EXECUTIVE SUMMARY

On 12 November 2020, the Ministry of Public Infrastructure, Industry and Commerce of the Republic of Palau
requested assistance from the International Renewable Energy Agency (IRENA) to develop a technology-specific
energy roadmap. This roadmap was to provide the government of Palau with clearly defined options for the least-cost deployment of renewables, with the goal of supporting the achievement of 100% renewable energy in the power sector by 2050, as well as decarbonising Palau’s transport sector. The resulting roadmap also built on an earlier version that IRENA had developed for the country in 2016-2017. That version had then been used to help inform the development of the country’s current nationally determined contributions (NDCs) under the Paris Agreement, which include a target of 45% renewable energy1 by 2025.

In addition, achieving 100% renewable energy in the power sector by 2050 also means covering the remaining 8%,
and for this, several distinct scenarios were analysed. These were: 100% renewables, PV plus wind; 100% renewables,
PV only; and 100% renewables, with green hydrogen. Of these, the green hydrogen scenario was found to be the
most cost-effective. Based on this result, an additional scenario, of 100% renewable, with green hydrogen plus EVs, was developed. This was in order to consider the impact that the full replacement of gasoline and diesel vehicles with EVs by 2050 would have. This scenario also aimed to identify the cheapest 100% renewable energy plan, while at the same time
decarbonising road transport. This last scenario, inclusive of green hydrogen production and EVs, has an estimated
LCOE of USD 0.15 per kilowatt hour (kWh), making it the least-cost option between the four 100% renewable energy
scenarios considered in this roadmap.

For the optimal system, an initial investment of approximately USD 126 million would be required. This investment would mainly be related to the additional solar PV, wind and battery capacity necessary to reach a 92% share for renewables. Regarding the 100% renewable energy scenario with PV and wind, the initial capital cost almost doubles, to
USD 249 million. This significantly increases the cost of electricity for a less than 8% increase in the share of
renewables. If no wind turbine capacity is added, however, and solar PV and batteries are relied on alone, the result is
the roadmap’s highest initial investment, at USD 266 million. This highlights the synergies available when combining
wind and PV, compared to investing in one single generation technology. Without the wind turbines, more battery
storage capacity and solar PV are required to store sufficient solar electricity, especially during cloudy days, to reliably
serve the load every hour of the year.

INTRODUCTION TO THE PALAU ROADMAP

ROADMAP OBJECTIVE
Located in the North Pacific, the Republic of Palau consists of more than 300 islands and six island groups. The total
area of the country is 459 km2 and the topography varies from high mountainous land, such as on the main island
of Babeldaob, to low, coral islands usually bordered by large coral reefs (CIA, 2021). According to the World Bank, in
2020, the Republic of Palau had a population of 18 092 people (World Bank, 2021). The government of Palau has proposed a target of achieving 100% of its electricity generation from renewable energy sources by 2050. With the country’s energy sector being dominated by conventional fossil fuel generation, transitioning to 100% renewable electricity would eliminate carbon dioxide (CO2) emissions from the power sector and simultaneously create the necessary environment for decarbonised transport through the adoption of electric vehicles (EVs). These could be charged using 100% renewable power, while potentially, hydrogen motorboats powered by locally-produced green hydrogen could also be used.

ROADMAP ANALYSIS OVERVIEW
This chapter describes the overall methodology for developing the roadmap and the various technology options
considered for the power and transport sectors. Figure 1 is a flow chart of the methodology and models used
for this study. To model Palau’s power and transport sectors, the Hybrid Optimisation of Multiple Energy Resources (HOMER) software was selected. HOMER is an optimisation tool used for designing both on-grid and off-grid power systems. It can be used to optimise systems for distributed generation, stand-alone and remote applications. The model allows the user to choose between a number of different energy resources and provides the user with the least-cost, viable solution based on the system inputs.

The following three sectors/applications were examined in depth to analyse the deployment of renewable energy
options in the Republic of Palau:
i. Electricity generation
ii. Road transportation
iii. Maritime transportation.
The following chapters describe the details of all three applications, including the different technology options
considered in order to achieve the ambitious 100% renewable energy target.

Electricity generation
Analysis of the Palau power sector includes a detailed optimisation of the current power system, together with that of 2050 Indeed, in order to prepare a detailed model of the latter, with a 100% renewable energy share, the model had
to first be calibrated by preparing an analysis of the current power system. For the calibration model, the initial step
was to prepare a baseline demand forecast to which additional renewable energy generation was added, in order to
achieve the 100% target by 2050. Chapter 2 describes more in depth the steps undertaken in preparing the baseline
demand from data on diesel generation provided by the Palau Public Utilities Corporation (PPUC).

SCENARIOS
The roadmap includes several detailed scenarios based on the data and information provided by the Palau Energy
Administration (PEA). The data were used to calibrate the model by first looking at the country’s current power
system, with this serving as the foundation for the other subsequent scenarios analysed in the study. The model included large amounts of diesel generation, with a minimal share of renewable energy coming from the solar PV systems currently present in Palau. The current power system was modelled to estimate the current share of renewable energy in the country and to understand how much more renewable energy capacity needs to be deployed to reach the ambitious target of 100% by 2050. In order to model the system in HOMER, the baseline load/demand for 2019 had to be estimated. The detailed hourly demand for 2015 which was used for the previous roadmap for Palau, from 2016-2017, was scaled up by using the annual demand value for 2019 provided by the government. This is discussed in more detail in Chapter 3 (Demand analysis).

Baseline electricity demand in 2019
In order to model all the scenarios considered in this study, a baseline demand for Palau was required, to which
the deployment of further generation capacity could be referred. To undertake this, data on each power plant and
generator present in the country was required. All this information was provided by PPUC.

