Renewable Energy in the Caribbean

Concerns over environmental degradation and climate change are by no means new, but have significantly heightened in recent times, as the manifestations of global warming become more obvious and occur with greater frequency. These include, but are not limited to, rising sea levels, given melting polar ice caps and the intensification of weather phenomena such as tropical cyclones, blizzards and droughts. Against this backdrop, there have been growing calls over many years for countries to take meaningful steps to cut greenhouse gas emissions. These calls perhaps hit their crescendo in the wake of the release of the latest report by the Intergovernmental Panel on Climate Change (IPCC) in August 2021, in the lead-up to the United Nations Framework Convention on Climate Change’s (UNFCCC) 26th Conference of the Parties (COP 26) in November 2021. The report revealed that changes in the Earth’s climate are being observed in every region, with some of these changes being unprecedented and irreversible, at least over hundreds of years. Additionally, the report indicated that immediate and drastic reductions in greenhouse gas emissions are needed if the world is to limit global warming to the 1.5°C target set under the 2015 Paris Climate Agreement. In the wake of this release, world leaders faced considerable pressure to use the occasion of COP 26 to take bold and decisive action to address the issue of climate change. After all, the planet’s ecosystems and future civilisations are at stake.

While there were some positive developments, the commitments made at COP 26 pale in comparison to what the situation requires. In hindsight, this shouldn’t be a totally surprising outcome, especially when we add to the equation the fact that global leaders were guaranteed to weigh the size of their commitments against political and short-medium term economic considerations. Putting aside the potential catastrophic events that are likely to occur because of the continued inadequate response of humankind to the mushrooming climate crisis, one may ask, what do these latest developments mean for the global renewable energy industry? Well, interest in the sector and its output are expected to expand significantly over the medium-long term, even if, not as fast as some anticipated heading into the conference. The pledge by many countries and companies in the energy, automobile, finance and other industries to work toward net-zero carbon positions is expected to fuel that growth. In the face of whatever disappointment there may be regarding COP 26, it is important to seek encouragement from what has already been accomplished. For instance, according to the International Energy Agency, the share of renewables in global electricity generation in 2020 was approximately 29 percent, up from 27 percent in 2019. It should be noted though, that this occurred in the context of an overall decline in the demand for electricity in 2020, due to the factors associated with the COVID-19 pandemic. Additionally, when we consider total energy usage, which will include transport and other sectors outside of electricity generation, the share of renewables is likely to be smaller.

In the Caribbean, the use of renewable energy has generally lagged the global average. According to the World Bank, 90 percent of the region’s energy needs were satisfied by oil in 2015, although there are only three Caribbean countries that actually produce petroleum. There is little evidence to suggest that this changed substantially in the ensuing six years. In fact, the region has the highest dependency on imported energy and as such, is highly vulnerable to the volatility of the international fossil fuel market. Consequently, several Caribbean countries find it very difficult to provide a reliable electricity supply, while the region’s average electricity cost is among the highest in the western hemisphere. Beyond high rates and supply interruptions, the heavy dependence on imported energy has negatively affected the economic performance of many Caribbean nations, contributing to below-potential growth and instability in both fiscal and external accounts. The irony in all of this, is that the region is blessed with an abundance of high-potential renewable energy resources, which have thus far, been largely untapped, notwithstanding efforts by some countries to change this situation. The region can substantially reduce its dependence on imported energy by leveraging the natural power generated by solar, wind, geothermal and hydroelectric sources at varying levels. This fact may lead those unfamiliar with the region’s challenges to ask, why, given the foregoing, has the Caribbean been slow to adopt renewables? The main reason is that historically the relative high cost of the infrastructure needed to roll out national green energy programmes, made switching costs prohibitive for most regional states. Even now, with green energy infrastructure and equipment much more competitive, the fiscal challenges that characterise much of the region remain a major impediment in the pursuit of this objective. Nevertheless, the region has recorded some success in this regard. The rest of this note will highlight the progress of a few countries in their quest to expand the use of energy from renewable sources.

Belize
Belize boasts a more diversified energy sector and produces more renewables than most other nations in the region. According to data from the Ministry of Public Service, Energy and Public Utilities, renewable energy accounted for 29.8 percent of the total energy supply in 2018, before falling to 21.1 percent in 2019, because of shortfalls in hydroelectric and biomass supplies due to severe drought. Turning to the country’s electricity capacity, which forms only part of the total energy produced and consumed, data from the International Renewable Energy Agency indicate that non-renewable sources represented 47 percent in 2020, while renewables accounted for 53 percent. The renewables sector is dominated by hydro/marine power, which provided 53 percent of all renewable energy, followed by bioenergy (40 percent) and solar (6 percent). Belize Electricity Limited is the main entity responsible for purchasing and distributing electricity and employs a few generating systems that are dependent on fossil fuel resources. However, the nation’s electricity grid is primarily supplied by local independent power producers, that are based in the hydroelectric, biomass, solar and petroleum industries. As part of its Intended Nationally Determined Contributions, submitted to the UNFCCC in 2015, Belize committed to increase the share of renewables in the energy mix to 85 percent by 2027. The country’s energy policy is directed by its National Sustainable Energy Strategy.

