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Energy connectivity benefits for Small Island Developing States

While each Small Island Developing State (SIDS) has its own unique characteristics and circumstances, as remote island economies each share similar challenges and opportunities. They have limited natural resources, narrow economies, are geographically distant from major markets, and are vulnerable to external shocks. All of these factors can affect economic growth, increase poverty, and often lead to a high degree of economic volatility.

Relatively small population sizes and low industrialization reduce the opportunities for economies of scale in the Pacific. The cost of doing business is high due to significant transportation and raw material costs, coupled with a small consumer base. This situation can lead to slow industrial development and leaves people with few employment opportunities as well as increased obstacles to entrepreneurship. Additionally, these factors, together with geographical dispersion and a lack of financial resources, create challenges for the development of sustainable energy.

SIDS remain dependent on expensive imported fossil fuels for electricity generation and transport, putting a major strain on their resources, jeopardizing their energy security, and worsening their terms of trade. Nevertheless, the Pacific SIDS possess a large potential to strengthen local economies and enhance quality of life as they modernize their energy sectors.

The transition to cleaner, more efficient power sources, such as renewable energy, reduces dependency on imported fossil fuels, increases access to affordable and reliable electricity, and supports climate change mitigation by reducing carbon dioxide emissions. Environmental issues are exceptionally important in the Pacific, as the region is tremendously vulnerable to climate change. Extreme weather events are becoming increasingly prevalent, with impacts including the loss of land in coastal regions due to rising sea levels and storm surges, failure of subsistence crops and coastal fisheries, losses of coral reefs and mangroves, and the spread of certain diseases. Therefore, immediate action is needed.

The value of regional and interregional approaches, which can, among other advantages, enhance the deployment of renewable and sustainable energy by facilitating the sharing of experiences, is emphasized in UNESCAP's Regional road map on power system connectivity. However, energy connectivity in the SIDS context takes a different form compared to larger economies because cross-border grid connections are in most cases not economically or technically feasible.

One of the priority projects of the GGI's Asia-Pacific Working Group, which brings together stakeholders from across the region to accelerate prioritized energy transition projects, is a knowledge exchange between SIDS. The project aims to share experiences between SIDS and increase collaboration with a focus on strategies to accelerate sustainable power system development for their specific context.

As part of the project, a series of knowledge exchange workshops have been developed in partnership with the Regulatory Energy Transition Accelerator (RETA) a platform for energy regulators to collaborate on decarbonization. Energy regulators in SIDS tend to be small and often relatively young organizations, grappling with the new challenges that the energy transition brings to their roles. Challenges faced by the Pacific region are similar to those faced in the Caribbean. While regional cooperation within both the Caribbean and Pacific is helping energy regulators learn from their peers, extending this knowledge exchange between the two regions helps deepen the learning. The first knowledge exchange sessions, facilitated by RETA delivery partner - RMI, focused on the deployment of Distributed Energy Resources (DER) in island nations.

DERs are a critical component for the decarbonization of island grids. The island nations of the Pacific and the Caribbean are endowed with many different types of renewable energy resources, in particular wind, solar, and hydro power. However, in order to deploy these resources, power systems must adapt to securely and affordably integrate high shares variable renewable energy resources. During the session the participants discussed technical standards and regulatory requirements for the development of DERs.

Based on the key outcomes of the first module, a report with best regulatory practices will be issued later this year to provide possible solutions for SIDS on how to support the development of DERs. The second module of the knowledge exchange between the Pacific and the Caribbean will focus on resilient energy access, and will be organized later in 2023, facilitated by RETA delivery partner - the Global Green Growth Institute (GGGI).

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