Power Sector Transition in Papua New Guinea

Introduction

Papua New Guinea (PNG) has one of the lowest electrification rates in the Pacific with only 13% of the population having access to reliable electricity, and the country has one of the lowest per capita electricity consumption rates in the world. By 2030, the national government aims to increase electricity access to 70% of households by 2030, which would require adding about 300 MW of capactiy to the national grid. about 60% of the population has access to off-grid solar options.

97% of Papua New Guinea's land area is customarily owned by Indigenous communities while 3% is owned by the national government, and 75-80% of the population lives in rural areas. Women are particularly susceptible to climate impacts because they are largely unable to own land, generate income, and build credit.

PNG is ranked as the tenth most climate-vulnerable country. The country's 2020 Nationally Determined Contribution (NDC) has outlined projected climate impacts that Papua New Guinea is expected to experience in the coming years, recreated below:

Climate Projections for Papua New Guinea, from PNG's 2020 NDC
Climate variable	Projection	Confidence level
Surface air temperature	Projected to increase	Very high confidence
Sea surface temperature	Projected in increase	Very high confidence
Annual mean rainfall	Projected to increase	High confidence
Seasonal mean rainfall	Projected to increase	High confidence
Intensity and frequency of days of extreme heat	Projected to increase	Very high confidence
Intensity and frequency of days of extreme rainfall	Projected to increase	High confidence
Incidence of drought	Projected to decrease	Moderate confidence
Frequency of tropical cyclones	Projected to decrease	Moderate confidence
Ocean acidification	Projected to continue	Very high confidence
Mean sea-level rise	Projected to increase	Very high confidence

Symbolic Importance

PNG has experienced significant economic growth since the turn of the century, resulting in an 88.2% increase in emissions between 2000 2015.

The International Energy Agency's Net-Zero by 2050 roadmap illustrates that no new gas projects are needed if, globally, net zero is reached by 2050. Furthermore, civil society organizations active in Papua New Guinea have highlighted the risks of "locking in" fossil fuel infrastructure, as well as the fact that fossil fuels aren't necessary to achieve PNG's climate and electricity goals. The national government has identified several renewable energy projects that, if completed, could supply 78% of the country's electricity needs by 2030.

Many LNG projects under construction throughout the world are having trouble securing SPAs. Experts from the Institute for Energy Economics and Financial Analysis believe that by the time the Papua LNG project comes online, the global natural gas market may be saturated which would lower anticipated pricing. Moreover, the International Energy Agency predicts a 55% decrease in gas demand by 2050. Because of this, the project, and natural gas buildout in Papua New Guinea as a whole, presents significant financial risks.

These risks are amplified by Papua New Guinea's current finances. While the country has the right to acquire 22.5% stake of Papua LNG upon the project's approval, Papua New Guinea's severe debt (estimated at USD $51.2 billion) makes this challenging and risks reallocation away from social and economic spending to cover investment costs.

Papua New Guinea is vulnerable to climate change, and residents are already feeling its effects. Landslides, soil erosion, deforestation, biodiversity loss, and floods may increase in incidence. The Asian Development Bank estimated a 15.2% loss in Papua New Guinea's GDP each year by 2100 stemming from climate change's impacts on agriculture and fishing industries.

Current System Description

Current Power Capacity Mix

As of 2022, Papua New Guinea had an installed capacity of about 580 MW total, broken down in the table below.

Installed renewable energy capacity in Papua New Guinea, as of 2022. Originally published by IRENA.

Energy Source	Installed Capacity (MW)	Percentage
Hydropower	230	39.7%
Diesel	217	37.4%
Fossil gas	82	14.1%
Geothermal	53	9.1%
Total	582 MW	100%

Operating projects in Papua New Guinea. Table only includes projects captured by Global Energy Monitor's power sector trackers.

Project Name	Energy Source	Installed Capacity (MW)
Ramu 1 hydroelectric plant	Hydropower	77
Lihir Island geothermal power plant, Unit 2	Geothermal	30

Prospective Power Capacity

Photovoltaic potential of Papua New Guinea, as published by SolarGIS.

Wind Power Density of Papua New Guinea at 100 meters, as published by the Global Wind Atlas.

