Economics & Development

Tuvalu relies heavily on imported diesel fuel for electricity generation and faces high electricity costs and energy security risks because of volatile fuel prices, limited institutional capacity, and aging power infrastructure. The Project was designed to strengthen Tuvalu’s energy security by reducing dependence on imported fuel and improving the efficiency and sustainability of the power sector. At closing, the Development Objective remained closely aligned with the World Bank Group’s regional strategy and Tuvalu’s national development priorities. However, the solar PV facility and battery system had not been commissioned, delaying the anticipated diesel savings and energy security benefits. Although the building energy efficiency investments, installation of prepaid meters and radio communication systems was fully completed, the energy-savings target was only partially achieved. Overall Project performance was weakened by significant implementation delays arising from limited implementation capacity, COVID-19-related disruptions, and the recent global fuel supply crisis. The Bank’s strong strategic alignment, sustained engagement, adaptive supervision, and responsiveness to implementation challenges were partly offset by inadequate Project readiness, overly optimistic assumptions, and repeated restructurings to address issues that could have been better anticipated during preparation. Future energy projects in Tuvalu should carefully assess implementation readiness, particularly site confirmation and PIU capacity. Aligning procurement with the installation and commissioning of key equipment is another important lesson. A TEC-based PIU should receive dedicated support and have clearly defined responsibilities, mentoring, and structured knowledge transfer. Practical support for procurement and Project implementation should also be provided, and Project schedules should include realistic contingencies for logistics, testing, grid integration, training, and handover.