From the desk of Marla Dukharan · September 2026
Energy Sovereignty - The Ultimate Panacea Against Petro-political Shocks
Marla Dukharan, Caribbean Economist and Advisor
Since our inaugural publication of the Caribbean Energy Price Index in January, so much has happened! Driven mainly by the Israeli-US attack on Iran and closure of the Strait of Hormuz, oil prices (WTI) jumped over 67% from roughly USD67.02 per barrel on February 27, 2026 to peak around USD112 to USD113 in March and April. At the time of writing, WTI is back over USD100/bbl, and ongoing petro-political developments suggest that volatility and prices in excess of USD100/bbl are likely to continue.
The IMF reported “Energy efficiency and fuel diversification help cushion the oil shock…the damage will depend largely on how long the disruption lasts.” How long the disruption lasts, and how long it takes us to better insulate ourselves from these inevitable shocks, I would add.
The Caribbean’s vulnerability to external shocks stems mainly from our acute openness (dependence on international trade) in general, made worse by the nature of that dependence - on imported food and fuel, most importantly. All the stuff our very existence depends on. Establishing and maintaining food and fuel security have been strategic goals across Caribbean nations individually and collectively for half a century. At least. Yet here we are, with very little to show for it.
This most recent (oil market) crisis, like all of those before it, raises so many longstanding and yet unaddressed issues which continue to hold us back and worsen our quality of life here in the Caribbean. So like victims, we curse the war, and again we lament the disruption, the volatility, the inflation, the vulnerability. We abuse and overuse these terms again. And again. And again.
The renewable energy (RE) transition is even more urgent now given the July 2025 International Court of Justice ruling on the Obligations of States in respect of Climate Change. But, there is a BUT.
Proper planning and alignment of ALL major stakeholders is absolutely crucial before we go running off and slapping solar on everything that doesn’t move. That kind of approach is likely to result in objectives not being met, potentially destabilizing the grid, or worse yet, even more solar electricity capacity going unused as currently seen in Barbados and Trinidad and Tobago for example. How to avoid these undesirable outcomes?
The major stakeholders - the utilities, Governments, Regulators, academia, and consumers - must all be aligned on :
- the outcomes we are trying to achieve - lower prices, better reliability, lower exposure to petro-political shocks, less foreign exchange lost on imported fuel, and
- the optimal way forward for the best possible outcomes to be realized, based on the data.
Furthermore, beyond initial alignment, a solid RFP process and active collaboration throughout the project life and across all players, even among competitors, will ensure that the desired outcomes are achieved in the specified timeframe. Simple, but not easy. Challenging, but not impossible. Uruguay did it.
Uruguay went from “crippling reliance on fossil fuel imports to powering 98% of its electricity with domestic renewables. This swift, state-led shift brought not only energy security, reduced costs, and a more predictable supply, but also supported the emergence of new jobs and industries.” How did Uruguay achieve energy security, in a little over a decade?
- They built a national consensus - the catalyst for which was the Global Financial Crisis of 2008.
- They had the data - and they used it. “A team at the Universidad de la República used one hundred years of data to develop a sophisticated model that could predict the availability of wind, hydro and solar and would allow the system to be based on the cheapest of these (wind and solar) with hydro filling in when needed without any battery storage.”
- The state did not have the money, so they conducted a competitive bidding process and engaged with private sector players under 20-year Power Purchase Agreements (PPAs) to develop the energy sources.
Closer to home, earlier this year Dominica became the second Caribbean country after Guadeloupe, to generate power from domestic geothermal sources. This project had been at least 15 years in the making. According to Dominica News Online “In June 2026, renewable energy accounted for 68% of electricity supplied by DOMLEC, with Geothermal energy contributing 43%, while hydroelectricity provided another 25%.”
St. Kitts and Nevis are also exploring geothermal sources of energy and is currently receiving / reviewing bids. This is especially timely as St. Kitts and Nevis now has the 6th most expensive electricity in the region on a purchasing-power-adjusted basis, and 4th in nominal terms, as discussed in the index’s second edition.
Beyond energy security, renewable energy can also provide a source of income for countries which produce enough cheap energy for export. Bhutan, the world’s first carbon negative country, earns over one-quarter of its annual fiscal budget from hydropower exported to India. Likewise, Dominica plans to export surplus electricity to neighbouring islands in the future.
The Governments who highlight their lack of financial resources to support the RE transition, can first look at their building codes and energy efficiency standards - for themselves as the largest economic actor, but also for the nation more broadly. As I published in June, we waste ⅔ of all energy produced globally on inefficiencies like poor insulation. Governments should also look at the electricity and fuel subsidies (USD7 trillion is spent annually on fuel subsidies globally) that many (not all) engage in - above all else, this is a most perverse incentive, supporting the wastage of energy, and energy inefficient behaviour overall.
The IADB recently discussed the region’s energy landscape in their Caribbean Economics Quarterly report, which concludes that “access to reliable, low-cost electricity is among the most important drivers of growth and prosperity.” We could not agree more.
