Small Islands, Big Challenges: Addressing Energy Needs With Clean Solutions, Says Study

Small and remote islands face significant energy challenges due to their isolation from mainland power grids and heavy reliance on imported fossil fuels. This dependence leads to high energy costs and security risks. Despite contributing minimally to global emissions, these islands are disproportionately affected by climate change, experiencing extreme weather events and rising sea levels.

The high cost of electricity generation on islands, often ten times that of mainland territories, underscores these inequities. In 2021, island nations recorded the highest average electricity costs globally. For example, electricity in the Solomon Islands cost almost seven times more than in the United States, while Caribbean countries had tariffs more than double the US average. This disparity hinders socio-economic development, with fuel imports accounting for up to 13% of GDP in some Pacific island countries.

Islands, particularly Small Island Developing States (SIDS), must upgrade their energy infrastructure to withstand higher temperatures, frequent natural disasters, and flooding. Aging power systems struggle to meet growing electricity demand, leading to recurrent outages and load-shedding events, as seen in Sint Maarten, Guam, and Dominica.

With over 730 million people living on 11,000 inhabited islands worldwide, addressing these energy challenges is crucial. Expanding clean energy technologies, increasing energy efficiency, and digitalizing energy systems offer significant opportunities for sustainable and affordable solutions.

Small islands, rich in renewable energy resources, can become clean energy innovation hubs. Although many generate less than 10% of their electricity from renewables, total installed capacity in SIDS more than doubled between 2010 and 2022, reaching 4.6 gigawatts (GW). Caribbean SIDS alone have an estimated potential for nearly 72 GW of solar PV development.

Distributed energy resources, like rooftop solar, can enhance renewable deployment on islands, increasing power system security and affordability while accelerating decarbonization. Complementary technologies, such as battery energy storage systems (BESS), are essential for integrating variable renewable energy sources and maintaining grid stability.

Microgrids and Virtual Power Plants (VPPs) can optimize distributed energy resources, promoting energy efficiency and resilience. Efforts to deploy these technologies are underway in places like Adjuntas, Puerto Rico, where a battery-supported community microgrid is set to power 17 small businesses. The VPP4ISLANDS project is enhancing VPPs on Gökçeada Island in Türkiye and Formentera in Spain using virtual energy storage and digital twin technology.

Increasing energy efficiency in end-use sectors can reduce costs and carbon emissions while creating local jobs. For example, Fiji’s Minimum Energy Performance Standards and Labels (MEPSL) for appliances saved around 9.3 gigawatt-hours (GWh) of electricity in one year. Expanding MEPSL could save the buildings sector 17% of its annual electricity demand by 2030.

Digitalization can further optimize local electricity systems, leveraging data and artificial intelligence for better planning and management. Islands like Curaçao are testing AI for renewable energy forecasting and predictive maintenance of infrastructure. Digitally-enabled demand response can reduce peak consumption by targeting high-use appliances.

Many small island countries have ambitious climate goals, but implementation is often hindered by investment challenges. International climate funding, development finance institutions, and blended finance can help bridge local financing gaps. Knowledge exchange platforms can replicate successful renewable projects and accelerate clean energy transitions.

Policymakers can support these efforts by raising awareness of island energy challenges, strengthening skilled workforces, and creating conducive policy frameworks. Simplifying procurement processes and lowering costs through bulk buying or revised import duties can also help. Public and private sector collaboration is essential for delivering the urgent progress needed.

This work is part of the Digital Demand-Driven Electricity Networks (3DEN) Initiative, supported by the Clean Energy Transitions Programme, the IEA’s flagship initiative for secure and sustainable energy systems worldwide.