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The Caribbean has some of the world’s highest energy costs – now is the time to transform the region’s energy market

by Christopher Barton, Lumas Kendrick, and Malte Humpert

The high and volatile price of electricity is the most important issue in the energy sector. Electricity prices in the Caribbean are among the highest in the world, and they fluctuate greatly with the global price of oil. The primary cause of the high cost of electricity is that most Caribbean countries use diesel and heavy fuel oil for electricity generation. These fuels are expensive and their prices fluctuate greatly based on the global price of oil. The table below shows average tariffs for 2010, 2011, and 2012 for utilities in numerous countries. The table shows that Trinidad and Tobago and Suriname have the lowest average tariffs, followed by the Dominican Republic. The table shows that all other Caribbean countries have significantly higher average tariffs, at levels above US$0.30 per kilowatt/hour.

There is an inseparable linkage between the fiscal crisis confronting the Caribbean Region and the reality of paying some of the world’s highest per capita energy costs. The countries in the region are encumbered with the necessity of importing increasingly expensive oil products for transportation and electricity generation. Covering the ever-increasing cost of energy places enormous pressure on countries whose national budgets are already heavily indebted.  Thus, a new Caribbean energy future is needed. Caribbean leaders in the public and private sectors must focus on taking full advantage of the region’s wealth of renewable energy resources, maximizing energy efficiency, and adapting recent developments in natural gas technology and supply to transform the Caribbean’s energy market.

On December 5, the IDB is hosting a regional, ministerial-level energy conference in Washington, D.C. entitled, “The Caribbean’s Energy Future: A Pathway to Regional Fiscal Stability.”   The key objectives of this one-day event are to:  (1) provide a forum to examine the issues associated with the region’s high energy costs and associated impacts; (2) explore options for addressing this problem; and,  (3) set forth a roadmap that will assist the region in developing a cleaner, more cost effective, and sustainable energy matrix.

As an honest broker in the region, the IDB seeks to assist the Caribbean in making the necessary changes in policy coordination, financial structuring, and infrastructure transformation that will usher in this new energy future for the region. This conference is but one small yet crucial step in this transformational process.

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15 Comments

  • avatar image
    Daryl Jackson
    November 18, 2013 Reply

    if there was 1 MWh of electricity produced for every meeting held or 100+ page documents produced on energy, the Caribbean would be energy independent by now. The challenges, constraints and risks associated with a total reliance on oil for electricity generation are well documented and understood. Similarly, the opportunities and benefits that can be derived from moving to renewable energy technologies and greater energy efficiency are quite clear to most. What is lacking is an investment climate which recognizes these realities and promotes private sector risk taking and innovation. Presently much of what happens takes place at 10,000 feet and above with very little - or no - impact on the ground.

  • […] fossil fuels has resulted in high electricity prices for many islands. In the Caribbean, the Inter American Development Bank found that average rates for electricity were 33 cents per KwH, while in many islands the rates were even higher. For example in the Bahamas, electricity rates […]

  • […] fossil fuels has resulted in high electricity prices for many islands. In the Caribbean, the Inter American Development Bank found that average rates for electricity were 33 cents per KwH, while in many islands the rates were even higher. For example in the Bahamas, electricity rates […]

  • avatar image
    Alex Hillman
    May 6, 2014 Reply

    I have been working in solar and wind for seven years in the U.S. We are looking at moving out efforts to the Caribbean, but I cannot tell from the figures you provided what the exact KwH costs are Where can I find a list? This would include distribution as well Thank you Alex Hillman

    • avatar image
      kafiluddin
      September 1, 2015 Reply

      Hi Alex , Can you contact me today or tomorrow? I am working to install more solar energy in Suriname within a couple of months ! You have my email address; my cell # is +597 8903400 Kindest regards Eric Kafiluddin 01-09-2015

  • […] islands also pay dearly for their energy. Caribbean electricity tariffs in 2012 averaged $0.33 per kWh, according to Inter-American Development Bank (IDB). In contrast, the average retail price in the […]

  • […] islands also pay dearly for their energy. Caribbean electricity tariffs in 2012 averaged 33 cents per kWh, according to Inter-American Development Bank. In contrast, the average retail price in the United […]

    • avatar image
      michelle
      April 28, 2015 Reply

      I only read about past tariff rates. What are the current rates like for the Bahamas? Has the Bahamas been more accepting of PV in current months?

  • […] islands also pay dearly for their energy. Caribbean electricity tariffs in 2012 averaged $0.33 per kWh, according to Inter-American Development Bank (IDB). In contrast, the average retail price in the […]

  • […] lack access to modern and reliable electricity services. Those that do have access are charged rates significantly higher than global averages, further dampening the country’s potential for economic […]

  • […] lack access to modern and reliable electricity services. Those that do have access are charged rates significantly higher than global averages, further dampening the country’s potential for economic […]

  • […] lack access to modern and reliable electricity services. Those that do have access are charged rates significantly higher than global averages, further dampening the country’s potential for […]

  • […] lack access to modern and reliable electricity services. Those that do have access are charged rates significantly higher than global averages, further dampening the country’s potential for economic […]

  • […] island states often have some of the highest electricity prices in the world. Unless they happen to be sat on big oil or coal reserves (and most aren’t), […]

  • […] are powered almost entirely by fossil fuels, and small island states are known to have some of the highest electricity prices in the world. Since most of these islands aren’t located above oil or coal reserves, […]

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