Saturday, April 3, 2010


The importance of geothermal energy to the Eastern Caribbean’s energy future came into sharp focus last week. 

In a March 22nd press release, West Indies Power, the private developer of the Eastern Caribbean’s first geothermal power project (being implemented on the tiny island of Nevis) announced that Scotiabank had signed on to finance the project, to the tune of US$30 million.

It was a remarkable announcement. A commercial bank? Financing a large renewable energy project? In the Caribbean?

What the seemingly amazing news proves is that renewable energy in the Caribbean is bankable on a commercial basis – and that geothermal is the game-changer in the Eastern Caribbean region. So essentially, St Kitts & Nevis will soon join the ranks of the few truly green, low-carbon countries in the world.

Congratulations to Nevis are in order – and, from the regional perspective, a few comments.

The first is that, in terms of geothermal energy potential, there’s nothing special about Nevis; the Lesser Antilles chain of volcanic islands has long been considered to have large geothermal energy resources. The US-based Geothermal Energy Association (GEA) in 1999 reported that there were 39 countries in the world that “could be 100% geothermal powered”. The eight Caribbean countries on that list are (in alphabetical order) Dominica, Grenada, Guadeloupe, Martinique, Montserrat, St Kitts & Nevis, St Lucia and St Vincent & the Grenadines.

Gerald W Huttrer, a respected authority on geothermal energy (and one of the references for the GEA report) has ranked the islands in order of their geothermal development potential. Nevis is at number 5 – below St Vincent & the Grenadines (which is number 4) and St Lucia (number 2). Guadeloupe, ranked at number 1, already has 15 MW of geothermal power in operation, with plans to increase this to 47 MW by 2020.

But Nevis has come from behind to win the Eastern Caribbean countries race. The Nevis Island Administration first signed a memorandum of understanding with their developer in 2007 and exploratory drilling started in January 2008. By October of that year the geothermal resource had been proven and today – three years after the process started – construction of a 10 MW geothermal power plant on Nevis is about to commence.

The Dominica government has been aggressively pursuing its geothermal agenda, with two exploratory drilling projects in progress, one of which, in November 2009, delivered proof of large geothermal resources. But, despite having signed agreements at the same time as (or even before) Nevis, St Lucia and St Vincent & The Grenadines are still in the locker room; exploratory drilling has not even started on either island.

So here’s the summary of the situation. After decades of preliminary study and some recent specific explorations, it is now fairly clear that the region is sitting on potentially large geothermal resources. If proven, they will be more than sufficient to supply present and foreseeable demand for electricity on the respective islands. Add to this the fact that most of the fuel these islands import is used by vehicles, and the full implications of the story become clear.

Geothermal energy provides the prospect that, if we move to transition our light-duty vehicle fleets to hybrid and electric vehicles, we can replace almost all of our total fossil fuel imports with a green, indigenous energy source. This will eventually happen on St Kitts & Nevis.

The transport sector transition is already happening elsewhere according to Matthew Savage, a director of UK-based Oxford Consulting Partners, an energy, climate change and sustainability firm. At an energy policy workshop in St Lucia last week, Mr Savage opined that, by 2020, he would not be able to buy a gasoline or diesel-powered car from a mainstream car dealer in the UK. By then, he thinks, such cars will be manufactured on an ever-dwindling scale, replaced by hybrid and pure-electric vehicles.

This scenario represents a business opportunity that Caribbean oil companies should now be seriously examining. Their customers in St Kitts & Nevis will soon have the option to buy cars that fill up with electricity, even as some of our governments carry on with business-as-usual while continuing to “make every effort” to “look into” renewables.

Thursday, April 1, 2010


What better topic to discuss on All Fools Day than rationality?

Last week, as part of a consultation on national energy policy in St Lucia, I made a presentation on energy awareness to a roomful of ‘energy sector stakeholders’. The audience was knowledgeable and involved. So, I requested a show of hands of people who knew roughly their electricity consumption at home, in kWh per day.

About 12% of the audience showed hands.

This would seem an unexpected outcome. Given the facts that a) many in the audience have some connection with energy and sustainability issues at work and b) they were attending a workshop on energy and sustainability issues, it should be a reasonable assumption that most of them would be aware of something as basic as their own electricity consumption at home.

Well, practically everything I have read over the past year about behavior suggests that such an assumption would be wrong - hence the outcome. And of course, the problem is obvious: if we don't know how much we are consuming, how can we take steps to reduce our consumption?

The field of behavioral economics, now enjoying a resurgence (ably assisted by such bestselling books as Nudge and Predictably Irrational), explains how surprisingly irrational we humans really are.

Seth Godin wrote a perceptive post about irrationality on his blog today, with an interesting example:

"When Chris Blackwell introduced reggae to the rest of the world (Bob Marley!), it was irrational. That moment in time was the best time to be working with Bonnie Raitt or Jackson Browne, not some unknown spleef-smoking guys from a tiny island in the Caribbean. No amount of rational analysis would have led an investor to back Chris."
Godin’s post inspired me to write this one. Behavioral economists would call that an example of the Bandwagon effect.