*Appendix A.1. Potential Challenges*

#### Appendix A.1.1. Political

**Political Stability**: Strong institutions and political leadership with the capacity to plan and manage policies and investments that support climate smart development are an essential building block of low carbon, climate resilient societies [49]. Therefore, the political stability of a country becomes an important variable when looking into wave energy for the Pacific Islands.

**Renewable Energy Targets**: Nations that have already established renewable energy targets are more likely to invest in wave energy technologies. Since most of the PICs have already committed to transitioning to renewable energy, this factor is going to serve as a motivation for wave energy to be utilized. However, wave energy has higher costs when compared to more traditional technologies and the absence of renewable energy targets might hamper a project.

**Government Support**: Wave energy currently needs government support for research and development (R&D) to compete with more mature technologies, such as wind and solar. However, this factor is also important for countries that have the potential for wave energy, since having support from the local government can facilitate the project. A cooperative agreement between government and developers will enable information sharing, which is essential to the pre-feasibility and feasibility stages where technical information is needed on a local scale. Having government approval is mandatory, nevertheless, different levels of support will either ease the process of project development or create additional hindrances.

#### Appendix A.1.2. Economic

**Economic Stability**: The economic stability of a country has a direct impact on the cost of energy, which is an important metric to analyze the viability of wave energy. Unstable economies can lead to high and unpredictable inflation, depreciation of the currency, lower investment opportunities, and low economic growth. The two main outcomes that can affect the viability of wave energy are the high exchange rates and unstable markets. Technology suppliers are outside the Pacific Island countries territory; therefore, the longterm wave energy project will be conducted using foreign currencies that might change in the future, altering projections. Furthermore, if there is negative economic growth, investors might refuse to start a project; given that the life cycle of a device is 25 years on average, any market uncertainties will reduce investor confidence and long-term stability is favorable.

**Cost of Energy**: This is the total costs for the generation of energy during the lifecycle of a device, including the capital, operation, maintenance, and decommissioning expenditures. Cost of energy (CoE) is one of the main indices to assess the economic feasibility of a project; another important index is the levelized cost of energy (LCOE), which can be calculated assuming different discount rates to levelize the costs for present value. Economic indices show how the costs for wave energy can compare to different sources of energy, including diesel generation, which is the main source for the PICs. If the costs are high, it will be more difficult to justify a wave energy project. Furthermore, there are factors within the CoE that should be included in the analysis, such as the distance to the shore, distance from the source point to the electricity grid, and water depth. Each one of the aforementioned factors can significantly increase the initial costs and is crucial when choosing a wave energy converter device. Additional important variables would be the discount rate and the conversion rate—considering that wave energy is still under development discount rates are expected to be high, moreover, the PICs will be importing the device, and conversion rates can fluctuate and generate a loss.

**Feed-In Tariff**: A FIT is a governmental incentive that ensures a premium fixed price for energy generated to the grid, making calculations of viability more predictable [7]. The FIT can make a project more appealing to investors and end-users by reducing price volatility and creating more opportunities for the renewable energy sector. On the same note, a lack of FIT schemes can hinder the chances of receiving funds and outside investment.

**Risk Assessment**: Any long-term investment will be bound to have risks related to different stages of the project. Risk assessment provides an understanding of risks, their causes, consequences, and their probabilities [50]. For wave energy projects, the risk is an important factor since it will influence economic parameters, such as Cost of energy (CoE) and levelized cost of energy (LCOE). Risks can take different forms, such as political and regulatory risk; counterparty, grid, and transmission link risk; currency, liquidity, and refinancing risk; as well as resource risk [51]. A qualitative and quantitative risk assessment should be performed to understand the source of the risks as well as their impact on the economic viability of the project.

**Access to Funds**: Ocean energy technologies demand high long-term investments, which are mostly due to the equipment costs, installation process, and discount rates. The Pacific Islands have a specific environment that creates drivers for ocean energy, such as high diesel costs and high ocean resources. Nevertheless, the high capital costs associated with these technologies preclude these island nations from constructing ocean energy facilities; financial and technical assistance must come from developed nations [52]. Access to funds is an important factor to justify a project, and lack thereof could impede or postpone the process significantly.

#### Appendix A.1.3. Social

**Offshore Mining**: According to Inniss et al. [53], "Marine mining has occurred for many years, with most commercial ventures focusing on aggregates, diamonds, tin, magnesium, salt, sulfur, gold, and heavy minerals. Activities have generally been confined to the shallow nearshore (less than 50 m water depth), but the industry is evolving and mining in deeper water looks set to proceed, with phosphate, massive sulfide deposits, manganese nodules, and cobalt-rich crusts regarded as potential future prospects". Pacific Island countries (PICs) are heavily dependent on natural resources and likely to remain so for the near future, making resource management an issue of critical importance for economic development [54]. Any project development must consider the presence of natural resources offshore and verify if there are any ocean policies regarding the use of these sites.