[insert estimates of solar, wind, hydro, geothermal potential]

Renewables in Papua New Guinea

Renewable Targets

By 2030, PNG aims to increase renewables to 78% of the national energy mix. Papua New Guinea aims to transition its energy sector to carbon neutrality by:

• Increasing renewables in the national energy mix from 30% in 2015 to 78% in 2030 (decreased from the goal of 100% renewables by 2030, as written in PNG's 2016 NDC, due to increased LNG planning)
• Minimizing demand through the adoption of performance standards, specifically the Minimum Energy Performance Standards and Labelling Regulations
• Establishing a mechanism for carbon offsets
• Enhancing emissions data collection

Moreover, Papua New Guinea has outlined four main actions to achieve Sustainable Development Goal 13 (Take urgent action to combat climate change and its impacts):

• Carbon neutrality in gas and mineral sectors
• Rural electrification using renewable energy resources
• Upgrades and construction of the national grid to improve resilience, reliability, and efficiency
• Government and private sector improves energy efficiency

Major Renewable Projects

As of 2022, the Climate Change Development Authority of Papua New Guinea had identified 15 renewable energy projects in the pipeline totaling 427.275 MW, as well as 21 proposed projects totaling 45.15 MW. If all projects fully came to fruition at their projected installed capacities, these projects alone could provide 78% of the country's grid-connected electricity by the end of the decade. All projects in the pipeline (both in-development and simply proposed) are summarized in the table below:

Planned and In-Development Generation Projects in Papua New Guinea

Project Name	Energy Source	Projected Capacity (MW)	Estimated year of commissioning
Divune-Popondetta/Divune HPP	Hydropower	3.1	2023
Samarai	Solar	0.075	2022
Naoro Brown	Hydropower	80	2022
Edevu-PNG	Hydropower	51	2023
Ramazon	Hydropower	3	2022
Rouna Hydro-additional (R1 & STOD)	Hydropower	8	2021
Lower Lake Hargy Hydro (Biala)	Hydropower	2	2022
Markham Valley Solar with Battery	Solar	17	2022
Wabag Hydro (Wabag Provincial Govt)	Hydropower	12	2023
Markham Valley Biomass (PNG Biomass IPP)	Biomass	30
Baime (IPP)	Hydropower	11.6	2024
Ru Creek 2 Hydro (Kimbe)	Hydropower	2.5	2026
Warangoi Rehabilitation	Hydropower	10
Ramu 1 (Refurbishments)	Hydropower	17	2023
Ramu 2	Hydropower	180	2028
Kerema Solar PV + ESS	Solar	1.5	2022-2024
Manus Solar PV + ESS	Solar	1.5	2022-2024
Alotau Solar PV + ESS	Solar	1.5	2022-2024
Saussia Solar PV	Solar	10	2022-2024
Aitape Solar-PV + ESS	Solar	0.4	2022-2023
Maprik Solar PV + ESS	Solar	0.2	2022-2024
Alotau Solar PV + ESS	Solar	1	2023-2026
Daru Solar PV + ESS	Solar	1.5	2024-2026
Fincshafen Solar PV + ESS	Solar	0.45	2024-2026
Kavieng Solar PV + ESS	Solar	1.5	2023-2025
Gumini Hydro	Hydropower	1.5	2023 - 2026
Kereu 1 Hydro	Hydropower	0.6	2022-2025
Butaweng	Hydropower	0.2	2024-2026
Murua Hydro	Hydropower	3	2025-2028
Damar/Mabam Hydro	Hydropower	3	2025-2028
Daundo Hydro	Hydropower	1.5	2025-2028
Lawes Hydro	Hydropower	2	2025-2028
Kimadan Hydro	Hydropower	2	2025-2027
Sohun Hydro	Hydropower	0.3	2023-2025
Mavelo	Hydropower	10	2025-2029
Kavieng biomass fuel plant (PPA has been signed)	Biomass	2	2026-2030

ESS stands for Energy Storage Systems. The Government of Papua New Guinea classifies biomass generation as renewable.

