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Obstacles to effective energy aid for small island developing states

Small island developing states have great potential to exploit renewable energy sources, and donors do commit aid to develop that potential. However, that aid has not improved access to energy across the board. Neither is all the money committed actually being spent. A look at what the obstacles are.

Andrea Lindblom / Published on 10 May 2019

Interview partner

Georgia Savvidou
Georgia Savvidou

Research Associate

SEI Headquarters

Your work has examined aid for energy to small island developing states (SIDS). Why is there a need for this research?

Energy is strongly connected with social, economic and environmental challenges in SIDS. Many are heavily dependent on imported fuels and are therefore exposed to high and potentially volatile fuel prices. Some also have low electricity access rates among their populations.

On the other hand, SIDS tend to have great potential for developing renewable resources, especially solar and wind. In the majority of the islands that potential remains largely untapped, although most, in particular Cook Islands, Cape Verde, Vanuatu, Saint Vincent and the Grenadines, and Samoa have adopted very ambitious targets for scaling up renewables.

Solar roof panels on Mahé, Seychelles

The potential to develop solar energy in island states like Seychelles is not fully exploited. Photo: A. Lindblom / SEI

“I come from an island state, Cyprus, which – even though it is not a developing country itself – faces some of the same challenges as the SIDS.”

What is your personal interest in this research?

I come from an island state, Cyprus, which even though it is not a developing country itself, faces some of the same challenges as the SIDS, such as high electricity prices and a dependency on imported fuels.

And I am also interested in working on energy issues because I believe that the energy system transformation is obviously very important in terms of combating climate change, which I believe is the biggest challenge our generation is facing and I want to contribute to this greater effort.

They can’t afford to make that change happen all by themselves. What kind of energy projects do donors fund, and what challenges arise from that?

In general, one challenge is that technology choices are often made by donors and are not necessarily compatible with local needs or expectations.

When it comes to the projects that are funded, we can see that funding has been targeted mainly to energy generation, both from renewable and non-renewable sources, energy policy and distribution. Commitments to renewables are considerably higher than those of non-renewables over the 2002 to 2016 period. The continued support for non-renewables can be explained by the fact that many SIDS are still depending on fossil fuel-based electricity generation and so in the near term, it may be difficult to completely shift away from any support for non-renewable energy.

Taking a closer look at the data, which originally comes from the OECD’s Creditor Reporting System database, it seems that the reporting on energy policy can be misleading, because donors report a wide variety of projects in this category, including projects that are obviously electricity generation projects.

Overall, wind energy has not received a lot of support. Even the biggest commitment to wind energy is insufficient to develop wind power on a large scale. That suggests that aid has perhaps been used for background studies or preparatory work rather than large-scale projects.


Total energy aid commitments to SIDS was around US$ 4.13 billion between 2002 and 2016, with the volume increasing particularly from 2009 onwards. The bulk of this money has gone to the Caribbean, which is the most populous region in the SIDS group.

The amount of commitments in SIDS is skewed by large amounts of finance going to a few target countries, namely the Dominican Republic, Mauritius, Haiti and Cape Verde. These four countries account for about half of total commitments, and half of that, in turn, was concentrated in the Dominican Republic.

Energy aid for the SIDS has increased over time. Has access to energy then improved?

In some islands there is an improvement, but in others access has actually declined.

Overall it seems there is little correlation between the allocation made to individual islands and their energy access gaps. Those islands that have the lowest energy access rates are not the ones receiving more energy related aid.

The two countries with the lowest access rates, Guinea Bissau and Papua New Guinea, are at the upper end of receiving energy aid in absolute terms. But per capita, both islands are at the lower end.

Your research has also shown that while funding commitments for projects have increased, disbursements are declining. Why are donors not able to spend the money they’ve committed?

Yes, the number of projects has almost tripled between 2002 and 2016. Because SIDS rely on relatively small public sectors, it could be they lack the capacity to manage and implement this increase.

Also, there seems to be more difficulty in disbursing projects in SIDS that are classed as Least Developed Countries compared with those that are wealthier. This points to issues such as limited technical capacity for working with new sources of energy, a lack of long-term planning and political commitments, short-term horizons of international donors and, in some cases, social or cultural resistance to switching to new energy sources or technologies.

In addition, in the 2002 to 2016 period, non-renewable projects have a higher disbursement rate than renewable projects, suggesting that donors, project developers and recipients are more familiar with and have greater expertise in executing non-renewable projects.

What area would you next like to focus on?

The natural next step is to try and answer the question of effectiveness. How has the penetration of renewables changed over years? What has been the impact of commitments and disbursements on renewables or on energy access? Basically, looking at different indicators to try to measure the effectiveness of energy aid would be a great next step.

Read the journal article

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