Caribbean Renewable Energy Market 2025

The Caribbean pays some of the highest electricity prices in the world, averaging US$0.25 per kWh across the region and exceeding US$0.40 per kWh in several territories, entirely because of a structural dependence on imported diesel and heavy fuel oil that no island can afford but every island has historically been unable to escape (World Bank, 2024). That picture is changing. In 2025, a series of landmark transactions, policy commitments, and project milestones collectively signal that the Caribbean energy transition has shifted from aspiration to investment-grade execution. TotalEnergies acquired a 1.5 GW combined renewable and battery storage portfolio spanning the Dominican Republic and Puerto Rico. Dominica's long-anticipated 10 MW geothermal project reached financial close. Jamaica awarded contracts for 99.83 MW of new solar capacity. Barbados advanced the region's first green hydrogen power plant toward construction. For energy developers, infrastructure investors, utilities, and the industries that depend on competitive electricity to operate, the Caribbean renewable energy market now requires serious strategic attention.

The Fuel Trap: Why Caribbean Electricity Costs So Much

The starting point for understanding Caribbean renewable energy is understanding why the status quo is so costly. Out of eleven Caribbean countries for which comprehensive data is available, nine generated more than 80% of their electricity using imported fuels, and five imported 90% or more of their total energy supply (World Bank, 2022). This structural dependence means that Caribbean electricity prices move in near-lockstep with global oil prices, a relationship that exposes consumers, businesses, and governments to shocks they cannot hedge and cannot absorb without significant economic damage.

The regional average of US$0.25 per kWh masks significant variation. Trinidad and Tobago, with domestic natural gas production and heavily subsidized tariffs, operates at approximately US$0.06 per kWh. Puerto Rico, with access to US federal grid support, is lower than most island peers. But the Cayman Islands average US$0.433 per kWh as of mid-2024, Curaçao averages US$0.419 per kWh, Bermuda US$0.458 per kWh, and Montserrat historically has paid over three times the US average (World Population Review, 2024; BVI Beacon). In markets like Jamaica, Barbados, Antigua, and St. Vincent, residential customers pay between US$0.30 and US$0.40 per kWh for electricity generated primarily from diesel engines burning imported fuel oil.

The economic implications are severe and documented. High energy costs suppress manufacturing competitiveness, inflate hotel and resort operating expenses, add friction to agricultural processing, and disproportionately burden low-income households that spend a higher share of income on utility bills. The Caribbean Development Bank has estimated that annual investments in renewable energy capacity average US$75 million across the region, significantly below the approximately US$1.3 billion per year needed to achieve stated regional energy targets (Caribbean Development Bank, via Energy Center). The gap between available capital and required capital is the central challenge the Caribbean energy transition must solve.

Electricity Tariffs by Key Caribbean Market

Note: Electricity tariffs vary by customer class and fluctuate with fuel adjustment charges. Figures above are indicative residential averages. Dominican Republic and Jamaica estimates are HRG projections based on available CARICOM and World Bank data. All markets are subject to tariff revisions as renewable capacity comes online and fuel clause adjustments are applied.

The Investment Case: Why Renewables Now Outcompete Fossil Fuels

The economic case for Caribbean renewable energy has crossed a decisive threshold. Rocky Mountain Institute's 2025 Caribbean Regional Transition Scenario report found that all three primary renewable options, including solar PV with battery storage, onshore wind with storage, and geothermal, offer lower lifetime costs than both light fuel oil and natural gas as soon as 2027, assuming current technology cost trajectories continue (RMI, November 2025). This conclusion represents a structural inversion of decades of energy economics in the region. For the first time, the cheapest long-term option for the Caribbean is the cleanest one.

Power purchase agreement pricing in Jamaica already reflects this shift. Recent PPA contracts for solar in Jamaica have reached the US$0.09 per kWh range, and wind PPAs are in the US$0.12 per kWh range, well below the retail tariff consumers currently pay for fossil-fuel-generated electricity (IDB, 2024). In Montserrat, a solar project that brought the island to 50% renewable energy is projected to reduce electricity generation costs by more than US$17.5 million over the project's lifetime (RMI via ASES). In the Bahamas, a solar canopy installation at the country's largest car park generates approximately US$350,000 in annual savings (ASES). These are not pilot demonstrations but commercially structured projects with bankable economics.