Potential impacts from renewables expansion

Papua New Guinea aims to assess the efficacy of climate adaptation efforts by looking at the health, agricultural, transportation, and infrastructure sectors. Government leaders anticipate the following outcomes:

• 100% of the population will benefit from new responses to malaria and other diseases affected by a warming climate
• 6 million people (70% of the population) will benefit from improved early warning to extreme climactic events
• 10% of the population will see increased food and water security
• USD $1.7 billion in transportation, building, and utility infrastructure will be built or renovated up to new codes and standards

Fossil Fuels in Papua New Guinea

Fossil Resources and Retirement

According to Global Energy Monitor's Global Oil and Gas Extraction Tracker (March 2024 release), Papua New Guinea has five discovered oil and gas extraction projects: the Pasca Oil and Gas Field, the Stanley Oil and Gas Field, the Kutubu Oil Project, the P’nyang Gas Field, and the Elk-Antelope Gas Field. Of those, only the Kutubu Oil Project is operational, and the Papua LNG project will extract from the Elk-Antelope Gas Field.

Papua New Guinea LNG Project

Project Overview

Approximate path of the Papua LNG pipeline. Source: Papua LNG

TotalEnergies, alongside ExxonMobil (37.04% interest), Santos (22.83%), and JX Nippon (2.58%), is planning a large-scale liquefied natural gas (LNG) project in Papua New Guinea (Papua LNG). Papua LNG will consist of nine production wells, a gas processing plant, a 320-km pipeline, and liquefaction units that process the gas into liquid for transport. Total capacity is estimated to be 5.6 million tonnes per annum (Mtpa). The project will connect to ExxonMobil's existing PNG LNG plant in near Port Moresby. Upon the project's approval, the Government of Papua New Guinea may acquire 22.5% of the stake.

Papua LNG is only the second large-scale natural gas project in the country and, if completed, would rival Indonesia's gas exports. However, by the time the project is expected to come online, experts are projecting a glut in gas prices due to flooded markets. In essence, there is little revenue certainty for the project.

The project has received explicit support from French President Emmanual Macron, primarily for its potential to replace coal-fired generation with gas.

Project Footprint

The pipeline will transport gas from the Elk-Antelope Field (north of Baimuru and Kerema) to project facilities near Port Moresby. 260 km, or 81%, of the pipeline is offshore. Planned upstream facilities for the Papua LNG project are slated for construction within areas of dense jungle with nearby access to the Purari River.

Project Impacts

Papua LNG may severely impact nearby ecosystems, communities, and the climate as a whole. ExxonMobil's previous PNG LNG project, which Papua LNG will connect to, is associated with accounts of human rights abuses and land disputes. Papua LNG is projected to increase Papua New Guinea's energy and industrial emissions by 7% create more than 220 million tonnes of Scope 3 carbon dioxide emissions over its lifetime, which is comparable to the annual emissions of the nation of Bangladesh.

Project Finance

Papua LNG is estimated to cost USD $13 billion. As of April 2024, no sale and purchase agreements of non-binding heads of agreement supply deals have been reached, which increases the project's financial risk. This means that the project lacks sales and assets financiers in which to lend against. For comparison, ExxonMobil's PNG LNG project has secured commercial agreements for 62% of the project's nameplate capacity approximately six months before the project published its Final Investment Decision.

Papua LNG has received significant pushback and has had challenges securing financing. While the financial investment decision (FID), a critical step in the project development process, was expected to be published in 2024, it has recently been delayed to 2025. Several banks have announced that they would not fund the project: BNP Paribas, CIC, Commonwealth Bank of Australia, Crédit Agricole, Natixis/BPCE Group, Société Générale, UniCredit Group, and Westpac. That said, 33 additional domestic and international banks and public institutions that may still finance the project. Banks that may still finance Papua LNG are: Alfa Bank, ANZ, Bank of America, Bank of China, Bank of Communications, Bayern LB, CaixaBank, CCB International Finance, Chiba Bank, China Development Bank, CitiGroup, DNB, DZ Bank, HKMC, ICBC, Intesa Sanpaolo, JPMorgan Chase, MUFG, Mizuho, National Australia Bank, Resona Bank, Santander, Shinkin Central Bank, Chinsei Bank/SBI, Standard Chartered, and SMBC. Public institutions that may still finance Papua LNG are: Asian Development Bank, China Exim Bank, Export Finance Australia, Korea Development Bank, U.S. Export-Import Bank, SACE, and JBIC.

