Off-Grid PV Systems
Business Model Description
Develop off-grid solar PV installations in Outer Islands or remote areas to generate electricity for the use of hotels, and key infrastructure operations, including desalination and water treatment plants, small businesses, and households. In Outer Islands and Silhouette work in partnership with Island Development Company (IDC) which is responsible for the management and development of 14 islands and applies a one-resort-one-island strategy, mostly delineating a single large customer in each island. In islands with Public Utilities Corporation (PUC) grid access, work as an Independent Power Producer (IPP) based on the distance from the power plants and land availability. Use solar PV-diesel hybrid systems to overcome interruption issues caused by occasional cloudy weather.
Expected Impact
Complete decarbonization of energy supply in remote islands, power critical infrastructure, and benefit resorts and small enterprises with reduced costs and modern infrastructure.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Outer Islands
- Praslin
- La Digue
- Rural Mahé
- Silhouette
Sector Classification
Renewable Resources and Alternative Energy
Development need
Seychelles' energy supply is generated from imported fossil fuels, accounting for about 25% of the country's total net imports. Therefore, securing energy supply and price stability is intrinsically bound to the cost of fuel, pressure on the national budget and foreign debt sustainability. In addition, 95% of the country's greenhouse gas (GHG) emissions come from the energy sector (1, 2, 3).
Policy priority
Seychelles' updated 2021 Nationally Determined Contribution (NDC) targets are 15.5% energy efficiency and 15% renewable share in national electricity production by 2030. Seychelles' 100% Renewable Energy Strategy foresees full energy sector decarbonization by 2050. NDC includes 293,8 ktCO2e economy-wide reduction in greenhouse gas emissions by 2030 (1, 4).
Gender inequalities and marginalization issues
In Seychelles, more than half of the households are headed by females. Poverty Profiling 2017/2018 by the National Bureau of Statistics (NBS) reveals that households with lone women (living out of union) at the head, aged 25 to 62, are more likely to be affected by income poverty. Hence, energy security in terms of affordability and continued access remains crucial for women's perception of safety and livelihood (5, 6).
Investment opportunities Introduction
Seychelles consistently ranks among the top three countries in Africa regarding governance and the top ten in foundations for economic opportunity. Reliability of the supply of electricity and the off-taker enhance solar energy use as Mahé alone has the theoretical potential to supply 125MW of solar energy through rooftop installations (12, 15).
Key bottlenecks Introduction
Isolated and limited land capacity for large-scale ground installations, insufficient number of the local workforce and technical experts for growing sector needs, hardship in access to blended and concessional financing, sector's highly political and regulated image, subsidized tariff scheme and cap in production of grid-connected energy are main bottlenecks (16).
Alternative Energy
Development need
In Seychelles, with universal access to electricity, only up to 5% of energy needs are supplied by renewable resources, accentuating the need for improving national energy security, meeting the rising demand, targeting subregional disparities in energy infrastructure, and reducing transport and tourism-related greenhouse gas (GHG) emissions (1, 8).
Policy priority
Seychelles Vision 2033 and National Development Strategy 2019-2023, strategize environmental sustainability and energy security in the country, as energy imports account for 12% of the total government budget annually. The targets share of renewable energy in electricity supply is 15% by 2030, according to Seychelles' updated 2021 Nationally Determined Contribution (NDC) (4, 9, 10).
Gender inequalities and marginalization issues
In Seychelles, parastatals are the main employer in the energy sector, including electricity, gas, steam, and air conditioning supply, with a higher share of the expatriate male workforce, which might undermine the participation of local female workforce in the renewable energy sector. Subregional storage and battery investments are required as 90% of the nation's population live in three main inner islands with grid connectivity (3, 11).
Investment opportunities introduction
Seychelles Energy Efficiency and Renewable Energy Programme (SEEREP) financing, net-metering programme by Public Utilities Corporation (PUC) and tax incentives promote alternative energy development with adequate land use as in the case of rooftop and floating PV systems in land-scarce Inner Islands and off-grid solution in outer islands (13, 14).
Key bottlenecks introduction
In grid-connected areas, dominant roofing structure, steep and made from corrugated iron sheets, voltage fluctuations, which affect the inverter, and subsidized household tariffs constrain private-led investments. The high cost of finance and battery investments, especially in Outer Islands, limited incentives, and equipment costs limit the scale of implementations (16).
