Kiribati has got funding to install solar panels at four sites across the capital Tarawa to feed electricity into the national power grid.
Australia, the World Bank and the Global Environment Fund are providing nearly five million US dollars for the project.
It is expected to reduce diesel fuel use in Kiribati by up to 230,000 litres a year and cut greenhouse gas emissions.
The Kiribati President, Anote Tong, says shifting the country's focus to reliable solar energy will provide a more secure, more sustainable power source.
"It's the first time we are doing this. We're excited at the prospect of even substituting fossil fuel to a small extent at this stage. What the system being envisaged will only produce around 500 kilowatts, but this is the beginning of what I hope will be a pattern, the trend in the future."
Almost half of the country's 110,000 people live on Tarawa atoll and are dependent on expensive diesel generation for electricity.