Maldives' STELCO (State Electric Company Limited) is faced with the task of providing electricity to the spread out island-nation of the Maldives. And throughout its long history, it has been instrumental in accomplishing that task while spurring on the country's extraordinary development. Now, with sights set on the future, it aims to partner with foreign companies and investors to find renewable energy solutions to provide reliable and cost-effective electricity that will support the Maldives' citizens and the booming economy.
In 1949 STELCO provided electricity to around 50 homes in Malé and today the company is responsible for powering much of the country and its booming economy. What have been STELCO's major milestones since 1949?
The country has changed so much since 1949. Today, the country has schools and universities, a powerful tourism industry and everyone has electricity. The development has been dramatic, and STELCO has been a major part of that. The Maldives has gone from being a least-developed country to a developing country – one of just a handful of countries to have graduated from that status. We have achieved so much in the last 30 years, but especially under President Abdulla Yameen. Before becoming president, he was trade minister, and the one who initiated the reforms that affected our business. Under his vision, the enhancement of the Maldives' electricity is integral to the country's development and so he transformed STELCO into a company.
What are your main priorities looking ahead?
Under the President's guidance, we are committed to building more power stations in the new city of Hulhumalé. Hulhumalé is key because it is envisioned as an economic hub, as well as providing homes for some 250,000 people. The government is also looking towards greater investment at the interregional level and finding cheaper solutions to the conventional fuel-burning generators. The Maldives is looking for cleaner energy. I'm sure solar power will be effective, and when it becomes reliably available at more cost-effective rates, we are very much committed to investing in it. However, when we think about solar energy on land, the only path open to us is to use people's rooftops. We don't have empty land like other countries. Here each piece of land is so highly valued – in Malé and Hulhumalé one square foot of land costs $300-400 (US dollars). So in that sense, we don't have space for conventional solar because when it comes to a cost-benefit analysis, we would lose money.
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"Demand for electricity is increasing — every five years it doubles, and we must meet it"
The Maldives has an incredibly unique geography. What are the major challenges in providing services to the different islands and how are you innovating to overcome those difficulties?
We have been facing those challenges and we welcome them. We have more than 180 inhabited islands and every island has electricity. Every island has its own generators supported by the government and either STELCO or FENAKA, the other electricity provider. STELCO works with 36 islands, including the Malé region. We have to invest in powerhouses, generators and people to look after their maintenance. The cost can be recovered when 2,000 people live on an island, but most have populations of less than 1,000 people. But we charge clients at the lowest rate that we can, so on many of the islands we don't make much profit. However, in cases where we have economies of scale, such as Malé, we do make a profit. The biggest challenge we have is in investment. Demand for electricity is increasing—every five years it doubles, and we must meet it. And to overcome these challenges in the future, we must partner with foreign investors and go forward towards renewable energy. We are currently using diesel fuel, but we want solar when the price is matched and the reliability achieved. At the moment, solar can provide for six hours, and it's too expensive to purchase the storage system to extend that time. Another challenge, of course, is the island distribution: we have to provide fuels to each island, train people on each island and have a powerhouse on each island.
"The Maldives is in a good location for solar power to be introduced, but besides on buildings, we have to go with floating solar panels because the sea is where we have space"
What are the specific opportunities for investors, especially from the Gulf countries, to get involved in STELCO's future development?
The government is looking into clean, reliable energy. And the Maldives is in a good location for solar power to be introduced, but besides on buildings, we have to go with floating solar panels because the sea is where we do have space. That's where it could be cost-effective and done on a larger scale. So if we get an attractive offer, it will be welcome. And for this kind of investment, STELCO will be the partner because we have our own grid. If investors want to make their own network then it will be very expensive. It could be a joint-venture, partnering or buy back.
And speaking to an audience of potential investors in the Gulf, what are the win-win benefits of investing in STELCO-led projects?
I think the Maldives is a very reliable partner. GCC investors can invest here and they are looking at a guaranteed return on their investment because the Maldives' economy is booming, especially in clean energy. The Maldives is a country where clean and environmentally-friendly is what we are looking for. So if we have clean energy, we think that will be effective in relation to tourism as well. People want to come to a clean environment that respects nature. Tourism is growing, our population is growing, and we are looking for clean energy investment so both parties will benefit.
How does STELCO work to support the Maldives' tourism industry? And what message would you like to send to potential hotel developers in terms of the quality of utilities on the islands?
Currently, on all the resorts that use the "one-resort, one-island" concept, the power is provided by the owners. But, in the future, STELCO and the government are looking to regionalise that electricity. We aim to have a regional network and provide cheaper power than is currently the case. Already, some islands are developing and changing from conventional electricity to solar and we are working with them. We bring our technical expertise to many aspects of maintenance and, in one way or another, we are a partner or a stakeholder.
More generally, what would you say to Gulf businesses and investors eyeing opportunities in this region? Why choose the Maldives and why now?
I believe that the Maldives is a place that has unique natural beauty and this natural beauty comes at an affordable price for investors. I can see that investments are doubling every year and the prices are also increasing alongside demand. We do want to see more investors from the Gulf in particular. If more Muslim investors come in, it could balance the investment which currently comes from many Western countries. Furthermore, this government can guarantee investors that his or her investment will be protected. And today is a better time to invest than in the past because the government has changed the laws to attract investors. Earlier, an investor who came could lease for 15-30 years. Then this was extended to 50 years, then 99 years, and in the future we are looking at a freeholds. Today, the Maldives is very much committed to working with investors. Now is the right time to engage with the government and explore investment possibilities here.
"Now is the right time to engage with the government and explore investment possibilities in the Maldives"
How is STELCO helping to bring about the President's ambitious vision for the future of the country?
I think the President has a very strong vision for this nation, and that vision is development, development, development. So STELCO has to meet that challenge, keep up with demand and provide reliable electricity. International cooperation is key to this, which is why there are many investment opportunities available. We believe in his strong vision to develop this country and it's not only for Maldivians; it's for investors and tourists. We forecast that tourism in 10 years' time will have increased by 700%. That's why the airport expansion is going on, and that's why connectivity in Malé and Hulhumalé is happening, besides the many changes in laws and regulations. Even within the energy sector, laws and regulations have been changed. Now private investment can be incorporated into our systems and private investors can provide power to the STELCO grid. All of these transformative rules and regulations have been brought in by this government.