Caribbean & Central America - May 2024

In April the Japan International Cooperation Agency (JICA) announced a US$20m donation to Cuba to help build a solar energy park in Isla de la Juventud, the second largest Cuban island (after Cuba’s mainland). Amid power cuts and fossil fuel shortages, investing in solar and other renewable energy sources could be the way forward for the country. But the evidence suggests there will be no quick solutions.

Prime Minister Manuel Marrero launched work on the new solar park, which will include the installation of rapid-discharge lithium batteries to smooth out the intermittency of generation. One of Cuba’s big problems is that it is about 95% reliant on imported fossil fuels (mainly fuel oil and diesel) to run its ageing thermo-electric power plants. With foreign currency shortages limiting fuel imports, the Partido Comunista de Cuba (PCC) government has had to impose rationing through ongoing power cuts. So far this year the rotating cuts have at any one point in time represented a 20%-45% shortfall on normal consumption levels. The cuts are deepening the economic recession as well as increasing political tensions with the government, which remains fearful of new popular protests.

In theory the JICA-funded project points the way forward to a solution to the Cuban energy crisis. Solar power is cost competitive. Although solar panels must be imported, renewable power running costs in foreign currency are less onerous. Authorities say that the JICA solar park will help take renewables up to cover 20% of electricity demand on Isla de la Juventud. At a national level the government has announced a target to have renewables cover 37% of the energy mix by 2030. In March, Energy Minister Vicente de la O Levy said two contracts had been signed with Chinese companies who over the next four years will build three solar parks in each province, adding 2,000MW of capacity. Spain has also offered to collaborate on a solar project. There are also plans to develop wind, hydro, and bioenergy projects.

The problem however is that a modest shift to renewable energy may be “too little too late”. As a result of years of low investment, the national electricity grid is close to collapse. Thermo-electric generating plants are between 24 and 49 years old and are frequently breaking down or requiring hard-to-source spare parts. The government has had to hire floating power plants from a Turkish company to try and keep the lights on. At present six such floating powerships are in operation, providing around 14% of total electricity generation. Sustained investment and reconstruction of Cuba’s power sector is needed, but it is hard to see how the government might find the foreign currency required.