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"The cost of electricity in the Caribbean has been persistently high over the past two decades, and has eroded competitiveness. This is largely due to serious inefficiencies in the power sector and dependence on expensive imported petroleum products."
That's according to IMF working paper Caribbean Energy: Macro-Related Challenges, released earlier this year and which highlights that electricity prices increased almost 80% over the 2002-12 period.
Many island nations, however, are migrating to more diversified energy matrices that include, particularly for power generation, natural gas.
Over the past few weeks, Jamaica power utility JPS began LNG-fired operations at its 120MW Bogue plant and the US Virgin Islands Water and Power Authority completed the commissioning of two of its three 20MW generating units on St Croix to run on LPG.
"This marks the first time in the utility's 52-year history that a fuel source other than oil is being burned to generate electricity," WAPA said last month.
It therefore comes as no surprise that AES Andres and Engie announced on Thursday that they had agreed to enter into a binding joint marketing deal for LNG, effective immediately for up to 12 years, to promote gas use in the Caribbean.
"The objective is to provide a cleaner and more cost-effective alternative to oil-fueled power generation, while satisfying a growing need for natural gas in the region. The agreement will pave the way to supply industrial customers and develop small scale demand," the companies said in a joint statement.
Under the deal, Engie pledges to deliver up to 0.7Mt/year, primarily from its Cameron gas liquefaction project in the US, due online in 2018. AES Andres will provide access to its 1.5Mt/year capacity regasification asset (pictured) in the Dominican Republic.
For a look at other potential offtakers of the AES Andres-Engie marketing plan, check out the BNamericas Project Profiles database which includes the following: