By Gaulbert Sutherland in Washington
With a growing market for renewables, the Caribbean and Central America are being urged to diversify their fuel sources and the US yesterday unveiled US$10m in grant financing but Guyana was not listed as among the countries that could potentially benefit.
“Our approach has been that any government that is actually moving in the direction of addressing these issues, we’re gonna meet their political will and their energy with equal support,” US Deputy Assistant Secretary of State for Western Hemisphere Affairs, Juan Gonzalez told reporters during a news conference at the State Department in Washington yesterday as Caribbean and Central American leaders met with top US administration officials to discuss energy security. He noted that moving to clean energy is not easy and is expensive but Washington is willing to provide support.
At the news conference, Senior Deputy Assistant Administrator of USAID Sarah-Ann Lynch also revealed the details of the Clean Energy Finance Facility for the Caribbean and Central America which was announced by US Secretary of State John Kerry on Tuesday as regional leaders gathered in the US capital for the US-Caribbean-Central American Energy Summit hosted by US Vice President Joe Biden.
Lynch said that the US will make available US$10 million for renewable energy projects in the Caribbean and individuals, organisations and state actors have up to March 2017 to apply for funds of up to US$1 million to support such initiatives. “As the US government lead agency, USAID can facilitate financing for projects that a more traditional investor may not want to invest in so we can use our broad experience in development globally and identify promising projects in this region that might be possibly less attractive to another investor” for various reasons, she said.
The Clean Energy Finance Facility for the Caribbean and Central America will finance projects in several countries in the region. However, Guyana is not on the list. Lynch told reporters that USAID began accepting grant proposals yesterday. “This opportunity will allow us to make up to US$10 million of US government resources available to cover project development costs for clean energy and energy efficiency projects,” she said. The USAID official said the window for proposals will be open until March 2017 and the maximum grant per project is US$1 million. While there is no cap per country, Lynch emphasised that they would like to have a wide distribution across the region.
The grants can be in any area such as feasibility studies, engineering and environmental analysis, in the legal area, “all the sorts of things that are necessary to bring a project from its conceptual stage to fruition,” the USAID official said. She asserted that the initiative will encourage entrepreneurship and offer the chance for small businesses to thrive and take advantage of the opportunity. She disclosed that some expressions of interest from across the region have already been received.
Questioned by Stabroek News on the eligibility of hydropower projects for funding, Lynch said that the focus is on solar, wind and geothermal energy at this time. Deputy Assistant Secretary for Energy Transformation in the Bureau of Energy Resources, Melanie Nakawaga at a subsequent news conference noted that clean energy penetration is relatively high in Central America but over-reliance on hydropower by some countries in the region is a source of energy insecurity during drought conditions as can currently be seen.
She said that the focus of the US government is always on the diversity of supply, a diversity of resources to ensure a well-balanced grid or a well-balanced energy system. She said each project has to be evaluated on a case-by-case basis. “Regardless of what the energy solution is, relying on solely just one would not be in the frame of diversity of supply,” Nakawaga said.
Meantime, Gonzalez pointed out that even though energy costs around the world have dropped significantly, for Central American and the Caribbean, they are still high. “It’s because there have been challenges on the regulatory front…regulatory governance, there have been challenges on the financing side, of course the high cost of borrowing in a lot of these countries makes it prohibitive but also donor coordination is something I think we can do better,” he said while adding that the State Department has been trying to assist in tackling the issues over the past couple of years and there have been positive results. He highlighted a project with St Kitts to develop the country’s geothermal resources and a US$200 million investment in Jamaica in natural gas.
“The vice-president has said this, the President of the United States has said this, Secretary Kerry last night said it, that if there is one thing that we can actually help the Central America and the Caribbean do and it is something that has implications for economic prosperity, for security and for development, it’s to reduce energy prices because what you have is, at the end of the day, you have families that are paying much more than anybody else,” Gonzalez declared. He also pointed out that it contributes to the US’ broader interests.
The State Department official said they are looking at an “all of the above approach” but are focusing on renewables particularly in the Caribbean. “You have an area that is ripe for expansion of solar, of wind and other sources of renewables,” he said while pointing out that US investment in new, clean energy projects grew by 10% in 2015 in the Caribbean. “It is concrete progress,” he said.
Lynch, meanwhile, highlighted the importance of energy diversification even as she pointed out that the Caribbean faces some of the highest electricity costs in the world with costs ranging from between 35 and 65 cents per kilowatt hour (kWh) in contrast to some other countries in the region with similar levels of development where they pay closer to 8 cents per kWh. She noted that the high costs are due to the region’s overwhelming reliance on imported fossil fuels for power generation.
Lynch said that in relation to energy, USAID works in four primary areas: to promote mutual collaboration on clean energy; to increase access to safe, reliable energy; to work with governments to develop policies for clean, renewable energy; and to promote entrepreneurship specifically in the energy sector. She informed that USAID will support the Caribbean Sustainable Energy Roadmap platform to encourage the sharing of information and best practices in order to encourage a move to renewable energy in the region.
According to Lynch, collaboration is key because knowledge sharing helps streamline the efforts of the donor community to avoid the duplication of efforts. She also highlighted the need for policy reform. “Legal and regulatory reforms…are key to unlocking private sector investment in clean energy in the region,” she said.
According to Gonzalez, “the agenda is a pro-Caribbean, pro-Central America” strategy. “It’s really about energy independence for all these countries and its regardless of who it’s independence from be it United States, be it Venezuela,” he said while noting that the solutions can be natural gas or petroleum but should also include renewable energy sources such as solar.
He acknowledged that oil prices and the challenges faced by Venezuela, from which many Caribbean countries get oil under the PetroCaribe programme, made the work even more important. He said that in terms of PetroCaribe, the fiscal padding for programmes is no longer there and countries that once used the concessionary terms to fund their own projects are running into fiscal problems.
He also emphasised that by addressing the region’s energy security, they are promoting prosperity and the broader security of the region and that is in the national interest of the US. He emphasised that they are encouraging private-sector led solutions.