Energy poverty is widespread in Small Island Developing States (SIDS) of the Pacific. It is estimated that 70 percent of Pacific Islander households do not have access to electricity, which is equivalent to access rates in sub-Saharan Africa and slightly below the average for low income countries. Pacific SIDS face unique challenges in expanding access to electricity, given that their populations are spread across tens of thousands of islands. Governments and development partners in Pacific SIDS continue to prioritise development of electricity grids, as is evident in ongoing subsidisation of grid-based power consumption and the establishment of ambitious (grid-based) renewable energy targets.

This paper argues that traditional approaches to rural electrification which prioritise grid extension are not suited to the Pacific islands region. Increased funding should be directed by both governments and development partners towards rural electrification, especially in off-grid areas where isolated systems are more appropriate. Institutional reform is also important. Regulatory reform is needed for power utilities to extend electricity grids into rural areas. Institutional arrangements that facilitate the sustainable operation and maintenance of off-grid systems also need to be established. Past donor and government-funded off-grid rural electrification projects have rarely been sustainable. Alternative approaches involving payment of output-based subsidies to energy service companies are worth exploring, although will only succeed where sound regulatory arrangements are in place.