Project Background
The United Nations Industrial Development Organization (UNIDO) in partnership with the General Directorate for Natural Resources and Energy (DGRNE) of the Ministry of Infrastructure and Natural Resources (MIRN, former MOPIRNA) and the National Designated Authority (NDA) at the Ministry of Planning, Finance and Blue Economy (MPFEA) are implementing the GCF readiness project “Building institutional capacity for a renewable energy and energy efficiency investment programme for São Tomé and Principe”.
It is being executed in close coordination with the ongoing GEF funded UNIDO project “Strategic program to promote renewable energy and energy efficiency investments in the electricity sector of São Tomé and Príncipe”. It is also linked with the regional activities of the Central African Centre for Renewable Energy and Energy Efficiency (CEREEAC), which was recently established by UNIDO and the Economic Community of Central African States (ECCAS) in Angola, Luanda under the Global Network of Regional Sustainable Energy Centres (GN-SEC).
The GCF project contributes to the nation’s Vision 2030 “São Tomé e Príncipe 2030: the country we need to build", which aims to transform the country into a climate-resilient and vibrant island hub for blue economy business, financial services and tourism, benefitting from the growing regional market of the ECCAS. The success of the vision highly depends on a power sector reform and a transformational shift of the entire energy system from a nearly complete fossil fuel import dependency to renewable energy and energy efficiency.
Therefore, the project aims to strengthen the capacities of the Government of Sao Tome and Principe (STP) to formulate and implement a paradigm-shift renewable energy (RE) and energy efficiency (EE) investment program, which will enable the country to achieve its climate mitigation targets in the Nationally Determined Contribution (NDC) and the 3rd National Communication on Climate Change (NCCC). Through RE&EE improvements, the country aims at reducing its GHG emissions significantly in comparison to the reference scenario 2012-2030.
The GCF project addresses demand and supply-side barriers, which hinder the market introduction of new sustainable energy technology products, services and business models in STP. The readiness project applies a holistic approach and focuses on a paradigm-shift of the entire energy sector. It builds on past and ongoing readiness activities and will complement and/or upscale existing support and close existing gaps in the sectors ranging from government ministries, private sector, energy producers/consumers and other stakeholders.
The project includes support for RE&EE policy and regulation, knowledge management, capacity building, as well as investment and business facilitation. The focus regarding renewables lies on specific regulations and practical documents/procedures, which aim to reduce risks for private participation (e.g. IPPs, PPPs, auto-producers, mini-grids) and project finance (equity, concessional and non-concessional finance), particularly in the area solar photovoltaics (PV) and run-off-river micro/small hydro power.
Specific context of the assignment
STP has an estimated total installed electric generation capacity of around 30 MW and has reached an electrification rate of 77%. However, still over 20% of the population in remote and rural areas does not have access to reliable electricity services. A majority of the population has no access to sustainable cooking services and relies on traditional biomass and charcoal. The electricity supply is characterized by frequent power cuts and load shedding, forcing businesses and essential social service providers to run on diesel generators.
Electricity services are expensive, with around 94% percent being produced by burning imported diesel fuel. Only around 6% is provided by hydropower. The country has the third-highest electricity supply costs in Sub-Saharan Africa reflecting the small-scale operations, a lack of interconnectivity between systems, underinvestment in energy infrastructure, high fuel costs, and management challenges at the national utility company, EMAE. The average transmission and distribution losses are estimated with 33% (around 22% commercial losses).
Even though STP’s average electricity tariff is among the highest in the ECCAS region, it is still insufficient to cover generation costs. Over the past years, the power sector has been a key driver of fiscal deficits and debt through accumulation of arrears by EMAE, the electric utility, with ENCO, the fuel supplier. The dependency on fossil fuel imports for energy generation and transportation questions the macro-economic stability of the country and hampers the productivity of key island industries.
Therefore, supporting a rapid transition towards renewable energy will free-up scarce hard currency resources for social and economic development (e.g. education, health care, transportation, export diversification, business development) and climate change adaptation. To address these challenges the Government has developed the National Renewable Energy Action Plan (NREAP) and the National Energy Efficiency Action Plan (NEEAP) with support of UNIDO.
The National Renewable Energy Action Plan (NREAP) of STP aims at a renewable energy penetration of 70% in the electricity mix by 2030 mainly based on solar PV and small hydro power. It is estimated that the achievement of the NREAP scenario would result in an approximate saving of 984,187 tons of diesel by 2050, which represents approximately USD 1.16 billion, considering diesel price forecasts. In 2019, expenditure on diesel imports corresponded to 8.4% of São Tomé and Príncipe’s GDP. The NREAP scenario considers also ocean renewable energy as part of the electricity mix in the mid-term. Whereas, assessments have identified only a very moderate potential for wave or tidal technologies, ocean thermal energy conversion (OTEC), is being perceived as an attractive mean to replace baseload diesel and balance out daily or seasonal fluctuations of other renewable sources.
In this context, UNIDO partners with SIDS DOCK, the private promoter Global OTEC Resources Ltd. and the Government on the development of the 1,5 MW floating OTEC platform “Dominique”, with the potential to be upscaled to 10 MW in the second phase. A memorandum of understanding (MOU) was recently signed by the Government and the promoter. The 160,000 km2 exclusive economic zone (EEZ) around São Tomé and Príncipe is an untapped solar heat battery, which OTEC platforms could harness to supply carbon-free, baseload power. An OTEC plant can generate electricity at a load factor of 95% throughout the year.
The efforts are part of the Global Ocean Energy Alliance (GLOEA), which was launched by UNIDO and SIDS DOCK under the GN-SEC at the UN Ocean Conference in Lisbon, Portugal, in 2022. The UNIDO support to the project in STP is considered as an important contribution to strengthen the technology readiness and commercialisation of the technology for the wider usage by SIDS and coastal developing countries. The industrial roll-out of OTEC is still hindered by significant barriers, including high upfront costs. Recently, a memorandum of understanding between the private promoter and the Government was signed. The feasibility phase of the project is funded by a mixture of equity, grants and venture capital. The project is developed as public private partnership (PPP) and will require concessional climate finance to break-even.
As part of the due feasibility assessments, UNIDO supports also the development of an Environmental and Social Impact Assessment (ESIA) in line with international quality standards. As a first step, UNIDO is seeking consultancy services for the development of a desktop scoping report, which will provide guidance for the final design and requirements of the ESIA. Due to the small number of operating OTEC plants globally (e.g. US, Kapan, Korea), there is need to learn more on required safeguards, standard procedures and quality standards. Future OTEC projects will benefit from the developed documents, which will be disseminated through the Global Network of Regional Sustainable Energy Centres (GN-SEC), coordinated by UNIDO.
An initial environmental and social screening, in line with GEF/GCF requirements, of the OTEC project in STP has revealed the need to develop a full ESIA and ESMP. Due to data gaps and limited experiences, it remained unclear whether the project can be classified as category A or B project. The scoping report shall provide further insight on the classification. The scope, depth and budgetary requirements of the full ESIA depend on the nature, complexity and significance of the identified issues.
Bidders are requested to submit their proposals by 26 June 2023 17:00:00 CET through the UNIDO e-procurement portal (https://procurement.unido.org/). In case of difficulties, please contact the UNIDO Help Desk at procurement@unido.org. Further information is available at: Procurement opportunities | UNIDO
Procurement expired