The regional investment gap remains real despite the favorable economics. The Caribbean Development Bank estimates that US$1.3 billion per year is required to hit regional energy targets, but actual investment averages only US$75 million annually. This gap is not primarily a function of economic unattractiveness but of structural barriers including fragmented regulatory frameworks, small grid sizes that limit economies of scale, high upfront capital costs on small islands with limited credit access, and the absence of standardized procurement mechanisms that can attract institutional capital at competitive rates. The World Bank, through the Caribbean Renewable Energy Infrastructure Investment Facility being developed under ECCB leadership, is directly targeting these structural barriers with pooled procurement models and risk mitigation facilities (World Bank, 2024).

TotalEnergies and AES: The Region's Defining 2025 Transaction

The most consequential single development in Caribbean renewable energy in 2025 was TotalEnergies' completion of its acquisition of a 50% stake in the solar, wind, and battery energy storage systems portfolio of AES Dominicana Renewables Energy in July 2025 (TotalEnergies, July 2025). This transaction followed TotalEnergies' 2024 acquisition of a 30% share in AES solar and battery assets under construction in Puerto Rico. The combined portfolio now exceeds 1.5 GW of renewable energy and BESS capacity across the Caribbean and is projected to produce 2.5 TWh of renewable electricity annually.

The Dominican Republic portfolio alone includes over 1 GW of contracted wind, solar, and BESS projects, of which 410 MW is already operational or under construction under long-term power purchase agreements, with an additional 500 MW in development. The Puerto Rico component adds 485 MW of contracted solar and BESS projects, comprising 200 MW of solar and 285 MW of battery storage with 1,140 MWh of total capacity (TotalEnergies, July 2025). TotalEnergies already operated a 103 MW solar plant under construction in the Dominican Republic at the time of the transaction, along with a partially solarized network of 184 service stations in the market.

The strategic significance of this transaction extends beyond its scale. A company with 28 GW of installed renewable capacity globally, that has been the region's leading LNG supplier since 2018, has now committed its full multi-energy strategy to the Caribbean, combining LNG baseload, renewable generation, and battery storage under a single integrated approach. This provides a blueprint for how large-scale energy transition finance can work in island markets: anchor the baseload with gas, layer in renewables as costs fall, stabilize with storage, and back the entire structure with long-term PPA revenue. Other institutional investors and energy majors are watching this model closely.

Major Renewable Energy Projects Across the Caribbean

Country Energy Transition Profiles: Five Markets to Watch

Jamaica

Jamaica represents the most actively managed and transparently tracked renewable energy transition in the English-speaking Caribbean. The government's 50% renewable electricity target by 2030 is backed by the updated Integrated Resource Plan (IRP-2), approved by Cabinet and published in 2024, which prioritizes wind, hydro, and solar as primary sources with battery energy storage systems for grid stability (JIS, 2025). As of December 2024, Jamaica's installed renewable capacity stood at 188 MW, generating approximately 481,432 MWh annually and representing 10% of national electricity production.

In November 2024, the Generation Procurement Entity awarded 99.83 MW of new solar capacity contracts to Wigton Energy Limited and Sunterra Energy Jamaica Ltd, with implementation completion expected by 2027. An additional 220 MW of utility-scale renewables with battery storage is planned for competitive procurement in 2025. Jamaica Public Service Company's replacement of 171.5 MW of retiring fossil fuel units with renewables, combined with these procurements, is projected to bring renewable electricity generation close to 48% once all projects are connected to the grid (JIS, 2025). Jamaica ranked 10th in Latin America and the Caribbean for renewable energy investment attractiveness in the 2024 Bloomberg NEA Climate Scope Report, moving up eight positions in a single year.

