Reforms for the expansion of electricity access and rural electrification in small island developing states

Abstract

Small island developing states face unique constraints to the provision of electricity services in rural areas, given their geographical features, and the small scale of government bureaucracies and markets. In small island developing states situated in the Pacific Ocean, these factors have resulted in some of the lowest electrification rates in the world. Seventy percent of Pacific islanders are without access to power; a figure that is equivalent to access rates in Sub-Saharan Africa, despite higher income levels in the Pacific. Past efforts by government and aid organizations to expand electricity access in rural areas have achieved negligible success, given regulatory frameworks that do not encourage grid extension, and the absence of effective institutional frameworks for operation and maintenance of decentralized systems. This paper argues that the binding constraint to rural electrification in Pacific small island developing states is the failure of regulatory frameworks to establish a viable business model for investment. Regulatory reform is needed that creates commercial incentives for private and public sector power utilities to provide power in rural areas, both through extension of electricity networks and decentralized power provision. Regulatory reform could also address past problems with the operation and maintenance of decentralized systems.