Energy Integration within
CARICOM
Caribbean Community Energy Programme
V th Regional Energy Integration Forum
Managua, Nicaragua: October 26 - 27, 2010
MAXINE ALEXANDER-NESTOR
Regional Energy Policy Advisor
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STRUCTURE OF PRESENTATION
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY INTEGRATION
REGIONAL POLICIES AND STRATEGIES
PROPOSED INTEGRATION INITIATIVES
WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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WHAT IS THE CARIBBEAN COMMUNITY?
Intergovernmental
Organization
Common Market
transformed into
Caribbean Single
Market and
Economy
CARICOM’s
objectives inter
alia are:
Established by
the Treaty of
Chaguaramas
Revised treaty
signed in July
2001
Foster regional
integration and
collaboration
Common
Market
established
Promote
enhanced trade
and economic
relations among
Members
Treaty signed on
July 4th 1973 effective August
1, 1973
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CARICOM MEMBER STATES
Total land area –
465,000 km2
Total population –
16.7 million
GDP / per capita ranges from:
US$ 21,529
(Bahamas) –
US $733 (Haiti)*
Monsterrat?
Type of
economies:
- Agricultural
- Service oriented
- Industrial
* Source: IMF 2009
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CARICOM ENERGY SITUATION
Vast
potential
for
renewable
energy
deployment
Heavy
reliance on
fossil fuel
for
electricity
generation
and
general
energy use
All
CARICOM
countries
are Net
importers
of
petroleum
except
Trinidad
and Tobago
Fuel
accounts
for
about
40% of
national
budget
Volatility
of oil
prices is a
threat!!!
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Continuation……
Constraints on fuel
diversification on a
standalone country
basis:
About 50% of utilities are
state-owned.
Archaic legislation –
monopolies exists. Little
scope for private producers.
Some renewables not viable
on a small scale.
Small market
size, low density
consumption;
Low purchasing
power;
Relatively low
industrial
demand.
Energy demand
expected to
double over the
next twenty years
– annual growth
rate 3.7%
Source: World Bank Report 2010
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ENERGY AND CLIMATE CHANGE
CARICOM countries are carbon producers.
Emissions levels relative small.
Need to ‘get on board’ and contribute to the
reduction of CO2 as part of the global programme to
address the issue of climate change.
Resources available to support sustainable energy
development as part of the Climate Change agenda.
Need to position Climate Change issues to access
these resources:
- to enhance mitigation;
- facilitate development of low carbon development in
Member States.
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STRUCTURE OF PRESENTATION
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY INTEGRATION
REGIONAL POLICIES AND STRATEGIES
PROPOSED INTEGRATION INITIATIVES
WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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MAJOR ENERGY RESOURCES IN CARICOM
GAS AND
PETROLEUM
GEOTHERMAL
WIND
HYDROPOWER
• Trinidad & Tobago –
major producer. All
domestic generation
from gas. Supplies
LNG to Puerto Rico
and
Dominican
Republic.
• Suriname and Belize
produce
limited
amount
of
petroleum
for
domestic
consumption.
• Barbados produces
crude oil and sends
to
Trinidad
for
refining.
Small
amount
of
gas
produced.
• Refinery in Jamaica.
• Nevis
geothermal
resources estimated
to be in range of
500+ MW. 10 MW
development
underway to supply
islands of St. Kitts
and Nevis.
• Dominica
geothermal project
at
preparatory
stage. Supplies to
Martinique
and
Guadeloupe
anticipated.
• St. Vincent and the
Grenadines
and
Saint Lucia have
potential.
• 20 MW Wigton
wind farm in
Jamaica
currently being
expanded by 18
MW.
• Guyana has 7000
MW
potential,
enough to supply
the
entire
CARICOM.
• In Belize Mollejon
Hydropower
adds
25.3 MW to the grid
and Chalillo adds
another 7.3 MW.
• Kabalebo
Hydroelectric
Project in Suriname
generates between
450 MW - 650 MW.
• Péligre hydroelectric
plant has installed
capacity of 47.1
MW.
• 2.2 MW wind
farm
commissioned d
in
Nevis
in
August.
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TRINIDAD AND TOBAGO COUNTRY BRIEF
Production almost doubles consumption
In 2008, 165,420 barrels per day (bbl/d) of total oil produced
(114,280 bbl/d crude oil, the remainder mostly consisting of natural
gas liquids (NGLs)). An estimated 41,000 bbl/d of oil was consumed
domestically, allowing it to export a sizable amount of its production.
The largest oil producer in the country is the state-owned Petroleum
Company of Trinidad and Tobago (Petrotrin). Other large producers
include BP Trinidad and Tobago and BHP Billiton.
