The rise of photovoltaics in the Caribbean

It’s no secret that we are barrelling towards a climate crisis. Countries worldwide are making efforts to reduce greenhouse gas emissions to mitigate the damage humans have done to the environment and stop us from passing a point of no return.

This global movement entails adopting cleaner alternatives like solar, wind, hydro, and geothermal power and advancements in energy storage and grid technologies. By promoting eco-friendly energy solutions, the green energy transition seeks to curb greenhouse gas emissions, improve air quality, and foster a more resilient and sustainable future for future generations.

After a slow start, the Caribbean is now taking steps toward becoming a part of the green energy transition. With high irradiance and year-round sunshine, the region is perfectly positioned to take advantage of solar photovoltaic (PV) technology to supply a significant proportion of its energy mix.

In this blog, we’ll look at the current state of the Caribbean’s energy market and how it is starting to embrace solar power. Read on to find out more!

The Caribbean energy market

Currently, most of the Caribbean region relies heavily on diesel fuel and natural gas imports to meet its energy needs, excluding Trinidad and Tobago and Guyana, which have their own reserves. Imported petroleum products account for 80% of the region’s energy needs and not only have a high environmental impact but cost around $7 billion annually.

The Caribbean faces a complex set of challenges when it comes to providing energy for its population. The decentralized nature of the region, with many small islands spread across large distances, means it is difficult to implement the infrastructure required to supply power to those who need it.

This, coupled with the small size of individual Caribbean markets, make it challenging to achieve economies of scale, hindering investment in large infrastructure projects and renewable energy systems.

The Caribbean region is also susceptible to hurricanes, storms, and other natural disasters, which can severely damage traditional energy infrastructure, leading to prolonged power outages and disruptions and making infrastructure upgrades difficult.

With the effects of climate change hitting the region with increasing severity, residents are often left without power. These extreme weather events and changing weather patterns affect the viability and sustainability of traditional energy sources.

Addressing these challenges demands a multifaceted approach involving policy reforms, regional cooperation, increased investment in renewable energy projects, energy efficiency measures, and the adoption of innovative technologies.

But it is not all bad news! The same weather that makes reliance on traditional energy sources fraught can also be exploited for green energy generation. The high wind speeds experienced by the region, while sometimes destructive, can be harnessed by wind turbines. The nature of being an island region also means that hydropower is a potential source of clean energy.

And finally, the high levels of sunlight, with 60% sunshine most months of the year, means that the Caribbean is an ideal location for solar PV projects.

In order to build on this and encourage investment, government bodies have implemented key changes in legislation and regulations. The Dominican Republic, one of the renewable energy front runners of the Caribbean region, has enacted laws that encourage investment and reduce legislative hurdles for the use of battery energy storage systems (BESS).

Law No. 50-07, for example, states that all forms of renewable energy generation that contribute to reducing pollution will receive tax relief on machinery and equipment, interest, and financing through funds and bonds.

Resolution CNE-AD-0004-2023 is another example issued by the National Energy Commission (CNE) to promote the adoption of renewable energy and improve the use of battery energy storage systems. The legislation is designed to streamline the legal and regulatory elements of battery storage for variable renewable energy projects (VREs) to ultimately improve grid stability.

The Caribbean solar market

The use of solar energy has been on the rise in the Caribbean in recent years. This change is driven by a desire to combat rising energy costs and move away from a traditionally unreliable grid that is subject to frequent outages due to adverse weather events.

Commercial and consumer PV installations are growing in popularity, and their natural resilience to extreme weather conditions makes them an attractive choice for many residents. PV modules are installed with high durability racking that allows them to withstand strong winds, and they are tested against impact damage to protect from storms.

The high-speed winds also mean that PV modules are kept cool despite the high irradiance and therefore are able to operate at a higher level of efficiency. The uptake of solar panels installed on residences and businesses also means that the energy supply to the region is becoming more decentralized, allowing communities to have reliable power regardless of whether the grid is functional.

This decentralized system can also be supplemented by battery energy storage systems (BESS) to ensure a reserve of power available for times of high demand or if the grid is compromised.

Here we look at some of the success stories around the Caribbean that are driving the solar industry forward:

Solar-powered projects on the horizon

The Caribbean region and its surrounding coastline have many exciting solar PV projects under construction or recently confirmed. Here are just a few examples:

The Dominican Republic is working to build on the 742 photovoltaic MW it had in 2022 and reach its goal of renewables making up 25% of the energy mix by 2025 with many new and exciting projects.

Legislation changes, agreements and proposals

The emergence of small-scale and nimble PV projects

What is the Caribbean’s largest PV plant?

However, small-scale solar projects are not the only type of PV installations cropping up in the Caribbean. In 2018, the Caribbean’s largest solar plant, the Montecristi solar farm, was commissioned.

Located in the Dominican Republic, the utility-scale installation spans 2 million square meters and has a total of 215,000 solar modules installed. The plant’s current capacity is 58 MW, with plans to increase this to 199 MW.

The Montecristi park produces around 103,000 MWh of electricity, enough to power 50,000 homes in the local area.

German company F&S Solar acted as both EPC and investor for the project, contributing 35% of the $87 million needed for the installation. The remaining 65% of funding was covered by another German company, Blue Elephant Energy AG, with debt financing supplied by a few European development banks.

A 20-year power purchase agreement (PPA) is in place with the state-owned energy supplier, under which energy generated by the installation will be sold at a fixed tariff.

The Montecristi solar farm marks one of the first significant steps towards a green tomorrow for the Caribbean. With the ever-increasing adoption of commercial solar technologies and the potential for diversification into other forms of green energy generation, the future looks bright for the region.

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