Seizing the Sunshine: Barbados’ thriving solar water heater industry

Case Summary: 

Barbados is an island nation in the Caribbean. Before 1970 Barbados relied on oil imports for 95% of all its energy needs including space and water heating. As oil prices rose 300% in the 70’s, Barbados sought to diversify its energy mixture.

Water heating is energy intensive using 2 MWh per household annually. Barbados has large solar resources making solar water heaters (SWH) an attractive opportunity to reduce oil energy usage. The Barbados government worked with start-up companies, provided financial and regulatory support, and helped generate customer acceptance of SWH. As of 2009 Barbados has over 50,000 SWH installs averaging 2 out of every 5 households. Barbados accounts for 60% of all installed SWH systems in the Caribbean demonstrating the success of their programs. Other Caribbean nations with similar energy dependencies on oil and available solar resources have not been as successful. It is estimated that the Barbados SWH programs have saved consumers $137 million since 1970.

The government of Barbados has released best practices in each of its target areas that significantly impacted the adoption of SWH systems.

To support early pioneers and start-up companies the Barbados government:

  • Provided the first round of funding, when banks were unwilling to accept the risk, through the Barbados Institute of Management and Technology.
  • Provided loan guarantees to banks for financing of start-ups after the first round of funding.
  • Encouraged the use of local workers and materials to build capacity.
  • Helped with targeted communication towards non-traditional buyers such as government employees and citizens who lived in wooden houses.
  • To provide financial and regulatory support the government of Barbados:
  • Provided tax incentives of 30% to the cost of an SWH.
  • Taxed traditional electric water heaters at a rate of 20%.
  • Mandated that all government housing projects include SWH systems.
  • To help build customer acceptance the Barbados government:
  • Established the legal framework for three-year loan structures that spread the payment cost of the SWH to below the operating cost of traditional electric heaters.
  • Produced formulaic system sizing so that the customers had: hot water in the morning, sufficient hot water available at any time, and a guaranteed temperature output.

Customer acceptance in other Caribbean countries has been challenging and was cited as a key indicator of success by the Barbados government.

Barbados, Armenia, Barbados
Latin America and Caribbean
Action Area 
Planning and Implementation Activity 
Developing Strategies and Plans, Developing and Implementing Policies and Measures, Governance and Stakeholder Engagement, Financing Implementation, Low Emission Development Strategies, Long-Term Strategies
Climate and Development Knowledge Network (CDKN)
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