As national relations with the United States and other nations continue to improve, Cuba is emerging as a potentially lucrative market for renewable and distributed energy development. The country’s first utility-scale solar PV contract awarded in June 2016 highlights its potential to become a leading market in the Caribbean. The potential for renewables and distributed energy resources (DER) development in Cuba and throughout the Caribbean stems mainly from the region’s extreme dependency on imported fossil fuels. Furthermore, Cuba has a number of very old thermal power plants and decaying grid infrastructure that must be modernized to improve reliability and meet the country’s increasing demand for electricity. Cuba also has significant renewable energy resources and a goal to generate 24% of its electricity from renewables in 2030, up from just 4% today.
Opportunities and Challenges Abound
Improved diplomatic relations are driving rapid changes in Cuba’s economy, including large-scale wind and solar PV facilities already under development. Island electricity grids inherently have less stability than large continental systems and have traditionally struggled to effectively integrate large amounts of renewable generation. As a result, many islands—including Puerto Rico and parts of Japan—require that new large solar plants include a set amount of energy storage capacity. This could likely become a requirement as the Cuban solar market matures. Energy storage both centrally located and distributed in buildings can allow for the stable integration of renewables by smoothing output and controlling ramp rates, as well as optimizing these new resources by aligning renewable output with demand by time shifting energy. Navigant Research’s Energy Storage for Renewables Integration report explores the dynamics for these technologies specifically on islands.
Some of the earliest opportunities for DER development in Cuba may be the island’s numerous tourist resorts. Resorts around the world have demonstrated a willingness to invest in DER to improve the reliability of their power supplies and to develop images as eco-tourist destinations. This can provide opportunities for DER providers focusing on the commercial and industrial sector, particularly companies offering innovative financing programs such as power purchase agreements (PPAs). This model is demonstrated by the power system developed by EnSync Energy (formerly ZBB Energy) for a resort in French Polynesia that includes solar PV, energy storage, a local biofuel generator, and advanced controls for system optimization.
Despite this potential, a number of barriers still exist in the Cuban DER space. The country’s electricity market remains state-run, along with most of its economy. In order to realize its renewable energy ambitions, Cuba will require foreign investments and technical expertise. The government is already looking at some level of market deregulation that would encourage investment by allowing foreign companies to own energy generation (and potentially storage) projects. These changes could provide a much-needed boost to the market; however, the Cuban market regulators will likely need to further formalize policies to instill confidence in foreign investors and financiers.
Tags: Cuba, Distributed Energy Resources, Energy Storage, Energy Technologies, Renewable Generation
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