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Cumulative installed capacity in CARICOM countries continues to grow

Cumulative installed capacity in the Caribbean Community (CARICOM) countries increased from 24,000 MW in 2000 to 33,726 MW in 2016 at a compound annual growth rate (CAGR) of 3.46%. The countries situated in the mainland have largely contributed to this capacity as the Caribbean island countries cater to small populations and their individual capacities in most cases range from a few megawatts to several hundred megawatts.

The following figure illustrates the cumulative installed capacity in CARICOM countries during 2006–2016 period. 

The power sector of the CARICOM and associated countries had seen limited growth in the historic period of 2006–2016. Power generation in the countries has been mostly limited to generation from imported oil keeping generation and supply costs high. The focus of these countries has been to substitute part of their generation portfolio with non-hydro renewables such as wind and solar PV, of which they have ample resource availability, partly in order to bring down costs and partly to ensure energy security. The establishment of utility scale renewable power projects in these countries though is hamstrung by a lack of large land resource availability in most of these countries.

The characteristics of CARICOM

The countries constituting the CARICOM association are Caribbean countries, and some Latin American countries. The Caribbean countries are islands with very small territories and populations while the Latin American countries are situated in the South American mainland with larger territories and populations. The economy of the CARICOM countries is mostly dependent on financial services and tourism, making the services sector (or otherwise the commercial sector) the prime contributor to national revenue in these countries. Power consumption in these countries is therefore influenced largely by the size of the commercial sector. Most of the CARICOM countries are also characterised by a high level of per capita gross domestic product. This makes the residential or household sector also a significant contributor to electricity consumption.

The CARICOM countries are mostly characterised by a lack of domestic energy reserves. Especially the Caribbean island countries lack both hydropower resources and fossil fuel reserves. The countries situated on the mainland such as Panama still have access to domestic hydropower resources. These countries have therefore, so far, depended on imported fossil fuel – mostly oil, for power generation which has ensured that electricity prices are on the higher side. A fairly stable population has ensured that installed power generation capacity has not increased much during the historic period under study. CARICOM countries are characterised by a single overarching public utility controlling all or most the generation assets, and the transmission and distribution system. However, in some of the other mainland countries such as Honduras, Nicaragua, and Panama, the power generation sector has been unbundled and the private sector owns the majority of the generation assets.

A greater energy mix to come

Power generation capacity is expected to increase at a similar rate in the forecast period (2017–2025) as in the historic period. Cumulative installed capacity, estimated to be 34,975 MW by the end of 2017, is expected to reach 47,677 MW in 2025 at a CAGR of 3.95%. The high cost of power generation and supply coupled with the near dependence on imported oil has spurred the CARICOM countries to focus on non-hydro renewable for future growth. This increase in installed capacity is expected to be largely driven by increments in wind and solar PV installed capacities. Some of the countries have also got favorable geothermal resources which will be exploited. Hydropower resources in the mainland countries will be expanded too such as in Honduras, where the national energy policy seeks to increase the exploitation of hydropower from 5% at present to 25% in 2034.

Almost all the countries in the CARICOM have an energy policy in place including future energy mix targets, on which to build a renewable-based framework. Puerto Rico has a target of generating 15% of its power needs through renewables in 2020 and 20% in 2035; Panama wants 70% of its energy supply from renewables in 2050; Nicaragua has a goal of achieving 74% of energy generation from renewables in 2018 and 91% in 2027; Honduras has an elaborate target of 50% in 2017, 60% in 2022, and 80% in 2034; while Guatemala aims to reach the same in 2027. Costa Rica does not have percentage based targets but rather absolute capacity targets in place.

Countries such as Belize, the Dominican Republic, El Salvador, Panama, Guatemala, Honduras, and Jamaica even have a policy of augmenting renewable capacity through auctions and tenders apart from the conventional policy of bilateral power purchase contracts.

Although oil-based capacity is expected to remain the major source of power generation in the forecast period in the CARICOM countries, its share is expected to come down. It will be compensated, to an extent, by a switch-over to gas-based generation. The share of renewable energy sources including small-hydropower in the capacity mix is therefore expected to increase in 2025 to nearly 30% from the present 16% (as of 2016) as shown in the following  figure.