Download Enabling environments for RE in the Caribbean

24 October 2016
Enabling environments for RE in the Caribbean are improving,
but the largest markets still have some catching-up to do
This year, Castalia will release its fifth version of the CREF-Castalia Renewable Islands Index,
which is the only comprehensive index on progress and prospects in renewable energy
investment in the Caribbean. The Index takes three factors into account: the enabling
environment for renewable energy investments, existing renewable generation, and planned
renewable generation.
At this year’s Castalia Renewable Islands Index, we saw that enabling environments
in the region for RE are improving. The average regional score rose 19 percent over 5 years,
from 2.26 in 2012—the first year of the Index—to 2.70 in 2016 (out of 5). For large-scale
investments, this reflects that utilities are better able to recover costs and make a return on
investments in renewables, and that Independent Power Producers (IPPs) can more easily get
bankable off-take agreements for RE investments. For small-scale investments, it shows that
there are better frameworks in place for customers to recover costs for viable grid-tied
distributed RE systems.
The regional rise obscures a vast diversity in scores across countries. The ‘Opportunity
for Investment’ figure below sorts the 29 countries from this year’s Index on two axes,
according to size and the attractiveness of the enabling environment.
Only a few large markets score highly in enabling environment, while most have some
catching-up to do. Of highest-scording markets, only Jamaica has a population over 500,000.
The four largest markets in terms of population—Cuba, Dominican Republic, Haiti, and
Puerto Rico—all score below the regional average of 2.7. Jamaica’s strong enabling
environment is paying off, setting the groundwork for the very bids it received in its renewable
energy tender earlier this year—including a bid of US$0.0854 per kWh from a 33MW solar PV
project.
Despite the regulatory uncertainty, projects in the largest markets are moving. Over
half of the planned generation in our regional Marketplace (a list of more than 330 existing
and planned renewable energy projects in the Caribbean) comes from Cuba alone. New
projects from Cuba and the Dominican Republic together make up 66 percent of total planned
new generation across the region. This shows that though the regulatory environments are still
emerging, interest in these markets is high.
Copyright Castalia Limited. All rights reserved. Castalia is not liable for any loss caused by reliance on this
document. Castalia is a part of the worldwide Castalia Advisory Group.
Notes:
The size of the circle for each country corresponds the size of planned new RE capacity from this
year’s RE Marketplace, in megawatts.
Source: CREF-Castalia Renewable Islands Index and Marketplace, 2016
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