Dominica
Like Belize, Dominica is notably less reliant on fossil fuels as an energy source than most of its regional peers. According to the US Department of Energy, the country’s electricity mix is made up of 63 percent diesel-powered infrastructure and 37 percent hydropower. The Island’s hydroelectric power is provided by three plants that draw power from the Roseau river. Dominica’s use of hydroelectricity is by no means a recent development. In fact, in the 1960’s the country was much more dependent on this source of power, which supplied 90 percent of its electricity at that time. However, as the population grew, the demand for electricity also increased, causing diesel generated power to assume a greater proportion of the energy mix over time. Nevertheless, the island’s energy mix seems set to shift in favour of renewables once again, as it has taken major strides to tap into its geothermal potential. The country is currently in the process of constructing its first geothermal plant, with funding from its Citizenship by Investment (CBI) programme and from donor organisations such as the World Bank and Caribbean Development Bank (CDB). The plant is expected to have a capacity of 10 megawatts (MW) upon completion in 2023 and will boost renewables contribution to the energy mix to over 50 percent. It will also play a key role in Dominica’s thrust to become the first climate-resistant nation in the world. In the wake of the devastation caused by Hurricane Maria in 2017, the country launched the Climate Resilience Execution Agency for Dominica (CREAD) in 2018, to engender and mainstream resilience into all areas of the country's growth. Geothermal energy is provided by heat that is constantly produced in the earth’s core. To generate this type of power, a well is dug to extract hot water to produce steam to turn an electrical turbine. It is possible to build such plants where geothermal resources are close to the surface of the earth, such as in countries with volcanic activity (close to active geological plates). The initial capital requirements for this type power generation is usually substantial, but the cost of producing energy from established wells is much cheaper than traditional sources and is also competitive with other renewables.

St. Vincent and the Grenadines
The electricity demands of St. Vincent and the Grenadines are satisfied by a combination of diesel, hydro and solar power. The latest estimates from the US Department of Energy suggest that diesel accounts for the lion share of supply, satisfying 81 percent of the nation’s electricity needs, while hydroelectricity accounts for 17.7 percent and solar 1.3 percent. Although the installed hydroelectricity capacity is 5.6 MW, this is reduced to 2 MW during the dry season. The main supplier of electricity, St Vincent Electricity Services Ltd. (VINLEC) generates and distributes electricity in the main island, St. Vincent and the smaller islands of Bequia, Union Island, Canouan, and Mayreau. Other islands are supplied by privately owned electricity systems using diesel plants as part of their resorts. The country’s Intended Nationally Determined Contributions, submitted to the UNFCCC in 2015, included plans to boost renewable energy by constructing a geothermal power plant, which was targeted for completion in 2018. The facility, when complete, was expected to account for approximately 50 percent of the nation’s electricity supply. However, the project encountered unforeseen challenges, which has brought it to a standstill. Having dug the wells to exploit the country’s geothermal resources, it was found that the flow rate was not sufficient to make the project economically viable. This was a consequence of the low permeability of the rocks. However, officials associated with the project indicated that they were not prepared to abandon the initiative but would evaluate ways to make use of the heat contained in the wells. The country is also acting to expand its solar power generating capacity and has received funding from the CDB to support the initiative. However, the supply chain challenges spawned by the COVID-19 pandemic and the disruptions caused by the volcanic eruptions in early 2021, have resulted in considerable delays.

Curacao
Curacao’s Renewable energy thrust is governed by the country’s National Energy Policy. The policy has several stated objectives, including encouraging private citizens and commercial enterprises to invest in solar energy by providing appropriate incentives, where necessary. Secondly, the policy seeks to increase wind energy generation from 46.5 MW in 2017 to 65 MW by 2025. Another aim is to establish the country’s first waste-to-energy facility by 2021, with a capacity of 7-15 MW. However, there is no evidence to suggest that any major progress was achieved regarding this project. Regarding the country’s electricity mix, 67 percent of power generation comes from petroleum, 29 percent comes from wind and solar accounts for 4 percent.

The countries identified above are among those in the Caribbean with the highest representation of renewable energy in their respective total national electricity output. As can be seen in Table 1 below, except for Suriname, which derives 60 percent of its electricity from hydropower, all the other Caribbean states are considerably more dependent on fossil fuels.

Table 1: Electricity Mix of the Caribbean

Source: US Department of Energy

While the main objective of transitioning the global economy to green energy is to slow or halt climate change, for Caribbean nations, there is the added benefit of the potential to vastly improve electricity supply and enhance long-term economic performance. Unfortunately, many countries in the region have considerable ground to cover to avoid being left behind. Given the pledges made by several developed countries, energy companies, automobile manufacturers and other key stakeholders, the Caribbean is likely to face a rapidly changing world before too long and thus, will be forced to change. It would be wise to try to gain meaningful momentum before that point. Nevertheless, the difficulty of the task must be acknowledged not only in terms of acquiring adequate resources, but also as it relates to gaining widespread buy-in for this urgently needed transformation. Regarding financing, the challenges related to the pandemic are expected to limit the extent to which resources will be available to facilitate this programme in the short-medium term. This does not reduce its importance, however.