Globally, new investment in renewable energy fell 11 percent in 2012. But in Latin America and the Caribbean (not including Brazil), it grew at a remarkable rate of 127 percent, totaling US$4.6 billion. This was the opening context for the 3rd Annual Renewable Energy Finance Forum for Latin America and the Caribbean (REFF-LAC), held this week in Miami, Florida. The yearly event, coordinated by Euromoney Energy Events, the American Council on Renewable Energy (ACORE) and the Latin America and Caribbean Council on Renewable Energy (LAC-CORE), aims to connect developers and investors who can continue fostering the strong investment climate for renewables that is happening in the region.
Presenters included project developers, financiers, and government officials, all of whom had experiences to share about what’s working in the region. In some places, like Chile and Peru, project tendering is working to advance renewable energy deployment. In the Caribbean, mechanisms such as net metering and feed-in tariffs are still the preferred approach to fostering renewables development. Many presenters stressed that the key to continued success in the region is the political will that creates an environment conducive to successful renewable energy investment. They also highlighted how projects become more attractive the less they have to rely on subsidies or other support mechanisms.
Worldwatch, based on its extensive work in the Caribbean and Central America, was asked to provide insight at the conference on which technologies are working well in various countries. I had a chance to show that in both regions, renewable energy technologies are working wherever there is a resource to match—provided that a suitable environment for investment and project success exists. Large-scale hydropower plays a very large role in the electricity generation of most Central American countries, sometimes as much as 35 percent or more. And although renewables comprise only 8 percent of current electricity generation in the Caribbean, there is room for significant improvement, especially as geothermal resources are explored in places like Nevis and Grenada.
Despite strong solar, wind, and biomass resources, however, governments are still trying to meet sharply rising energy demand with increased fossil fuel-fired generation. For example, even though the Dominican Republic recently celebrated the opening of the second phase of its Los Cocos wind farm and has made significant progress in securing a developer for a 30 MW solar plant in Monte Plata, the country recently announced plans for a new coal-fired power plant 10 times the size of the solar plant. A second coal plant is to follow in the near future, both of which are being built to replace soon-to-be-retired diesel-fired generation. Carbon War Room President José María Figueres summarized this approach as, “taking us into the 21st century using energy technology that has run out of steam 200 years after the invention of the first steam engine.”
Worldwatch has already demonstrated that a very favorable solar resource exists in the Dominican Republic, and the costs of solar equipment worldwide continue to fall. Yet large-scale investment continues to elude the D.R. Unreasonable payback limits (seven years), shifting incentives for renewable energy, and poor government finances help contribute to a poor investment climate.
To maintain the region’s positive momentum, countries should be taking a cue from Aruba. On the second day of the conference, Jocelyne Croes, Minister Plenipotentiary for Aruba and Representative for the Government of Aruba at the Dutch Embassy in the United States, described Aruba’s recent partnership with Carbon War Room to transition the island to 100 percent renewable energy. Wind, solar, and ocean resources will play a central role in shifting the fossil fuel-dependent economy to one that is no longer affected by fluctuating oil prices or degradation of the natural environment, and that enjoys the economic benefits of increased investment and a technically trained workforce.
Aruba’s effort illustrates what ACORE President Vice-Admiral Dennis V. McGinn (USN-Retired) calls “a triple bottom line” of energy, economic, and environmental security, and is exactly the kind of bold, forward-thinking that Latin American and Caribbean countries should be adopting to successfully address their growing energy needs. It‘s also the kind of signal that investors look for as they try to bring innovative renewable energy solutions to market.
As with the first two REFF-LAC conferences, this week’s event was a great chance to survey progress made and to match investors with opportunities in Latin America and the Caribbean. LAC-CORE president Carlos St. James compared the renewable energy world to walking in a fog. Sometimes that fog lifts and you see the landscape as it is and in which direction you are going to go. REFF-LAC is that break in the fog and provided all participants with that necessary glimpse to keep moving in the right direction.
Mark Konold is a Project Manager for Worldwatch’s Climate & Energy Program.