Barbados

Barbados has set the most ambitious renewable energy target of any Caribbean nation: 100% renewable electricity by 2030. The country's deregulated electricity market has already produced results, with 85% of installed renewable capacity coming from decentralized, small-scale rooftop solar systems as of 2025 (TriplePundit, 2025). Nearly half of all Barbadian households use solar water heating systems, a legacy of tax incentive policies dating to the 1970s that created an enduring solar services industry.

The most innovative development in Barbados is the RenewStable project, developed by HDF Energy with IFC, IDB Invest, and Rubis. This is the Caribbean's first green hydrogen power plant, designed to supply electricity to approximately 16,000 homes at a competitive tariff (World Bank, 2024). The project uses excess renewable energy to produce green hydrogen for storage, which is then converted back to electricity when solar output falls, addressing the intermittency problem that prevents small islands from relying on variable renewables alone. Barbados is also a signatory of the RELAC initiative, committing to generate at least 80% of electricity from renewable sources by 2030.

Dominica

Dominica's energy transition pathway is built entirely around geothermal energy, leveraging the island's position on the volcanic Eastern Caribbean arc. The country has pursued geothermal development since 1969 and formally since the Geothermal Development Corporation was established in 1974. A confirmed geothermal reservoir was identified in the Roseau Valley at approximately 1,000 metres depth, with water temperatures around 250 degrees Celsius (UN News, 2024).

The long-anticipated 10 MW geothermal plant developed by a subsidiary of Ormat Technologies reached financial close in September 2025, backed by a blended financing package arranged by the Caribbean Development Bank that combined concessional capital from the Green Climate Fund with equity from partner institutions (Energy Capital Power, January 2026). Once operational, the plant is expected to supply most of Dominica's baseload electricity demand from zero-carbon power, moving the island toward the first small island developing state to achieve 100% renewable electricity. The project's significance extends beyond Dominica: it demonstrates that layered risk-sharing and concessional finance can make complex Caribbean geothermal projects bankable without straining public finances, potentially unlocking similar projects in St. Kitts and Nevis, St. Lucia, and Grenada.

Dominican Republic

The Dominican Republic is the Caribbean's largest renewable energy market by absolute installed capacity and investment volume. The country's 14.6% renewable share of electricity generation as of the most recent available data reflects a grid that combines established hydropower, a growing wind fleet, and accelerating solar development (University of Navarra, 2024). The TotalEnergies-AES portfolio represents over 1 GW of contracted renewable and BESS capacity in the Dominican Republic alone, with AES Dominicana's wind farm at Guanillo and multiple solar parks contributing to the pipeline. The country is a RELAC signatory targeting 80% renewable electricity by 2030, supported by the Public-Private Partnership Law 47-20 that has attracted global developers and contractors to energy project tenders.

The Bahamas

The Bahamas presents a distinctive challenge for renewable energy deployment: the nation consists of 700 islands and 2,400 cays spread across 250,000 square kilometres of ocean, making centralized grid development impractical and microgrids the natural architecture for the energy transition. Renugen Pro Limited is preparing more than US$40 million in hybrid energy projects across Cat Island, Long Island, and San Salvador, combining solar PV, battery storage, and natural gas generation under long-term power purchase agreements with the government (Energy Capital Power, January 2026). Baha Mar's over US$700 million resort expansion, currently under construction in Nassau, incorporates renewable energy and energy efficiency standards that will make it one of the most energy-efficient large resort developments in the region when it opens in 2029.

Geothermal and Battery Storage: The Two Technologies That Unlock Island Grids

Solar and wind are the cheapest renewable technologies available to the Caribbean, but their intermittency creates a fundamental grid stability problem on small islands. A 50 MW island grid cannot absorb the output variability of a 30 MW solar farm without additional firm capacity or storage, and the grid size economics that make utility-scale battery systems competitive in continental markets are harder to achieve on islands where peak demand may be only 15 to 60 MW (Atlantic Council, 2024). Two complementary technologies address this challenge: geothermal energy, which provides constant baseload power regardless of weather conditions, and battery energy storage systems (BESS), which absorb excess renewable generation and dispatch it when solar and wind output drops.

