Update Country Report Curaçao 17 May 2019

Energy independence is a major challenge for the Caribbean. With the exception of Trinidad and Tobago, no country is a major hydrocarbons producer, leaving them at the mercy of the global oil market (on which most countries depend for energy production). In addition, the region is one of the most vulnerable to global climate change, with the expectation of more intense hurricanes and rising sea levels in coming years. These two challenges highlight the need for the region to embrace renewable energy, which, up until now, has been an almost insignificant source.

The use of renewables in the energy matrix varies throughout the region, but does not exceed 20% in any of the island countries (the percentage is higher in countries like Guyana, Suriname or Belize. which have access to hydropower; this is not available in the island countries, given their limited size). Still, the region demonstrates tremendous potential for investment in renewable (solar, wind, geothermal and biomass) energy. Many of the countries have made commitments to increase the share of energy from renewable sources (Puerto Rico is the latest, with a commitment in March to produce 100% of the island's energy from renewable sources by 2050), but, with the help of international donors, many countries have begun to fulfil their natural potential in an effort to diversify their energy sources and leave them less vulnerable to global energy prices.

Growing portfolio of renewable energy projects

Given the region's abundant sunlight (a mainstay of the region's tourism sector), solar energy is an obvious source of renewable energy for the region. In March 2019, the Abu Dhabi Fund for Development (ADFD) inaugurated the three latest projects in the Caribbean: a total investment of US$50m for solar projects in the Bahamas, Barbados, and Saint Vincent and the Grenadines (with an installed capacity of 2.35MW in total). The structures will be built to withstand hurricanes with winds of up to 160 miles per hour. Solar projects in the region are serving a multiple purposes: to generate electricity and to serve as carports of parking places and as fast-charging stations for electric vehicles.

Wind energy is also another source of renewable energy for the region. Given its location on the western side of the Atlantic and the continuous trade winds, which flow eastwards as a result of the rotation of the Earth, the islands are favourably placed in this respect. Jamaica hosts the region's oldest and largest windpower project at Wigton. The first turbines started operation in 2004 (Wigton I, a 20.7-MW plant), with a second phase launched in 2010 (Wigton II, with an 18-MW capacity), and a third in 2016 (Wigton III). In April 2019, Wigton Windfarm (which belongs to the Jamaican state oil company, Petrojam) announced the initial public offering of the company on the Jamaican Stock Exchange to raise J$5.5bn (US$42m) for further expansion. Despite these successes, a critical challenge remains that wind turbines installed in the Caribbean must also be able to withstand gusts of up to 160 mph, given hurricane-force winds, and most turbines are not designed to withstand such pressure.

Volcanic activity provides another potential energy source in the region (particularly prominent in the Lesser Antilles), given the potential for geothermal power. However, the cost and complexity of such projects have largely kept investors away, especially given the relatively small energy markets offered by the small islands. Still, in March 2019 the World Bank approved a US$27m project for a 7-MW geothermal power plant in Dominica. It is hoped that future expansions of the plant will allow the export of electricity-via submarine cables-to the neighbouring islands of Martinique and Guadeloupe (both overseas departments of France). Four other Caribbean countries have expressed interest in developing geothermal plants (Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines), although, to date, there is nothing concrete.

Biomass remains the last major source of renewable energy. Given the region's traditional sugarcane production, the burning of sugarcane husks (bagasse) is a renewable energy source in the region. This has become an important replacement for fossil fuels in the region, and has the potential for expansion. In March 2019, French energy company Albioma announced it would spend EUR68m (U$77m) to convert a coal power plant in Guadeloupe to run on biomass. The use of biomass is also increasingly common in Cuba, given the challenges that country faces owing to US sanctions.

An increasing priority

As climate change becomes more of a concern-as evidenced by the severe damage wrought on many of the islands in the 2017 hurricane season, when Hurricanes Irma and Maria swept through much of the region-Caribbean countries have ramped up efforts to combat climate change. These efforts should continue in an environment of higher energy prices, and as programmes such as Petrocaribe-the Venezuelan initiative that offered oil to many Caribbean countries on concessionary terms-comes to an end. The renewables sector of the Caribbean should, therefore, continue to expand. This will include not just electricity generation, but also electric vehicles (although many islands still have high tariffs on vehicle imports), and other projects. Over the medium to long term, this should help reduce countries' import bills, contain inflation and also contribute to lower global emissions, helping to mitigate the effects of climate change in the region.