Costs and Benefits of Citizen Participation in the Energy Transition: Investigating the Economic Viability of Prosumers on Islands—The Case of Mayotte

Citizen-driven approaches are promising to overcome the challenges in the energy transition of geographical islands. However, the economic profitability of related activities must be ensured to achieve the intrinsic and sustainable uptake of related solutions in an island’s communities. Here, we investigate the long-term (2020–2054) economic profitability of solar-based prosumption on islands belonging to the European Union (EU), soft-linking energy system modelling and actor-related cash-flow analysis. This combination considerably extends common assessments of the profitability of renewable energy technology and long-term projections of island energy systems. We base our case study on the French overseas territory of Mayotte, discussing household affordability and the socio-economic impact of prosumerism. These topics are relevant to transferability on non-EU islands. The profitability of investments in PV depends on (i) the size of the PV system, with larger systems (>9 kWp) profiting from lower specific investment costs compared to smaller systems; (ii) the time of investment, with more profitable investments to be expected in early periods; (iii) the level of decarbonization of the entire energy sector, with an ongoing decarbonization reducing the compensation or energy-saving possibilities; and (iv) the market behavior, with the practice of feeding in all electricity produced rather than self-consuming energy offering a higher expected return on investment under current feed-in-tariff (FiT) compensation schemes. We introduce various policy measures to improve solar rooftop PV profitability and discuss their trade-offs and effectiveness. While indirect subsidies via FiT are generally effective in improving PV profitability, they undermine efforts to incentivize decentralized self-consumption. From the perspective of harmonizing efforts in the energy transition of African and European islands, we recommend a careful evaluation of the trade-offs in relevant regulations required for the economic incentivization of prosumers to achieve compatibility with the principles of a citizen-driven and just energy transition. Particular attention must be paid to context-specific socio-economic characteristics, including low access to financial resources and non-financial access barriers, including legal status.