Improving Energy Efficiency & Lowering Costs in the Caribbean

Ramón Espinasa, Lead Specialist (Oil & Gas)

Energy / Infrastructure & Environment

A Problem

Residents of Caribbean nations face very high electricity and transportation fuel costs that have measurably negative

impacts on its economic performance.

A Problem

- 5 10 15 20 25 30 35 40 45

Dominican Republic

Grenada

Barbados

Brazil

Guyana

Nicaragua

Colombia

Panama

Honduras

Peru

Mexico

Bolivia

Trinidad & Tobago

Venezuela

US cents per kilowatt-hour

Source: OLADE (2012); EIA (2014)

- 5 10 15 20 25 30 35 40 45

Dominican Republic

Grenada

Barbados

Brazil

Guyana

Nicaragua

Colombia

Panama

Honduras

Peru

Mexico

Bolivia

Trinidad & Tobago

Venezuela

US cents per kilowatt-hour

Source: OLADE (2012); EIA (2014)

- 5 10 15 20 25 30 35 40 45

Dominican Republic

Grenada

Barbados

Brazil

Guyana

Nicaragua

Colombia

Panama

Honduras

Peru

Mexico

Bolivia

Trinidad & Tobago

Venezuela

US cents per kilowatt-hour

Source: OLADE (2012); EIA (2014)

Reasons

What explains these high costs of energy?

Reasons

What explains these high costs of energy?

The Jamaican energy matrix illustrates

the reasons for these prices

Reasons

Final Consumption by Sector

Final Consumption by Source Transformation

Imports Secondary Energy

Total Supply Primary Energy

Exports Primary Energy

Production & Imports Primary Energy

Oil Products (33)

Industry (6)

Transport (14)

Residential (6)

Commercial (4)

Other (10)

20

28

Coal (1)

Hydro (0.2)

CR&W (11)

Total Production (11)

Total Imports (25)

0.2

Total Supply (33)

1

0.2

3

Electricity

Final Consumption (42)

Sector Consumption (42)

Jamaica 2011 (kboe/day)

Crude Oil (25)

Solar/Wind (0.2)

0.2

1

0.2

5

7

Editor: Ramón Espinasa (INE/ENE) Author: Carlos Sucre (INE/ENE)

Source: Own calculations based on IEA World Energy Balances

Inter-American Development Bank, 2012 Infrastructure & Environment/ Energy

11

25 25

Heat, Waste & Losses (17)

Elec

tric

ity

Inp

ut

(23

)

o Almost all generation capacity is thermal, based on fossil fuels – which are almost all imported

75% 88%

100% 96% 100% 100% 100% 100%

80%

49%

100% 95%

53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% D

om

inic

a

St. V

ince

nt

& t

he

Gre

nad

ine

s

Gre

nad

a

St. K

itts

& N

evi

s

An

tigu

a &

Bar

bu

da

St. L

uci

a

Gu

yan

a

Bar

bad

os

Hai

ti

Suri

nam

e

Bah

amas

Jam

aica

Trin

idad

& T

ob

ago

Do

min

ican

Re

pu

blic

shar

e o

f in

stal

led

cap

acit

y

Fuel Oil Gas Coal Hydro Other

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

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

o Therefore, the realistic scope for generating efficiencies in energy applies to about half of current

Final Consumption by Sector

Final Consumption by Source Transformation

Imports Secondary Energy

Total Supply Primary Energy

Exports Primary Energy

Production & Imports Primary Energy

Editor: Ramón Espinasa (INE/ENE) Authors: Malte Humpert

Source: Own calculations based EIA, Castalia Consulting, GEF

Inter-American Development Bank, 2013 Infrastructure & Environment/ Energy

Oil Products 4,800

Industry (601.1)

Transport (721.3)

Residential (390.7)

Commercial (631.1)

Other (300.5)

365

2,279.8

Total Supply (0.0)

Heat, Waste & Losses (1,916.3)

Electricity

Antigua & Barbuda 2009 (boe/day)

2,281.3

Sector Consumption (2,644.8)

Final Consumption (2,644.8)

Elec

tric

ity

Inp

ut

(2,2

81

.3)

Total Production (0.0)

Total Imports (0.0)

Exports (239)

A Solution

A Solution

Turning to the scope for improving energy sector efficiency…

A Solution

Turning to the scope for improving energy sector efficiency… there is potential for:

A Solution

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

A Solution

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

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 • Geothermal geological conditions

Divergent Gas & Oil Prices

0

2

4

6

8

10

12

14

0

20

40

60

80

100

120

140

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

do

llars

pe

r M

MB

tu

do

llars

pe

r b

arre

l

Cushing, OK WTI Spot Price FOB Henry Hub Natural Gas Spot Price

Source: EIA

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

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

Potential Gas Import Ports

System Cost: Gas vs. Fuel Oil

0

2

4

6

8

10

12

14

16

Do

min

ican

Rep

ub

lic

Jam

aica

The

Bah

amas

Bar

bad

os

Gu

yan

ada

An

tigu

a &

Bar

bu

da

Hai

ti

St. L

uci

a

Suri

nam

e

St. K

itts

& N

evis

Gre

nad

a

St. V

ince

nt

& t

he

Gre

nad

ines

Do

min

ica

US$

/kW

h

Average Cost of System (Natural Gas) Average Cost of System (Fuel Oil)

Introducing natural gas for electricity generation can lead to savings between 20-30% for nearly all countries in the Caribbean

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

0.50

0.47

0.29

0.26

0.23

0.20

0.14

0.12

0.10

0.09

0.09

0.09

0.08

0.05

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55

OTEC (5MW)

Wind (10kW)

Solar PV (small scale)

Solar PV (commercial scale)

Seawater Air Conditioning (2MW)

Solar PV (utility scale)

Residential SWH (2kW)

Hydro

Wind (850kW)

Commercial SWH (70kW)

Landfill gas to energy (internal combustion)

Bagasse cogeneration

Anaerobic Digestion / Biogas (2MW)

Geothermal (100MW)

US$/kWh

Firm Technology

Non-Firm, Less Reliable Technology

Non-Firm Technology

Gas Turbine, fuel cost US$0.15/kWh

LSD/HFO, all in cost US$0.16/kWh

System Cost: Gas vs Other Sources

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

Conclusions • Scope for savings from diversifying from fuel oil to non-

conventional 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%