The Price of Power

How Jamaica built one of the world's most expensive electricity systems: what it will take to escape it

Published by The McEwan Index · June 2026

Seven decades after independence, Jamaica pays some of the highest electricity rates on earth, a structural constraint that suppresses investment, inflates the cost of living, and quietly caps national ambition. A convergence of events in June 2026, including a national blackout, a looming licence expiry, and competing visions for the future of Jamaica's grid, has forced the country to finally confront the full weight of that reality.

Introduction

In August 1962, as the Union Jack was lowered for the last time over Kingston and Jamaica stepped into independent nationhood, the promise of the era was unambiguous. A new country would chart its own economic destiny, industrialise its own economy, and deliver prosperity to a people who had been denied it for three centuries. Energy: reliable, affordable, sovereign energy. It was assumed to be a foundation of that project, the invisible infrastructure beneath every factory, every hospital, every classroom, and every business.

Sixty-four years later, Jamaica's electricity costs remain among the highest in the world. At roughly US$0.29 per kilowatt-hour for residential customers (172 percent of the global average), the bill that arrives at the end of every month is not merely an inconvenience. It is a structural tax on production, competitiveness, and development itself.

The events of June 2026 brought this long-running crisis into sharp relief. On June 5, the island suffered its first complete system-wide blackout since April 2016, the sixth total national shutdown since 2006. Nine days later, Prime Minister Andrew Holness stood before the Jamaica Chamber of Commerce's 41st Annual Awards Banquet and delivered a statement that went far beyond the usual policy language: renegotiating the Jamaica Public Service Company's electricity licence, he said, would not fix Jamaica's energy problem. The country needed to begin preparing for nuclear technology within a decade. That same week, the architect of Uruguay's landmark renewable energy transformation told a Kingston audience that Jamaica could run entirely on renewables. The obstacles, he said, were neither financial nor technological but institutional.

Two visions, two pathways, one burning question: after more than half a century of expensive, unreliable power, what does Jamaica do next?

The Making of an Energy Trap

From colonialism to monopoly: Jamaica's electricity history

Jamaica's electricity story begins earlier than most people realise. In 1892, a mere 13 years after Thomas Edison demonstrated the incandescent lamp, the Jamaica Electric Light Company provided the island's first electricity supply from a plant at Gold Street, Kingston. By 1897, the West India Electric Company had extended service further, establishing a hydroelectric plant on the Rio Cobre River at Bog Walk. The island was, by the standards of its era, a regional pioneer.

Through a series of mergers, buyouts, and consolidations spanning five decades, these early providers were absorbed into a single entity: the Jamaica Public Service Company, incorporated in 1923. By 1945, JPS had emerged as the island's dominant electricity company, and in 1966, four years after independence, it was granted the first All-Island Electricity Licence, formalising its monopoly over transmission, distribution, and supply.

In 1970, under Prime Minister Hugh Shearer, the government nationalised JPS, acquiring controlling interest in a company it now formally dominated but had never truly reshaped. The nationalisation reflected the interventionist economic philosophy of the era, but the structural problems it inherited (ageing infrastructure, oil-dependent generation, and the constraints of a small island grid) remained stubbornly intact.

For thirty-one years, JPS operated as a public utility. Then, in 2001, as part of a package of national economic and fiscal reforms under Prime Minister P.J. Patterson, the government sold an 80 percent stake to the American Mirant Corporation for US$201 million, retaining a minority interest. In 2007, Mirant sold its stake, and JPS ultimately passed into the ownership of Japan's Marubeni Corporation and South Korea's Korea Electric Power Corporation, with the Jamaican government retaining a minority holding.

What did not change through nationalisation, privatisation, or changes in foreign ownership was the fundamental architecture of the system: a single company holding monopoly rights over transmission and distribution, a grid powered overwhelmingly by imported fossil fuels, and a regulatory structure designed around the economics of oil rather than the economics of the 21st century.

"JPS was privatised in 2001, is 80% privately held, and holds a monopoly on electricity transmission, distribution, and supply. Its 2016 Electricity Licence governed that monopoly for a 20-year period, a period now approaching its end." — Jamaica Sustainable Energy Roadmap

The introduction of Independent Power Producers in the 1990s brought some competition to the generation side of the market, including Jamaica Energy Partners, Wigton Windfarm, and others who now sell power to the grid. But JPS remains the sole buyer through its role as the national grid operator, and the exclusive holder of transmission and distribution rights. The competitive generation market, such as it is, feeds into a pipeline that only one company controls.