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DIVERSIFICATION OF ENERGY SOURCES
Energy security
Proximity of Member States
Greater efficiencies
Lower long run marginal cost
Minimise effects of climate change - GHG
Reduce foreign oil expenditures – for oil
imports
Greater opportunities for energy trade
Requires grid infrastructure
Integrated
energy
policy
framework
required
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STRUCTURE OF PRESENTATION
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY INTEGRATION
REGIONAL POLICIES AND STRATEGIES
PROPOSED INTEGRATION INITIATIVES
WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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BENEFITS OF ENERGY INTEGRATION
Lower energy prices and increased system
reliability (i.e. the n-2 rule - generating plants in
operation must at all times be able to carry the
full load)
– This requires significant spare capacity, creating
burden on the small utilities and consumers as this
translates to high electricity prices.).
Security of energy supplies.
Economies of scale.
Strengthen regional cooperation integration and
energy trade (Art. 15 (2) (f) – Revised Treaty).
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Reduce cost of investments.
Benefits cont’d ….
Enhance economic feasibility of large-scale
RE developments.
Reduce consumption of fossil fuels and CO2
emissions.
Enhance universal access to electricity in
Member States which have unserved
population.
(Revised
Treaty
promotes
regional
harmonisation and energy integration).
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Relevant provisions of Revised Treaty
Article 52 (8): For the purpose of this Article,
"production integration" includes:(a) the direct
organisation of production in more than one Member
State by a single economic enterprise;
(Endorsement for the integration of Member States
through transmission lines for distribution of electricity
produced in one country?)
Article 74: The COTED shall promote the modernisation
of government bureaucracies by, inter alia:(b)
removing impediments and improving the regulatory
framework for economic enterprises at national and
regional levels;
(Backing for independent regulatory structure at the
national and regional levels to enhance commercial
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enterprises including electricity generation)
STRUCTURE OF PRESENTATION
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY
INTEGRATION
‫ ﻌ‬REGIONAL POLICIES AND STRATEGIES
‫ ﻌ‬PROPOSED INTEGRATION INITIATIVES
WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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BARRIERS TO ENERGY INTEGRATION
Non-existing inter-island / country transmission infrastructure.
need for regional strategy on integrated electricity market.
Lack of financing by utilities.
requires commitment from policy-and decision makers, private and public sector, and multilateral organizations.
Absence of legal and regulatory framework to promote integration.
national sector laws to be revised to facilitate unbundling,
cross border electricity supplies etc .
significant regulatory oversight required to set rules
and operational criteria. National and Regional
regulatory regime to be improved.
Absence of inter-Governmental and other inter-parties agreements.
Governments in the region to develop bilateral Agreements for cross border transmission of electricity as
contemplated by the Revised Treaty. Multiparty agreements amongst IPPs, utilities, gas suppliers etc
Lack of technical and organizational capacity to develop commercial agreements.
need for pooling of expertise and resources and sharing of information (technical information on systems
requirement, load profile, generating cost etc.)
Not all potential interconnection project may prove to be economically or environmentally viable.
more detailed assessment and analysis needs to be conducted
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STRUCTURE OF PRESENTATION
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY INTEGRATION
REGIONAL POLICIES AND
STRATEGIES
‫ ﻌ‬PROPOSED INTEGRATION INITIATIVES
WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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CARICOM ENERGY POLICY
Draft Policy developed
by Task Force and
submitted to Heads of
Government in 2007.
Genesis of policy relates
to issue of national
treatment.
Study commenced in
February 2010 – to be
completed by November
2010.
Study will assess the
structure of energy
pricing, including LNG
within the context of
CSME.
Outputs to be fed into
draft policy.
Revised draft policy to
be considered by
Council of Technical and
Economic Development
(COTED).
Pricing Study identified
as being fundamental to
the finalization of the
Policy.
Gap analysis to be
conducted
COTED to submit
decision on revised
draft policy to HOG.
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CARICOM ENERGY POLICY Cont’d
Universal
access to
sustainable and
secure supplies
of energy
Diversification
of energy
sectors as a
foundation for
economic
development
Optimization of
domestic
production of
energy in an
environmentally
sound manner
Relationship
between energy
and international
competitiveness
of regional
industries
Four pillars which underpin the regional policy
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CARIBBEAN SUSTAINABLE ENERGY ROAD MAP & STRATEGY
Development of CSERMS approved by CARICOM
HOG in 2009.
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C-SERMS cont’d …..
C-SERMS will:
define a strategic and targeted approach to
increasing the contribution of renewable energy,
energy efficiency and bio-energy in the energy mix.
provide the basis for firm commitments by
Government of the region, and development
partners in achieving this objective.
be a dynamic and living document to be refined
and updated over time.
set achievable short, medium and long-term targets
(2015, 2020, 2025).
The CARICOM Secretariat has received initial support from the IDB to
commence development of C-SERMS-1. Additional funds to be
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mobilized for remaining phases.
STRUCTURE OF PRESENTATION
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY INTEGRATION
REGIONAL POLICIES AND STRATEGIES
PROPOSED INTEGRATION
INITIATIVES WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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PROPOSED INTEGRATION INITIATIVES WITHIN CARICOM
Adopted from the 2010 Study conducted by
the World Bank titled: “Caribbean Regional
Electricity Generation, Interconnection,
and Fuels Supply Strategy”.
