Renewables

Solar and battery microgrid saves Lord Howe Island $1.5m in diesel fuel costs in two years

Published by

A solar and battery-based microgrid installed on the World Heritage-listed Lord Howe Island on the coast of Australia in the Tasman Sea delivered more than $1.5 million in diesel fuel cost savings in its first two years of operation, a new report has revealed.

Commissioned in April 2021, the Hybrid Renewable Energy Project (HREP) was installed to provide a sustainable supply of electricity for the 400 residents and up to 400 tourists on Lord Howe Island, slashing its reliance on costly and polluting diesel fuel generation.

The $11.1 million project, developed by Photon Energy and backed by the Australian Renewable Energy Agency (Arena) installed 1.3MW of solar with a 3.7MWh Tesla battery energy storage system and micro-grid controller, alongside the existing diesel system of three 300kW generating units.

It received $4.5 million in funding from Arena, while the Lord Howe Island Board secured a NSW government loan of $5.9 million, providing the remaining balance of funds from its own capital.

Within its first six months of operation, the microgrid proved its worth, with reports emerging that the solar and battery system had navigated stretches of up to five days and nights powering the island without any additional diesel-generated back-up.

But in a knowledge sharing report published this week, Arena says the project has outperformed expectations on a number of fronts, including the average amount of renewables it supplies, forecast at 67%. And it has saved the island hundreds of thousands of dollars a year.

“Over the first 12-months of operation, HREP supplied approximately 1,587 MWh of renewable energy to the LHI grid. The average RE penetration was 73%,” the report says.

“Over the second 12-months of operation, HREP supplied 1,654 MWh of renewable energy to the LHI grid with an average RE penetration of 67.93% … owing largely to the wet autumn.”

The report also says that the microgrid saved 349,082 litres of diesel in the first year, delivering $740,054 in fuel cost savings based on an average supply price of 2.12 $/L (GST exc.). During the second, 360,236 litres of diesel was saved, delivering $815,641 in fuel cost savings based on an average
supply price of 2.26 $/L (GST exc.) – a total saving of around $1.55 million over two years.

The report also notes that the microgrid caused “zero interruptions” to the island’s power supply during the reporting period.

“The hybrid renewable energy project has improved Lord Howe’s self-sufficiency whilst also reducing the island’s reliance on diesel generators and imported fuels,” the report says.

“The project has enabled skill development by power station operators, LHIB personnel and island residents. The partnership with Arena means that knowledge about the Island’s hybrid renewable energy microgrid will be shared to the benefit of other remote communities in the future.”

Sophie Vorrath

Sophie is editor of Renew Economy and editor of its sister site, One Step Off The Grid . She is the co-host of the Solar Insiders Podcast. Sophie has been writing about clean energy for more than a decade.

Share
Published by

Recent Posts

Home battery numbers shrink for the first time since rebate launch, as installers take a beat

Even the booming home battery market could not escape the January doldrums, with the summer…

6 February 2026

We need more hydro, Turnbull says: But would many smaller projects have been better than Snowy 2.0?

Malcolm Turnbull says more "simpler" pumped hydro needed as solar outpaces wind, and insists that…

6 February 2026

First solar-battery hybrid sends power into evening peak, heralding radical changes for Australia’s main grid

The first solar-battery hybrid has begun sending power into Australia's main grid in the evening.…

6 February 2026

Is AEMO still fit for purpose? Review to probe governance of energy market operator

Transparency, accountability, membership and corporate structure will all come under the microscope as part of…

6 February 2026

Energy Insiders Podcast: Malcolm Turnbull on hydro, LNP, One Nation and Trump

Former prime minister Malcolm Turnbull is pushing for more hydro, but is still pumped up…

6 February 2026

Australia urged to release “terrifying” climate security analysis after UK report flags ecosystem collapse by 2030

The Australian government has been urged to come clean on security threats posed by climate…

6 February 2026