Why Clean Energy in the Caribbean Matters for the World

Caribbean nations stand at the forefront of climate change’s impact today. More frequent and powerful hurricanes, rising sea levels, disasters, heat waves, and more hit the Caribbean’s already-strained energy system hard, leading to power outages and soaring energy costs. 

As predominantly small island nations, they face unique challenges in addressing these impacts, particularly when it comes to energy security and resilience. Disasters and unexpected events often leave residents, especially the most vulnerable, without reliable and affordable access to energy for their homes, hospitals, schools, and businesses. 

The good news is that momentum for a clean energy transition in the Caribbean is building up. Renewable energy is not only more cost-effective than imported energy but also offers a pathway for these nations to diversify their economies and strengthen resilience. The Caribbean is rich in renewable resources such as solar, wind, and hydro power, and many governments in the region are leveraging these natural resources to drive the clean energy transition forward. 

The rest of the world should take note: How Caribbean countries solve their energy challenges will provide lessons and approaches that can be applied elsewhere as climate change’s impact grows, especially in other small island nations.

In this article, we discuss what it will take to turn renewable energy potential into progress towards a clean energy transition that builds resilience among Caribbean nations. 

Renewable Energy in the Caribbean: Turning Challenges into Opportunities       

While they are least responsible for global climate change, small island nations –like those in the Caribbean– are among the most affected by it.  

Most of the small island nations of the Caribbean rely on high-priced and highly contaminant imported fossil fuels, which generate between 80 to 90 percent of their electricity. This leaves them susceptible to fluctuations in global markets for oil, gas, and coal, which hurts their economic stability and growth. Many of these countries are also too small to benefit from economies of scale in electricity generation. These factors combine to make power costs in most of the Caribbean extraordinarily high for businesses and consumers.

At the same time, the Caribbean has ample renewable energy sources that could provide reliable, affordable, and sustainable energy locally and reduce their dependence on energy imports. Renewable energy and storage technologies are becoming cheaper, with battery storage costs expected to fall by up to 40 percent by 2030. Globally, electricity generated from solar and wind technology now costs almost one-third less than the lowest-cost fossil fuel. The current high costs for electricity in the Caribbean make these new technologies even more competitive.

Renewable energy provides an opportunity for the Caribbean’s small island nations to diversify their economies, create new jobs in a growing energy sector, and reduce exposure to global price shocks, all while reducing or avoiding greenhouse gas emissions.

Harnessing the Potential of Clean Energy for Resilience and Sustainability in the Caribbean

The private sector has begun developing clean energy projects to take advantage of the competitive prices of renewables in the Caribbean, but project development is moving faster than the policies and infrastructure that create an enabling environment for clean energy to flourish. 

For example, most countries lack the regulation, smart grid infrastructure, and the technical knowledge needed for integrating distributed solar and energy storage. Electric utilities are struggling to manage the changing power grid and find their business models threatened as customers seek alternative energy sources. Some utilities are even restricting new interconnections in response to these challenges, which has frustrated clean energy project developers. 

To attract investment and drive growth, governments need to establish clear enabling environments. This starts with new approaches to planning in the sector. For example, deploying distributed rooftop solar energy systems depends on the individual decisions of thousands of businesses and consumers, rather than centralized, utility-scale decisions. 

To better plan for a clean energy future, governments and utilities need bottom-up analyses, a departure from traditional, top-down approaches. They also need to coordinate the creation of long-term targets and action plans across stakeholders along with policies, standards, and regulations that foster a supportive environment for renewable energy. International development projects can assist by partnering with Ministries and other planning entities to help them effectively regulate and guide the energy sector and by fostering private and public sector connections and understanding of each other’s motivations and barriers. 

Through the USAID Energy Sector Reform project, we are providing novel analyses and planning tools that give decision-makers in the Dominican Republic and Jamaica the information they need to establish a clear pathway for energy reform that balances the interests of all stakeholders.

Good stewardship of the sector also requires governments to accurately and timely plan for disasters and consider how to climate-proof renewable energy infrastructure as it is developed. For example, distributing storage infrastructure throughout an island ensures accessibility during power outages caused by disasters and strengthens climate resilience. Belize, for example, is creating a 40-megawatt battery storage system and distributing it across four locations to increase resilience. Although not an island, Belize faces hurricanes and other natural disasters that threaten its power grid. This type of innovative and integrated approach can create a supportive and attractive environment for renewable energy investment. 

Leveraging Financial Resources for a Sustainable Clean Energy Transition Future in the Caribbean

These changes require substantial financial resources. Development banks can play a crucial role by de-risking private investment and encouraging its flow into renewable energy projects. Financing for micro-, small-, and medium-sized enterprises, not just large companies, is essential to ensure economic benefits of the clean energy transition are widely shared. International development projects can help these enterprises understand where to access financing and build their capacity to make a successful pitch for it. For example, the USAID Energy Sector Reform project is helping clean energy project developers and banks in the Caribbean increase credit guarantees to small business lenders for sustainable energy projects and expanding banks’ portfolios of renewable energy financing. As climate finance grows, global leaders should also dedicate more of it to the frontlines of the climate crisis in these countries, where more sustainable energy practices and sources can bolster mitigation and adaptation goals.

Additionally, intentional effort is needed to ensure women benefit from the clean energy transition. Workforce development and training can provide women with opportunities in this growing sector. In the Dominican Republic, the USAID Energy Sector Reform project partnered with the Ministry of Energy and Mines to ensure that women are represented in all aspects of the country’s energy system. Another example: the project hosted a discussion with public and private sector leaders on the role of data in gender-focused public policy and gender indicators, approaches for increasing women’s participation in the energy sector, and the intersection of decarbonization policies and gender.

Ensuring Energy Security and Resilience in the Caribbean       

A clean energy transition in the Caribbean will enhance regional security in the Western Hemisphere. Economic growth and creation of good jobs at local levels can reduce the pressures that drive migration and attract transnational crime and can also improve each country’s ability to respond to disasters and remain resilient. 

With the help of partners, Caribbean countries can achieve a transition that provides reliable, affordable, and sustainable energy for their economies, diversifying their economies and creating new jobs in the process. This all adds up to more economic resilience in a region where climate change is already hurting people’s lives and livelihoods in dire ways. 

Clean energy is a clear win for small island nations in the Caribbean. It’s also a win for the rest of the world as lessons and technologies applied in the Caribbean will be useful elsewhere as climate change’s impact spreads.

Learn more about RTI’s Energy for Development portfolio and RTI’s Center for Climate Solutions.