Development bank funding powering Caribbean renewables
Even before Hurricane Dorian lashed parts of the Caribbean in August, the islands were grappling with high energy costs and piecemeal energy infrastructure. Now the challenge has become that much more difficult.
“The relatively small populations and remote nature of many Caribbean countries restrict their ability to attract capital for large-scale power projects. There just aren’t enough residents, even in the wealthier islands, to make it a priority for renewable energy developers,” Kijana Mack, a director at Latam Energy Advisors, told BNamericas.
Yet, despite the challenges, where that financial support exists, projects in the Caribbean are taking shape, pointing the way toward the future.
“Development bank support is vital,” Mack said.
Off-grid solar projects point toward de-centralized future
“As a firm, we have typically recommended that organizations focus on larger projects, but we acknowledge the success of distributed solar projects in Antigua, Dominica and Jamaica,” said Mack.
He cited the government of Antigua, which “along with a private consortium, constructed an off-grid, solar-powered solution for the largest hospital on the island.”
The off-grid solar project on the island of 80,000 residents has a total capacity of 4MW, with battery-powered back-ups designed to make the project resilient to hurricanes and inclement weather, according to international renewable energy association (IRENA).
Solar PV plants and EV charging stations
“We expect more sophisticated investors to deploy capital in Caribbean renewable projects as policies and frameworks become clearer,” Mack said.
In 2017-18, the Abu Dhabi Fund for Development committed US$50mn for three rounds of renewable energy projects in the Caribbean.
Those funds are currently supporting a range of projects, from a 900kW solar PV plant and electric vehicle charging stations in the Bahamas, to smaller-scale solar plant-EV station installations in Barbados and St. Vincent and the Grenadines.
Renewables gain ground in wake of disasters
Beyond helping to improve electricity generation in the Caribbean, in recent years development bank assistance has tended to follow in the wake of natural disasters.
Latam Energy Advisors pointed to the IDB Smart Fund II program in Barbados as a promising example.
"We expect the program to install roughly 10MW to 15MW of distributed power in government-owned buildings. The program will also invest in energy efficiency and smart building technologies. The funding consists of a 24-year, US$30mn facility linked to Libor,” Mack said. “We also expect the recent success of Sustainable Development Bonds to provide additional capital for projects in the Caribbean."
The Smart Fund II, announced in late September, builds upon a successful round one initiative that saw IDB investments build up financing instruments and technical assistance for Barbados to begin a conversion away from fossil fuels.
Earlier initiatives helped Barbados increase electricity generation from distributed grid-connected photovoltaic cells from 10.4MW in 2015 to 27MW in 2017, according to the IDB.
Similarly, a major push into renewables by the Dominican government came in the wake of Hurricane Maria in 2017. With World Bank financing of US$12mn, Dominica was able to fund the final construction of a geothermal plant, while also moving forward with plans for solar PV cells.
As a result, last year Dominica generated 28% of its electric energy from hydropower and wind, the highest percentage of any of the 15 Caricom member nations.
Jamaica is also making strides. After years of installing solar PV farms and working to arrange PPAs, earlier this month the CEO of Jamaica Public Works (JPS) announced that the company was forming new partnerships to accelerate renewable energy generation and transmission.
“The future of energy in Jamaica will be fueled by partnerships,” said JPS CEO Emmanuel DaRosa. “No single company is expected to supply all of Jamaica's energy needs; that's why JPS has partnered with several independent power producers who sell electricity to us for the distribution to our customers.”
Jamaican Prime Minister Andrew Holness has set a target for the island to generate 30% of its electricity from renewables by next October – growing to 50% by 2030.
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