Palau remains heavily reliant on imported fossil fuels for its energy, with approximately 97% of electricity production currently derived from diesel. While the nation is actively transitioning toward cleaner sources, renewable energy progress has faced logistical and infrastructure challenges, though recent solar projects have significantly increased its share in the mix.

Palau is transitioning from >97% fossil fuel reliance toward renewable energy, aiming for 45% renewable generation by 2025 and 100% by 2050. Key efforts focus on solar power expansion, including the largest solar-plus-storage project in the Western Pacific, aiming to reduce high import dependence and combat climate change.

As of 2026, no information is available indicating that Palau is producing green hydrogen from electrolysis of seawater.