As Cuba moves to develop more renewable energy, a joint venture is set to break ground this quarter on the first of five power plants designed to produce electricity from sugarcane waste and the invasive plant marabu.
Developing the project is Biopower, a joint venture between United Kingdom’s private Havana Energy and Cuba’s Zerus SA, a subsidiary of state sugar holding company Azcuba. Biopower aims to start construction on its first 62-megawatt plant at the Ciro Redondo sugar mill in Ciego de Avila province in central Cuba. The plant is slated to start operations in 2019 to supply the national power grid.
Havana Energy formed the joint venture with Cuba’s government in late 2012. But structuring the pioneering project and securing financing took time, said Havana Energy CEO Andrew MacDonald, who has been active in Cuba business for more than a decade. “The big issue we have is that the [US] financial embargo on Cuba stifles investment and makes doing business very difficult,” MacDonald told Cuba Trade. To start building, “we used equity. We couldn’t do project finance because of the blockade.” Investment in project development and the inaugural plant will cost roughly $200 million, MacDonald said, including some funds and equipment to come from China’s Shanghai Electric Co. MacDonald hopes that success at the first plant—and a hoped–for eventual lifting of the U.S. embargo—will facilitate loans and reduce the cost to build four similar plants elsewhere on the island.
Cuba long has made energy from the sugarcane waste known as bagasse. All 56 of the island’s sugar mills now burn bagasse to help provide power for their operations during sugar-crushing season.
Biopower’s plants are more ambitious. They seek to produce electricity year-round both from bagasse during the sugar season and all year from the thorny marabu bush that has invaded much of Cuba’s agricultural land. The electricity would run the sugar mills in season and, more importantly, provide electric power to towns and cities the rest of the year.
“We invested several million dollars in different technologies to harvest marabu and make it into chips for the boilers,” said MacDonald. The dense, hardwood marabu has a low moisture content ideal for burning; burning it would also free up farm land for food crops.
Construction comes as Cuba aims to obtain 24 percent of its electricity from renewable sources by 2030––up from roughly 4 percent today—a campaign accelerated by Venezuela’s ongoing economic crunch. Venezuela has for years provided Cuba with oil at subsidized rates but has recently trimmed support amid its own financial woes. Biomass commands priority in the push for renewable power sources, because unlike wind or solar, energy from plants does not depend on the vagaries of daily weather.
“If you’d asked me three months ago about the future of renewable energy in Cuba, I would have said, ‘It’s going to be a very long road. There are significant issues in terms of financing projects and in risk mitigation,’” says Matthew Perks, CEO of New York-based New Energy Events. “But now, I think the timeline is shorter. There’s a real sense of urgency in Cuba to get this done.” Perks’ firm organized the first renewables energy conference in Havana in September, attracting 200 participants including some 80 Cuban government officials and 80 potential investors from overseas.
Energy specialists are optimistic that renewables can thrive in Cuba and across the Caribbean because the cost of electricity is so high. In other world regions, renewables must be subsidized to compete with energy made from oil and coal. But in Cuba and the Caribbean at large, renewables are already cheaper than conventional energy that depends on imported fossil fuels.
A few island nations, such as the Dominican Republic, already make some renewable energy from exotic plants that have invaded their farmlands. But none are doing so on the scale that Cuba and Biopower propose “with multiple biomass plants,” said Janet E. Hawkes, a biomass and environmental consultant based in New York. “Using invasive species, especially marabu that has a high energy value, for generating power makes a lot of sense, has environmental benefits and is very cost effective,” she said.
Biopower’s progress also sets a precedent for investors interested in Cuba’s clean energy sector. “What’s significant is that there’s a company in Cuba already that has a power purchase agreement and financing for the first phase of its operations,” said New Energy Events’ Perks. “So we know it can be done.”