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SYDNEY/MANILA (Pacific Islands Times) – Despite Pacific Island countries setting ambitious targets to increase their renewable energy generation capacity by 100 per cent, the region as a whole is making slow progress towards achieving this collective goal, according to a new policy paper released today by the Asian Development Bank’s Pacific Private Sector Development Initiative.
The report noted that as of 2021, the total renewable energy generation in the Pacific Island region has only increased by 1%, lagging behind the rest of the world. In contrast, the total renewable energy generation in Southeast Asia has increased by 68%, and the total renewable energy generation in the Caribbean has increased by 71%, slightly higher than the demand growth.
The ADB report attributes the lag to a variety of factors, including remoteness, high transition costs, weak regulatory frameworks and limited land availability.
“Most countries in the Pacific region still rely heavily on imported fossil fuels for electricity generation,” the paper Powering the Pacific: The cost impacts of renewable energy states.
The policy paper examines the impact of transitioning from fuels to renewable energy in Fiji, Palau, Papua New Guinea, Samoa, the Solomon Islands and Tonga.
The report noted that of the 14 developing economies in the region, only three had renewable energy accounting for 40% or more of total electricity generation in 2021.
The countries with the largest share of renewable energy generation are Fiji, at 60%, Samoa, close to 50%, and Papua New Guinea, at 40%.
The paper points out that Fiji and Papua New Guinea are also the largest power generators in the region, accounting for about 83% of the region’s total power generation in 2021. Hydropower stations in both countries that were put into operation before 2012 accounted for as much as 88% of renewable energy production in 2015 and 2021.
Recent investments in solar energy in Palau and Tonga are expected to increase the contribution of renewable energy in these countries.
Laure D’Arcy, PSDI’s expert on state-owned enterprise reform, said: “While Pacific island countries are still in the early stages of their energy transition, investment in renewable energy is already reducing the cost of electricity generation.”
The ADB study found that cost reductions were concentrated in fuel savings, as renewable energy generation in the Pacific region typically replaces diesel.
“The six utilities surveyed have fuel costs ranging from $0.02 to $0.21 per kWh generated, so the savings from renewable energy will be greater for utilities with the highest fuel costs,” the report said.
However, the cost savings from renewable energy do not necessarily mean a direct reduction in customers’ electricity bills.
With many Pacific utilities already paying below full cost recovery, the study showed, “the expected cost savings from renewable energy are already effectively factored into the price of electricity.”
Darcy, one of the report’s authors, assured that “as renewables become a larger share of the energy mix, costs for consumers are expected to fall, especially as the cost of battery storage systems falls”.
Renewable energy expert Denzel Hankinson said reducing electricity costs and improving supply reliability involves several other factors besides investment in renewable energy infrastructure.
“Utilities also need to follow commercial principles and improve operational efficiency to curb high system losses,” said Hankinson, one of the report’s authors.
“International experience also shows that increasing competition in the energy sector can also reduce costs for consumers.”… PACNEWS
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