The Anatomy of Expensive Electricity

Why Jamaica pays so much for power

The price of electricity is not a mystery in Jamaica. It is the predictable output of a system built on structural vulnerabilities that compound and interact with each other.

Key figures

• US$0.287–0.291/kWh — Jamaica's residential rate (GlobalPetrolPrices.com, 2023–2026)
• 172% — of the world average electricity price
• US$0.057/kWh — Trinidad and Tobago's residential rate, one-fifth of Jamaica's
• 87.64% — share of Jamaica's electricity from fossil fuels (EIA, 2022)
• 27.3% — system losses from theft and grid inefficiency (JPS, 2024)
• ~180,000 — estimated illegal connections on Jamaica's grid
• US$260 million — estimated annual cost of electricity theft

The first and most decisive driver is fuel dependency. Jamaica has no oil deposits, no gas fields, and very limited hydroelectric resources. Nearly 88 percent of its electricity comes from fossil fuels, primarily imported oil and liquefied natural gas. Every global oil price shock therefore transmits directly and almost instantly into Jamaican electricity bills. When Middle East tensions escalated in early 2026, PM Holness noted that energy costs had risen approximately 60 percent as a direct consequence. Jamaica does not absorb these shocks; it passes them through.

The second driver is technical losses. JPS reported total system losses of 27.3 percent in 2024, with a five-year average of 27.8 percent. The majority comes from theft: an estimated 180,000 illegal connections, equivalent to 26 percent of the legitimate customer base. The cost of these losses, estimated at US$260 million annually, does not disappear. It is socialised across paying customers, adding approximately 8.7 percent to the bills of those who comply.

The third driver is the structure of power purchase agreements. Legacy contracts between JPS and its Independent Power Producers include capacity payments: fees paid for having generation capacity available, regardless of whether the electricity is actually used. These fixed-cost commitments, embedded in long-term agreements, limit flexibility and sustain a cost floor beneath which rates cannot easily fall, even when fuel prices decline.

Former Trinidad and Tobago Energy Minister Kevin Ramnarine, writing for the US think tank Energy for Growth Hub in June 2026, described Jamaica's electricity rates as among the highest in the Caribbean and globally, driven by imported fuel dependence, system losses of 26.9 percent, and legacy power purchase agreements that "continue to lock in uncompetitive pricing."

The foreign exchange dimension compounds all of these factors. JPS pays for fuel, capital equipment, and debt service in US dollars, while collecting revenue in Jamaican dollars. The Jamaican dollar lost 26.5 percent of its value against the US dollar between 2014 and 2024, a depreciation that quietly inflates the local-currency cost of imported energy without any change in global prices.

The Economic Damage

A tax on everything

High electricity costs are, in economic terms, a tax on productive activity. They increase the cost of every good produced, every service delivered, and every business operated on Jamaican soil. They are a tax that is paid regardless of whether a company turns a profit, regardless of season, and regardless of the global competitive environment. For manufacturers, processors, and logistics operators (sectors whose international competitiveness depends on operating costs), this tax can be decisive.

Jamaica's GDP is approximately US$20.6 billion in nominal terms. The economy had grown steadily through the early 2020s before Hurricane Melissa struck on October 28, 2025 as a Category 5 storm and the strongest in Jamaica's recorded history, causing damages estimated at US$12.5 billion, equivalent to roughly 60 percent of 2024 GDP.

Against this backdrop of structural vulnerability, energy costs act as a permanent drag on the sectors Jamaica most needs to develop. Manufacturing has never reached the scale that post-independence planners anticipated, partly because the cost-of-production environment made Jamaica less competitive than lower-cost locations. The Business Process Outsourcing sector, which Jamaica has actively courted as a digital economy driver, requires round-the-clock electricity; high and unpredictable rates narrow margins and constrain growth.

Tourism, Jamaica's largest foreign exchange earner, is itself a heavy electricity consumer. Hotels, resorts, and attractions bear energy cost burdens that are passed on to guests or absorbed into thinner margins. The all-inclusive model, which dominates Jamaica's tourism sector, essentially bundles the cost of electricity into a fixed-price product competing with properties in destinations where power is considerably cheaper.

