by Drs. Eugene B. Holiday
July 21, 2024, Maho, Sint Maarten
1. Introduction Distinguished guests, Ladies and gentlemen, good evening,
Let me begin by commending Dr. Cletus Bertin and the Board of CARILEC on the organization of this 2024 Engineering and Procurement Conference & Exhibition. The theme: “leveraging technology and process innovation with enhanced procurement: Solutions for a more resilient Caribbean Power Sector”, is very relevant and current considering the developments in our region in general and in Sint Maarten in particular.
Dr. Cletus Bertin, I am therefore pleased that I could accept your invitation to deliver the keynote address this evening. To all conference delegates I encourage you to make optimum use of this conference to share information, knowledge and experiences. To those of you visiting from overseas I welcome you to Sint Maarten and to the extent possible I hope that you will make use of the opportunity to enjoy Sint Maarten and the hospitality of our people.
Ladies and gentlemen, Building on the theme of the conference the tittle of my address is: Towards a More Resilient Caribbean Power Sector: Reengineering and Procurement Strategies.
• To begin, I will first highlight global and regional energy goals as a prerequisite for sustainable development.
• Second, considering those energy goals, I will discuss some key factors of the Caribbean Power Sector.
• Third, I will then propose some reengineering and procurement strategies aimed at achieving the goals for a more resilient power sector.
• And I shall close with some concluding remarks.
2. Global and Caribbean Sustainable Energy Goals
Ladies and Gentlemen,
Electricity is a basic need and prerequisite for development. No modern economy can function effectively without a stable and reliable electricity power supply. Ensuring the resilience, stability, reliability and security of our Caribbean power sector is essential to the overall and long-term development and wellbeing of our people.
In 2015 the United Nations recognized and underscored this critical relationship via its 2030 Agenda2 with Sustainable Development Goal 7 (SDG7). SDG7 focusses on achieving “affordable, reliable, sustainable and modern energy for all” by 2030. Its five targets are:
1. Ensuring universal access to modern energy services.
2. Increasing substantially the share of renewable energy in the global energy mix.
3. Doubling the global rate of improvement in energy efficiency.
4. Enhancing international cooperation to facilitate access to research, technology and investment in clean energy.
5. And expanding and upgrading sustainable energy services for developing countries. Two years earlier, in 2013, CARICOM, as part of the broader Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS), set regional energy goals aimed at enhancing energy security, affordability, and sustainability across the region. These goals include the target for the phased increase of the share of renewable energy in electricity generation to 47% by 2027.
It is in addition important to emphasize that achieving SDG7 and CARICOM renewable energy targets helps to attain global carbon emission reduction goals. Given that the region is suffering the brunt of the impact of climate change it is in the Caribbean’s interest to take a lead and do what it can to catalyze climate action. This despite of the fact that the region’s contribution to carbon emissions is negligible.
3. Key Factors of the Caribbean Power Sector
Ladies and gentlemen,
Realizing SDG7 and CARICOM’s targets is critical to achieving a more resilient Caribbean electric power sector. The question therefore is: where do we stand in that regard? A look at the Caribbean power sector shows that with the advancement of technology there are an increased number of sustainable energy initiatives. The overall progress in terms of energy transition and efficiency has, however, been uneven. Consistent with the small size and scale of the economies, Caribbean electricity companies operate small plants3. The installed capacity averages less than 200MW per island4 (that is excluding Trinidad, Jamaica, Puerto Rico, The Dominica Republic and Cuba).
The generating plants in several of the countries of the Caribbean including Sint Maarten are ageing and undercapitalized. That combined with the increasing demand for electricity to drive economic growth is at times the cause of supply shortfalls and blackouts. Investments in upgrading and replacement of these plants in the short term to avoid further deterioration in overall supply reliability are therefore imperative.
Imported fossil fuels continue to be the main sources of energy used to generate electricity. The use of renewable energy sources, such as solar and wind, accounted for about 11% on average in 2019, according to the report “A Roadmap for the Caribbean’s Energy Transition” published in September 2023. In Sint Maarten the use of renewable energy is minimal.
As a result of the heavy reliance on imported fuel, Caribbean consumers are subject to global oil price volatility and pay some of the highest electricity prices in the world. Residents and businesses pay an average electricity price of around USD 0.25 per kWh5. That is more than double the average price in the United Sates. In the case of Sint Maarten, the price of electricity is comprised of two components: a base rate (which at the moment is USD 0.14 per kWh6) and a so-called fuel clause that fluctuates with the costs of fuel (which at the moment is USD 0.24 kWh).
