Renewables
Aminath, Shauna. (2023, Oct 10). How One Tiny Island Nation Is Replacing Fossil Fuels With Renewable Power. The New York Times.
For the Maldives, a small nation of a half-million people across many small islands in the Indian Ocean, the transition to renewable energy sources has come with ups and downs. Using solar as the primary source of energy makes sense for the Maldives given their abundant sunshine; producing a unit of electricity on a sunny day is cheaper than using diesel. Their primary setbacks have been the cost of capital for such projects coupled with the political instability of a new and fragile democracy. Because of their poor credit rating, bank loans come with high interest rates and risk premiums. In light of this, some development banks have established debt relief for developing countries, which has been beneficial for the Maldives, enabling them to roll out solar projects to more remote island communities and in lagoons.
Can renewable electricity replace fossil fuel?
The technology exists for renewable electricity to fully replace fossil fuels, but infrastructure upgrades to support such a grid would come with financial and political barriers. Hydro and nuclear energy can be reliable sources of consistent baseload energy. On the other hand, solar and wind power are dependent on the availability of wind and sunlight, and therefore need to be coupled with energy storage systems to balance out demand to meet the needs of consumers. Infrastructure upgrades come with significant financial capital that can be mitigated with market interventions such as direct investment to support these projects. Additionally, policy tools like insurance and guarantees can make renewable projects more appealing to invest in.