For households, the consequences are more direct. An average residential customer using 165 kWh, a relatively modest level of consumption, faces monthly bills of approximately J$9,000 or more at 2025 rates. For a household earning Jamaica's average wage, that represents a disproportionate share of disposable income. The psychological and economic result is rationing: Jamaican families disconnect appliances, forgo air conditioning, and limit productive home-based activity to manage an unavoidable monthly cost.

Jamaica had made significant strides in reducing public debt from 140 percent of GDP in 2012 to approximately 64.9 percent by 2024. Hurricane Melissa reversed that trajectory. Public debt is now expected to increase to 68.5 percent of GDP before resuming a downward path, delaying the country's legislated target of reaching 60 percent.

"Every investor running a cost-benefit analysis on Jamaica puts electricity rate in the spreadsheet. It does not matter how beautiful the island is, how skilled the workforce, or how favourable the tax incentives: electricity cost is a hard constraint on investment returns." — The McEwan Index

How the System Works

Monopoly, regulator, and the architecture of Jamaica's electricity market

Understanding Jamaica's energy market requires clarity about who does what. The sector has three principal layers.

At the generation level, there is nominal competition. JPS owns and operates several power plants. Independent Power Producers, including Jamaica Energy Partners, Wigton Windfarm, and JamaicaWatt Limited, also generate electricity and sell it to the grid under long-term power purchase agreements. Renewable energy projects, largely solar and wind, have entered the market through competitive bid processes over the past decade.

At the transmission and distribution level, JPS holds an exclusive monopoly. It owns and operates the wires, transformers, substations, and metering systems that carry electricity from generators to consumers. No other entity is permitted to transmit or distribute electricity on a commercial basis under the current licence. This is the layer that critics most often target when calling for structural reform: it is the bottleneck through which all electricity must pass, and the source of JPS's dominant market position.

Oversight is provided by the Office of Utilities Regulation (OUR), an independent regulatory body responsible for setting and reviewing electricity tariffs, monitoring service quality, and enforcing licence conditions. Following the June 5 blackout, the OUR established a special internal team to review JPS's preliminary outage report, noting that no regulatory enforcement actions could follow from preliminary findings alone.

The current licence, issued in 2016 under the Electricity Act of 2015, expires on July 8, 2027. On July 1, 2025, the Government gave formal notice of its intention not to renew under existing terms. The licence expiry is now widely understood as the most significant structural opportunity in Jamaica's energy sector in a generation.

The Renewable Possibility

Sun, wind, and the 50 percent question

Jamaica is not short of renewable energy resources. The island receives approximately 5 to 6 kilowatt-hours of solar radiation per square metre per day, among the highest averages in the Caribbean. Trade winds provide consistent wind resources, particularly in the eastern and northern parishes. Biomass from sugarcane residue has long contributed marginally to the energy mix.

The government's stated target is to generate 50 percent of electricity from renewable sources by 2030. Jamaica's national grid carries roughly 1.0 gigawatt of total generating capacity. As of 2022, renewables (wind, solar, and hydro combined) accounted for approximately 12.36 percent of the electricity mix. The gap between current reality and the 2030 target is substantial. In 2026, the government launched its largest-ever renewable energy tender in pursuit of that goal.

Into this debate stepped a striking external voice. Dr Ramón Méndez Galain, who served as Uruguay's energy secretary between 2008 and 2015 and is credited as the architect of that country's transformation to 99 percent renewable electricity, addressed the Maurice Facey Lecture Series in Kingston on June 11, 2026.

"The transition is not even a cost issue. It is not a technology issue." — Dr Ramón Méndez Galain, Kingston, June 2026

Méndez Galain argued that Jamaica could achieve more than 90 percent renewable electricity. The obstacles, he argued, were institutional rather than technical or financial. The global economics of renewable energy have been transformed: solar costs have fallen eightfold over the past decade, wind threefold, and battery storage by a factor of ten. For import-dependent island economies like Jamaica, modelling suggests that electricity production costs could be cut by as much as half under optimal renewable configurations.