Solar Technology and Project Developers
Pipeline Opportunity
Off-Grid PV Systems
Develop off-grid solar PV installations in Outer Islands or remote areas to generate electricity for the use of hotels, and key infrastructure operations, including desalination and water treatment plants, small businesses, and households. In Outer Islands and Silhouette work in partnership with Island Development Company (IDC) which is responsible for the management and development of 14 islands and applies a one-resort-one-island strategy, mostly delineating a single large customer in each island. In islands with Public Utilities Corporation (PUC) grid access, work as an Independent Power Producer (IPP) based on the distance from the power plants and land availability. Use solar PV-diesel hybrid systems to overcome interruption issues caused by occasional cloudy weather.
Business Case
Market Size and Environment
30% of Outer Islands
Fourteen islands managed by the Islands Development Company (IDC) that are not linked to the national grid are scheduled to be powered by off-grid solar energy in 2022, while four of them, Desroches, Alphonse, Astove, and Farquhar, are currently solar-powered (17, 20).
Several projects have been proposed to expand small off-grid solar power stations. The projects include a USD 4.6 million financing support announced by the Chinese government for such investments in remote areas of the Inner Islands, such as Curieuse Island, located one kilometre north of Seychelles' second largest island, Praslin (21).
Indicative Return
10% - 15%
Investments in off-grid solar hybrid systems are expected to generate a return in eight years based on a feasibility study for a 5.2 MW solar farm with a project cost of about USD 5.4 million in Seychelles (22).
Investment Timeframe
Medium Term (5–10 years)
Investments in off-grid solar hybrid systems are expected to generate a return in eight years based on a feasibility study for a 5.2 MW solar farm with a project cost of about USD 5.4 million in Seychelles (22).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Seychelles consists of 115 islands, some of which have a distance of more than 1000 km from its capital Victoria. The main source of energy is imported diesel fuel which is transported to islands to be used in generators emitting high levels of carbon and involving a high risk of marine pollution (1).
High electricity and fuel costs impede growth and business operations in Seychelles, aggravated by global price volatility and supply disruptions (29).
Gender & Marginalisation
Gender-sensitive and island-specific data lacks various indicators. The livelihood of small communities on islands, where the population is as low as a few households or several hundreds of people, depends on their access to and ability to afford basic needs.
Expected Development Outcome
Off-grid solar systems in remote areas increase energy security and reduce carbon emissions and threats to the environment posed by the use and transport of diesel.
Islands, where off-grid solar systems are installed, contribute to Seychelles' goal of achieving a 15% renewable share by 2030 and price and supply stability, reducing dependency on imported diesel and supporting business growth.
Gender & Marginalisation
Although gender-sensitive data are lacking for most of the Outer Islands and remote islands within the Inner Islands, improved access to clean energy contributes to the livelihood of small communities in terms of reliable access to energy and small business operations.
Primary SDGs addressed
7.1.2 Proportion of population with primary reliance on clean fuels and technology
7.a.1 International financial flows to developing countries in support of clean energy research and development and renewable energy production, including in hybrid systems
7.2.1 Renewable energy share in the total final energy consumption
Not defined at national level. More than 90% in Outer Islands where off-grid solar PV systems have been installed (17, 20).
An envolope of USD 11 million will be dedicated through international flows to renewable energy techonologies in Seychelles (21).
1.99% in 2019 (1).
Regional strategy includes powering all 14 islands under Islands Development Company (IDC) management to run by solar energy in 2022 (20).
N/A
15% by 2030 (4).
13.2.2 Total greenhouse gas emissions per year
790 ktCO2e in 2019 (24).
Reduction in total Greenhouse Gas (GHG) emissions by 293.8 ktCO2e in 2030 (26.4%) compared to business as usual (BAU) scenario (4).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Public sector
Outcome Risks
Rooftop PV technologies are foreign-dependent. Therefore, expanding such facilities without improving local technology may increase dependence on imports and deteriorate the trade balance.
Lacking adequate infrastructure to recycle end-of-life solar panels may exacerbate risks associated with the export of waste, such as soil contamination and illegal dumping of hazardous waste.
80% of the employed in the electricity sector are male. New investments may exacerbate the issue if gender balance is not accounted for (25).
Impact Risks
Tariffs may increase if the maintenance and installation costs rise, impeding access or costing a significant portion of the budget of low-income households.
The high cost of rooftop PV technologies may be unaffordable for lower-income households, exacerbating inequalities in access to energy.
Impact Classification
What
The build-up of off-grid systems improves access to clean energy for remote islands and locations without a grid connection, reducing carbon emissions and dependence on diesel fuel imports.
