Improving Energy Efficiency & Lowering Costs in the Caribbean. Ramón Espinasa, Lead Specialist (Oil & Gas) Energy / Infrastructure & Environment

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1 Improving Energy Efficiency & Lowering Costs in the Caribbean Ramón Espinasa, Lead Specialist (Oil & Gas) Energy / Infrastructure & Environment

3 A Problem

4 A Problem Residents of Caribbean nations face very high electricity and transportation fuel costs that have measurably negative impacts on its economic performance.

5 Source: OLADE (2012); EIA (2014) Venezuela Trinidad & Tobago Bolivia Mexico Peru Honduras Panama Colombia Nicaragua Guyana Brazil Barbados Grenada Dominican Republic US cents per kilowatt-hour

6 Source: OLADE (2012); EIA (2014) Venezuela Trinidad & Tobago Bolivia Mexico Peru Honduras Panama Colombia Nicaragua Guyana Brazil Barbados Grenada Dominican Republic US cents per kilowatt-hour

7 Source: OLADE (2012); EIA (2014) Venezuela Trinidad & Tobago Bolivia Mexico Peru Honduras Panama Colombia Nicaragua Guyana Brazil Barbados Grenada Dominican Republic US cents per kilowatt-hour

8 Reasons

9 Reasons What explains these high costs of energy?

10 Reasons What explains these high costs of energy? The Jamaican energy matrix illustrates the reasons for these prices

11 Electricity Input (23) Jamaica 2011 (kboe/day) Production & Imports Primary Energy Exports Primary Energy Total Supply Primary Energy Imports Secondary Energy Transformation Final Consumption by Source Final Consumption by Sector CR&W (11) Hydro (0.2) Oil 25 Products 25 (33) 28 Industry (6) Transport (14) Solar/Wind (0.2) Total Production (11) Coal (1) Total Imports (25) Crude Oil (25) Total Supply (33) Electricity 7 5 Final Consumption (42) Residential (6) Commercial (4) Other (10) Sector Consumption (42) Inter-American Development Bank, 2012 Infrastructure & Environment/ Energy Heat, Waste & Losses (17) Editor: Ramón Espinasa (INE/ENE) Author: Carlos Sucre (INE/ENE)

12 share of installed capacity Dominica St. Vincent & the Grenadines Grenada St. Kitts & Nevis Antigua & Barbuda Source: IDB (2013) Pre-Feasibility Study of the Potential Market for Natural Gas as a Fuel for Power Generation in the Caribbean St. Lucia Guyana Barbados Haiti Suriname Bahamas Jamaica Trinidad & Tobago Dominican Republic o Almost all generation capacity is thermal, based on fossil fuels which are almost all imported 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 75% 88% 100% 96% 100% 100% 100% 100% 80% 49% 100% 95% 53% Fuel Oil Gas Coal Hydro Other

o Therefore, the realistic scope for generating o All generation capacity is thermal, based on fossil fuels, which are almost all imported o Thermal generation wastes on

13 o Therefore, the realistic scope for generating o All generation capacity is thermal, based on fossil fuels, which are almost all imported o Thermal generation wastes on average around 2/3 of the energy input to generation o Transport uses about ½ of total supply and it s very difficult to shift transport away from oil products on a large scale

14 Electricity Input (2,281.3) Antigua & Barbuda 2009 (boe/day) Production & Imports Primary Energy Exports Primary Energy Total Supply Primary Energy Imports Secondary Energy Transformation Final Consumption by Source Exports (239) Final Consumption by Sector Industry (601.1) Total Production (0.0) 2,281.3 Electricity 365 Transport (721.3) Residential (390.7) Commercial (631.1) Total Imports (0.0) Total Supply (0.0) Oil Products 4,800 2,279.8 Final Consumption (2,644.8) Other (300.5) Sector Consumption (2,644.8) Inter-American Development Bank, 2013 Infrastructure & Environment/ Energy Heat, Waste & Losses (1,916.3) Editor: Ramón Espinasa (INE/ENE) Authors: Malte Humpert

16 A Solution

17 A Solution Turning to the scope for improving energy sector efficiency

18 A Solution Turning to the scope for improving energy sector efficiency there is potential for:

19 A Solution Turning to the scope for improving energy sector efficiency there is potential for: - Diversifying to other thermal

20 A Solution Turning to the scope for improving energy sector efficiency there is potential for: - Diversifying to other thermal - Diversifying away from thermal

21 A Solution Turning to the scope for improving energy sector efficiency there is potential for: - Diversifying to other thermal - Diversifying away from thermal Solar/wind intermittency & storage

22 Source: EIA dollars per barrel Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 dollars per MMBtu Divergent Gas & Oil Prices Cushing, OK WTI Spot Price FOB Henry Hub Natural Gas Spot Price

23 Potential Gas Sources Source: IDB (2013) Pre-Feasibility Study of the Potential Market for Natural Gas as a Fuel for Power Generation in the Caribbean

24 Potential Gas Import Ports Source: IDB (2013) Pre-Feasibility Study of the Potential Market for Natural Gas as a Fuel for Power Generation in the Caribbean

25 US$/kWh Dominican Republic Jamaica The Bahamas Barbados Guyanada Source: IDB (2013) Pre-Feasibility Study of the Potential Market for Natural Gas as a Fuel for Power Generation in the Caribbean Antigua & Barbuda Haiti St. Lucia Suriname St. Kitts & Nevis Grenada St. Vincent & the Grenadines Dominica System Cost: Gas vs. Fuel Oil Introducing natural gas for electricity generation can lead to savings between 20-30% for nearly all countries in the Caribbean Average Cost of System (Natural Gas) Average Cost of System (Fuel Oil)

26 Source: IDB (2013) Pre-Feasibility Study of the Potential Market for Natural Gas as a Fuel for Power Generation in the Caribbean System Cost: Gas vs Other Sources Geothermal (100MW) Anaerobic Digestion / Biogas (2MW) Bagasse cogeneration Landfill gas to energy (internal combustion) Commercial SWH (70kW) Wind (850kW) Hydro Residential SWH (2kW) Solar PV (utility scale) Seawater Air Conditioning (2MW) Solar PV (commercial scale) Solar PV (small scale) Wind (10kW) OTEC (5MW) Gas Turbine, fuel cost US$0.15/kWh 0.14 LSD/HFO, all in cost US$0.16/kWh Firm Technology Non-Firm, Less Reliable Technology Non-Firm Technology US$/kWh

27 Conclusions Scope for savings from diversifying from fuel oil to nonconventional renewable sources (small-scale wind, solar water heating, bagasse) exist in a small scale Problems of intermittency and reliability remain very important with solar, wind Geothermal is a very attractive solution for countries with the underground endowment Only realistic large-scale diversification would be from fuel oil to natural gas Economies of scale of supply Ability to replace fuel oil with gas for generation Even expanding current NCR installed capacity to 10% of total, reliance on fuel oil remains around 70-90%

OVERVIEW OF THE ENERGY SECTOR IN LATIN AMERICA AND THE CARIBBEAN

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