Cayman Islands households carry the fifth most financially burdensome electricity costs in the Caribbean once the local cost of living is taken into account, according to the second edition of the Caribbean Energy Price Index.
While the territory’s nominal electricity rate, or the actual dollar price paid per unit, places Cayman below the Caribbean’s average, the adjusted rate reflects the financial strain that many Caymanians and residents feel each month with the arrival of their electricity bills.
The index, produced by Caribbean economist Marla Dukharan in partnership with clean-energy firm SOL Ecolution, benchmarks electricity prices across 35 Caribbean jurisdictions.
The index draws a sharp distinction between what consumers pay per kilowatt hour and how affordable that price actually is relative to what people earn and what goods cost locally.
Cayman’s purchasing power-adjusted price places the territory only behind Bermuda, the Turks and Caicos Islands, Barbados and Anguilla in terms of burden to the consumer.
On a nominal basis, Cayman’s average electricity rate is indexed at 0.97, or about 3% below the Caribbean average, placing it between Barbados and the Bahamas. But once adjusted for purchasing power using price-level data from the Penn World Table, Cayman’s index rises to 1.35, placing the jurisdiction among the top spots.
High regional burden
Across the Caribbean, electricity costs sit at more than double the global average, Dukharan calculates, driven in large part by the region’s vulnerability to external shocks and dependence on external trade. The Caribbean felt this reality acutely this year, after the price of oil spiked from US$67 per barrel in late February to a peak of around US$113 in March and April following the Israeli-US attacks on Iran, Dukharan explains.
In Cayman, consumers saw the fuel cost rate charged by the Caribbean Utilities Company increase from CI$0.140253 per kilowatt hour in May to CI$0.195054 in June, a rise of about 39%. Over the same period CUC’s base energy charge rose by just under 2%, from CI$0.1360 to CI$0.1387 per kWh.
That period also overlapped with a strong financial performance for CUC, which reported net earnings of US$15 million for the three months ended 30 June — a 17% increase on the same period last year.
Providing relief
In April, the Cayman Islands Government announced a three-part plan, aimed at reducing the cost burden on consumers, beginning with an immediate CI$9 million relief package and culminating in a long-term transition to solar.
The long-term goal, if planned properly, aligns with Dukharan’s suggestions for effectively addressing the region’s cost burden.
She argues against fuel subsidies as a “perverse incentive” that further encourages energy waste and, instead, pushes for structural measures that address inefficiency in energy usage and shift production towards renewables.
Most Caribbean countries, like Cayman, are majority powered by imported fossil fuels and have failed to meet their renewable energy goals. Cayman has set a target of 100% renewable energy by 2045, with an interim milestone of 30% by 2030.
Yet as of 2024, renewables accounted for just 2.7% of the jurisdiction’s electricity production, according to the index, leaving little time to close the gap to the nearer target. That figure places Cayman 22nd among the 31 territories for which the index carries a renewable production figure.
The Cayman Islands government cites a slightly higher figure of around 4% for 2024, and its National Energy Policy targets are framed in terms of renewable “penetration” rather than share of production. By both measures, however, Cayman remains in the low single digits against a target ladder that climbs steeply from 2030.
Cayman’s long-term vision of transitioning to solar energy will require a concerted effort, Dukharan advises.
“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,” she says.
“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.”
To achieve sustainable and effective relief, Dukharan says the major stakeholders, from utility providers and lawmakers to consumers and academia, will need to be aligned on the desired outcomes and the optimal way forward.
