Allocating the economic benefits of renewable energy between stakeholders on Small Island Developing States (SIDS): Arguments for a balanced approach

Abstract

For many Small Island Developing States (SIDS) the cost of producing electricity from imported fossil fuels is so high and the cost of renewable energy technology has fallen so significantly that transitioning towards renewable energy is likely to produce cost savings. A recent workshop at NYU School of Law, which brought together SIDS utility representatives with a leading renewable energy developer and other stakeholders, provided strong support for this prediction. Utilities are likely to own the majority of renewable energy assets in SIDS and will therefore be the initial custodians of any cost savings renewable energy provides. This raises a key policy question: to what extent should SIDS utilities pass on these savings to consumers by lowering electricity rates? We analyze this overlooked element of energy policy and highlight undesirable consequences that complete disbursement of the savings to consumers could cause.