Why investing on Guam will help the U.S. reach clean energy targets

  • August 23, 2023
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  • Julia Bell, Chief Commercial Officer

New York Times Magazine recently featured a detailed account of the history between the United States and Guam, among other territories. Central among its conclusions is how Guam is lacking in infrastructure and amenities compared to the mainland U.S. while still playing an incredibly important—and risky—role in national security. This lack of investment is endangering both the U.S. and Guam and must change moving forward, especially if we are aiming toward energy independence.  

Global temperatures are rising, both actually and metaphorically, as climate change becomes ever more apparent and tensions rise among superpowers. Investing in the energy transition on Guam will result in a stronger and more sustainable territory while moving the U.S. closer to its emissions goals. As a result, Guam will thrive with new capital, which will invigorate economic growth, and enable the island to continue to strengthen its role in national security. 

Phasing out fossil fuels

The vast majority of Guam’s electricity generation still comes from diesel fuel and residual fuel oil. These methods were phased out from the U.S. starting in 2006, almost two decades ago, but the island is just now converting to ultra-low sulfur diesel to meet such standards. Guam has been playing catch-up due to its location and chronic lack of U.S. investment. By still using diesel fuel and residual fuel, the island is reliant on environmental and health-damaging power plants. Additionally, the cost to the communities in Guam has been uncertain and constantly fluctuating, dependent upon petroleum pricing. In April, the Guam Power Authority (GPA) announced a temporary reduction in electricity costs to consumers. Although this temporary reduction puts the cost of energy closer to that of the average in the U.S. (23 cents per kilowatt-hour), it is not a long-term solution to address the financial uncertainty that comes from tying consumer electricity pricing to global petroleum pricing.   

Guam not only has a dependency on electricity from fossil fuels, but it also has a dependency on imports to support its electricity demand. One of the top imports of Guam is refined petroleum. This dependency on external production could be a red flag for national security as trade agreements and import laws adjust. For Guam to remain a long-term reliable and secure pillar of the U.S. defense posture, the transition to self-produced energy will be essential for the future of the island.  

Solar successes on Guam

As a capital investor in climate and energy solutions, CleanCapital has already taken steps to invest on Guam. In July 2022, we acquired a 36.6 megawatt (MW) solar facility in Inalåhan, Guam. This included the operating Dandan solar farm and rights to the solar development pipeline on the island. Since then, two additional solar plants have been developed. And although the plant generates 6% of the entire island’s electricity generation capacity, there is still more to be done.  

Guam is on the path to energy independence through policies supporting the future of clean energy development. The island’s Renewable Portfolio Standard (RPS) requires that 50% of the island’s power come from renewable sources by 2035, increasing to 100% by 2045. These standards are pushing the island to advance its energy targets, making it a pivotal place to invest in renewable energy.  

The Clean Energy Future of Guam

With the passage of the Inflation Reduction Act (IRA), the U.S. committed to changing its power patterns and shifting to cleaner power sources. Crucially, the IRA also applies to Guam, which should not be forgotten. By utilizing the incentives available, the island will see a boost to its renewable energy investments. Since the implementation of the IRA the U.S. has seen significant progress and growth in renewable energy and there is no reason why Guam should not share the same success. 

As a territory critical to the national security, energy independence should be a priority. Guam is positioned uniquely to thrive in a micro-grid environment with the right investment in solar and storage development. Investing and building the needed solar and storage facilities on the island will create stronger resiliency, especially for an area that experiences extreme weather events.  

It’s time for the U.S. and renewable energy investors to look at Guam as a serious contender for the clean energy transition. This U.S. territory is ready and waiting to grow and produce clean energy. From policies to investments to national security, the island is primed for the deserved attention to support the infrastructure needed for energy independence.