Electricity Generation in Fiji: Assessing the Impact of Renewable Technologies on Costs and Financial Risk

In recent years, renewable energy technologies have been advocated in Fiji on the basis that they improve energy security and serve as a risk-mitigation measure against oil price volatility. Despite this, there have been few attempts to measure the impact of renewable technologies on energy security. That analysis is important if the benefits of renewable energy technologies in Fiji are to be adequately evaluated. This paper develops and applies a method for assessing the potential contribution of renewable technologies to the security of electricity supply in Fiji. The method is based on an application of portfolio theory, traditionally used in financial markets, to the electricity generation mix in Fiji. The results demonstrate the impact of different renewable technologies on both portfolio generation cost and risk for Fijian electricity grids.