The key, he said, was the cost of capital: long-term power purchase agreements of 20 years or more, backed by credible regulatory frameworks and binding planning commitments, dramatically reduce investor risk and therefore financing costs. Uruguay's success rested on cross-party political consensus sustained across multiple administrations, a deliberate insulation of energy policy from electoral cycles.

His sharpest prescription was structural. Jamaica's regulatory framework, he argued, was designed around fossil fuel generation and was fundamentally incompatible with renewables. "We have to stop asking renewables to play the game with rules that have not been made for them." A powerful, independent regulatory body and an equally powerful long-term planning institution were, in his analysis, preconditions for transformation, not consequences of it.

The renewable pathway faces genuine technical constraints that the Uruguay analogy does not fully resolve. Uruguay is a continental country with strong interconnections to the broader South American grid. Jamaica is an island with no external grid connections. When solar generation falls at dusk and wind drops in calm weather, battery storage must bridge the gap. Grid stability on an isolated island system is a different engineering problem from grid stability on a continental system with backup options.

The Nuclear Question

The longest bet: Small Modular Reactors and Jamaica's energy future

At the Jamaica Chamber of Commerce banquet on June 12, 2026, Prime Minister Holness described nuclear energy as "the de facto clean energy resource" and called for Jamaica to begin preparing for its deployment within the next decade. The statement was not unprecedented. In 2023, he had expressed the intention to introduce nuclear energy to the country, and in December of that year Jamaica signed onto the global Declaration to Triple Nuclear Energy Capacity by 2050. In October 2024, the government formalised this direction by signing a Memorandum of Understanding with Atomic Energy of Canada Limited and Canadian Nuclear Laboratories, covering cooperation on Small Modular Reactors, hydrogen sciences, radioactive waste management, and the exchange of scientists and engineers. The groundwork has already begun.

The technology Holness is pointing toward is the Small Modular Reactor: nuclear reactors with generating capacities typically between 50 and 300 megawatts, designed for modular manufacturing, faster construction timelines, and passive safety systems that do not require active operator intervention to prevent meltdown in the event of an accident. The IEA projects the first commercial SMR projects to begin operation around 2030, with Canada's Ontario Power Generation targeting commercial operation of a BWRX-300 at the Darlington site by 2029, the likely first grid-scale SMR in North America.

For Jamaica, the arithmetic is not simple. IEA data puts capital costs of SMRs at approximately US$2,500 per kilowatt in China and up to US$5,000 per kilowatt in Western countries. A modest 100-megawatt plant, a reasonable initial scale for Jamaica's grid, would cost between US$250 million and US$500 million. For a country with an annual national budget of approximately US$7.9 billion and a public debt ratio that Hurricane Melissa has pushed back above 68 percent of GDP, the financing question is not academic.

Research published in 2025 on SMR deployment in newcomer countries found that first-of-a-kind installations in countries with no existing nuclear infrastructure typically require 7 to 10 years from the beginning of preparation to commercial commissioning. This is precisely the timeline Holness is referencing: if Jamaica begins the preparatory work now, including reforming the legal framework, building the regulatory body, training engineers and operators, selecting sites, and engaging international partners, a reactor might be technically feasible by the mid-2030s.

But barriers are formidable. Jamaica's existing laws currently prohibit the development of a nuclear power plant. Legislative reform is a prerequisite. The country's nuclear research team numbers fewer than 20 people, insufficient to staff a reactor's operational and safety requirements without a decade of dedicated training and recruitment. Radioactive waste management infrastructure does not exist. Public perception of nuclear energy in the Caribbean context remains largely shaped by historical accidents at facilities in the Northern hemisphere, despite the significant safety improvements of modern designs.

The cautionary tale that will shadow any Jamaican nuclear discussion is the failure of NuScale's Carbon Free Power Project in Idaho, which collapsed in 2023 when construction costs ballooned, per-megawatt-hour prices rose beyond what municipal utility subscribers could bear, and the project's customer base withdrew. The lesson is not that SMRs are impossible; it is that first-of-a-kind nuclear is expensive, and someone always pays for the learning curve. For a small developing country with limited fiscal space, the risk of bearing that cost is not trivial.

