Alternative Energy - Energy Security in the Pacific by Guam Environmental Protection Agency

“The Energy Security Challenge and Solutions in the Pacific”

Jeffrey Voacolo- Vice- President Micronesia Renewable Energy Incorporated

Energy Challenges in the Outer Islands Highly dependent on foreign oil Skilled labor shortage both on the policy formation and implementation stages Political Challenges Local issues/Tribal/Land disputes Access to Capital/Investment Security Remoteness/limited market/shipping BAU Mentality ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Oil- A finite Resource The Growing realization that the world is now at or close to peak conventional oil production is fueling a steady increase in world oil prices The need for oil is expected to increase by 40% from now until 2030 Our Pacific Islands near total dependence on fossil fuel imports for all energy needs creates a economic burden for end users ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Implementing Change- Policies Facing the need to expand access to energy while reducing the dependence on imported fuels, policy makers well versed in implementating these procedures will be needed to focus on demand management as well as on improving the efficiency of energy supply. The greatest potential to increase supply side efficiency and reducing technical and non technical losses can help close the gap between “generated energy” and “billable energy” Local Island labor can be trained into skilled labor not only for the implementation of upgrading old generation equipment and adding new renewable energy projects but also for the maintenance stage of the asset which is so desperately needed. © 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Political Challenges Reform of the power sector in the Pacific has been limited. In most of the Island nations electricity continues to be supplied by vertically integrated, state owned utilities. Electricity prices are often politically determined, resulting in electricity prices that are below the cost of service provisions, placing huge financial strains on the power utilities. Financial performance of independent third party IPP under independent price regulation lead to higher productivity and improved financial performance, including supply efficiencies with maintained equipment. ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Access to Capital Access to Capital is very difficult for the private sector and limited due to small markets, investment security, and politics. The reliance on the public sector is still the main source of infrastructure upgrades. EU, JAC, ADB, USAID, AUSAID and select other agencies are the main source of investment

Solutions Implementation of renewable energy projects throughout the region, such as energy efficiency, solar and small wind technologies, and hydro energy where feasible these are real, time tested, proven and bankable solutions. Hybrid solutions working with the utilities implementing new technologies, efficient generation, scada technologies for the implementation of renewables. Working with the Tribal and Political leaders for real change with the implementation of net metering, interconnection and feasibility agreements. Working with the Political leaders and the Finance community and finding ways to attract the private sector to finance these infrastructure projects with adequate security vehicles.

Federated States of Micronesia The Federated States of Micronesia is taking steps forward to achieve their renewable energy targets set for year 2020. In 2012, FSM put in place an energy policy, which calls for a 30 percent reduction in use of fossil fuels and 50 percent increase in energy efficiency by 2020. FSM, President Manny Mori, pointed out that â&#x20AC;&#x153;energy must be sufficiently available if we are to achieve private-sector-led economic growth to meet our needs and contribute to our shared-global millennium development goals.â&#x20AC;? ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

CNMI CUC fully supports developing strategies that reduce fossil fuel dependency, while providing reliable generation and distribution at the least cost possible for consumers of the CNMI A Renewable Energy Integration Study is out for RFP that will extensively analyze the island's power grid to understand where and how much renewable energy can be introduced into the system, while maintaining grid stability. Another requirement is the development of an Integrated Resource Plan, or IRP, a roadmap and agreed-upon strategy that will break the cycle of crisis management of energy in the CNMI.

Palau The President of Palau met with representatives of the International Renewable Energy Agency (IRENA) to discuss results of a week-long IRENA workshop on renewable power for the renewable power for the island. The workshop concluded that Palau could easily install photovoltaic (PV) power systems, using solar cells on rooftops and parking lots, to provide up to thirty percent of the islandâ&#x20AC;&#x2122;s total electricity requirements. It also found that PV system could provide substantial savings for the island compared to power from diesel fuel. The President expressed his strong interest in expanding renewable power options. But he stressed that it is important for electricity to be affordable and renewable energy options should help to lower electricity rates. ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Hawaii The DOD energy security goals are aligned with the State’s goals for a cleaner energy future. This has made the Military a big spender in Hawaii’s alternative-energy sector, including multi-million dollar investments in solar, biofuels, conservation and other areas. The military is a big partner with the State of Hawaii in any kind of initiative that involves sustainable, renewable clean energy. Hawaii and the U.S. Pacific Command have been collaborating on cleaner energy solutions. The State appreciates the U.S. Department of Defense's voluntary commitment to comply with the State’s goals to achieve 70 percent clean energy by 2030.

