Access to affordable energy is one of the most pressing considerations faced by island communities, and it is a priority to actively promote and facilitate access to renewable energy, especially in the subregions of Small Island Developing States (SIDS). In Fiji, there are efforts underway to reduce the consumption of expensive imported diesel and increase the availability of clean power, including three outer islands (Lakeba, Kadavu, and Rotuma). There is a similar reliance on diesel fuel on King Island, off the coast of Tasmania, where the focus has been on creating the world’s first hybrid system to achieve 100% renewable energy penetration at a megawatt-scale. Many of these sub-regions possess significant renewable energy potential including solar, wind and geothermal energy.
Furthermore, according to the International Renewable Energy Agency (IRENA), there has been an 85% increase globally in renewable energy power capacity over the past decade, and there has been a corresponding decline in the cost of renewable energy technologies by more than 70%. Despite this, there is still a high dependence on fossil imports to supply energy demand in many island territories, especially since the financing of renewable energy projects brings with it some specific challenges that need to be addressed.
Transitioning to Renewable Energy
Over the course of the past 30 years, a number of island communities have been striving to implement renewable energy initiatives and solutions. Examples of such efforts can be seen in Dominica and St. Lucia, where fossil fuels are imported primarily for electricity generation. Both territories are in the process of investigating the use of geothermal energy as a component of transitioning to renewable energy, and are bolstering this with the accompanying legislative developments to fully optimise renewable energy and energy efficiency.
The island of Ærø in Denmark, is on its way to a complete transition to Renewable Energy Sources, garnering it first place in the EU’s RESponsible Island competition rewarding holistic achievements in local renewable energy initiatives. West African Cape Verde has also started working towards 100%, and in the future, 300% renewables. Surplus energy remaining from meeting domestic needs could either be stored or exported. Cape Verde aims to become a renewables training hub for Africa. And in Samoa, a project is underway to build or rehabilitate the country’s hydropower infrastructure, which in 2012 was damaged by Cyclone Evan.
These islands have also illustrated a standard reality of many island communities: transitioning to renewable energy cannot be done without the necessary support and partnerships. These partners include entities such as the United Nations Industrial Development Organization (UNIDO), and The Global Sustainable Energy Islands Initiative Consortium (GSEII). Additionally, the respective governments have themselves invested millions of dollars in testing, research, and carrying out pilot studies, and this willingness is indicative of the undeniable potential of a way to effectively address the issue of energy. However, an unfortunate reality is that a barrier to effective transitioning and financing is that potential projects are often lacking clear objectives and implementation strategies. This will be further explored in the section “The Challenges of Financing Renewable Energy Projects.”
A joint project carried out by ECLAC and the German Development Agency GIZ, identified the following major fiscal considerations for islands transitioning to renewable energy sources:
- Energy balance forecasting and goals financing
- Interests of donors, funders and sponsors
- Identification of intermediary entities
- Identification of financing lines of entities that offer financing
- Documentation and formalisation
Policy Considerations for Renewable Energy
Table I. Energy Challenges in the Caribbean.
|Isolated grid networks||High Electricity tariffs|
|Small overall generation capacity||Vulnerability to rising, volatile fuel prices|
|Inability to meet existing and future energy demand||Missed opportunities for domestic investment and jobs|
|Outdated equipment||Energy poverty|
|Isolated grid networks|
|Small overall generation capacity|
|Inability to meet existing and future energy demand|
|High Electricity tariffs|
|Vulnerability to rising, volatile fuel prices|
|Missed opportunities for domestic investment and jobs|