Nuclear energy internationally

• ~70% — France's share of electricity from nuclear (2025), the highest share globally
• 19% — United States' share from nuclear (2024)
• €3 billion+ — France earns annually from electricity exports, powered by low-cost nuclear generation
• US$30 billion+ — invested globally in SMR technology between 2020 and 2025
• 4 — commercial SMR units operating worldwide as of early 2026
• 7 to 10 years — typical first-of-a-kind SMR deployment timeline in newcomer countries

Reform, Continuity, and the Licence as Leverage

Beyond the licence: the structural reform imperative

The framing of Jamaica's energy debate around JPS's licence renewal is understandable but potentially misleading. The licence expiry on July 8, 2027 is the most visible decision point, a lever that the government has, correctly, resolved not to release without extracting significant change. PM Holness has publicly committed to using the renegotiation to "lock in certain changes that will see tangible reductions in electricity and energy costs for households and businesses."

But Ramnarine's warning is correct: the licence is a tool, not a solution. A new contract with JPS that leaves the underlying cost drivers (fossil fuel dependency, system losses, legacy IPP agreements) largely intact will produce marginal improvements rather than structural transformation. The success or failure of Jamaica's energy reform in the next decade will be determined not by what is written into a licence but by whether the reform addresses root causes.

Those who advocate deeper restructuring argue that Jamaica's challenge is not JPS specifically but the model: a monopoly over transmission and distribution that insulates a single company from competitive pressure, limits consumer choice, and slows the energy transition by giving the incumbent first-refusal rights over new generation capacity. Pan Jamaica Group CEO Jeffrey Hall argued publicly in 2024 that the licence renewal should be used to open transmission and distribution to competition. That is a more radical proposition than licence renegotiation, and one that raises genuine questions about the capital requirements of infrastructure duplication on a small island grid.

The cautionary perspective, not without merit, holds that rapid restructuring of a utility that serves 709,963 customers and annually delivers over 3.2 terawatt-hours of electricity carries real risks. Grid reliability is not an abstract aspiration; it is the operational condition on which hospitals, schools, factories, and households depend. The June 5 blackout, attributed by JPS President Hugh Grant to lightning strikes that damaged equipment at two stations triggering a cascading grid failure, is a reminder that energy system reliability is a complex engineering problem as much as a policy one.

What is not in serious dispute is that the status quo is not an option. Jamaica's electricity costs are not merely inconvenient. They are a binding constraint on the country's economic trajectory.

Energy as Economic Destiny

The foundation layer of national development

The countries that industrialised in the 20th century did so on the back of cheap, reliable energy. South Korea built its manufacturing sector, now among the world's most competitive, partly through deliberate energy policy that kept industrial electricity costs manageable. France used nuclear energy to achieve energy independence and become a net electricity exporter. China has subsidised industrial energy consumption as an explicit tool of manufacturing competitiveness. The relationship between energy affordability and economic development is not coincidental; it is causal.

Jamaica has been attempting to develop with among the most expensive electricity in the world. The Special Economic Zones the government has established to attract foreign investment offer fiscal incentives, customs relief, and administrative simplification. They do not, and cannot, offset a structural electricity cost disadvantage measured in multiples relative to competitor locations in Southeast Asia, Central America, or the Dominican Republic.

The digital economy ambitions that successive governments have articulated, including BPO expansion, fintech, and digital services, are electricity-intensive in a different way from manufacturing: continuous, round-the-clock consumption at a scale sensitive to marginal cost. A call centre operating 24 hours a day at US$0.29 per kilowatt-hour faces fundamentally different economics from one in a country at US$0.10.

Tourism, still the dominant foreign exchange earner despite deliberate diversification efforts, is itself evolving. The all-inclusive model has served Jamaica well in volume terms, but its margins compress under high operating costs. The premium and experiential tourism segments that command higher per-visitor spending are more sensitive to the quality and reliability of the overall product, including consistent electricity supply.

The diaspora investment angle is perhaps the most underexamined. Jamaicans living abroad (an estimated 2 to 3 million, concentrated in the United States, United Kingdom, and Canada) remit approximately US$3 to US$4 billion annually to the island, a figure that consistently exceeds tourism receipts. A portion of diaspora savings flows into Jamaican real estate and small business investment. Energy reliability and affordability are significant factors in the decision calculus of diaspora investors considering a more substantial return or business commitment.