GPA Commitment to Renewable Energy GPA is a non-interconnected medium-sized grid that is run entirely on high-cost, oil-based generation. U.S. EPA regulations such as the RICE MACT mandate are leading GPA into new directions such as a potential liquefied natural gas (LNG) and renewable energy futures. In 2004, Guam enacted legislation requiring the Guam Power Authority (GPA) to allow net metering for customers with fuel cells, micro turbines, wind energy, biomass, hydroelectric, solar energy or hybrid systems of these renewable energy technologies. In 2010, Guam amended net metering and raised the system capacity limits to 25 kilowatts (kW) for residential systems and 100 kW for non-residential systems.* GPA must provide customer-generators with a bi-directional energy meter and may, at its own expense, install additional meters. ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

GPA- Commitment to Renewable Energy The Guam Power Authority is set to start a wind turbine pilot project to be constructed along Cross Island Road in Yoña. The project is being funded by a U.S. Department of Interior Office of Insular Affairs grant amounting to $1.5 million, which will be used for the installation of a single 275kilowatt wind turbine. “At the completion, it is anticipated that this project will produce windgenerated power to serve approximately 25 residential homes,” GPA General Manager Joaquin Flores said in a statement. © 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Guamâ&#x20AC;&#x2122;s Commitment to Renewable Energy Guam Bill 166, enacted in March 2008, established a renewable energy portfolio goal of 25% renewable energy by 2035.* Under this law, each utility that sells electricity for consumption on Guam must establish a renewable portfolio goal according to the following schedule: 5% of net electricity sales by December 31, 2015 8% of net electricity sales by December 31, 2020 10% of net electricity sales by December 31, 2025 15% of net electricity sales by December 31, 2030 25% of net electricity sales by December 31, 2035

Guam Energy Office The Guam Energy Office supports energy conservation, energy efficiency, renewable energy programs and practices, and is committed to understanding the energy issues of our island. As a line agency within the Executive Branch, the Guam Energy Office implements energy programs for the benefit of the island community, utilizing grants that have been awarded by the U.S. Department of Energy : State Energy Program (SEP), American Reinvestment and Recovery Act (ARRA), and the Weatherization Assistance Program (WAP). ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Guam Renewable Energy Association Industry Leaders from the Island of Guam that are forming a Trade Association for the renewable energy Industry Membership is open to any company or professional who is involved in the enhancement of the Renewable Energy Industry This Association will be a non-profit entity supporting the Industry here on Guam with Industry best practices, technology enhancements, and supporting legislature for the betterment of Guam and the Industry ÂŠ 2013 Micronesia Renewable Energy Incorporated. All rights reserved.

Solar Energy—Guam’s Power Generator Plentiful– Guam is blessed with an abundance of natural power, sunshine. The amount of solar energy available to the Earth in one minute if captured exceeds Global demand for energy for one Year on our planet. Clean Energy—Solar Energy (Photovoltaics or PV) provide clean usable electricity with zero emissions for the next 25 to 30 years. Security– With our total dependence on Foreign oil. You can not only own your own power producing energy plant for your business, but hedge your energy costs for the short term knowing exactly what you’ll be paying until the system is paid off. And then adding those dollars back to your bottom line where the money matters the most.

Solar Energy Advantage to Business Available Incentives to businesses Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2013) - businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property. The 50% first-year bonus depreciation allowance was further extended for property placed in service during 2013 by the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 331) in January 2013. Business Energy Investment Tax Credit (ITC) - The credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy

Solar Energy-Typical 100 KW Business Installation Net installed cost of this system, after taking advantage of all of the tax benefits was a little over $2.00/watt Payback period is 3.75 years 15 year IRR is 26.64% 1st year savings on electricity is $57,000.00 This installation would be equal to planting 777 acres of trees, taking 494 cars off of the road and not driving 6,228,200 miles a year.

Micronesia Renewable Energy, Inc. Contact Information For more information Please contact: Jeffrey Voacolo Vice-President Micronesia Renewable Energy Inc. Office:(671) 632-2613 Mobile:(671) 487-3763 www.micronesiarenewableenergy.com