**Tourism**: Tourism represents a key driver of global economic growth and is a crucial component of the effort to alleviate poverty and achieve the other development objectives in many developing countries [21]. In the Pacific, tourism is a key sector of the local economy and is one of the main contributors to the gross domestic product. Tourism sector development offers Pacific Island countries a path to economic security that dovetails with broader development goals around infrastructure and employment [55]. For this reason, wave energy should not interfere with the tourism industry of any potential site and should seek the approval of possible stakeholders. Areas that are being used for diving, snorkeling, swimming, or that have any touristic purposes, ought to be mapped and circumvented.

**Navigation**: Islands are more reliant on marine transportation for commercial and non-commercial shipping due to lack of resources, dependence on international trade, and remoteness factors. There is the possibility of utilizing a WEC in the port structure since the port is an ideal location for a wave energy converter based on the overtopping principle as it can be easily integrated into the mound ruble without compromising the success of the project [56]. Nevertheless, if the WEC being studied will not be used as such, the proposed development should account for effects on navigation channels and seek to not interfere with main shipping routes.

**Fishery**: Fishery is one of the most crucial sectors of several islands inside the Pacific, considering its importance to the local economy and the subsistence of the local communities. Much of the region's nutrition, welfare, culture, employment, and recreation is based on the living resources in the zone between the shoreline and the outer reefs. The continuation of current lifestyles, the opportunities for future development, and food security are all highly dependent on coastal fisheries resources [57]. Considering the key role of the fishery sector, it will be imperative to map fishing areas and choose a site that does not coincide with this activity.

**Aquaculture**: According to Adams et al. [58], "Profitable aquaculture of penaeid shrimps and blacklip pearl oysters has now been established in some areas of the Pacific by commercial interests. Stand-alone enterprises producing penaeid shrimps for export markets are firmly established in New Caledonia, Fiji, and the Solomon Islands". The aquaculture sector in these countries is significant to their economy, nevertheless, there are still other examples of aquaculture activities being developed at different PICs which should also be accounted for. When choosing a suitable site for wave energy it is important to identify any aquaculture farms to avoid conflicts of use.

**Recreation Sites**: Recreation sites include the presence of beach areas or sites that are being used for sports, leisure, and additional activities that do not suit the previous factors. These can be used by both locals and tourists and could further be categorized as tourism; nevertheless, considering that several Pacific Islands do not have a high flux of tourists this will be then defined as a category of its own and will serve to identify important recreation sites.

**Cultural and World Heritage Sites**: Mixed cultural and natural World Heritage sites have both outstanding natural and cultural values and so are included on the World Heritage List according to a combination of cultural and natural heritage criteria [59]. These sites require tourism management and have regulations regarding the types of activities that are allowed, which means that using heritage sites for energy purposes or interfering with its lands is unviable. It is also important to note that aside from UNESCO Heritage Sites, any area with cultural value will create obstacles for project development.

**Local Acceptance**: People tend to accept renewable energy due to environmental issues (reduction of pollution by producing clean energy), but questions arise about environmental impacts, mainly those related to marine mammals, landscape/seascape changes, and noise [60]. It is important to consult key stakeholders, including members of the community, to share the benefits and potential impacts of the project and allow them to voice their opinions. A consensus between the local population and decision-makers can be achieved through stakeholder engagement plans to avoid any future conflicts of interest.

#### Appendix A.1.4. Technological

**Electricity Supply and Demand**: Each wave energy converter is capable of supplying a limited annual energy output; the actual output will vary depending on the local climate characteristics and if it is a singular device or an array of devices. To compensate for the high initial costs, it is common to establish a wave energy farm with high energy outputs. Nevertheless, Pacific Island countries encompass thousands of islands with varying population sizes, including remote islands with less than 1000 inhabitants. For a wave energy project to be viable, the chosen device needs to account for the relationship between energy output and energy demand, whilst keeping the costs competitive. For this reason, islands with higher population densities are more suitable locations.

**Electricity Grid**: Since islands with small-scale grid systems are more affected by fluctuations in renewable energy power supply than other areas connected to largerscale grids, grid stability is a particularly important issue when increasing the renewable energy penetration rate in these areas [20]. Nevertheless, several islands still lack the basic infrastructure for grid connection and there are communities that are not yet connected to the grid. For this reason, not only is the stability of a grid an important aspect when studying the possibility of bringing wave energy to a site, but the presence of grid infrastructure is also crucial. The building of or improvement of an electricity grid will add costs to the installation process and can be detrimental to the feasibility of a project.

**Seaports**: Ports have an essential role in maritime logistic chains as they are the places where the cargoes are handled [57]. They also play an important role when it comes to wave energy since WECs are relatively large structures and might need several weeks for transportation and large-scale vessels. The process of receiving materials and supplies for a WEC will therefore require a port for operation; in case there is no infrastructure available, additional investment costs might be required.

**Expertise**: Even though having expertise available is preferred, the offshore industry in the Pacific is not yet developed and it is most likely that training programs will be necessary to conduct and maintain a wave energy project. The expertise factor is relatively complex, and even though the lack of expertise creates extra initial costs, it also benefits the local economy by creating job opportunities. Therefore, costs will increase but the chances of achieving public acceptance will be higher.