Current impacts from fossil fuel

PNG's energy sector is the country's largest source of emissions at about 87.7% of total emissions (excluding land use and deforestation). A large portion of PNG's grid is reliant on diesel fuel for power which can be far more expensive than alternatives. In agricultural uses, diesel generators are approximately 150% more expensive than biomass-powered generators and 50% more expensive than paired solar-storage systems.

Supply Chain

Papua New Guinea is rich in several metals necessary for clean energy technology. Specifically, Papua New Guinea exports copper, nickel, and cobalt, and the mining and quarrying industries are projected to increase by 6.9% in 2023.

Employment

Approximately 15% of workers in PNG are employed formally in forestry, fishing, and commercial agriculture, whereas the remaining 85% are employed informally and largely work in subsistence agriculture.

Prospective employment from the renewable energy sector

Skills development in areas of installation is crucial. In particular, women, communities, workers, and professionals must receive training in installations, maintenance, and end-of-life processes so community members are better able to manage their electricity systems.

Civil Society Engagement

In August 2023, 27 organizations cosigned a letter to the president of the United States Export-Import Bank urging them to reject financing the PNG LNG project on the grounds of climate impact. The organizations and their areas of expertise are summarized in the table below.

Organization	Country	Area of expertise/Areas of work
Friends of the Earth USA	United States	Campaigning around clean energy and climate change solutions, toxic substances, and protection of marine ecosystems and nearshore communities.
Oil Change International	International	Research, communications, and advocacy focused on phasing out fossil fuels and rapidly phasing in clean energy.
Centre for Environmental Law and Community Rights Inc.	Papua New Guinea	Community outreach and engagement focused on Papua New Guinea's environment and natural resource management.
Forests for Certain, Forests for Life!	Papua New Guinea	Sustainable land use, ecological conservation, community action planning processes, and village-based enterprise support.
Wide Bay Conservation Association	Papua New Guinea	Strengthening recognition of women as conservation leaders and equals within their communities. Advocates for improving women's rights to land and livelihoods.
Research Conservation Foundation	Papua New Guinea	Education and advocacy on environmental protection and natural resource management.
Tree Kangaroo Conservation Program	Papua New Guinea	Education focused on conservation practices landowners can undertake.
Tenkile Conservation Alliance	Papua New Guinea	Service delivery in support of rainforest communities. Management and protection of rainforest communities' biological and cultural resources.
Jubilee Australia Research Centre	Australia	Research and advocacy focused on economic justice in the Asia-Pacific region.
Market Forces	Australia	Campaigns and communications focused on institutions financing environmentally destructive projects.
Center for Oil and Gas Organizing	United States	Watchdog group keeping United States federal agencies, like the Federal Energy Regulatory Commission and Department of Energy, accountable on gas export and infrastructure. Cultivates grassroots and frontline leadership.
Earth Ethics, Inc.	United States	Outreach and education focused on ecological assessments, land use, water quality, and air quality.
The People’s Justice Council	United States	Interfaith organization focused on advancing interdisciplinary (environmental, social, economic) justice.
Peaceful Systems	United States
Center for International and Environmental Law	United States	Legal procedure and advocacy focused on environmental protection, human rights, and building a sustainable society.
Food & Water Watch	United States	Local, state, and federal organizing on issues ranging from fracking to farming, with a focus on advancing clean water protections.
Earth Action, Inc.	United States
Defend the Gulf	United States
Global Witness	United States, United Kingdom	Investigations, communications, and advocacy focused on exposing human and environmental rights violations.
Natural Resources Defense Council	United States	Advocacy, litigation, and partnership-building to protect nature and wildlife, human health, and equity and justice, as well as fight against climate change.
Rainforest Action Network	United States	Campaigning and partnership-building related to protecting rainforest ecosystems, mitigating climate, and advancing the rights of forest communities.
Unitarian Universalist Service Committee	United States	Advocacy, grassroots partnerships, and leadership development to support human rights efforts worldwide.
Care About Climate	United States	International youth organizing in support of transformative climate efforts.
Sierra Club	United States	Education, advocacy, and grassroots activism in support of environmental protection and environmental justice.
La’o Hamutuk	Timor-Leste	Monitoring, analyzing, and reporting on local (Timor-Leste) development, particularly as it relates to activities of national and international entities.
PERMATIL	Timor-Leste	Advocacy, community engagement, and local (Timor-Leste) development initiatives, especially as they relate to soil restoration and conservation, sustainable land management and organic farming.
Friends of the Earth Japan	Japan	Research, policy proposals, and mobilization to advance environmental projection, as well as social and climate justice.

