The Seychelles wants to generate at least 30% of its electricity from wind energy under the country's 2010-30 energy policy framework. But so far, it has very little renewable energy, apart from solar water heaters. Its energy policy sets short-term goals to source 5% of energy from renewable sources by 2020 and 15% by 2030 through public-private partnerships and direct government investment in the sector.
The islands rely almost entirely on diesel-fired generators for their electricity supply. This consumes 22% of the country's GDP in fuel import bills and releases significant greenhouse gas emissions. Less than 1% of the energy supply is generated from solar photovoltaic panels.
The nation aims to reduce dependence on fuel imports, whose prices have become highly volatile. It wants to see economic growth of at least 5% in the next two years, compared with 3% last year.
Transporting diesel to the archipelago is very expensive. Consequently, the operation and maintenance costs of the wind farm will be approximately ten times less than those of the conventional power plants currently in use on the island, according to Andrew Jean-Louis, chief executive officer of energy regulator the Seychelles Energy Commission.
The deal with Abu Dhabi is for the development, design and installation of a $20million 6MW wind farm on Port Victoria's Romainville island. The project will consist of at least eight 750kW turbines and will be a build-and-transfer project, to be taken over by the government firm Public Utilities Commission.
Abu Dhabi's state renewable energy firm Masdar Power will implement the project, which is slated for commissioning in the last quarter of this year.
The Middle Eastern country has substantial business interests in the Seychelles' tourism and fishing industries. It intends to use the Seychelles wind project as a key plank in its global expansion strategy in the renewable energy sector as it seeks to diversify its earnings from a heavy reliance on oil.
"Our investment decision and strategy is not based on short-term fluctuations on oil prices; our view is more on the long term and we know that the key drivers of renewables, which are climate change and the scarcity of energy, are still as valid today as a year ago," says Ziad Tassabehji, director of Masdar's utilities and asset management unit.
The agreement follows successful negotiations launched in 2009 when Abu Dhabi declared a willingness to finance feasibility studies into the potential of the Seychelles' wind resource and construction of the project.