James Ellsmoor

Island Innovation

Looking to Islands for the Future of Energy 

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Looking to Islands for the Future of Energy 

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Looking to Islands for the Future of Energy 

Do islands hold the key to the future of energy? James Ellsmoor, CEO of Island Innovation, sits down with Energy.Media to discuss how islands around the world are making breakthroughs in energy and how we can use them as inspiration for utilities back on the mainland. 

  • Island Innovation is a virtual network connecting islands across the globe, allowing them to share and access information on sustainable development. According to James, energy is the most fundamental issue facing all island communities, which are home to the world’s highest rates of electricity. For example, the cost of electricity throughout the Caribbean is three to six times higher than neighboring Florida. 
  • Upwards of 20-30% of all GDP in the Caribbean is spent on importing fuels for electricity production. High electricity costs act as a barrier to development on islands, since other sectors of the economy depend heavily on electricity to be successful. By switching to renewable energy sources, islands not only reduce the cost of electricity, but can further other parts of their economy – from manufacturing to tourism and beyond.
  • The key to energy success on islands is diversification and decentralization. Distributed renewable energy sources increase resiliency in the face of storms and make islands more energy independent. As renewables become cheaper and more accessible, models of use on islands may act as an indicator for what will work on the mainland.  

Thanks, Peter. Island Innovation is a global network connecting islands that may have similar issues. And for me energy is one of the most fundamental facing all islands around the world. Places like the Caribbean, the cost of electricity, maybe three to six times higher than people play in Florida, within the US states guess which has the highest rates of electricity, Hawaii. And this applies right around the world. From my own country in the UK, the Scottish islands have the highest levels of energy poverty in the country, to the Pacific and Asia. And so islands share this common energy experience. And particularly, I’m talking about electricity. This really impacts all areas of development, how can you be effective in manufacturing if you have high cost of electricity, for example, and can be a real barrier to development. And so renewable energy represents not only an important environmental effort, but actually impacts all sectors of the economy, because for most islands, renewables is actually the cheapest option. So if we want to talk purely about economics, we can look at the optimum renewable energy rate for most islands being anywhere from 50 to 90%. So I’m gonna give a bit of context around why I think the island energy conversation is so important, and what this means for the wider renewable energy and electricity grid conversation. So to start off, many of you may be familiar with Puerto Rico, and know the issues that Puerto Rico had after Hurricane Maria, which I guess is three, four or five years ago, now. Hurricane Maria hit the island and wiped out the grid. And this is what happens when you have an old fashioned electricity grid that has not been updated. And this was a really interesting opportunity for Puerto Rico, to rebuild almost from scratch because the grid had been wiped out. Unfortunately, that didn’t happen. Through various political and economic efforts I won’t go into now, the effort was slow to rebuild. But what it does show is that if you were to build an electricity grid from scratch, it would not look like the electricity grids that we have today. Because most the way that the technology has evolved has means that the cheapest and best options that we have today are not reflective of the existing infrastructure. A really good example of this is looking at all this leapfrogging effect, is looking at telecommunications in Sub Saharan Africa. Most people in Africa, and I’m being very general about the continent. So let’s take that said, Kenya, most people, almost everyone in Kenya owns a mobile phone. But most Kenyans don’t have a landline installed in the house, because why do you need it? Most people now, really, the landline exists in the house is redundant. And we kind of see that same leapfrogging effect that could take place in in the energy sector as well. So there are three fundamental questions that I kind of want to address in my brief talk to you today. One, why is energy so important, the islands have already gone into to what trends Can we see in energy for islands? And three, the question of 100% renewables and what is an effective level of renewables for islands? So I’ve covered that first question, why is energy so important for islands? And I guess it’s really important to underline that most islands around the world today still get a bulk of that energy or electricity from diesel generators, to the point that in many parts of the Caribbean, the GDP spent on importing fuels can be as high as 20 or 30%. Imagine 20 or 30% of GDP spent on importing fuels.

So moving to renewables can have multiple really big benefits. If you take a region like the Caribbean one, reducing the cost of electricity, which I mentioned, to increasing the resilience to hurricanes to storms. That’s a really interesting one. Clearly, solar panels and hurricanes don’t go well together. But actually, if you look at the engineering and the efforts that have been done around this, hurricanes in the Caribbean, and are being built to a level that means that they can withstand the vast majority of hurricanes, clearly a direct impact from anything is is difficult. But the big difference it goes back to the Rico discussion is that solar panels will be distributed across an island across a wide area with multiple different farms in different places. So if one is taken out, you still have other plants around the place. Gentle rating and maybe you have winds, you could even have Ocean Energy generating, Puerto Rico had pretty much all of its energy being located it sorry, all of its electricity being generated on one corner of the island. And when a hurricane made direct contact with that, it wiped out the generation for across the whole island. And so the idea of moving towards a decentralized grid for somewhere for islands is an exciting opportunity. The reason that I’m kind of emphasizing some of these points is that what is happening on islands, I think, is an indicator of what the future of electricity grids looks like, on mainland areas, you see these extreme pressures due to the high prices and various other factors that are really a microcosm of what could be happening to energy. In general, as the price of oil goes up across the coming decades, obviously, renewables will continue to become more competitive. And what is happening now looking at small island communities is really a petri dish, to think about what the utility of the future can look like for really large scale utilities.