Governmental information

Related governmental policies and papers

Papua New Guinea Development Strategic Plan, 2010-2030: The Development Strategy Plan aims to create economic conditions that allow PNG to prosper while building that prosperity on resilience, self-reliance, and sustainable management. The plan includes two major energy- and climate change-related goals: 1) All households have access to a reliable and affordable energy supply, and sufficient power is generated and distributed to meet energy requirements and demands, and 2) Adapt to the domestic impacts of climate change and contribute to global efforts to abate greenhouse gas emissions.

National Energy Policy 2017-2027: Gave rise to the National Energy Authority Act, which established the National Energy Authority.

National Distribution Grid Expansion Plan, 2017-2031: Outlines PNG Power's plans for expanding the grid to rural communities near the company's existing provincial grids.

Public-Private Partnership Act, 2014 (Amended in 2022): Establishes a procedure and resource center for public bodies to partner with private sector entities for the construction and maintenance of infrastructure.

Climate Change (Management) Act, 2015 (Amended in 2021): Establishes a regulatory framework to manage climate change through means compatible with development and international climate frameworks (United Nations Framework Convention on Climate Change and the Paris Agreement). Established Climate Change Development Authority for implementing clean energy programs and procedures.

Papua New Guinea Vision 2050: Outlines the framework for Papua New Guinea's long-term planning, with Environmental Sustainability and Climate Change listed as one of seven focus areas underpinning development. Within this pillar, the Vision has outlined twelve goals by 2050:

1. Reduce greenhouse gas emissions by 90% relative to 1990 levels
2. Assist the majority of Papua New Guineans to become resilient to natural and human disasters and environmental changes
3. Establish a Sustainable Development Policy in all sectors, especially forestry, agriculture, mining, energy, and oceans by 2015
4. Develop mitigation, adaptation, and resettlement measures in all impacted provinces by 2015
5. Conserve biodiversity at the current 5-7% of the world's biodiversity
6. Establish a total of 20 national reserves, wilderness areas, and national parks
7. Establish at least one million hectares of marine protected areas
8. Conserve and preserve cultural diversity
9. Provide 100% power generation from renewable resources
10. Provide 100% of weather and natural disaster monitoring systems in all provinces
11. Integrate environmental sustainability and climate change studies in primary, secondary, and national high school curricula
12. Establish an Institute of Environmental Sustainability and Climate Change

Electricity Industry Policy (EIP): Passed in 2011, the EIP is designed to improve access to electricity and electricity services, improve reliability of electricity supply, and ensure power affordability.

PNG Power Fifteen-Year Power Development Plan, 2018-2030:

Government Programs

PNG Electrification Programme

Pawarim Komuniti - PNG Off-grid Electrification Program

Town Electrification National Program

Rural On-Grid Electrification Program

Relevant Governmental Ministries

Department of Petroleum and Energy: The department is broken into three Divisions: Petroleum, which administers and regulates all petroleum-related projects in the country; Energy, which oversees and regulates all non-fossil and renewable forms of energy, as well as the petroleum as it relates to electricity generation; and Corporate Services, which supports and facilitates the other two divisions by developing policies, procedures, organizational structures, and human resources.

Climate Change and Development Authority (CCDA): Formerly the Office of Climate Change and Development, CCDA coordinates all climate change-related policies, procedures, and actions across the country. It is currently being restructured.

National Energy Authority: The National Energy Authority has four primary responsibilities: 1) promote transparency and encourage participatory, demand-driven and sustainable development; 2) promote responsibility, accountability, awareness, impartiality, and transparency; 3) ensure a reliable and secure energy supply, promote effective competition in the energy market, and develop a dynamic energy sector; and 4) adapt ethical and social responsibility principles while encouraging participation and promoting sustainability.

Partnerships and Coalitions

The Organisation for Economic Co-operation and Development (OECD) was launched in 2023. Consisting of more than 175 organizations from across the globe (including organizations from Australia, Canada, the European Union, Japan, South Korea, New Zealand, Norway, Switzerland, Turkey, the United Kingdom, and the United States), OECD aims to govern export credit agencies and end export finance for oil and gas projects worldwide.

