Page 29 - CARILEC CE Industry Journal_Oct_2019

How Does Lower Solar PV Pricing

Impact the Caribbean?

- Chris Cadwell, WRB Energy, VP Renewable Energy

Solar PV wholesale energy pricing is continuing to drop To answer the second question, it’s important to
below two cents per kWh in the U.S., Latin America, and acknowledge that renewable energy prices are decreasing
other regions. In the U.S., the sub-two cents/kWh solar in the Caribbean just as everywhere else due to the lower
price is a watershed moment because solar plus storage cost of equipment. However, island pricing won’t ever
is now the cheapest energy source available today. It is match exactly. Some examples of issues that drive
truly a paradigm shift when solar plus storage is less energy prices above the mainland counterparts include:
expensive than natural gas in an oversupplied gas market.
1 Costs to develop per MW multiply when amortizing
I speak with utility executives from Caribbean nations higher development costs due to lack of economies
frequently—many with aggressive renewable energy of scale in each market—MW versus GW. Each
goals. First, they ask me if these new price levels are market is unique from a legal, tax, permitting, and
real and achievable for long-term power purchase cultural perspective.
agreements. And second, they ask a line of questions 2 Islands with unique ports, terrain, and roadways,
about how the price for renewable energy on islands can incur higher import and transportation costs for
reach the same level. solar equipment.
3 Additionally, the push for increased resiliency in
First, yes, these recently reported numbers in the U.S. the Caribbean can boost higher hurricane/disaster
and Latin America, including those in California, insurance costs, which further increases the risk of
Nevada, the Midwest, and Mexico, are real. And, yes realizing reasonable equity returns for investors.
they are bankable because:
1 The renewable projects are massive plants at utility
gigawatt (GW) scale.
2 Investment tax credits (ITC) in the U.S. and other
subsidies are available to reduce costs.
3 Renewables in the U.S. are sufficiently de-risked
to the point where equity owners view the
investment the same as a medium-risk bond. I like
to say that they are seeking “micro-yields.”
CE INDUSTRY Journal 27