Additionally, the transmission and distribution facilities of the region’s power system are generally overhead. The system is a result very vulnerable to recurrent disruptions from the impact of more frequent and stronger hurricanes. The most recent example is the devastating impact of Hurricane Beryl on Grenada, St. Vincent and The Grenadines and Jamaica.
Considering these factors, it is evident that there is a lot of work to be done to meet SDG and CARICOM energy targets and with that secure our region’s long-term growth potential.
4. Energy Resilience Strategies Ladies and gentlemen,
That calls for the urgent implementation of energy resilience strategies that will reduce our dependency on imported fossil fuels, reduce the costs of electricity production, better secure the system from climate change impacts, improve the reliability and modernize the system. This calls for a profound reengineering of the region’s electric power system. That with a focus on investing in the transition to renewables, upgrading the system and enhancing procurement procedures.
The need for the investments in renewables has been outlined in various reports, including recent reports, such as: “A Roadmap for Caribbean Energy Transition” published in September 2023 and the TNO report on “Energy Transition in Aruba, Curaçao and Sint Maarten, issued in May 2024.
We are at the point where we must move from reports and take significant sustainable energy action, because our development and very existence is at risk and time is running out.
In that regard I will suggest five strategic areas for action. Action in terms of reengineering and procurement strategies with a focus on leveraging technology and regional cooperation to attain the targets for a more resilient energy power sector.
The first strategic area for action is the establishment of an energy program.
It is as a starting point imperative for each country – insofar as that has not been done – to prepare or where necessary revisit and establish its own energy plan. In doing so it is advisable not to reinvent the wheel, but rather to draw from the Caribbean Energy Policy and make use of regional expertise in designing the respective programs and action plans specific to our respective situations. In designing and implementing our plans we should:
– leverage demand, supply and storage modelling and forecasting technologies,
– draw from the examples and successes in our region,
– and collaborate with CARILEC and the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE).
It is in that regard imperative that all stakeholders, government, utility companies, businesses, and households, work together and commit to renewable energy and energy efficiency strategies with a focus on technology, innovation and procurement.
The second strategic area for action is the acceleration of sustainable energy transition.
Through our respective energy plans we must move to reengineer our energy production systems and accelerate the transition from fossil fuels to renewables, such as solar and wind. Because of the advancement in technology and given the fact that we have optimal access to an abundance of solar energy, I believe that solar panel technologies in combination with battery storage technology offers the best opportunity for the Caribbean in general and for Sint Maarten in particular. This is not to imply in any way that wind turbines technology or other renewable sources are not viable alternatives for inclusion in the energy mix.
Considering the topography and land space constraints on many of our Caribbean islands and recurrent hurricanes, it is recommended to adopt and implement a decentralized renewable energy strategy. Initiatives can include:
(a) The reform of legislation via, for example, the incorporation of hurricane resilient standards in the building codes for solar or wind turbines installations and the inclusion of incentives such as feed in tariffs, net metering or net billing in energy regulations aimed at encouraging households and businesses to install solar panels systems.
(b) That should be combined with the implementation of distributed energy generation in the form of a “public sector solar program” which provides for all public sector buildings to be solar powered by 2030.
(c) And to achieve greater access, utility companies should install solar based community microgrids, with a capacity of 5 to 10 MWp, to serve one or more districts by 2030. The successful implementation of the 4.15 MWp PV Solar Park with battery storage technology in Sint Eustatius can serve as a model in this regard.
This approach will diversify the energy mix, empower consumers, reduce costs, and improve resilience.
The third strategic area for action is the modernization of the energy grid.
The accelerated transition to the use of renewable technologies must go hand in hand with the leveraging of technology to modernize our electric grid. To realize the required upgrade of the system utility companies must invest in smart grids, advanced metering infrastructure, predictive analytics and artificial intelligence (AI). That should be accompanied by introducing innovations in capacity planning processes, which should include the streamlining and interfacing of systems of governments’ building permits departments and utility companies’ capacity planning departments.
These measures will optimize load forecasting, improve capacity planning, enhance grid stability, reduce losses, optimize maintenance schedules, strengthen outage management, and improve energy efficiency.
The fourth strategic area for action is the strenghtening of the security of the system.
