Caribbean states have promised to reduce their dependence on fossil fuels and transition to a more renewable energy economy. Saint Lucia and Aruba has even gone so far as to vowed to transition to 100% renewable energy generation as part of the Ten Island Challenge. Yet these commitments, as important as they are, have not produced regulatory reform to match these lofty promises. The Caribbean Development Bank is working to update legislation to support emerging renewable energy projects across the Caribbean region. The RE market needs policy support from governments if it is to secure funding.
Shockingly, very few countries currently have energy policy and legislation in place allowing households and businesses to generate their own power through alternative technologies. This leads to a policy gap that acts as a barrier to wider investment.
The most notable exception is Jamaica whose electricity grid allows for independent power produces (IPPS). In many countries such as Bermuda and Grenada, there is a monopoly for electricity generation where a single privately-owned company controls the entire vertical electricity market. Out-dated cost benefit analysis hinders renewable energy installations, especially small-scale household solar, which are seen to be more expensive than wholesale diesel-based electricity. This leaves no demand or economic incentive to develop new technologies for these utility monopolies.
In Barbados, the popular locally designed and manufactured solar water heaters were subsidized by the government. There have also been hugely successful wind farms in Jamaica, backed again by the Government. However, other projects struggle to get off the ground due to lack of regulatory reform and land leaseholds. In Bermuda, years of negotiations have failed to produce fair payment arrangements between domestic solar PV projects and the Bermuda Electric Light Company (BELCO).
Promising research by Rebekah Shirley and Daniel Kammen, University of Berkeley, demonstrates that there are many scenarios in which renewable energy technologies already provide significant job creation and carbon reduction benefits, and most importantly, are competitive with current electricity costs.
This is supported by the Caribbean Development Bank and the Inter-American Development Bank, but there is still a long way to go to translate into changes in national regulation, local investment opportunities and reduced barriers to grid integration. As noted by Thomas Scheutzlich, Principal Advisor for the Caribbean Renewable Energy Development Programme, the absence of large renewable energy projects in the region can be attributed to the absence of regulations requiring utility companies to back implementation. The potential for green jobs is strong and could prove to be a powerful incentive for national regulatory reform. It will be interesting to see what develops over the coming years.