POWER SECTOR ASSUMPTIONS
The Republic of Palau’s power sector is highly dependent on conventional fossil fuel generation, with diesel generators
supplying electricity to cover most of the country’s total demand. Currently, there are a total of five main power plants
on different islands in Palau, supplying electricity to meet the load. The two largest power plants are the Malakal and
Aimeliik power stations, which have total generation capacities of 15.5 MW and 10 MW respectively. As mentioned
earlier, this study focused on the four main generators which have a total capacity of 20 MW.

In order to perform a detailed analysis of the power sector in HOMER, several key assumptions had to be made for
each scenario modelled in the study. These include the main components considered, such as the renewable energy
technologies, the battery storage systems, the converter and the diesel generators. Furthermore, some general assumptions in terms of the economics of the project were also made and are discussed in detail in the following sections.

OPTIMAL SYSTEM
Once the model was calibrated in HOMER, using Palau’s current power system, the first, optimal system scenario
was modelled with additional renewable energy capacity added to the generation mix. The results showed that by
adding solar PV and wind specifically, the Republic of Palau could significantly increase its renewable energy share
from the current 4.03% to more than 92%. This could be achieved by adding 76 MW of solar PV and 9 MW of wind
to the current capacity. Furthermore, to support such a system, the model’s results showed that a battery storage
capacity of 259 MWh and a battery inverter of 31 MW would be needed. The maximum VRE week for Palau’s optimal system is shown in Figure 12. The graph shows a distinct difference compared to the minimum VRE week. It is noticeable that during the maximum week, there is a higher VRE generation, which also leads to more excess electricity – the maximum excess is almost 50 MW. Another difference is that less diesel generation is needed to cover the load, as most of the demand is met through renewables. Battery storage deployment allows the excess electricity from solar PV and wind to be stored and used to cover the load when needed, hence significantly decreasing diesel consumption.

100% RENEWABLE ENERGY – PV AND WIND
The second scenario analysed in the roadmap is 100% renewables, with solar PV and wind. This scenario was modelled
in HOMER to show that the target proposed by the government could be achieved through increased deployment of VRE and battery storage systems. The scenario did not consider any green hydrogen production, or EVs. The results of the optimisation show that the government of Palau can achieve its 100% target by deploying an additional 190 MW of solar PV and 20 MW of wind turbines. In order to achieve the target, however, installing battery storage systems will be of utmost importance. An estimated 412 MWh of storage and 41 MW of battery inverters would be needed to support such a power system. The results also show an increase in the excess electricity generated over the previous scenario, with a total of 199 GWh/year produced. The increase in excess electricity is due to the extra renewable energy capacity being added to the system, together with the battery storage. As this scenario analysed a fully, 100% renewable energy system, no diesel generation was considered in the model.

The maximum VRE week for this scenario is seen in Figure 15. When looking at the graph, there is a clear and distinct
difference from the minimum VRE week. The figure shows an evident increase in excess electricity, signifying also an
increase in the VRE generation. The excess electricity reaches a peak of 165 MW during one day of the week. As with
previous figures for this scenario, the graph also shows battery generation and charging occurring proportionate to VRE generation.

OUTER ISLANDS
As mentioned previously, the study focused mainly on Palau’s two largest islands, namely Koror and Babeldaob.
At the request of the PEA and PPUC, however, a HOMER optimisation was also performed for the outer islands of
Peleliu, Angaur and Kayangel. This chapter covers the results of that analysis and discusses the possibility of deploying
further renewable energy capacity on these islands as part of achieving the government’s proposed 100% renewable
energy by 2050 target.

Results
Once the calibration model representing the current power system of Peleliu and the planned, 206 kW government
project was prepared, additional RE capacity – in terms of solar PV generation – was added to the model to observe
how much the share of renewable energy could be increased. The HOMER optimiser was used to size the ideal
additional solar PV capacity needed. Furthermore, a battery storage system and a battery converter were also added,
as they are crucial components required not only to increase the share of renewable energy, but also to provide flexibility to the power system. Both of these components were also sized using the optimiser. Table 14 shows the main results of the optimisation performed for Peleliu’s optimal power system.

The results showed that with an additional 718 kW of solar PV capacity, a battery storage system of 3.3 MWh and
a converter of 440 kW, Peleliu’s power system could reach a 93.1% renewable energy share. This is a significant
increase from the current 17.7%. Together with this, Peleliu would also require less diesel generation capacity, with
just the Cummins generator being enough to support the system. The results show excess electricity generation of
0.45 GWh/year, with no unmet load and no capacity shortage. In terms of economic costs, the optimisation for Peleliu’s optimal system shows a significant decrease in the levelised cost of electricity, from the current power system’s USD 0.25/kWh to USD 0.09/kWh. This shows that with current renewable energy technology costs decreasing, a power system widely dominated by renewables becomes more viable. The initial capital cost for this would be around USD 1.28 million. The net present and operating costs also show a significant decrease, compared to the current power system, at USD 1.72 million and USD 0.03 million/year, respectively.

RECOMMENDATIONS AND CONCLUSIONS
This roadmap concludes that deploying additional renewable energy capacity through a mixture of solar PV, wind
turbines and green hydrogen production across Palau is both feasible and cost-effective. The recommended path forward for the government of Palau is that it follows the optimal system scenario analysed in this study. Following this scenario would allow the current share of renewable energy to significantly increase, rising from 4.03% to 92.1%. The final 8% can then be reached by exploring green hydrogen production from solar PV and wind, as analysed in the 100% renewables, with hydrogen scenario. Full deployment of EVs can also be achieved cost-efficiently by 2050, also increasing the share of renewables in the transport sector.

Source:IRENA