29 Aug 2013

Tonga Power's CEO says power is still expensive

4:57 pm on 29 August 2013

A 7,000-panel solar farm was installed in Tonga just over a year ago to lower electricity prices, but financial benefits are still to reach the Tongan people.

Tonga Power Limited's CEO, John Van Brink, says the company was able to reduce electricity tariffs when the solar farm was first commissioned, but a volatile diesel market raised prices earlier this year.

He has told Daniela Maoate-Cox that the company could not keep absorbing the increasing costs.

JOHN VAN BRINK: Now price is set at Singapore. And the prices went up by more than 20%. In the end we just couldn't carry that cost any longer and not recover it. When we were able to reduce our tariff last year before the diesel prices skyrocketed, people could see that the progress that we wanted to get involved with was going to have some impact over the next few years. Unfortunately, since then, the volatility of the diesel costs has overwhelmed the savings so far, so for us it's more important to get projects in place.

DANIELA MAOATE-COX: Can you tell me a bit about the projects that are planned and the new initiatives coming through?

JVB: We've got six strategic projects we were developing through last year, ourselves, as Tonga Power Projects, and the government of Tonga has approved that those be put out into the marketplace to see if we can achieve grant funding from our development partners. They include biomass generation, where we're using waste woodchips from the forests. That would replace diesel generators. Over all, though, six projects will have a significant impact on reducing the tariff. It depends on the size of the wind generation.

DMC: The Tonga Energy Road Map plan was to be 50% renewable energy by 2020. Are you on track to reach that?

JVB: I believe we are. If we can get these six projects going. As I said, we could be looking at 30% diesel subsitution. And then we're developing other projects.

DMC: Are people generally happy with the electricity prices in Tonga?

JVB: No, they're not. It is expensive. About 70% of our customers use a very little bit of power. Basically, it's mainly TV and a few lights. Those customers struggle to pay for their electricity. And as a result we get a large number of disconnections, which is worrying. We've certainly had quite a lot of scrutiny and questioning as to why we need to put the price of electricity up. I think customers understand it's diesel and I think that leads to the question, 'What are we doing about it?' That's why we're trying so hard to get these projects going.

John Van Brink says the company will bring in a prepay power system by next year to help people budget for electricity costs.