Carribean Solar Power

 By Andrew Burger

Tourists have been flocking to the Caribbean for its sunshine, beaches and turquoise blue waters, well since air travel became accessible to the common man. With all that sunshine and energy prices among the highest in the world, you would think Caribbean island nations would be installing solar PV systems all over the region. That’s not the case, however. Despite some high-profile public relations campaigns, such as the Richard Branson-backed Carbon War Room’s Ten Island Challenge, Caribbean nations have been very slow to take advantage of the latest in solar energy technology. There are a variety of reasons why, and in this article Andrew Burger describes the major hurdles, as well as provide examples of successful renewable energy projects, both at large and small scale…

Many a tourist has fled from colder climes to enjoy the white sand beaches, turquoise-blue waters and warm ambiance of a sun-kissed Caribbean island. Yet despite the abundance of sunshine, as well as some high-profile initiatives, use of solar energy has fallen far short of expectations, much less its potential.

The prices Caribbean residents pay for electricity are among the highest in the world. Yet Caribbean island nations continue to rely almost entirely on imported, and heavily subsidized, fossil fuels, draining billions of dollars per year from local economies and wreaking ecological havoc. Around one percent of fiscally troubled Puerto Rico’s electricity comes from renewable resources, for instance.

Adding heat and pressure to the situation, Caribbean island nations are among the most vulnerable to, and least capable of addressing, the effects of a warming climate associated with fossil fuel use and ongoing conventional commercial property, industrial and agricultural development. Moreover, a lack of genuine political will and incapacity to resolve these problems has apparently been the norm.

In short, longstanding, complicated political, institutional and socioeconomic issues continue to prevent solar and renewable energy development from taking off in the Caribbean. Recent news and developments suggest that conditions could take a turn for the better, however.

All the Ingredients for a Good ¨Solar Soup¨

As attractive as the Caribbean is in terms of two all-important investment and project development criteria – the level of solar insolation and energy costs – the regional market for solar energy is limited by geography and grid factors, U.S.-based law firm Sullivan & Worcester points out.

Demographic studies and statistics highlight several other barriers to recouping investments, and hence financing, solar and other renewable energy projects in the region. Lack of adequate education and up-to-date technical skills and know-how, along with relatively high levels of financial poverty, characterize Caribbean island nation populations, for instance.

The cost of logistics is another hurdle solar energy project developers face, Van P. Hilderbrand Jr. and Joshua L. Sturtevant, Sullivan & Worcester attorneys who have worked on several transactions in the region, highlighted in an interview.

¨I think there’s a good set of ingredients for a ‘solar soup’ in the Caribbean,¨ Sturtevant said. ¨It seems to make sense, certainly when you consider the sustainability goals that have been set, but there are also some hurdles.

¨It’s expensive to get materials out to these islands, the grids tend to be older and utilities are challenged to manage critical issues, such as the intermittent nature of solar power and reliability of grid distribution.¨

Lots of Sunshine, but Little in the Way of Solar Power

From a systemic perspective, corruption and an ingrained public mistrust of government officials and electric utilities complicate solar power project development. Typically, regional electric utilities are government-owned, or at least have extremely close ties with elected government officials and bureaucrats, and in general have histories of poor performance.

Furthermore, the degree of public transparency and accountability of regional power utilities and governments has been and continues to be poor, well below international standards. Associated with this, a lack of data for energy production, costs, sources and uses is another obstacle, U.S.-based GTM Research points out in its April 2015 research report, ¨Solar PV in the Caribbean: Opportunities and Challenges

The outlook for residential solar isn’t any sunnier. Multinational money center banks aren’t comfortable with lending or investing in projects that rely on large numbers of residential solar PV customers who don’t have documented credit histories or scores paying off loans or leases. The same can be said of leading solar finance and installation companies in the nearby U.S.

¨Take a large, fast-growing U.S. solar installer like a SolarCity,¨ Hilderbrand and Sturtevant elaborated. ¨You’re not going to be able to finance Caribbean residential solar installations through the bond market. It’s too hard to analyze credit at the individual level.

¨It’s going to be a while before you see uptake of any real scale in residential solar in the Caribbean,¨ they continued. ¨That’s only going to happen when large installers feel comfortable committing capital and putting ‘boots on the ground.’¨

For their part, in-country local bankers generally aren’t up to date or up to speed when it comes to understanding and assessing PV technology or projects. It follows that they don’t offer attractive financial products – solar home loans or leases – to retail customers.

The most significant potential catalyst for solar and renewable energy development in the region, the Inter-American Development Bank and the Caribbean Development Bank on October 20 signed a $71.5 million 'Sustainable Energy Facility for the Eastern Caribbean.' The program has the potential to initiate a radical change in the energy landscape for the beneficiaries

Catalyzing Solar and Sustainable Energy in the Caribbean.

Despite all the challenges, there are some deals being done, the two attorneys noted. ¨Grand Cayman is an interesting place to be looking, as is Cuba.¨ They added that development work is taking place in the U.S. Virgin Islands, ¨but it’s more of an exploratory nature.¨

In addition, ¨despite a credit downgrade in 2014, a group of U.S. bondholders offered to invest $2 billion in energy production and other measures to help improve the finances and infrastructure of Puerto Rico’s power company amid fears it will go bankrupt,¨ Sullivan & Worcester highlights in its May 2015 Energy Finance Report.

The most significant potential catalyst for solar and renewable energy development in the region, the Inter-American Development Bank (IDB) and the Caribbean Development Bank on October 20 signed a $71.5 million ¨Sustainable Energy Facility for the Eastern Caribbean.¨

¨The program has the potential to initiate a radical change in the energy landscape for the beneficiaries,¨ CDB president Dr. William Warren Smith was quoted in a news report. ¨It could become a model for the rest of the Caribbean, and the lessons learned from this program can inform the creation of expanded facilities for the benefit of all of the borrowing member countries of CDB.”

Looking ahead, Worldwatch Institute on November 3 released a strategic climate change-sustainable energy plan for pan-Caribbean association of nations CARICOM. The ¨Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS) Baseline Report and Assessment¨ suggests setting a regional renewable energy generation target of 48 percent by 2027. In addition, Worldwatch suggests a 33 percent reduction in the region’s energy intensity.

In addition to investment capital and technical assistance, it will take fundamental energy reform, along with changes in trade regulations, for these initiatives to have a good chance of succeeding, however. Furthermore, broad-based public outreach and education programs are necessary in order for residential solar to take off, Hilderbrand and Sturtevant said. Ultimately, however, whether or not such efforts can succeed where previous initiatives have failed remains largely a matter of political and public will and determination.

about the author
Andrew Burger
Andrew Burger has been reporting on energy, technology, political economy, climate and the environment for a variety of online media properties for over five years.