The volcanic Eastern Caribbean arc, running from Saba and St. Eustatius in the north through Dominica, Martinique, St. Lucia, St. Vincent, and Grenada, sits above geothermal resources that could theoretically power not only these islands but neighbouring non-volcanic territories through undersea cable interconnection. Dominica's stated ambition to export surplus geothermal electricity to Martinique and Guadeloupe under the European Union's electricity regulatory framework would create the Caribbean's first cross-border renewable energy trade. St. Kitts and Nevis, St. Lucia, and Grenada all have active geothermal exploration programs supported by the World Bank and bilateral donor governments. Guadeloupe, a French overseas territory, already operates the only currently active geothermal power plant in the Caribbean.

Battery energy storage is advancing in parallel. The AES-TotalEnergies Puerto Rico portfolio includes 285 MW of BESS capacity at 1,140 MWh of total storage, one of the largest battery storage deployments in any Caribbean market to date. Jamaica's IRP-2 mandates that all new utility-scale renewable procurements include battery storage for grid stability. The World Bank's BESS regulatory roadmap for the Dominican Republic, supported by the US Trade and Development Agency, is building the policy and regulatory framework needed to attract private BESS investment at scale (US State Department, 2024). These developments collectively indicate that BESS is transitioning from a premium add-on to a standard requirement in Caribbean renewable project design.

National Renewable Energy Targets Across the Caribbean

Structural Barriers to Caribbean Renewable Energy Investment

Despite the favorable economics and increasingly ambitious policy targets, Caribbean renewable energy faces a set of structural barriers that require deliberate solutions rather than simply better project economics. The Atlantic Council's 2024 roadmap for the Caribbean energy transition identifies the core constraint as grid scale: most Caribbean island grids operate below 250 MW of total installed capacity, and projects sized below 30 MW typically cannot achieve the economies of scale needed to secure competitive financing (Atlantic Council, 2024). This means that every renewable project on a small island competes against a cost structure designed for markets ten or twenty times larger.

Regulatory fragmentation compounds the scale problem. The Caribbean spans dozens of sovereign and semi-sovereign jurisdictions, each with distinct energy legislation, procurement rules, grid codes, and utility ownership structures. A developer attempting to replicate a successful project from Jamaica in Barbados faces an entirely different regulatory environment, legal framework, and counterparty risk profile. The Caribbean Electric Utility Services Corporation has documented that complex regulatory requirements can extend project timelines by up to 24 months, a delay that substantially increases development costs and deters investors seeking predictable returns (CARILEC, 2021).

The World Bank's pooled procurement approach, being developed through the Caribbean Renewable Energy Infrastructure Investment Facility under ECCB leadership, directly targets both problems by aggregating procurement across multiple small markets to achieve scale, and by standardizing contract frameworks to reduce the legal and regulatory friction that delays projects (World Bank, 2024). The inaugural Caribbean Energy Week in Paramaribo, bringing together policymakers, financiers, and developers to discuss risk allocation and project preparation, signals growing momentum around regional coordination as a practical financing strategy rather than a diplomatic aspiration (Energy Capital Power, 2026).

HRG Research Capabilities in Caribbean Energy Markets

Hope Research Group supports energy developers, utility companies, infrastructure investors, and government agencies operating across Caribbean energy markets with consumer and commercial research, stakeholder analysis, and market entry assessments. Our work in the energy sector spans consumer willingness-to-pay studies for net billing and rooftop solar programs, brand perception research for utility companies undergoing energy transition, and commercial and industrial energy consumption research that quantifies demand-side flexibility in key sectors including tourism, hospitality, manufacturing, and retail.

For developers assessing market entry in Jamaica, the Dominican Republic, Barbados, Trinidad and Tobago, or OECS markets, HRG provides regulatory landscape mapping and competitive intelligence research covering incumbent utility relationships, independent power producer market structures, and the policy reform agendas shaping procurement timelines. For infrastructure investors evaluating Caribbean energy assets, our political risk and stakeholder perception research provides the on-the-ground intelligence that quantitative models cannot capture.

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