Australia should supercharge the development of Pacific Island Countries (PICs) and contribute to their lasting economic security by investing in inter-island electricity grids and diversified energy sources.
A green energy project in Vanuatu completed this August demonstrates the opportunity—and the need for action on a much larger scale.
Pacific islands suffer from poor electricity access and reliability, with as few as 60 percent of households connected. Local energy production depends on fossil fuel imports, whose vulnerability to price shocks and supply disruptions poses a disproportionate economic burden on PICs. Fuel for electricity generation often exceeds 10 percent of GDP of multiple states, and shortages sometimes leave communities subject to prolonged blackouts.
Despite the necessity of reliable energy supply for economic development, the sector receives only 3 percent of aid to these countries. Governments struggle to pay for the rest.
Nonetheless, many PICs have committed to reaching 100 percent of renewable energy by 2030, and that ambition has become a focus of what little aid goes to the sector. The Asian Development Bank and the United Nations Development Programme are investing in decentralised, small-scale sources of electricity generation—such as off-grid solar—then in some cases linking them via intra-island microgrids. These are necessary first steps for building energy access, but such decentralized sources can’t fully meet the Pacific’s energy needs.
The Vanuatu Energy Access Project is an example. Commissioned by the Vanuatu government and the Asian Development Bank, it built a transmission line between two towns on the island of Espiritu Santo and a hydropower plant on another island, Malekula. But Malekula’s grid access increased only from 8 percent to 14 percent and national diesel imports were barely dented.
The project’s localised improvement on energy access highlights a need for a new energy development paradigm led by Australia: the establishment of inter-island, nationally encompassing grids that could integrate and diversify local generation while enhancing efficiency, resilience and economic progress.
Connecting isolated sources to a national grid would enhance the reliability and extend of electricity supply. A national grid would also standardise energy regulations, utility fees and maintenance operations across an island chain.
Australia should also support diversifying Pacific islands’ sources of green energy through development finance. The islands variously suit using wind, solar, hydro and copra oil for cheap, renewable generation, decreasing fossil fuel dependence.
Connecting variety of generation types to a national grid would also mitigate the intermittency of renewable energy production. When one form of production is unavailable, households can access alternatives through the grid. Achieving power-sharing between communities and islands is vital to securing reliable access to cheap energy for the Pacific.
A vision for integrated, diversified energy development furthers Australia’s goal of being the partner of choice in the Pacific. China is manoeuvring aggressively for influence in the Pacific under the guise of development, signing secret security deals, penning predatory loans and undermining good governance. As Pacific leaders call for collective action against climate change, this new development vision that Australia could pursue would enable to provide attractive counteroffers to China’s development model and build goodwill in the region.
However, tropical island geography complicates energy development endeavours, with population centres often separated by tens or even hundreds of kilometres of jungle or ocean. Integration and power-sharing would require long cable connections over land and under the sea.
Such obstacles are not insurmountable. In August 2024, the Australian government approved the Australia-Asia PowerLink, which is intended to carry solar-generated electricity from Australia to Singapore through a 4300km subsea cable.
Conceivably, Australia could fund a similar energy export model in the Pacific Islands where national grids transition into green energy export markets. Internationally integrated renewable energy grids will stop haemorrhages of Pacific wealth to foreign diesel suppliers, stimulate economic activity, and promote PIC unity and cooperation across the vast oceans between them.