Increasing Renewable Contributions for Island Utilities

Globally, island electricity systems are on a journey to reduce energy costs and break their historical reliance on imported diesel and heavy fuel oil. As the costs for renewable generation and battery energy storage decline, island utilities can create increasingly resilient, reliable, lower-cost energy supplies while meeting domestic goals on the use of renewable energy. Intelligent controls and smart automation are critical technologies for enabling island utilities to unlock the benefits of the low-cost solar photovoltaics (PV) and battery energy storage systems (BESS) available today.

The largest driver for high-energy costs in islands is the price of imported fuels. To address this issue, Hitachi ABB Power Grids first developed an island utility business case achieving an 18 percent reduction in the cost of generation while sourcing 35 percent of the delivered energy from renewable sources. This island utility was able to deliver 35 percent of the energy to customers from renewable sources while minimizing the life cycle cost of their electricity supply. The cumulative investment increased the use of domestic energy sources, enhanced energy security and reduced the island’s contribution to climate change. It provided a robust foundation for meeting higher renewable contributions into the future—even up to 100 per cent.

Three conclusions could be drawn from this business case: 1) Islands have a strong economic case for the use of solar PV and BESS to reduce their reliance on imported diesel fuel. This improves their resilience against volatile fuel prices. 2) Islands can make strong progress towards their renewable energy goals while lowering costs. 3) Smart controls and automation are key technologies necessary to unlock the benefits of lowcost solar PV and BESS.

Benefits of Storage and Renewables for Island Utilities

Investments in renewable generation, BESS and smart control technologies can make islands less vulnerable to market conditions, more resilient to environmental challenges and increase energy security using domestic energy sources.

Island utilities are, traditionally, reliant on costly diesel and heavy fuel oil for their electricity. This singular reliance on an expensive resource has led them to pay some of the highest and most volatile electricity costs in the world. It is not uncommon for island utility customers to pay between 0.20 and 0.50 USD/kWh for their electricity — two to five times what many customers of mainland utilities might pay.

Beyond the high cost, these fuels are toxic and contribute to climate changes that are eroding shorelines and affecting the environmental stability of many islands. Recognizing these challenges, many islands have committed to ambitious targets to reduce their dependence on imported fossil fuels. To meet these goals, islands must increasingly rely on renewable energy with support from BESS and smart control solutions. This island energy transition is technically viable and can economically reduce the risk and exposure to fossil fuels.

As compared to mainland utility grids, island grids have less diverse generation and demand, do not interconnect with larger networks and tend to have less secure and reliable network infrastructure. Adding BESS and smart control solutions has the added benefit of mitigating the impact of these challenges.

One key economic driver is reduced technology costs: Installed solar PV prices have declined around 80 percent over the past eight years, while lithium-ion battery pack prices have dropped around 80-90 percent in the same timeframe. Cost declines for these technologies are projected to continue. In parallel, innovations in intelligent controls and integration technologies, like the e-mesh™ solution, have created a successful enabling environment for islands to unlock the economic benefits and decrease fossil fuel usage.

Hitachi ABB Power Grids Customer, Robben Island, South Africa

As renewable and storage prices fall, fossil fuel prices continue to spike and disrupt island economies. Renewable and storage investments can protect utility rate payers from fuel volatility, while supporting the islands in achieving their environmental and domestic energy goals. There is no technical limit to higher contribution of renewable energy; it is expected that the contribution of renewable energy possible at least cost will continue to improve as technological innovation continues.

The opportunity for BESS and smart controls with renewable energy in islands is immense. These technologies can increase fuel efficiency of the existing generation fleet, reduce wear and tear on the generation assets, stabilize frequency and voltage to improve power quality, all while improving renewable integration and use of renewable energy. Each island is unique and has its own driving factors for using renewables.

They can reduce energy volatility, increase use of local energy and limit contributions to climate change. Key stakeholders in island energy systems include the utility, the island government, local renewable advocates and citizens, businesses and utility ratepayers. In addition to these domestic stakeholders, there is a diverse set of multilateral funding agencies, various political associations and investors that are working with island residents to influence their decision to transition to a lower-cost and less-volatile energy supply. Hitachi ABB Power Grids has developed a modular solution with flexible design options to address this diversity of needs in islands.

Proven advanced integration technologies and controls also create an opportunity for utilities to leapfrog the challenges of utilities in larger markets. Grid Edge Solutions (GES) has expertise and experience in designing optimized microgrid and battery energy storage solutions across a range of applications serving remote communities, islands, utilities and industrial customers. We are a leading provider of microgrid products and solutions that offer a complete end to end approach from initial consultancy through to remote monitoring. These flagship solutions for island electrical grids are based on the e-meshtm portfolio and offer flexibility and scalability to support power island power demands from hundreds of kilowatts to tens of megawatts.

Hitachi ABB Power Grids/GES business has supported many islands in their goals to lower costs and increase the use of renewable energy. Globally GES has successfully supported more than 200 microgrid and battery projects deployed globally, with a cumulative installed capacity exceeding 500 MW. This proven track record of renewable systems operating in all corners of the globe provides islands with certainty that they too can unlock these benefits.

To summarize, the grid edge technologies presented here: battery energy storage and solar PV with smart controls can reduce costs, reduce risk, and increase renewable penetration and contribution to meet island goals. The low cost of these technologies presents a compelling case to justify making an investment in them to reduce reliance on diesel fuel today. Their economics and technical capabilities present an investment opportunity for islands and island utilities where the technical, economic, and environmental goals all align.

- Hamideh Bitarafm, Ph.D., Senior Advisor, Hitachi ABB Power Grids

- John Glassmire, Senior Advisor, Hitachi ABB Power Grids