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attractive and economic. Variable renewables can be integrated into these systems to a level of around half of total generation, while still achieving cost reductions due to the high costs of diesel‐fired generation.1 The data for off‐grid solar PV systems is predominantly based on aid projects and the potential for cost 1 Not all island systems will be able to easily achieve this and additional investment in grid management and means to increase the flexibility of the existing diesel generators may be required. Higher levels of penetration than 50% will typically require investment in more expensive flexibility options such as “smart grids”, electricity storage and perhaps newer more flexible diesel generators. reductions from large‐scale deployment, for instance by pooling projects across countries, is significant and could reduce the LCOE of off‐grid solar systems with battery storage to USD 0.50 and USD 0.85/kWh. To achieve their potential, however, renewable projects in the islands will need to overcome the difficulty in accessing capital that many projects face, particularly smaller‐scale ones. As a result, many projects are funded through development banks and soft loans. In some cases this restricts competition in the procurement process, and it is often not clear to what extent the reported costs of many of these projects reflect commercial realities. 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 Average range of diesel-fired generation for islands FIGURE 2.4: LEVELISED COST OF ELECTRICITY FROM RENEWABLE POWER GENERATION TECHNOLOGIES FOR PACIFIC ISLANDS Note: Diesel generation costs can be as high as USD 2/kWh in remote, small-scale applications. SOURCES: BASED ON DATA FROM KLIMBIE, 2012; SYNGELLAKIS, K., 2011; ZIEROTH, G.H., 2010; CASTLE ROCK CONSULTING, 2012; AND IRENA ANALYSIS. Renewable Power Generation Costs in 2012: An Overview 23 2011 USD/kWh Wind large-scale Wind small-medium Solar PV-grid connected Solar PV-off-grid Biomass-gasification Landfill Coconut oil Geothermal small Hydro smallPDF Image | International Renewable Energy Agency
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