Island grids represent an overlooked opportunity for renewable power. In addition to geographical islands there are also many electrical islands, such as remote locations throughout the world, where interconnections with neighboring grids are not a practical option. Due to transportation issues and the lack of economies of scale, these grids typically rely on liquid fuel derived from petroleum.
Thanks to policy incentives in a growing number of jurisdictions, wind and photovoltaics have become the two fastest growing energy sources in the world. They are now dominated by global corporations with the resources to support their installations with the reliability demanded by the electric utility industry. To date, most of this growth has been targeted at continent-scale electric grids, where they represent a tiny fraction of the installed capacity.At current penetration levels, continent-scale electric systems can easily absorb the variable output of the wind and solar resource. Output variability becomes a much more important issue at the higher penetration rates that are easily reached on smaller grids. However, the overriding economic and security benefits of displacing petroleum can more than offset the additional integration costs.
Relying on petroleum for electric generation raises three substantial and increasing concerns. First, petroleum is the most costly and risky fossil fuel. The prospect of near term decline in global petroleum production is a very controversial issue. However, electric systems are planned using a horizon of decades over which even the most optimistic projections of oil supply suggest that global production will have difficulty meeting increasing demand.
Second, relative to more diversified utilities, island utilities would face a severe and immediate crisis in the event of a geopolitical incident, even one that disrupted oil supplies for only a few weeks.
Third, islands and certain remote communities such as those in the Arctic are literally on the front line of climate change.Although they are not the predominant cause of the problem, they are at substantially higher risk than their mainland counterparts. Leadership actions they take to reduce carbon emissions will amplify their voice in the climate change debate. In addition, many islands are unusually dependent on the tourism market, which is, in turn, highly dependent on energy-intensive aviation and is showing a rapidly increasing sensitivity to environmental issues.
Project development on islands is more challenging for several reasons. Logistic costs are greater and it is harder for island utilities to take advantage of economies of scale. This is more of an issue for wind power than for photovoltaics. These costs are relatively easy to analyze. The variability of the output of wind and solar represents a more complex analytical challenge.Although variability in output does not create technical challenges at current levels of renewable penetration on continent-scale grids, small island systems can easily reach renewable penetration levels at which utilities need to take special provisions to maintain power quality and system stability.