Small Island Developing States (SIDS) have established ambitious renewable energy targets. The promotion of renewable energy has been motivated by several factors: a desire to lessen dependence on fossil fuels, to attract development assistance in the energy sector, and to strengthen the position of SIDS in climate change negotiations. Here we explore the interplay between the role of aid and energy policy in the development of renewable energy resources in SIDS. We find that the importance of development assistance has implications for the sustainability of renewable energy development, given that funding is not always accompanied by necessary energy policy reforms. We also identify energy efficiency and access to modern energy services as having received insufficient attention in the establishment and structure of renewable energy targets in SIDS, and argue that this is problematic due to the strong economic case for such investments.