party, nor enter into any other type of financial agreement by which the UNELCO customer is not 100% owner of the PV solar installation prior to commissioning.
UNELCO may request proof of ownership during its due diligence.
You cannot; the utility has exclusive right to supply electricity (regardless of whether that electricity is produced from PV solar installations or other technologies) within its concession area.
No person or company can therefore supply electricity to another within the UNELCO concession areas, whether for compensation, trade or even for free.
There are several important considerations associated to individual PV solar generation and so-called “distributed generation” in general but below are four elements that help explain most of the rules and constraints:
- The first is the need to ensure the safety of utility employees/subcontractors working on the grid and persons that may be close to the grid. Having unknow power injections into the distribution grid is a serious safety risk during planned and unplanned maintenance;
- The second is the need to ensure the continuity of supply of the grid.
The utility has an obligation to the Grantor and its customers to provide power all the time. In small island systems, having too much intermittent power sources (such as PV solar and Wind), can disrupt the network and even cause blackouts.
The amount, the nature and the location of intermittent power generation sources must therefore be closely managed by the utility; in particular once high rates of intermittent power are reached (as is currently the case);
- The third is ensuring that the public grid is sustainably financed.
If customers were to consume their own PV solar generation but also rely on the grid to provide guaranteed power; based on the current tariff structure, they would no longer contributing the proper amount to pay for their reliance on the grid as backup.
- The fourth is ensuring equity and fairness amongst users of the public grid. If certain consumers do not contribute the proper amount for to cover the backup facility provided by the grid (cf. previous point), that is the option for that consumer to call upon the grid at any time, then the other customers will eventually be the ones to pay for the solar generating customer. This poses serious fairness and social equity issue in a country such as Vanuatu, where there are many customers with very limited means and very high interest rates which make it very unlikely for modest customers to be able to afford a PV solar installation.
- Electricity Act (CAP 65), as amended
- UNELCO concession contracts (Efaté, Tanna and Malekula), as amended
- URA guidelines
Unless you are in the green scenario (in question 2), as more than 80% of the Vanuatu population would be, the situation is complicated.
None of the texts listed in the previous question can be read independently from one another.
Furthermore there is a legal order of precedence between each of the texts.
For example, regulatory orders neither supersedes the law nor pre-existing concession contract etc.
It is therefore highly recommended for customers to get truly qualified and independent legal advise, from a legal professional, before making a substantial investment in an individual PV solar.
The short answer is no.
Vanuatu is currently undergoing an energy transition that should lead to significant evolutions to its energy strategy and energy mix.
As a result, individual PV solar policy will most likely evolve.
It is therefore very likely that the rules and therefore the economics will evolve in the coming months or years.
It would be irresponsible and misleading for any PV solar stakeholder, including UNELCO, not to advise potential customers interested in PV solar that they are taking on a certain level of risk by installing an individual PV solar system.
Beyond the operational and technical risks of running the installation over the slated timeframe in order to make the promised savings, there is also a risk that the texts will evolve: this is of particular importance in the case of PV solar because as a customer you will outlay 80% of the investment upfront, but the payback will only come over the years, and its amount will depend on how the texts evolve.
The installing company and customer could face legal prosecution and/or regulatory fines and/or the customer could be disconnected from the public grid, depending on the nature of the offence.
It is strongly advisable to seek independent legal advice, from a qualified legal professional, before proceeding with any type of PV solar installation.
The above Frequently Asked Questions is meant to provide high-level guidance. In no way should the questions or the points discussed be construed to be or to replace legal advice from a qualified professional.
Any person that endeavors to pursue a PV solar project, either as an installer or customer, is responsible ensuring the legality of their practices and would be prudent to seek independent qualified legal advise before proceeding.