Preheat the oven to 350 degrees F (175 degrees C). Line 36 cupcake cups with paper liners.

Beat sugar and butter together in the bowl of an electric stand mixer until fluffy, about 10 minutes. Beat in eggs, 1 at a time, adding coconut extract and vanilla extract with the last egg.

Combine flour, 1 tablespoon plus 1/2 teaspoon baking powder, and nutmeg in another bowl. Beat into the egg mixture until thoroughly combined; beat in buttermilk and lime juice. Stir in coconut and lime zest.

Fill each of the prepared cupcake cups with about 1/4 cup of batter using a large cookie scoop.

Bake in the preheated oven until a toothpick inserted into the center of a cupcake comes out clean, 20 to 25 minutes. Remove from the oven and let cool before serving.