It is moreover critical to take measures to protect the region’s electric infrastructure from external shocks. It is together with the increased use of digital technology, increasingly essential to shield our critical systems from cyber-attacks through improved cybersecurity. Additionally, utility companies and governments across the region should, where feasible, place the transmission and distribution grid underground to protect it from the impact of hurricanes. Noteworthy in this regard is Sint Maarten’s underground cabling project, which was initiated and gradually implemented following the devastating impact of hurricane Luis in 1995. With over 95% of the high voltage and 82% of the low voltage network underground7 that strategic decision and the subsequent investments paid significant dividends in the aftermath of hurricane Irma in Sint Maarten in 2017. That is because it helped to secure a quicker restoration of electricity. Utility companies and governments across the region should, where feasible, place the transmission and distribution grid underground to provide a more robust network and reliable power supply.
The fifth strategic area for action is the enhancement of the procurement process.
Realizing investments of this scale in our region’s power systems requires sound planning and robust implementation. Including and implementing an effective and efficient procurement strategy in that planning is indispensable to the delivery of the required energy projects and to the subsequent effective operation and maintenance. Successful procurement should provide reliable and sustainable supply chains to ensure that projects meet their budget, timeline, and quality objectives. It involves selecting the right suppliers, managing supplier relationships, and the leveraging of technologies and best practices. This is particularly critical given existing financial constraints and supply chain issues, in terms of supply interruptions and longer delivery periods in the wake of COVID-19 and various geopolitical armed conflicts.
That calls for timely initiation of tenders, the use of open, competitive and transparent procurement processes based on clear criteria and limited application of exceptions and single-source procurement. To optimize procurement processes utility companies and government strategies should focus on incorporating electronic procurement platforms, e-sourcing tools, artificial intelligence (AI), machine learning algorithms and the use of vendor management systems (VMS), and supplier relationship management (SRM) software. These technologies
•facilitate better collaboration, transparency and accountability in supplier relationships
•support more informed and faster decision-making
•enable more effective adjustment to changing market conditions and tracking of performance metrics
•and result in better contracts and in improved contracts management
Further, given the small size of plants and projects utility companies should in addition collaborate with regional partners to aggregate demand and negotiate better terms with suppliers.
By incorporating the right strategic objectives and technologies and regional collaboration companies can achieve cost savings, operational excellence, and resilience in their procurement operations.
5. Closing Remarks Ladies and gentlemen,
In closing, the current heavy dependence on imported fossil fuels is costly and unsustainable. And the resulting carbon emissions form an existential threat to our region. This calls for an urgent and accelerated reengineering of our region’s energy system and the effective procurement of the required investment projects.
Given the magnitude of the required investments and existing financial constraints, it is going to take a gigantic effort to realize our region’s energy resiliency needs. A challenge which we must meet urgently. We must do so with our Caribbean resiliency and creativity and in cooperation with partner countries and multilateral funding institutions. As such I wish to quote Mother Theresa where she said:
“…I can do things you cannot, you can do things I cannot…
together we can do great things”.
As a region we are rich in renewable energy resources, such as solar and wind, waiting for us to harness. Moving forward let us therefore embrace technology and creatively work together and with our partners to harness our renewable energy resources for a more resilient Caribbean power sector. And with that secure a great sustainable future for our region.
I therefore trust that this CARILEC conference will contribute to the realization of our critical mission of achieving a more resilient Caribbean Power Sector.
Thank you.
1 Keynote Address delivered at CARILEC’s 2024 Engineering and Procurement Conference & Exhibition, July 21, 2024, Sonesta Maho Beach Resort & Spa, Sint Maarten.
2 Declaration UN meeting September 25-27, 2015.
3 The Caribbean electric power sector is in large part vertically integrated and operated by a mix of government owned and privately owned utility companies.
4 Excludes countries with populations over 1 million, i.e., Trinidad, Jamaica, Puerto Rico, The Dominica Republic and Cuba). Sources: A roadmap for the Caribbean’s energy transition, by David Goldwyn, Eugene Tiah, and Wazim Mowla, September 26, 2023.
5 In some countries the electricity price reaches over US$ 0.40 per kWh.
6 ANG.0.25 per kWh. This excludes the monthly fixed charge of ANG.29 for the use of: 0 – 100 kWh.
7 Source: Sint Maarten’s utility company NV GEBE.
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