**Logistics**: Wave energy technologies are currently being developed in a limited number of countries, which might create supply-related drawbacks. Dedicated suppliers are not yet abundant due to the relatively small scale of the industry but suppliers in related applications may have the capacity to modify their existing products/services to supply the marine energy sector [61]. Due to the remoteness factor of Pacific Island countries, there will likely be additional costs in the process of importing, installing, and maintaining a wave energy converter device; the need for special vessels that will travel long distances will increase the initial, maintenance, and operation costs.

### Appendix A.1.5. Environmental

**Natural Hazards**: Even though there is a lack of studies on the relationship between natural hazards and wave energy, it is well-known that storms can cause extreme wave events which might have an adverse impact on offshore structures. During storms and other extreme events, the stresses induced on the foundations, moorings, pylons, and sub-structures, etc., can exceed the design stress-causing failure of the device [62]. It is important to identify hazard-prone areas as well as the type and frequency of natural hazards to have a better understanding of risks. If a site has frequent storms this might add to unplanned maintenance costs and therefore may increase the overall costs of a project. For this factor, important variables include the number of past disaster events, frequency of natural hazards, as well as their intensity and proximity to the island. In the case of hurricanes, for instance, it is necessary to analyze the hurricane tracks, hurricane categories, frequency of events, wind speed, distance from the center of the storm to the island, and the number of events that caused damages and turned into disasters.

**Biodiversity**: Marine biodiversity plays an important role in the livelihood of the local population as well as in the environmental cycle. It is at present not clear what the scaling-up from the limited observations on individual or small clusters of devices to commercial-scale arrays will mean in terms of environmental effects and whether or not the effects observed to date are directly applicable [63]. Thus, since the effects on the local environment are still uncertain, areas that are rich in biodiversity should be avoided for wave energy projects to minimize the chance of negative impacts. It is also important to identify local protected species, endangered species, and key species during this stage to avoid incorporating areas of their natural habitat. This information will be used for early assessments: however, an EIA study will be required for further analysis and for identifying interactions between a WEC and the local environment.

**Coral Reef**: According to Moritz et al. [25], "The tropical Pacific region holds approximately 25% (about 66,000 km2) of the global coral reef area. Spread across such a large area, these reefs vary considerably in terms of proximity to continents, reef structure, and biodiversity, as well as frequency and intensity of natural disturbances". Thus, the PICs hold a significant percentage of the global coral reef resources, which are also extremely valuable for the local environments and provide essential services. As to prevent any possible harmful interaction with the corals, a wave energy project should avoid utilizing areas with such environments for potential sites.

#### Appendix A.1.6. Legal

**Regulations**: Even though countries are expected to have regulations concerning the energy sector, the lack of specific regulations for marine energy might bring additional barriers or bureaucratic procedures. Since marine energy is not yet consolidated in the Pacific, there will be a high chance of encountering a lack of regulations for this market, and consultations with local government will be necessary to establish boundaries and define associated fees.

**Marine Protected Areas**: A marine protected area (MPA) is an area of intertidal or subtidal terrain, together with its overlying water and associated flora, fauna, and historical and cultural features, which has been reserved by law or other effective means to protect part or all of the enclosed environment [64]. There are different levels of protection, which result in different regulations regarding marine activities. Usually, marine exploration is prohibited in MPAs, while tourism and shipping activities might be limited. It is advisable to keep renewable energy generation outside the MPA boundaries to avoid any impact during the construction, operation, and decommissioning stages.

**Maritime Zones**: According to Goodall [65], "maritime zones are areas of ocean or sea which are or will be subject to national or international authority. They are delimited as parts of the seabed, water column and sea surface, the subdivision being on the grounds of political jurisdiction relating to the use and ownership of marine resources". These areas can include resource exploration, protected areas for marine species, disputed territories, and the exclusive economic zone (EEZ) boundary. To avoid any project constraints, maritime zones should be avoided and the WEC should remain inside the EEZ.

**Military Zones**: The Pacific Islands are strategically positioned between Eastern Asia and North America, which has sparked interest from different nations through the last decades. Due to their importance in terms of geographical position, it is possible to find military zones in the Pacific or agreements for future bases. For instance, The United States of America has air and naval bases in Guam and an intercontinental ballistic missile test site in Kwajalein Atoll in the Marshall Islands, which also supports space surveillance activities [66]. Utilizing these areas might either be prohibited or require an agreement between developers, local government, and responding authorities for the military zone.

**Dependent Territories**: There are still several Pacific Island Territories whose government does not hold full sovereignty and any developments on those areas will need to respond to different legislations. Those territories can be associated with the United States of America, France, Australia, the United Kingdom, and New Zealand; their levels

of sovereignty might differ as well as their federal relationships. Bringing wave energy to these areas will require public acceptance from the local communities as well as from different governments, which might create additional difficulties.
