Caribbean electricity demand: What’s driving the project pipeline?

by Jed Bailey | January 29, 2018   

On January 25, 2018, Energy Narrative’s Managing Director, Jed Bailey presented an overview of electricity demand trends in the Caribbean at the 18th annual Platts Caribbean Energy Conference in Nassau, the Bahamas.

Mr. Bailey’s presentation noted that while electricity demand is growing in nearly every country across the region, most have also experienced periods of flat or shrinking demand in the past decade, owing to economic recessions and natural disasters.  Many countries continue to face economic challenges and are highly indebted, suggesting that electricity demand growth will remain muted.

A related challenge for power project developers is the small size of many markets in the region, limiting average demand growth to 5 MW or less per year for all but the largest markets.  Although the Dominican Republic, Puerto Rico, and Jamaica are all sizable power markets with more than 1 GW of average demand,  electricity demand in Dominica (at the other regional extreme) is less 1% that of the Dominican Republic.

Despite the limited need for incremental power generation investment from electricity demand growth, there are other factors that will drive future investment.  Many countries are rebuilding from natural disasters (such as the devastating hurricanes of 2017) and need to replace aging equipment. Others are investing in natural gas and LNG infrastructure to reduce their dependence on oil imports and improve the environmental performance of their thermal generation units. Across the region, all countries have set target to reduce greenhouse gas emissions and increase the share of renewable energy in their electricity generation matrix. For many countries, the targets outpace the expected growth in electricity demand, suggesting that electricity generation capacity that is currently operating will have to be replaced by renewable sources. Finally, the interests and priorities of international donors and multi-lateral agencies that are active in the region will influence the number and type of projects that move forward. This is particularly true for those countries whose debt load is too high to be able to finance new power projects without support.

The full slide deck from Mr. Bailey’s presentation is available for download in PDF format through the link below.  Please contact us with any questions or comments at info@energynarrative.com.

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