The NZD 550,000 is the initial support required for this NAMA to cover the annual cost (for 8 years) of a renewable energy technology trades training programme and the cost of policy assistance for new legal and regulatory frameworks, in particular as required for private sector investment in renewable electricity systems. (For further detail, see the separate "Full Description" file of this NAMA.)

The financial support outlined above is for capacity building activities. There is a need for increasing the number of and upskilling local trades people involved with installing and maintaining renewable energy systems. This should begin to occur prior to the implementation of the first systems, so as to ensure local trades people (men and women) can be part of the installations rather than just ‘imported’ trades expertise (that will return home with the receipts of their labours following the installation, so only have minimal ‘benefit footprint’ on the local economy). There is also a need for policy assistance in developing new legal and regulatory frameworks associated with private sector engagement in the electricity sector, tariff reform and technical and non-technical aspects of connecting renewable energy systems to the grid. To a significant extent, the successful engagement of domestic and international private capital and Cook Island businesses and households will depend on an improved policy, legal and regulatory framework, including incentives that flow down to encourage individual actions. A major barrier that has been identified internationally for private capital availability in developing countries is “policy risk” (sometimes also called, or included in, sovereign risk). In short this represents uncertainties about a stable investment environment with respect to government policy and decisions that may affect ‘the deal’ and negatively impact on the expected return on investment. The Cook Islands government will need expert help to put in place an “investment grade” policy framework that will enable and attract private investment in the larger renewable energy systems required on Aitutaki and Rarotonga. This includes such practical issues as the best form and required detail of requests for expressions of interest for IPPs seeking to enter into PPAs with the government electricity companies/institutions, should this approach be taken. One key matter of detail is how offers by the IPPs might fit with the objective of the CIG to lower the electricity tariffs for consumers.

Currently, power generation by the public owned electricity systems in the Cook Islands is by diesel generators. The objective of this NAMA is to see all these replaced by renewable sources of electricity, with diesel genrators only kept for emergency back-up purposes. The benefits of replacing diesel generation with renewable sources of electricity are quite straightforward. Using an emissions factor of 2.7 kgCO2/litre diesel, the avoided emissions based on the current total generation per annum in the Cook Islands is about 25 kt CO2. It is as yet unclear the extent to which demand reductions from energy efficiency measures being implemented will equal and exceed demand increases from projected economic growth and increased tourism. If demand were to increase, then avoided emissions of diesel generation would increase commensurately.

The primary indicator of implemetation will be the percent of diesel generation replaced by renewable sources as measured in MWh per annum.

There are a wide range of economic and social effects associated with a programme to replace diesel generation with renewable energy. These include: • the direct benefit of jobs created during installations of the RE systems • the general financial benefit of lowered electricity tariffs (which are planned) to consumers who will have more disposal income to spend elsewhere, thereby stimulating the economy • the macro economic benefit of avoided diesel purchase with the commensurate reduction in foreign transfers and balance of trade deficit (noting that this benefit may be offset to some degree if an effect is that diesel imported/sold in the transport sector becomes more expensive) • the macro and micro economic benefit if more private sector capital is attracted to the Cook Islands, e.g. investments by IPPs • the intangible benefit of consumer and business confidence about the future costs of electricity with the elimination of the volatile cost of world oil prices – and increased investment that may stem from this increased confidence • the effect of all these positive benefits on stemming migration both from the outer islands to Rarotonga and the Cook Islands to other countries – and, as well, the possibility to attract Cook Islanders living abroad to return and contribute to the national economy There are also important benefits of a physical and environmental nature from reducing and eliminating the use of diesel generators: • Importing diesel fuel and shipping it to outer islands has commensurate risks of spills into pristine environments (that attract tourists, vital to the economy), especially with increased projections of severe weather events due to climate change. • There are also problems with leaks from diesel storage facilities and dumping of waste oil during servicing of diesel generators. • Diesel generator emissions can also have local air pollution effects.

see http://cookislands.gov.ck/docs/renewableenergy/Cook%20Islands%20Renewable%20Energy%20Chart%20Final%20April%202012.pdf