The Caribbean faces a critical energy challenge.
Historically dependent on imported fossil fuels, the region is experiencing rising energy costs, environmental degradation, and energy security issues. However, the Caribbean’s abundant natural resources present a significant opportunity for renewable energy development. This article explores the potential of renewable energy in the Caribbean, highlighting the benefits, challenges, and strategies for harnessing these resources to ensure a sustainable and resilient energy future.
Renewable energy refers to energy from renewable natural resources that are replenished on a human timescale. The most widely used renewable energy types are solar energy, wind power and hydropower.
The Current Energy Scenario
Presently, the Caribbean relies heavily on imported fossil fuels to meet its energy needs, resulting in high energy costs and vulnerability to global oil price fluctuations. Many islands face frequent power outages and limited access to modern energy services, which exacerbates economic and social challenges. This reliance on fossil fuels also contributes to environmental issues, including air pollution and greenhouse gas emissions, threatening the health of the region’s ecosystems, and by extension, its people.
To face the challenge, CARICOM Member States have set a regional target of 47% renewable energy contribution to total electricity generation by 2027. Caribbean Islands will need to add 4 gigawatts (i.e. 4 billion watts) of renewable energy capacity, requiring approximately USD $9 billion in additional investments to comply with their Nationally Determined Contributions (NDCs)–each country’s national climate plan and report as part of the Paris Climate Agreement.
The Promise of Renewables
Besides reduced pollution and GHG emissions (worthy reasoning in itself)–there are other benefits to investing in renewable energy infrastructure in the Caribbean:
- Energy Security & Independence: Transitioning to green energy sources enhances energy security by reducing dependence on fossil fuels and promoting local energy production. Importantly, the shift reduces the need for energy imports, providing Caribbean nations with greater control over their energy supply and reduces their vulnerability to geopolitical tensions affecting energy markets.
- Cost Savings: Green energy technologies, such as solar and wind power, have become increasingly cost-competitive in recent years, and continue to drop in cost. Investing in these technologies creates long-term cost savings for Caribbean countries by reducing their reliance on expensive imported fossil fuels.
- Economic Diversification: The burgeoning Caribbean green energy sector has made tremendous strides in stimulating economic growth and diversification. In recent years the region has seen the growth of jobs in manufacturing, installation, maintenance, and research and development of renewable energy technologies.
- Environmental Preservation: The Caribbean is globally known for its stunning natural beauty, a key driver of tourism. Transitioning to green energy helps to maintain this brand by preserving the environment, reducing air and water pollution, and protecting fragile ecosystems, ensuring the long-term sustainability of tourism as an economic driver.
- Energy Access and Reliability: Many remote or underserved communities in the region struggle to access reliable energy sources. Green energy solutions like microgrids and distributed solar power improve energy access and reliability in these areas, promoting social and economic development.
A number of transformative projects are sprouting across the Caribbean, driving innovation, fostering economic growth, and showcasing the remarkable potential of renewable energy sources to support a sustainable future.
So what are the best sources of renewable, or green energy for the Caribbean?
- Solar Energy–The Caribbean boasts high solar irradiance, making it an ideal location for solar energy projects. Islands like Barbados and the Bahamas have already invested in solar farms, providing clean and affordable energy to their populations. With over 300 sunny days a year, the potential for solar energy in the Caribbean is immense.
- Wind Energy–Several Caribbean islands have strong and consistent wind patterns, particularly along coastal areas. Wind farms in Jamaica and the Dominican Republic have demonstrated the feasibility of wind energy, reducing reliance on imported fuels and cutting greenhouse gas emissions.
- Hydropower–While hydropower potential varies across the Caribbean, islands with significant rainfall and river systems, such as Saint Vincent and the Grenadines, have harnessed hydropower for decades. Small-scale hydro projects can provide a reliable and sustainable energy source, especially in rural areas.
- Geothermal Energy–The volcanic nature of many Caribbean islands offers substantial geothermal energy potential. Countries like Dominica and Saint Kitts and Nevis are exploring geothermal projects to tap into this reliable and low-emission energy source, which can provide baseload power and enhance energy security.
