Emphasizing that the Caribbean is not energy poor, Caribbean Development Bank (CDB) president, Dr. Warren Smith, is encouraging regional countries to pursue realistic goals in that sector, which he says will help substantially reduce electricity costs which represent a major impediment to competitiveness and growth in most Caribbean economies.
He noted that Guyana has the hydro power potential to meet its electrical needs and also supply a large chunk of northern Brazil and virtually all of Trinidad & Tobago through undersea cable, and there is hydro production in Dominica and proven reserves of geothermal energy in six Organization of Eastern Caribbean States (OECS) countries.
“What is useful about geothermal energy is that it’s renewable and clean and it also represents what the power engineers among us would call stable base load power,” said Dr. Smith while addressing a business forum at the Jamaican Canadian Association centre recently.
He said that the region’s vast resources of hydro, wind and solar energy can be developed in a way that will significantly reduce fossil fuels importation, thereby reducing import expenditures.
“It’s estimated that energy costs could be reduced by as much as 30 to 50 per cent,” said Smith. “Reductions in energy costs of this magnitude could lay the basis for the emergence of new and competitive economic activities across the region. To make energy transformation a reality, appropriately priced resources will have to be made available to cushion the high up-front capital cost and the uncertainty associated with some of the renewable energy technologies.”
As a principal catalyst of resources in the region, the CDB recently signed a Memorandum of Co-operation with the Inter-American Development Bank and Japan International Co-operation Agency for nearly C$100 million in soft financing for the OECS geothermal industry development.
“Such financing will make possible the transformation of some economies, like Guyana, to become lower cost energy producers and others, like Dominica, to become energy exporters,” said Smith. “Dominica will not only save foreign exchange by reducing the importation of fossil fuels, but it will also, in time – once they develop that geothermal resource to its potential – be able to sell electricity to the neighbouring islands of Martinique and Guadeloupe which have a much greater demand than Dominica itself. Because of their size, most renewable energy projects will have to be jointly financed with the private sector.
“Distributed generation will be the order of the day with power purchase agreements linking privately-owned generating facilities to the existing electric utility companies. The mechanism of public private partnerships will, in all likelihood, be extensively utilized.”
By leveraging its historically strong infrastructure financing skills across the Caribbean, Smith said the CDB is positioned to become a major player in the development of climate adaptation projects geared towards making regional countries climate-resilient and less vulnerable to hurricanes and other adverse climatic conditions.
“We have committed 80 per cent of a climate action line of credit that was provided by the European Investment Bank and our objective is to mobilize additional resources from sources such as the Green Climate Fund,” he said.
The CDB’s fifth president since the bank’s creation in 1970, Smith urged members of the Caribbean Diaspora in Canada to consider taking advantage of the vast economic opportunities that are emerging in the region.
“With your knowledge of the business culture and your links to the Caribbean business community, you are well positioned to take advantage of these opportunities that are emerging in our rapidly changing environment,” he said. “Canadian businesses which are owned and operated by the Caribbean Diaspora can benefit from winning contracts in all areas of activity by the CDB. Because of Canada’s membership in the bank, all Canadian businesses are eligible to procure contracts from us.”
Following a Canada-Commonwealth Caribbean Conference in 1966, a recommendation was made that a study be conducted to investigate the possibility of creating a financial institution to serve the Commonwealth Caribbean countries and territories. The report, submitted by a team of experts in July 1967, recommended the establishment of the CDB with an initial capital of $50 million.