Renewable technologies and risk mitigation in small island developing states: Fiji’s electricity sector

Matthew Dornan and Frank Jotzo

Renewable and Sustainable Energy Reviews, 2015, vol. 48, issue C, 35-48

Abstract: Renewable technologies have been advocated in Small Island Developing States (SIDS) as a risk mitigation measure against oil price volatility. This paper applies empirical data in a custom-built stochastic simulation model in order to assess the economic impacts of renewable technology investments in Fiji’s electricity grid. The model extends previous applications of portfolio theory to the electricity sector by incorporating variability of output from different technologies. The results demonstrate that investments in low-cost, low-risk renewable technologies, such as geothermal, energy efficiency, biomass and bagasse technologies, can be expected to lower both generation costs and financial risk for the electricity grid in Fiji. These results are driven by the reduction in oil-fired generation that these investments entail. The benefits of hydropower and several other “intermittent” renewable technologies are more limited in the model, given that they require costly investment in back-up oil based generating capacity.

Keywords: Small Island Developing States (SIDS); Pacific island countries; Fiji; Renewable energy technologies; Risk mitigation; Portfolio theory; Electricity generation (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:rensus:v:48:y:2015:i:c:p:35-48

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DOI: 10.1016/j.rser.2015.03.059

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