Islands around the world are heavily reliant on costly oil imports from distant locations which can burden government budgets and inhibit investment in social and economic development.
Indigenous renewable energy resources such as hydropower, wind power, solar power, geothermal power, bioenergy and wave power can reduce these expensive imports and create important business and employment opportunities.
But how should islands go about attracting the investment to put these resources to use? The case studies in this short report are meant to show that a wide variety of islands in different locations and at different levels of development can all attract investment in cost-effective renewable energy resources through a mix of four key ingredients: » Political priority to attract investment
» Market framework for investment
» Technical planning for investment
» Capacity to implement investment
Political priority to attract investment in renewable energy on an island results from a realisation by its people, its utilities and its leaders that it is paying too much money for electricity and renewable power offers a way out. To be credible and have an impact, the political priority must be clearly articulated by ministers and embodied in legislation.
An effective market framework for investment must ensure that the electricity market is open to participation by all types and sizes of players who could profit by installing renewable power facilities. These include incumbent utilities, independent power producers, and building owners. Regulations should make it profitable for utilities to invest in cost-effective renewable power options. They should also make it possible for independent power producers to invest in such options – directly or through power purchase agreements with the utilities. And they should make it profitable for building owners to install photovoltaic power systems through net metering arrangements whereby the value of electricity they provide to the grid is credited to their electric bill.
Technical planning is needed to ensure that investment in renewable power options is consistent with the economic interests of the island and does not impair the reliability of service. Some sort of integrated resource planning should be done to ensure that an optimal mix of energy options is chosen for the island, to minimise costs within the constraints of preserving the environment, promoting public health, and serving other social objectives. And grid stability analysis is needed to ensure that the grid remains stable and service remains reliable as the share of variable renewable generation grows.
Finally, human capacity building is needed for successful incorporation of renewable power options on island power grids. A variety of skills are needed to plan, finance, manage, operate and maintain the power grid effectively, safely, reliably and economically.
Looking at islands in oceans around the world, this report shows how these four factors have combined to create successful settings for renewable power investment. Download PDF