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1.1 Motivation Small island developing states (SIDS) in the Caribbean face unique challenges associated with the generation and use of energy. Most Caribbean island nations depend almost exclusively on imported petroleum for their electrical generation and transportation needs. This significant level of dependence leaves these countries vulnerable to the volatility of international oil prices and results in a tremendous drain on capital for imports. Likewise, Caribbean islands are particularly vulnerable to the environmental impacts associated with fossil-fuel consumption, such as the rising sea level, coral bleaching, and the increased strength and frequency of hurricanes. Although each country has a unique set of economic and energy sector conditions, they all share several common characteristics that are critical to understand in this analysis. These include the following. • Small population size (population size range 45,000 to 330,000) • Low to moderate income levels • Single monopoly electric utilities (whether state or private) • Small overall electricity generation capacity (installed capacity range 22 MW to 140 MW) • Isolated grids • Petroleum dominates as fuel for power generation (only Dominica, St. Kitts and Nevis, and St. Vincent and the Grenadines have small-scale grid-installed renewables and small hydro) • High average electricity costs (U.S. $0.21 to U.S. $0.46 per kilowatt-hour) Despite its dependence on imported fossil fuels, the region demonstrates great potential for the use of sustainable energy alternatives. Most Caribbean islands have significant RE resources——including solar, wind, geothermal, hydro, maritime, waste-to-energy, and biomass—that can be used on a cost competitive basis for power, heating and cooling, and transportation applications. Further, there exist tremendous opportunities to reduce energy consumption through energy efficiency measures. Renewables and energy efficiency are not common in the region due to several barriers, all of which largely are unrelated to the available resources or technical potential. These barriers include the following. • Policy: Current policies and regulations favor traditional resources—fossil fuels and diesel generation systems • Institutional: There is typically a lack of in-country institutional knowledge associated with aspects of clean energy project design, development, implementation, and operation. The entities of the existing utility structure in the project countries—composed of single utilities and electric monopolies— are often resistant to independent power producers and generally are resistant to transitioning away from conventional fossil fuel–powered generation. • Management and Capacity: There exists a lack of capacity among energy sector stakeholders (government, utility, and key consumers) to adequately manage the energy sector and to participate in a transition to new energy systems. • Finance: Affordable financing for clean energy projects is difficult to acquire. It is particularly challenging to find funding for project preparation (pre-feasibility and feasibility) preparing “bankable” documents. • Awareness: The lack of understanding of the costs, benefits, and applications of renewable energy and energy efficiency technologies is another substantial barrier. 2PDF Image | Energy Policy and Analysis Caribbean
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