Supporting the Development of Energy Efficiency Tender - 105076906

A. Background 1. The Pacific Island Countries (PICs) comprise 11countries: Fiji, Kiribati, Marshall Islands, FederatedStates of Micronesia, Nauru, Palau, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. The total population is about 2.6 million people. Fiji has the largest population, with about930, 000, followed by Solomon Islands (about 700, 000). Other PICs havepopulations below 200, 000, including Nauru and Tuvalu with about only 11, 000and 12, 000 respectively in 2021, which are among the smallest population membercountries of the World Bank Group (WBG). These populations are scatteredover an area equivalent to 15 percent of the globe-s surface. The PICs are allrelatively small, with open but concentrated economies and limitedinstitutional capacity. 2. As small andremote economies, PICs share many similar challenges and opportunities. Theyhave limited natural resources; the high dependency on imported fossil fuels furtherconstrains the limited public fiscal space while the consumers, both householdsand industries, still suffer from the high and volatile energy costs. Continuingthe current reliance on diesel generators would mean PICs are stuck in avicious cycle where they pay more for unreliable and unsustainable electricity, with less opportunities for the youth and less resources to adapt to climatechange. 3. Electricitytariffs in the PICs are among the highest in the world, with exception forFiji. The electricity tariffs for residential customers in 2019 was the highestin Vanuatu and Solomon Islands (0.72 US$/kWh in both countries) versus theglobal average. The high tariffs are a result of the high share of diesel-basedgeneration that uses expensive imported fuel and low economies of scale. AllPICs import fuel for their energy use, and approximately 80 percent ofcommercial energy use in all PICs depends on imported petroleum. 4. Expediting the clean energy transition in the PICs requiresnew solutions and deployment of new technologies. For PICs, increasing energ...