Energy insecurity remains extreme even as renewables investment picks up

The Pacific’s extreme energy insecurity stems from a heavy dependence on imported fossil fuels for electricity generation. Imported diesel and fuel oil account for around 44% of grid electricity in Fiji, roughly 80–95% in Tonga, Kiribati, Vanuatu, and Solomon Islands, and close to 100% in the Federated States of Micronesia and the Marshall Islands. Even Samoa remains majority fossil-fuelled despite significant progress in renewable energy deployment.^* This reliance contributes to some of the highest electricity costs in the world. At approximately $0.47/kWh, the average cost of electricity supply in the Pacific is nearly three times the global average of around $0.17/kWh.^*

In view of this exposure, the region’s renewable targets are, on paper, world-leading. Cook Islands, Fiji, Marshall Islands, Samoa, Tuvalu, and Vanuatu have all pledged 100% renewable electricity by 2035, while Tonga and Solomon Islands target 70% by 2030 and full decarbonisation by 2050.

Donors have sought to address this exposure and assist regional governments in meeting targets. External investment in Pacific energy security, tracked in the Pacific Aid Map by combining flows to renewables, grid and efficiency measures, fossil fuel projects, and other energy sector activities, totalled $2.2 billion over 2015–24, or around 6% of all ODF support to the region (Figure 16). Renewables account for the largest share of these investments, at 59%, followed by grid and efficiency investment (10%), and fossil fuel projects (6%), with the remaining share made up of energy policy, technical assistance projects, and other energy sector initiatives.

Energy financing peaked in 2019 at $367 million, driven by a one-off surge in renewable energy commitments, before falling back to an annual average of around $193 million across 2020–22. Since the ramp-up in the early 2010s, however, total energy financing has been broadly flat, with spending since the pandemic only 6% higher in real terms than the half-decade prior. Yet recent figures show some positive signs: energy security commitments have jumped to $699 million, with more than two-thirds of it for renewables.

The composition of energy financing varies considerably across donors. Australia is the largest single energy partner in the region, leading renewables investment through its AIFFP pipeline (Figure 17). The ADB sits second overall and leads on grid and efficiency investment. China has also been a notable renewables partner, providing financing for a range of projects including the Ramu Hydro project in PNG, the Somosomo Mini Hydro project in Fiji, and wind power investments in Tonga.