- Biomass Energy–Agricultural residues and organic waste in the Caribbean present opportunities for biomass energy production. Projects in countries like Guyana and Belize demonstrate the potential of biomass to generate electricity and reduce waste, contributing to sustainable development.
Challenges to the Renewable Energy Transition
According to the Atlantic Council, several hurdles stand in the way of the Caribbean energy transition, primarily due to existing energy systems that are not equipped to incorporate renewables.
- Small projects, high costs: Caribbean governments have relied on a project-by-project approach for renewable-energy development. However, the grid size in the region has been an impediment to this approach. Caribbean countries are small and isolated, and have limited viable space for utility-scale solar (large solar projects) or onshore wind farms—the size of projects that typically allow for economies of scale. Further, projects are inherently more expensive in the Caribbean because of the lack of a local supply chain and the inability to procure at scale.
- Technical capacity: A major obstacle faced by nearly every Caribbean nation is weak administrative capacity. The number of regulators and policymakers available to devise transformation plans and implement them is small. Although some countries, such as Jamaica and Barbados, have adopted frameworks for renewable-energy introduction, existing administrators are inexperienced in tariff setting and procurement.
- Project development: While many investors seek to develop renewable-energy projects, there is a traditional “valley of death” between initial project development and financing. These initial project costs of pre-feasibility and feasibility studies, environmental assessments, production of design drawings, and other elements necessary to achieve financing lead to delays, often measured in years, which obstruct creation of a project pipeline.
- Project finance: Most commercial renewable-energy projects have been funded through project finance—a project loan backed by the cash flow of the specific project. The predictable nature of cash flows from a renewable-energy project means they are highly suited to this type of investment mechanism. The financing of a project requires careful considerations of all its different aspects, as well as the associated legal and commercial arrangements.
- Existing utility constraints: State-controlled utilities are responsible for providing reliable power, and tax revenues generated from fuel importation are often used to fund schools and critical public services. Many utilities signed long-term contracts for electricity supply before renewable-energy alternatives were viable or national targets were set. Therefore, these contracts are binding until the end of their terms and, if the utility does not see any economic benefits to introducing renewables, they present a significant barrier for governments.
Most utilities in the Caribbean also have top-down, vertically integrated structures: i.e., a single company owns and operates all aspects of the electric power system, including generation, transmission, and distribution. This means that the utility company (and, in some cases, the government itself) owns the power plants, the transmission lines, and the distribution network that delivers electricity to consumers. Some of the drawbacks to this model include limited innovation and lack of competition and customer choice, which all drive high costs for consumers.
Overcoming the Challenge
Aiming for 100% renewable is a fine ambition, though not realistic in the short to medium term.
The region under-utilizes its export capacity that can service power systems during the transition. For example, Jamaica currently sources LNG from Trinidad and Tobago and the United States to satisfy its domestic energy demand, meaning this is a potential option for other Caribbean countries. Few Caribbean countries can import and re-gasify natural gas, but modern technology is reducing the cost of entry thanks to power systems that can incorporate floating storage and regasification units with either a pipeline to shore or shipments of small containers.
Over the longer term, Guyana and Suriname, along with Trinidad and Tobago, might be able to provide the necessary supply to the region.
And in the meantime, we can continue to invest and cooperate to achieve renewable energy economies of scale as well as innovation to serve the energy needs of the Caribbean people.
- The Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE), promotes sustainable energy development and capacity building.
- The Caribbean Climate Smart Accelerator (CCSA) leverages global expertise and resources to drive regional renewable energy transformation.
- The Caribbean Electric Utility Services Corporation (CARILEC) is an association of electric energy solutions providers and other stakeholders operating in the electricity industry in the Caribbean region, as well as Central and South America.
And investments from the International Renewable Energy Agency (IRENA), the Inter-American Development Bank (IDB), the World Bank and others will help us secure energy security, efficiency and access for all.
Author: Alicia Richins
Sustainable Impact Strategist | SDG Champion | Climate Justice Advocate | Climate Futures Writer