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The cost of unsubsidized electricity in off-grid areas, particularly in the islands dependent on fossil fuels, is expensive. Previous studies and recent installations have proven that renewable energy-based hybrid systems could be suitable alternative to diesel power plants in island grids. In this comprehensive analysis of small island grids in the Philippines, results show that there is a huge economic potential to shift the diesel generation to solar photovoltaics-battery-diesel hybrid systems, with an average cost reduction of around 20% of the levelized cost of electricity. By encouraging private sector participation, hybridization could help provide electrification for twenty-four hours, stabilize the true cost of generation rate with less dependence on imported diesel prices, and reduce greenhouse gas emissions. Further, the declining cost of solar modules and batteries will significantly improve the economics of energy transition in the island grids.

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