Who
Small businesses, communities in remote islands and the island hospitality sector benefit from increased access to clean, reliable and affordable energy sources.
Risk
PV technologies and their maintenance may be too expensive for lower-income groups, exacerbating inequalities in access to clean energy.
Contribution
Off-grid solar PV systems replace diesel fuel generators in remote and rural areas, which are otherwise the main power source in small islands.
How Much
The provision of off-grid solar technologies benefits islands where they power more than 90% of the electricity needs by decreasing more than 80% of their diesel fuel dependency (23).
Impact Thesis
Complete decarbonization of energy supply in remote islands, power critical infrastructure, and benefit resorts and small enterprises with reduced costs and modern infrastructure.
Enabling Environment
Policy Environment
Seychelles Energy Policy, 2010-2030: sets the long term energy strategy of the country which includes target of supplying 5% of Seychelles' energy from renewable sources by 2020, 15% by 2030 and 100% in the long term (2).
Seychelles’ Updated Nationally Determined Contribution (NDC), 2021: maintains the power sector targets from the previous NDC, including 15% energy efficiency improvement and powering 15% of the national mix by renewable sources in 2030 (4).
Seychelles Vision 2033: the long-term national vision, envisages that the country's energy needs will be provided by renewable energy and efficient technologies (9).
Seychelles National Development Strategy (NDS), 2019-2023: focuses on using renewable energy to achieve targets of energy security and economic resilience (10).
Islands Development Company (IDC) The Third Outer Island Development Plan 2018-2023: entails the strategic objective of introducing renewable energy projects and hybrid systems, where applicable, to promote environmental and sustainable principles in island development (26).
Reserved Economic Activities Policy, April 2020: ensures that certain economic activities that are doable and affordable to the Seychellois investors and businesses shall remain reserved for them; the list includes electrical contractors, land surveyors, and landscaping services (34).
Financial Environment
Financial incentives: Seychelles Energy Efficiency & Renewable Energy Programme (SEEREP) was initiated in 2014, offering a subsidized loan for renewable energy investments of Small and Medium Enterprises (SMEs) and households (37).
Fiscal incentives: Imported renewable energy-related commodities, including imported solar panels, are exempt from goods and services tax (30).
Regulatory Environment
Seychelles Energy Act, 2012: provides the legal basis for development and utilization of energy resources in Seychelles, functions of the regulator, Seychelles Energy Commission (SEC), establishment of Seychelles Energy Board, and the tendering procedure for independent power producers (IPPs) (27).
Seychelles Companies Act, 1972: provided the legal basis for creating the Island Development Company (IDC) in 1980 (20).
Seychelles Investment Act, 2010: broadly defines investment and investor’s nationality - based on citizenship or the level of control- and makes all foreign investments subject to screening by Seychelles Investment Board (SIB), giving the latter a business facilitation role (30, 31, 32).
Seychelles Meteorology Act, 2015 establishes the Seychelles Meteorological Authority, which provides forecasts for weather and climate phenomena and monitors climate change (33).
S.I. 76. - Seychelles Investment (Economic Activities) Regulations, 2022: lists engineering (design) services, in particular for mechanical and electrical installations for buildings as an activity a non-Seychellois may invest in with the requirement to conduct an Economic Needs Test (ENT) (35).
Marketplace Participants
Private Sector
Sustainable Power Solutions (SPS), Mettle Solar Investments, Sun Tech Seychelles, Energy Solutions Seychelles (ESS), VetiverTech.
Government
The Ministry of Agriculture, Climate Change and Environment, the Ministry of Investment, Entrepreneurship and Industry, Public Utilities Corporation (PUC), Seychelles Energy Commission (SEC), The Seychelles Investment Board (SIB), Islands Development Company (IDC).
Multilaterals
The United Nations Development Programme (UNDP), the Global Environment Facility (GEF), International Renewable Energy Agency (IRENA), Abu Dhabi Fund for Development (ADFD), Institute for Environmental Analytics (IEA), African Legal Support Facility (ALSF).
Non-Profit
Seychelles Islands Foundation (SIF), Sustainability for Seychelles (S4S), University of Seychelles (UniSey), Clinton Foundation.
Target Locations
Outer Islands
Praslin
La Digue
Rural Mahé
Silhouette
References
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- (22) UNDP Project Team consultation undertaken with a public stakeholder regarding the feasibility of off-grid investments, in May 2022.
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- (28) UNDP Project Team stakeholder consultation undertaken with a local solar panel supplier in May, 2022.
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