Gas Market
Eastern Caribbean Gas Pipeline:
• Tobago,
Barbados,
Martinique, St. Lucia,
Guadeloupe
• 1,000 km
• Pipeline gas half as
costly as distillates
• Highly economic
Source: Franz Gerner – World Bank
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Regional Initiatives cont’d
Electricity Market I
Dominica Interconnections
Geothermal
• Dominica-Martinique
-100 MW,
-70 km,
-US$588/kW
-Highly economic
• Dominica-Guadeloupe
-100 MW,
-70 km,
-US$588/kW
-Highly economic
Source: Franz Gerner – World Bank
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Electricity Market II Regional Initiatives cont’d
Nevis - St. Kitts/Nevis-US VI/NevisPuerto Rico Source: Franz Gerner – World Bank
Nevis – Puerto
Rico
- Geothermal
- 400 MW,
- 400 km,
- US$ 1,790/kW
-Highly economic
Nevis – St.
Kitts
- Geothermal
- 50 MW,
- 5 km,
- US$328/kW
-Highly economic
Nevis – US Virgin Islands
- Geothermal
- 80 MW,
- 320 km,
- US$ 3,540/kW
- Marginally economic
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Regional Initiatives cont’d
Electricity Market II
Dominican Republic – Haiti Land Connection
Source: Franz Gerner – World Bank
• HFO
steam plant 250 MW,
• 560 km, US$1,900/kW
• Uneconomic unless from lower cost energy source
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Regional Initiatives cont’d
Electricity Market IV
Northern Caribbean Interconnection
Interconnection linking Florida-Cuba-Haiti-Dominican
Republic-Puerto Rico-Nevis
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Regional Initiatives cont’d
Electricity Market V
Guyana Hydro Interconnection/
Suriname - Guyana
Other initiatives not considered
under the World Bank Study:
 Hydroelectric power from Guyana to:
- Brazil (state of Roraima)
-
Trinidad
US Virgin Islands
Puerto Rico
Dominican Republic
 Hydropower or hydrocarbon trade
between Guyana and Suriname.
Source: ENMAN Services – Trinidad & Tobago
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Regional Initiatives cont’d
BELIZE
ELECTRICITY
MARKET
REPRESENTS A CLASSIC CASE OF
ELECTRICITY INTEGRATION AND
MARKET
COMPETITION
IN
ELECTRICITY
GENERATION.
EXISTING INTERCONNECTION OF
SYSTEMS BETWEEN BELIZE AND
MEXICO.
 Peak Load –74 MW
 Customers – 74,000
 Power Supply:
- Hydro IPP’s – 36 MW
– Mexico ‐ 50 MW
– Company owned Diesel
Fired 32 MW
Source: Lynn Young – Belize Electricity Limited
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STRUCTURE OF PRESENTATION
‫ﻌ‬
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BACKGROUND
ENERGY SOURCES
BENEFITS OF ENERGY INTEGRATION
BARRIERS TO ENERGY INTEGRATION
REGIONAL POLICIES AND STRATEGIES
PROPOSED INTEGRATION INITIATIVES
WITHIN CARICOM
‫ ﻌ‬CONCLUSIONS
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CONCLUSIONS
Notwithstanding the fact that all of the CARICOM
Member States are endowed with renewable energy
resources, electricity generation by fossil fuel is
dominant. This poses a threat to environmental and
economic security of the region.
Many of the RE projects require large ‘take-up’ to
make them economically feasible.
Transmission of electricity within the region and
within some Member States is currently fragmented.
As a result inefficiencies exist.
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CONCLUSIONS
Integrated electricity system is fundamental to the
sustainability of the region’s energy sector.
Preliminary assessments of potential integrated
systems need to be complemented with detailed
studies. Innovative financing mechanisms should be
leveraged as far as possible to make schemes
viable.
Political will for integrated systems need to be
bolstered and commitment required from private
and public organization, including utilities, investors,
financiers, developers, gas producers etc.
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CONCLUSIONS
Strategies, policies and regulatory framework are
required at regional level to support energy
integration in CARICOM and give effect to the
Revised Treaty.
There are opportunities for greater collaboration
between OLADE and CARICOM on the issue of
energy integration:
– Lessons to be learnt from success stories and experiences
in electricity interconnections in Latin America;
– Technical experts to support detailed studies on various
integration models;
– Support in designing legal and regulatory framework for
energy interconnection and negotiating commercial
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agreements.
Contact:
Joseph Williams
Manager, Energy Programme
Caribbean Community Secretariat
Tele: 592 -222-0001-75 Ext 3521
592-222-0139 (Direct)
Fax :592-222-0155
E-mail: jwilliams@caricom.org; jwilliams6764@gmail.com
SKYPE 'jwilliams67641“
__________________________
Maxine Alexander Nestor
Regional Energy Policy Advisor
Caribbean Renewable Energy Development Project
c/o Caribbean Community Secretariat
Tele: 592-222-0001-75 Ext. 3501
592-222-0222 (direct)
email: mnestor@caricom.org
skype: maxine.alexander.nestor
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