The Caribbean needs to lure as much as $30 billion of investment to cut reliance on fossil fuel and expand renewable energy, partly by securing attractive payments for generators of clean power, a regional development bank said.
“Most of our countries are highly dependent on fossil fuels for power generation,” Caribbean Development Bank President Warren Smith said in an interview in London. “This vulnerability to volatile oil prices has contributed hugely to the competitiveness challenges of Caribbean industries.”
About $20 billion is needed in the next five to 10 years to replace power plants and upgrade distribution and transmission, he said. Another $10 billion is required to improve roads and airports and “climate-proof” current infrastructure. There is potential to replace 4,750 megawatts of fossil-fuel generation with renewables through 2019, Smith said.
The bank is talking with regional utilities interested in building clean-energy plants to feed power into the grid.
Nations need to attract investors by amending their laws to ensure generators are paid “equitable” fees for electricity. Barbados and Jamaica already have legislation in place and other countries should follow their lead, Smith said.
Barbados plans to get 29 percent of its power from clean sources by 2029 and Jamaica 30 percent by 2030. Barbados Light & Power Co. said June 12 it planned to build an 8-megawatt solar park. The bank is working with other islands to draft laws and draw investors to projects. Cutting fossil-fuel dependence would also help cut trade and debt imbalances in the region.
The islands should coordinate legislation to help counter the small size of their individual markets, according to Smith.
Eastern Caribbean islands including St Lucia and Grenada are working together on the Eastern Caribbean Energy Regulatory Authority to oversee utilities and advise governments on green energy development and cross-border interconnection, according to the website of the Organization of Eastern Caribbean States.
“Our role is to catalyse investments,” Smith said. “We’ll work with other financial institutions, including the other multilateral banks, to provide a percentage of the debt financing required at relatively low rates of interest.”
The bank will offer loans to the energy industry that are subject to generators meeting goals.
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