Palau’s power bill leaks through inefficient cooling system

By: Laurel Marewibuel

KOROR, Palau — More than half of every dollar Palau pays for electricity generated on the national grid goes toward diesel fuel. That means equipment that wastes electricity can also add to the country’s fuel bill.

A recent inspection of a government campus cooling system found several problems that may be driving up electricity use, including failed chillers, pumps running at full speed and cooling water that was much warmer than the system was designed to handle.

The assessment was conducted in May by Taiwan-based ArchiPilot Artificial Intelligence Co. Ltd. and presented this month during the Pacific 100 forum in Koror, held as an official side event of the 55th Pacific Islands Forum Leaders Meeting.

What the inspection found

Engineers found that the campus cooling system was operating well outside its original design conditions.

The system is designed to send chilled water through the building at about 42 degrees Fahrenheit. Instead, the inspection found the supply water at about 55 F, or 13 degrees warmer than designed.

The water returning to the plant was about 59 F, leaving only a 4-degree difference between the supply and return temperatures.

Two of the three original chillers — the machines that cool the water used to cool the building — were also not working.

The inspection also found that variable-speed controls on the secondary pumps had been bypassed. The pumps were therefore running at full speed around the clock instead of slowing down when less cooling was needed.

In simple terms, the building was using a cooling system that was not operating as efficiently as it should, while some of its equipment was either broken or running harder than necessary.

Why this matters to electricity users

Palau’s electricity is expensive in large part because the country depends on imported diesel fuel to generate power.

The current electricity charge includes a base energy rate of 17 cents per kilowatt-hour and a diesel fuel surcharge of 21.2 cents, for a combined rate of about 38.2 cents per kilowatt-hour.

That means every unnecessary kilowatt-hour used by a government building adds to the cost of running that building — and ultimately to the government’s overall operating expenses.

For public buildings in a tropical climate, cooling can account for roughly 40% to 50% of total electricity use. ArchiPilot estimates that cooling accounts for about 68% of electricity use at the government campus it inspected because the cooling plant operates continuously.

The issue is not simply about one building.

When government buildings use more electricity than necessary, the government has to pay for that additional power. Because much of Palau’s electricity generation depends on imported fuel, higher electricity use also means more fuel has to be purchased from overseas.

Fix the equipment before adding AI

ArchiPilot’s main business is developing software that can monitor and automatically adjust building cooling systems to reduce energy use.

But the company says software alone is not the answer for the Palau campus.

Its proposal calls for the physical cooling system to be repaired first, followed by the installation of an AI-based control system.

Stan Ho, chief executive of ArchiPilot, said the goal is to make sure the equipment is working properly before using software to make it operate more efficiently.

“The cheapest megawatt is the one you never have to generate,” Ho said.

He said the company’s system can adjust cooling equipment using standard building-control systems while keeping the original safety controls in place. ArchiPilot says its technology has produced energy savings of between 10% and 30% at sites where it has been used.

The company estimates that the proposed improvements at the Palau campus could eventually reduce carbon emissions by about 702 metric tons a year.

That would equal roughly 1% of the emissions-reduction target outlined in Palau’s Nationally Determined Contribution, or NDC 3.0.

The financing problem

The inspection points to a larger challenge for Palau and other small island countries: Even when an energy-saving project could eventually save money, the government still has to find money to pay for the repairs upfront.

In this case, the government is already paying the electricity bill. Fixing the cooling system could reduce that bill in future years, but the repairs have to be paid for first.

That creates a difficult budget problem.

“The Pacific’s efficiency problem is rarely a shortage of technology,” said Romona Guan of APAC 2 IMPACT, which organized Pacific 100.

Guan said governments often lack the money and financing mechanisms needed to make improvements even when the potential savings are clear.

For a small island economy with limited borrowing capacity and little access to private investment, finding a way to finance energy-efficiency projects can be as difficult as identifying the technology needed to make the savings.

ArchiPilot completed the site assessment in May and submitted a preliminary proposal to the Republic of Palau in July. The proposal was presented during Pacific 100 in September and is now under technical review.

Lessons for Palau

The government campus assessment highlights a basic problem: A building can have modern equipment and still waste electricity if the equipment is not maintained, properly controlled or operating as designed.

For Palau, where electricity generation depends heavily on imported diesel, reducing unnecessary electricity use could also reduce fuel consumption and government operating costs.

The same challenge exists in other island jurisdictions that rely heavily on imported fuel and face high cooling demand.

Hawai‘i recorded the highest commercial electricity rates in the United States in May 2026, while most of Guam’s generating capacity is oil-fired.

The United States also has more established financing tools for energy-efficiency projects. According to the Hawai‘i State Energy Office, Hawai‘i has procured more than $500 million in energy performance contracts, with estimated lifetime savings of more than $1.1 billion.

For Palau, the question may therefore be not only whether a government building can save electricity, but how to pay for the improvements that make those savings possible.