The Caribbean is a test-bed for solar utopia

By Mike Taylor

On the surface, the azure blue waters of the Caribbean Sea have the makings of a solar energy utopia — combining a warm, sunny climate and some of the highest electricity prices in the world. Retail power prices run upwards of 60 cents per kilowatt-hour (kWh) on some islands, and electricity is generated nearly universally from diesel generators using fuel oil. Solar energy can save utilities and their customers money, while providing all the value-added jobs, cleaner air and energy independence everyone dreams of — in theory.

The Caribbean: A sunny utopia for money-saving solar? (Image courtesy of USSolar Institute)

But, as with most ideals, the devil is in the details, and the Caribbean islands represent a real-time laboratory for two of utilities’ most pressing solar challenges: grid integration and cost recovery.

This fall I traveled to the British Virgin Island of Tortola to attend the Renewable Energy Forum held by the Caribbean Electric Utility Services Corporation, a regional assocation of electric utilities, suppliers, manufacturers and other stakeholders.  The event drew utility staff from many of the region’s electric companies to discuss the benefits, opportunities and challenges of renewable energy.

Grid Integration: What’s the tipping point?

Given high power prices, solar markets could economically drive themselves in the Caribbean, if not for the technical impact of the high penetration of solar on these small electricity grids. The Caribbean islands are generally not interconnected to one another — even those islands that are in the same country — so each island must balance its own electrical supply and demand.

As a result, system-level integration was a major focus at the conference, rather than any issues related to individual distribution feeders.

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To lower the risk of unplanned outages, Caribbean utilities build excess power plant capacity, providing higher reserve margins. But they operate each power plant fewer hours per year than U.S. mainland utility averages for coal or nuclear power plants serving similar baseload functions, that is, with lower capacity factors.

As one speaker put it, the first large renewable energy project — or the equivalent of many smaller ones — are easy to integrate. However, many utilities here seeing peak demand in the 10s of megawatts, and they have varying capabilities to react quickly to increased fluctuations on the electric grid. Confidently absorbing the second or third large renewable project then requires more complex planning and grid upgrades.

In one example, managing the operation of several diesel plants while coordinating fluctuations in solar generation was presented as an exercise in smart communications and generation controls, rather than building more wires or power plants.

Another complicating factor, various countries in the region have widely disparate financial and technical resources to manage system upgrades and control facilities to accommodate solar and wind energy — and to do it across multiple islands in some cases.

Cost-effective energy storage could be a panacea for increased renewable energy penetration in the Caribbean.

Cost Recovery: A policy patchwork

Electricity rates in the Caribbean, unlike in much of the U.S., are based on a small monthly customer charge and energy costs per kWh, with per-kilowatt demand charges fairly uncommon. Under these conditions, customers are highly motivated to offset their large electric bills with energy efficiency and solar.

At the same time, it wasn’t uncommon to see incandescent light bulbs being used in commercial businesses where cost paybacks for more efficient bulbs, such as compact fluorescents or LEDs, might number in the weeks. As much as we think consumers are rationally and economically motivated, inertia remains, even among those with the highest electricity prices.

The economics of solar have also made consumer net energy metering (NEM) a key focus for utilities in the islands, with perhaps even more immediacy than anywhere in the U.S., Hawaii being the obvious exception.

Distributed solar policies vary across the region. In some places, NEM is available or available with limits, while in others, consumer-generated electricity is prohibited. Net billing, essentially real-time net metering with exports purchased at wholesale rates, seems also to be a popular arrangement, with direct purchases at wholesale rates another alternative, though still at higher prices than on the U.S. mainland.

Grid defection, that is disconnecting from the system with an off-grid installation, doesn’t seem to be an option in the places where the topic was raised. Consumers who have electricity service can’t legally disconnect.

The potential for revenue loss is also viewed with more immediacy than in the United States, where with a few exceptions, solar penetration is still quite small. But along with states that have fast-growing solar markets or progressive energy policies — such as Hawaii, California and New York — the Caribbean islands have the potential to become future business and integration models for the rest of the U.S.

This is not to say that a large contingent of Caribbean utilities, solar stakeholders and a cottage industry of nongovernmental organizations, private companies and government authorities aren’t tackling these two issues head-on with research studies, tests and financing options.  Earlier this year, the Carbon War Room and Rocky Mountain Institute launched a joint project in the Bahamas — the 10-Island Challenge — aimed at accelerating the region’s transition to renewable energy.

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However, the vision of 100-percent renewable electric grids simply isn’t a short-term reality, even if the Caribbean has copious sun and solar is cost effective.

It’s a goal most people would support but the solutions are not simple and will vary by jurisdiction —something U.S. solar markets must also acknowledge as they continue to confront and debate these two important issues.

Mike Taylor is the Solar Electric Power Association’s director of research. He can be reached at [email protected].