The Questions That Cannot Be Deferred

What energy justice requires of Jamaica

The energy debate Jamaica is having in June 2026 is not, at its core, a technical debate. It is a debate about political will, institutional capacity, and the distribution of transition costs.

Can Jamaica escape structural energy dependency? The evidence from Uruguay and from the global SMR pipeline suggests the answer is yes, but on timelines measured in decades, not years, and requiring the kind of cross-party institutional commitment that has rarely characterised Jamaican policy. Energy policy in Jamaica has too often been subsumed by the electoral cycle, with long-term contracts signed in ways that bind future administrations and limit future flexibility.

Who bears the cost of energy reform? Transition to renewables requires capital investment in solar and wind capacity, battery storage, and grid upgrades. That capital has to come from somewhere: from consumers through tariffs, from public borrowing, from concessional international finance, from private investors on terms that reflect Jamaica's risk profile. Nuclear, if pursued, requires even larger upfront commitments. The distributional question of who pays during the transition, and when the benefits of lower long-term costs begin to flow, is a question of energy justice that technical proposals too often skip.

What does energy justice look like for ordinary Jamaicans? The 180,000 illegal electricity connections that JPS estimates exist on the national grid are not merely a law enforcement problem; they are a signal. They indicate that a significant segment of the population finds the cost of legal electricity access prohibitive and has resolved the tension between compliance and necessity in the only way available to it. Any energy reform that reduces system costs without addressing the affordability of legal access for low-income households will replicate the injustice of the current system in a new form.

Should Jamaica replicate global models or build a unique path? The Uruguay analogy is instructive but imperfect. The Singapore or Dubai comparisons that have featured in recent Jamaican economic discourse, small, disciplined states that leveraged their constraints into competitive advantages, are both more ambitious and more complex than they appear. What each of those models required, at the foundational level, was energy security. Jamaica is still working on that.

Conclusion

The turning point

Jamaica has arrived, later than it should have, at an energy reckoning. The convergence of a national blackout, an expiring utility licence, a prime ministerial declaration about nuclear technology, and a visiting expert's challenge to think bigger about renewables, all in the space of a single week in June 2026, is not coincidence. It is the accumulated pressure of structural problems that were deferred, managed, and worked around for too long, finally demanding resolution.

The path forward is neither simple nor singular. A purely renewable future is technically and economically feasible, according to the best available evidence, but requires institutional transformation, regulatory reform, and political consensus of a kind that Jamaica has not yet demonstrated it can sustain across administrations. Nuclear energy offers a different kind of promise: firm, baseload, low-carbon power that reduces fuel import dependency. But that pathway unfolds on timelines of a decade or more, at costs that require international financing, and through legal and institutional changes that have barely begun.

What is clear is that the two pathways are not mutually exclusive. A Jamaica that pursues aggressive renewable deployment over the next decade, using the licence renegotiation to mandate grid modernisation, storage investment, and competitive generation access, while simultaneously building the institutional and legal foundations for a future SMR is not pursuing contradiction. It is pursuing the only sequencing that matches the timeline of each technology's readiness with the urgency of Jamaica's need.

What cannot happen is another decade of managed stasis. Jamaica's electricity system has cost the country not only money but opportunity: factories not built, investments not made, talent not retained, businesses not scaled. The post-independence generation that believed energy independence was an inheritance of nationhood is reaching the end of its working lives. The generation now entering Jamaica's workforce deserves to inherit a different energy reality.

The decisions made in the eighteen months between now and the expiry of JPS's licence in July 2027 will echo for twenty years. The question is not only what Jamaica decides about nuclear or renewables or JPS. It is whether Jamaica decides at all, or whether it allows the urgency of the moment to pass into the next cycle of deferrals, studies, and managed inadequacy.

Sixty-four years after independence, the price of power is still too high. The cost of inaction is higher still.

Janiel McEwan | Economist & Author

Sources: The Gleaner (June 14, 2026) · GlobalPetrolPrices.com · World Bank Jamaica Country Brief (2026) · IEA Nuclear Report · AECL/CNL MOU (October 2024) · Energy for Growth Hub (Ramnarine, June 2026) · EIA Jamaica Energy Statistics · Jamaica Public Service Company · ScienceDirect SMR Newcomer Study (2025) · IMF Article IV Consultation (June 2025) · World Nuclear Association · Climatescope 2025