The island and remote community energy opportunity

The livelihoods of individuals and families living on islands and in remote communities across the globe are directly tied to the availability and price of one volatile global commodity: oil. While oil is also used for various purposes in larger communities across the globe, islands and remote communities are disproportionately dependent on oil for their well-being. In these communities, oil powers the way people move. It propels the ships and trucks that bring in goods from the outside. It enables the tourism industry that keeps many of these local economies afloat. It also powers the electricity system in most of these communities.

For well over 100 years, oil has enabled remote communities to generate electricity and enjoy the benefits of a consistent electrical supply. However, unlike many larger, non-isolated communities across the globe that are increasingly turning to a diverse supply of resources to generate electricity, most islands and remote communities continue to rely on oil and oil alone for their electricity and other energy needs. Relying solely on oil for electricity generation has left island and remote communities exposed to several risks and drawbacks. Oil-based electricity generation is often more expensive and subject to price volatility, which can result in the use of risky fuel hedging strategies that can lock in prices for years to come.

Importing oil puts these communities at risk of supply interruption, reducing energy security. Furthermore, small-scale electricity systems that aren’t connected to a larger electricity grid tend to be more expensive and difficult to maintain: in the U.S. and Europe, regionally interconnected grids can support one another, whereas remote and island community grids have no such luxury.

Accordingly, residents of island and remote communities pay some of the highest retail electricity prices in the world. While the average residential rate in most U.S. states is 12.5 cents per kilowatt-hour (USDi ) for electricity, the average in most Caribbean nations is at least three times higher. These risks and drawbacks—paired with continuing cost reductions in solar, wind, and energy storage technologies—suggest that an alternative to the fully oil-based electricity systems of the past is now available to islands and remote communities across the globe: affordable renewable energy.

Leading islands and remote communities, from the deserts of Australia to the isles of the United Kingdom, have already transitioned from 100 percent oil-based electricity systems to ones with significant renewable penetration. These communities are enjoying the many benefits that come with the transition: operational cost savings, reliable and stable power, long term energy price stability, and reduced dependence on oil. This casebook profiles islands and remote communities actively embracing this transition in order to provide examples for other communities looking to make the switch away from oil to efficiency and renewables.

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