A really interesting case study, I think, is the utility death spiral that you’ve hopefully heard of before. In the island context, let’s take an island, the Turks and Caicos Islands just started the Bahamas, for several years, the only electricity, the only solar panels on the island, what are the utilities officers, they were the only place that was allowed to actually install that. And the reason for that is the utility obviously, knew that renewables represented a good option for them to generate cheaper electricity. But they obviously did not want to give up the right to that and that you see this struggle happening across the whole region and governments responding in really different ways in their, in their policy. One, one interesting examples also in Curacao and the Dutch Caribbean, the government that implemented what was branded as a solar tax really just a way for the utility to remain, keep some control over who was installing solar and keep some of the benefits of that, I won’t go into the utility economics details there. But what will happen is happening in in some islands, is that wealthier people install solar go off grid, and we see this downward spiral as more people go off grid, fewer people are then in the customer base, and the price goes up. And if you have a customer base of 30,000, people, maybe less than 10,000 households, it doesn’t take a lot of people to go off grid for it to get quite scary and have potentially national national consequences. So the policy efforts are being made very, very different across very different islands. And so there’s been some really examples of bad policy that has had a detrimental effect. Some examples of policy that has not been communicated well to the public. And some examples, which remains to be seen, which are the most successful, but I’m sure there will be examples of good policy that can then be led that can then be taken and learn from now, obviously, COVID has thrown, thrown a spanner in the works for this experiment, given that one of the main uses of electricity in many islands goes to tourism. And so that has really impacted utilities in a big way. But I think it will be interesting to see how this does evolve for many different islands in this process of adopting renewables. Now, the final point I had on my list was this idea of 100%. Renewable. So the reason I bring that up is politicians love 100%. It’s, it’s a great way No, no politician is going to stand on the stage and say, We want 95% renewables, it doesn’t sound doesn’t have that ring to it. And so what’s really interesting for me, I’m not I’m clearly not an engineer, I’m seeing in working with utilities, the government’s local NGOs, universities, and seeing how all these different players are communicating and thinking about renewables and how they interact with each other. And what is really clear is that the average person in the street does not have time to spend that have a detailed conversation about utility economics. And so these branded phrases like 100% renewables or a solar tax or a sun tax are ways that grabbed the public’s attention and sometimes lead to less than optimal decisions being taken at the policy level. And so 100% renewables sounds great on paper, but let’s They said the economic optimum is going to be anywhere from 40 to 95%, depending on what the local conditions are. And I think what’s really key is that island does the already have this really high cost of electricity should be aiming for that optimum. I’m not for the 100%. Because whatever is going to be cheapest on that the the carbon emissions of these islands are negligible in the global sense. And so it’s really important to focus on that economic optimum. Now, one of the interesting elements is that this is often balanced with the tourism or branding element that the green brand is more and more important for many of these islands. And so that does play into it. And if you’re already at 99%, then maybe you want to try and reach that 100%. But the reality is that we all know that that that last five or 10%, is rarely economic to achieve in most cases. But that doesn’t haven’t stopped politicians from making these promises. And so over the last 10 years, we’ve seen a slew of islands around the world commit to 100% renewables. And to my knowledge, none of those have actually been maintained. Unfortunately, my favorite example is a small island in the South Pacific called Tokelau, only 1500 people. So a relatively small place to get there, which I have tried and failed, you have to take a two day boat from Samoa to actually reach there. There’s no airport in the islands. And so what a great example of somewhere where it, I think the generation cost was nearly one US dollar is on those islands. So clearly, clearly very expensive. And when they went 100%, renewable, which they did achieve, the first thing, or the biggest impact of that was the Islanders, for the first time, had 24 hour electricity. And that was obviously a huge change, a huge lifestyle change. But what did everyone do? Buy a freezer? Because when you’re fishing, and you happen to have a good catch, if you don’t have a freezer, then what are you going to do? And so I think that the demand there doubled in, in within two years that actually doubled the total electricity demand. And so they went back down from that 100%. So there’s tons of different examples from islands around the world that are interesting case studies. And, okay, a 1500. Person Island is very different than a huge utility in the mainland of the US. But there are some interesting lessons. In general, I think this importance of centrality of energy to all these conversations in the island context context, is worth paying attention to. And these trends that we’re talking about in terms of the diversification towards different types of renewables, the decentralization and the the distributed nature, of energy of electricity generation, make for some interesting reading. But the fundamental lesson is this. This I think, difference between politics, branding and reality. And I find myself constantly trying to navigate between all of those to look at what makes the most sense in that island context. So then hopefully that was a whirlwind tour around islands from the, from the Pacific to the Caribbean, and beyond some interesting examples and we happy to take any questions or comments from any of any anyone watching.


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