PNG Electrification Partnership: Founded in 2018, the Partnership aims to support Papua New Guinea's goal of 70% household electrification by 2030. Partners include Papua New Guinea, Australia, the United States, New Zealand, and Japan.

Transmission

Current transmission resources

PNG Power Limited (PPL) manages the generation, transmission, and distribution of three grids: Gazelle, Port Moresby, and Ramu, all of which total 320 MW, as well as 16 mini-grids serving 26 provincial centers. PPL transmission infrastructure is comprised of 26 power stations and nine backup substations. The mini-grids are medium and low-voltage and powered almost entirely by diesel.

Port Moresby, despite covering a relatively small area, is PNG's largest grid with respect to peak demand (~125 MW in 2019). Ramu's peak demand was ~97 MW in 2019, though this grid covers the largest geographic area, and Gazelle has a peak load of ~10 MW and services East New Britain nd the Gazelle Peninsula.

New transmission needed for renewables

Because electricity demand is relatively low in rural and isolated areas, and the existing demand is met through diesel-powered mini-grids, PNG Power Limited has little incentive to expand grid buildout to these locations.

With financing from the Asian Development Bank, the Power Sector Development Project aims to increase electricity access and improve system efficiency across PNG. The project will consist of:

• Construction of 100 km of new 66-kV transmission lines and eight new substations, including three switchyards. These upgrades will occur in Gazelle, Ramu, and Port Moresby.
• Upgrades to 135 km transmission line from 66 kV to 132 kV.
• Construction of 2,274 km of new medium (11 or 22 kV) and low-voltage (415-/240-volt) distribution lines in Gazelle, Ramu, and Port Moresby.
• Strengthening of PNG Power's capacity to perform grid modeling and planning, procurement, comprehensive diagnostic assessment of PPL's performance against industry standards, and assessments of PNG Power's financial management and accounting, as well as improved participation of women in technical roles.

The project aims to support efforts to reach 70% electrification by 2030 (single-handedly increasing electrification rates from 13% to 20%), as well as improve distribution to more than 56,000 new customers.

Ownership

PNG Power Limited (PPL), the state-owned power utility that manages the majority of Papua New Guinea's generation, transmission, and distribution, has been marred by challenges, such as the Board's susceptibility to political influence, poor asset management, inability to adequately control costs, and high turnover of management personnel. PPL receives full cost recovery to their investments.

Major owners of prospective renewables

As of 2022, the Asian Development Bank has provided $171.1 million in loans and $3.4 million in technical assistance.

Finance

Upgrading and updating Papua New Guinea's power sector in line with the government's 70% electrification by 2030 target will require an investment of $1.7 billion. There is a funding gap of approximately 400 million Kina needed to complete all proposed projects in the pipeline.

Financing for existing LNG projects, like ExxonMobil's PNG LNG, was provided by credit agencies in Australia, Japan, South Korea, the United States, and Italy. Entities in these countries provided a total of USD $8.3 billion in financing.

Funding for the Power Sector Development project was provided by the Asian Development Bank (USD $208.6 million) and the Government of Australia (USD $96.4 million).

PNG Power Limited is able to completely recuperate costs on investments.

Potential providers of wind/solar finance

Potential funders capable of supporting NDC goals include development partners, like the PNG Electrification Partnership, Asian Development Bank, and the World Bank; private sector leaders; and international climate finance. While Small Island Developing States tend to have trouble accessing international climate finance, PNG's involvement in the Climate Finance Access Network may provide advice on finance needs.

The Green Climate Fund is the world's largest climate fund with a portfolio of USD 13.5 billion (USD 51.9 billion including co-financing). The Fund is mandated to invest 50% of available resources into mitigation and 50% to adaptation, though only one project in PNG has been financed, totaling USD $2.4 million.

Grants-based financing is preferred over traditional loans in the case of energy development. Grants would address the high upfront costs of renewable infrastructure without required payback.

Pawarim Komuniti provides grants ranging from PGK 500,000 to PGK 5,000,000 to civil society organizations interested in spearheading off-grid electrification projects in rural provinces of the country.