Transitioning to solar energy in PNG

The cost of solar equipment worldwide continues to get cheaper every year and even without any government policy to encourage it, solar is already one of the cheapest forms of energy in Papua New Guinea. Many local companies already understand this and are making plans to transition but we need to grow the industry to meet demand. Businesses that transition to solar will have increased profitability due to lower energy costs. Retail prices for electricity in PNG are very high. President of the Solar Association of PNG Christian Lohberger responds to questions from Business reporter DALE LUMA.

What is the current state of the business environment in regards to the use of solar energy in the country?
Based on experiences in other countries, it is expected that the business environment for solar will rapidly increase over the next few years.
Currently, there are many businesses selling small scale solar energy equipment.
These are things like solar lanterns that have a small panel that can charge a battery for a light and sometimes charge a mobile phone through a USB (universal serial bus) port.
There are also larger versions called solar home systems that have a bigger panel and battery that can power up to five lights.
These products are being sold through specialist solar and electrical companies but they are also becoming more common on the shelves of supermarkets and other retail stores.
The solar lanterns and home kits are low voltage direct current systems that don’t need an electrician or expert to install them.
Their cheapness and simplicity makes them very popular.
For larger 240 volt alternating current (AC) systems that can power a whole house or a business the market is much smaller.
These need an expert to design them and a qualified electrician to install them safely.
Only a few PNG companies are currently doing systems of this size though it is possible to buy large panels, inverters and regulators at specialist electrical stores.

What percentage of the business community is transitioning to using renewable energy in PNG?
Very few probably less than one percent of PNG businesses currently have solar or a plan to transition towards it.
Some notable exceptions are Air Niugini which has a large solar rooftop system at its 6-Mile office and Bank South Pacific which is developing an energy strategy to run many of its branches with solar power.
Due to an absence of government polices to encourage solar, most systems in PNG will either need batteries to store the power they use or be a behind-the-meter system.
Behind the meter is where solar is blended with electricity from PNG Power so that cheaper electricity produced by rooftop solar is used first and then PNG Power can supply the balance of electricity that’s required.
Batteries on the other hand mean that it’s possible to cut off PNG Power entirely if you have a big enough roof.

Batteries are still very expensive but we are seeing dramatic price drops for them and soon it will probably be cheaper to just use a big battery instead of a backup generator for blackouts.

Will businesses in the country maintain the type of profitability that they are used to when they transition to using renewable energy sources like solar?
Profitability will actually increase because of the much lower energy costs that are involved.
A business that can access solar through a rooftop system will have a big advantage through cheaper energy.
The actual savings depend a lot on the size of the roof a business can use but its expected electricity produced by solar can be up to 20 percent cheaper than electricity from PNG Power.

How do businesses transition into using renewable energy?
The important first step for any business is to understand their electricity usage and energy costs well.
This can be done through examining the electricity bills for the last 12 months to identify patterns in usage and costs. If a business has a big rooftop and it uses large of amounts of electricity during the daytime it is a good candidate for solar power.
Businesses with only a small roof, or that use most of their electricity at night, will be less compatible with solar.
Once the energy needs are well understood a rooftop solar system can be designed that suits the business needs.
The solar panels sit on special racks that are attached to the roof. Because solar panels only make direct current electricity, the energy they produce feeds into an inverter to turn it into 240 volts of alternating current power.
Unfortunately there is no government programme to help businesses transition to solar so any interested business would need to do it by themselves.
This is not too difficult but it is essential to use an experienced solar engineer and qualified electrician to design and install commercial solar projects safely.
An important thing to remember is that solar is not a replacement for PNG Power or for a generator.
There will still be times for most business when they need more energy than can be supplied off their rooftop or when the weather does not allow the sun’s rays to reach the panels.
A common scenario would be a large building that can supply one quarter of its electricity needs through solar.
They will still need to get the other three-quarters from PNG Power and if there is a blackout during a rainy day they will need a generator that can supply 100 per cent of the power they need.
There are plans for the country to transition into using solar energy by 2050. What is the progress and are we on target to reach that goal?
Progress on this seems to be going slowly.
Solar in PNG is a very new technology and there are not many experienced organisations capable of installing large scale projects.
However, this is changing quickly as many international solar companies have got PNG marked as a place to invest.
Many other markets around the world already have well established and mature solar sectors, however, in PNG, it is tiny despite our combination of high electricity prices and bright sunshine making solar a very competitive and practical energy source.
PNG has a large and growing market for electricity and no established solar industry so global solar companies are very interested to come here.

Do we have the capacity to make a complete and smooth transition into using solar energy by 2050?
It’s likely that PNG will always have many different sources of energy.
We have very good hydroelectric resources and these assets will make up the bulk of our electricity supply as PNG Power continues its programme to upgrade and restore the hydro power stations.
However it’s possible that solar and battery combined could be a major contributor to the grid. In many countries around the world, solar and battery is already cheaper than diesel and gas plants.
If PNG Power and the government decide to really invest in solar then it’s likely to become the second source of the country’s electricity behind hydro.
There is also huge potential for wind power along the coastline of Central and Milne Bay.
It’s unlikely that PNG will be using 100 percent renewable energy by 2050 but it’s entirely possible to be up to 90 per cent or higher.

What can the government do to encourage the change to renewable energy, specifically solar in the country?
There are many things the government could do to encourage solar.
Most importantly it could create a market for solar electricity by introducing a feed in tariff or a net metering system.
A feed in tariff is where solar that you make on your rooftop goes straight into the PNG power grid and then you are paid for the amount you generate.
This is the system that operates in Australia and other more developed solar markets and it allows large scale solar projects to generate cash income for their owners.
Net metering is where you feed electricity from your rooftop into the PNG Power grid and they then agree to pay you back the same amount of electricity when you need it, say at night time.
This would have the benefit of opening up solar for residential users.
Most homes in PNG are empty during the day while people are at work but become busy at night with cooking and family life.
If net metering allowed them to use cheap solar from the daytime to be paid back at night then many would install solar.
Other things the government could do is offer a tax rebate on solar or renewable energy investments.
Adopting a carbon price would also make renewable energy projects more attractive to investors.
Tariff reform from PNG power in the form of off-peak pricing would encourage solar projects.
Pricing electricity at night (off peak) cheaper than electricity at daytime (peak) would encourage solar investment and also reduce demand on PNG Powers daytime load.
Solar is going to happen in PNG no matter what.
The economics are just so compelling and with a payback period for a medium-sized solar rooftop of around three years smart business owners are already looking into it.
But if the government and PNG Power came up with some good policies like net metering we could see solar being used by all parts of society including homeowners and not just businesses.