A BRIEF (END-OF-DECADE) ENERGY ROUNDUP

1.  What century are we in, again? 

Here’s an amazing fact: over the past 10 years, the retail price of electricity across the OECS has roughly doubled.  And over the same period, most of the energy-sector leaders of the affected countries have done exactly nothing about the fundamental problem.  

This makes the chances quite good that, unless things change drastically and soon, pretty much the same thing will happen again – with one important difference.

What is the fundamental problem?  The problem is that we in the OECS depend on imported fossil fuels for almost all of our energy supply – and there are two things we can say for sure about fossil fuels.  Over the long run, (a) their prices will go up and (b) at current rates of extraction, they’re eventually going to run out.  So guess what will happen to economies that don’t break their dependence on the stuff before those two trends collide?  Ok, in the long run, we’ll all be dead (as British economist John Maynard Keynes is said to have observed), but this isn’t about us.  It’s about the legacy of failure we will leave to future generations if we continue along the present path of business as usual.

Business as usual has been encouraged by the failure of our leaders to see beyond the useful Petrocaribe scheme initiated by Venezuela.  Petrocaribe should have been taken as a short-term expedient to give cash-strapped governments some breathing space to start reducing our dependence on fossil fuels, but it appears to have given some of us the impression that oil can still be had cheaply – with the net effect of increasing our dependence on oil (not to mention our debt) since the scheme was launched.

Think of a serious medical case, accompanied by intense pain.  The attending doctor will prescribe the appropriate painkillers to provide short-term relief, but will also proceed to treat the underlying illness, to ensure a good longer-term outcome.  

It’s that second part that’s not happening in our energy sector and, if this continues, business as usual is pretty quickly going to turn into economic disaster when – and this is the important difference – a future oil price crisis is accompanied by an actual supply shortage of the stuff, worldwide.  At that point, small individual islands in the OECS are not likely to be at the top of the global supply chain.  In short, we won’t be able to get enough oil, even if we can get a low-interest loan to pay for it.

There are a few bright spots: Nevis and Dominica have shown the necessary vision and leadership to actually treat the fundamental problem and are forging ahead with geothermal and wind power projects, some of which are already generating green energy for their citizens.  The other governments are at various stages of either making actual plans to move forward, talking about moving, or simply carrying on with business as usual.

So, let’s summarize.  The OECS energy sector is ending the first decade of the new century, still largely stuck in the old one.  If this continues, our economic development plans and programmes are ultimately useless: it won’t matter how many hotel rooms, airports, highways and mobile phones per thousand people we can boast, because without a secure, reliable and affordable supply of energy, none of these things will matter.  Ten years into the new century, the OECS is staring disaster in the face if our energy sector leaders don’t start following the example of the real leaders – the ones who are looking at the next 50 years, and taking their people towards a truly sustainable energy and economic future.

2. The Electric Vehicles are coming!

On Nov 17^th the Chevy Volt (a gasoline-electric hybrid) was named “Car of The Year” by not one, but two of the most prestigious auto magazines in the US.  Less than 2 weeks later, the European car folks named the all-electric Nissan Leaf as Europe’s 2010 “Car of the Year”.  

The electric car is going mainstream.  Pretty soon, it will be just as easy to buy a hybrid or an all-electric as it is to buy a gas or diesel vehicle now.  What will happen in the Caribbean?

More than half of all fuel imported to the OECS goes into the transport sector.  Three-quarters of that energy is actually wasted, due to the inherent inefficiencies of burning liquid fuels in gasoline and diesel engines.  So, just imagine the huge economic and environmental benefit if we could replace that gasoline and diesel with electricity generated from steam that comes from a hole in the ground?

Pretty soon, that’s going to be happening on Nevis.  Their geothermal power plant, scheduled to be producing power by 2012, will make Nevis the first viable electric vehicle location in the Caribbean.  So ten years from now, when the rest of the Caribbean is yet again struggling with crippling fuel prices (this time quite probably accompanied by actual fuel shortages), some Nevisians will be happily driving around, getting the equivalent of 100 miles per gallon of fuel, without importing a single gallon of fuel to do so.

3.  A home-grown Social Energy Innovation enters the Global Stage

In July 2010, GE, one of the world’s largest companies, launched their Ecomagination Challenge, a global competition to find and fund the world’s best ideas to power the 21^st century smart grid, backed by a US$200 million venture capital fund.

The contest attracted over 3,800 ideas, submitted from more than 150 countries.  One of the submissions was Welectricity, an innovative social network for energy efficiency conceived in and launched from St Vincent & the Grenadines.  And, as the post below reports, Welectricity received an Ecomagination award for consumer innovation, winning the “Best Idea for the Millennial” prize.  Read more here, and have a productive and green 2011!

MAKING EVERY EFFORT TO LOOK INTO THE PRESENT

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.