Renewable Energies Offer Cost Effective Alternative For Island Tourist Facilities

Renewable energy technologies offer the opportunity for island tourism to remain competitive in the face of rising global oil prices.
Published: Tue 23 Sep 2014

Island tourist facilities can considerably reduce their air conditioning and water heating costs and can also save on electricity generation costs by switching to renewable energy technologies, according to a new study from the International Renewable Energy Agency (IRENA).

Tourism is a significant economic driver for many islands. However, many island economies are particularly vulnerable to oil price volatility, as they are highly reliant on imported fossil fuels for their energy needs. Consequently islands the world over, such as those in the South Pacific, are looking to renewables to reduce this reliance. [Engerati-Spotlight On South Pacific – On The Way To A Clean Energy Future]

Tourism a major energy user

The tourism sector is a significant energy user, making use of electricity for cooling, water heating, lighting, cooking and other key services. UNEP has estimated energy use in hotels and resorts to range between 25MJ and 284MJ per guest per night, with a weighted global average for international tourism activities of 135MJ per guest per night.

In turn the electricity bill is an important cost item for island facilities such as hotels. As a result these facilities are increasingly looking to renewable energy technologies, with the aim to reduce their energy costs and thereby help to maintain their competitiveness with non-island destinations.

As an example of the energy use of an average hotel, according to the IRENA study almost half is for air conditioning, with kitchen and refrigeration equipment and lighting the next largest uses each accounting for around 11%.

Four renewable energy technologies

In order to compare the different technologies IRENA uses the ‘Levelized cost of electricity’ (LCOE) index, which takes account of the upfront investment and annual running costs and the expected lifetime energy output. Thus it is a measure of the overall competitiveness of the technology and may be used to assess its economic viability, and in particular to compare with diesel-powered systems.

The IRENA study considers four renewable energy technologies that are being deployed increasingly on islands.

Solar water heating (SWH) systems, which use solar heat to warm domestic water, can offset the cost of gas/electric water heaters. The average investment required to purchase an SWH system in the islands is about US$300/kW, and the payback period is usually less than 1 year.

The calculated LCOE for these systems is US$0.031-0.053/kWh, which compares with an LCOE of US$0.4-1.1/kWh for electric water heaters.

Solar air conditioning (SAC) systems, which use solar heat to provide cooling and heating, would usually replace traditional electric chillers. The average cost of an SAC system is about US$1,800/kW, and the payback period ranges between 5 and 10 years.

The LCOE for these systems is US$0.078-0.149/kWh, which compares with an LCOE of US$0.15-0.42/kWh for electric chillers.

Sea water air conditioning (SWAC) systems, which use cold water from the ocean depths to provide air conditioning, also would usually replace traditional electric chillers. The average investment required is about US$4,000/kW of air conditioning load, and the payback period is between 5 and 11 years.

The LCOE for these systems is US$0.042-0.069/kWh, which similarly compares with the LCOE of US$0.15-0.42/kWh for electric chillers.

Solar photovoltaic (PV) systems would usually replace diesel-generated electricity, either purchased from the local power grid or self-produced with private diesel generators. The average investment required for the purchase of grid-connected solar PV systems in islands is US$3,750/kW, and the payback period is estimated between three to six years.

The LCOE for these systems is US$ 0.179-0.344/kWh, which compares with an LCOE of US$0.38-1/kWh for diesel generation.

Energy savings

To test the use of these technologies IRENA models an island penetration target of 100% for renewables regarding air conditioning and water heating, and 50% for other electricity use by 2025.

Among the findings are that for a US$20 million investment in 10.8MW of renewable energy technologies by 2025, the cumulative savings generated by that date would be over US$80 million, with a positive annual flow of over US$20 million in 2025 alone. That amount would increase beyond 2025, as the price of diesel is expected to increase while the generation cost from the renewable energy technologies remains constant.

Further reading

IRENA: Renewable Energy Opportunities for Island Tourism