SYDNEY/MANILA (PACIFIC ISLAND TIMES) —While Pacific island nations have each set an ambitious goal to grow their renewable capacity by up to 100 percent, the region as a whole has been slow in advancing toward the collective target, according to a new policy paper published today by the Asian Development Bank’s Pacific Private Sector Development Initiative.
The paper noted that the Pacific island region has increased its total renewable energy generation by only 1 percent as of 2021, falling behind the rest of the world. In contrast, Southeast Asia has increased its total renewable energy generation by 68 percent and the Caribbean region by 71 percent, slightly outpacing demand growth.
The ADB’s paper attributed the lag to a combination of factors including remoteness, high transition costs, weak regulatory frameworks and limited availability of land.
“Most countries in the Pacific remain heavily reliant on imported fossil fuels to generate electricity,” states the paper “Powering the Pacific: The Cost Implications of Renewable Energy.”
The policy paper examined the impact of the fuel-to-renewable transition in Fiji, Palau, Papua New Guinea, Samoa, the Solomon Islands and Tonga.
It noted that of the 14 developing economies in the region, only three had 40 percent or more of their total electricity produced by renewables in 2021.
Those with the largest share of renewable energy generation are Fiji, 60 percent; Samoa, close to 50 percent; and Papua New Guinea, 40 percent.
The paper noted that Fiji and PNG are also the largest electricity generators in the region, accounting for approximately 83 percent of the electricity produced across the region in 2021. Their hydroelectric plants—commissioned before 2012—accounted for up to 88 percent of their renewable energy output in 2015 and 2021.
Recent solar investments in Palau and Tonga are expected to increase the contribution of renewables in these countries.
“While Pacific island countries are still in the early stages of their energy transition, investments in renewable energy are already lowering the generation costs of electricity,” said Laure Darcy, PSDI state-owned enterprise reform expert.
The ADB study found that the cost reduction is concentrated in fuel savings since renewable generation in the Pacific typically displaces diesel.
“Fuel costs represented US$0.02–US$0.21 per kWh generated in the six utilities surveyed, so the cost savings generated by renewables will be greater for those with the highest fuel costs,” the paper said.
However, cost savings from renewables do not necessarily translate into a directly proportional reduction in power rates billed to customers.
The study revealed that since power rates are already below full-cost recovery levels for many Pacific utilities, “anticipated savings from renewable energy are effectively already rolled into the tariffs.”
Darcy, one of the authors of the report, assured that “as renewable energy becomes a larger part of the energy mix, costs for consumers are expected to decrease, especially as the costs of battery storage systems fall”.
Denzel Hankinson, a renewable energy specialist, said cutting electricity costs and improving supply reliability involve several factors other than just investment in renewable infrastructure.
“Utilities also need to follow commercial principles and improve operational efficiencies to curb high system losses,” said Hankinson, co-author of the report.
“International experience has also shown that increasing competition in the energy sector can also reduce the cost to consumers.” …. PACNEWS