The Minister in charge of the Niue Power Corporation, O'Love Jacobsen, says residents on the island will save money on their power bills once new solar energy panels are installed.
Five small Pacific island nations, including Niue, the Marshall Islands, Palau, Nauru and the Federated States of Micronesia will receive 16 point 75 million US dollars from the European Union over the next four years to improve energy efficiency through solar power.
Mrs Jacobsen says the country relies too heavily on diesel which has proven to be very expensive.
"It will be a cost cutting measure for many of our people. And of course we have plenty of sunlight here; probably enough that we don't know what to do with it. But this is certainly very welcoming news in terms of renewable energy and of course its a much more better way of generating energy."
O'Love Jacobsen says she hopes solar power can quickly be used to power the island's street lights.