For most of the last two centuries, sugar has been a core part of the Cuban economy — even to its detriment, as the island’s leading export depended on the vicissitudes of world demand. It is not without irony then that, in its attempts to create energy from cutting-edge renewable sources, that Cuba aims to produce 14 percent of its electricity from sugar waste and other biomass by 2030 — more than the share it expects from all other renewable sources combined.
State sugar group Azcuba leads the drive to produce renewable energy from biomass. Cuba Trade spoke in Havana with engineer Barbara Hernandez, who heads up electricity generation for Azcuba. She’s focused her career on energy and worked with the government’s sugar entity, formerly the Sugar Ministry, since 1998. The interview, translated from Spanish, has been edited for space and clarity.
What is the current status of Cuba’s electricity production from sugar waste and biomass?
Cuba now produces 4.7 percent of its electricity from renewable sources, and sugar waste generates most of that: 3.7 percent of all the country’s electricity. The sugar energy comes from burning the bagasse waste left after milling the cane and a bit from the chaff picked up in the harvest.
All of Azcuba’s 56 mills can generate electricity from sugar waste. We’re now getting about 37 kilowatt hours of electricity for every ton of cane milled. We use about 85 percent of that electricity for factory operations and provide the remaining 15 percent to the national grid.
Depending on the size of the harvest, we’re now generating between 700 and 800 gigawatt hours of electricity a year. We’ve been increasing energy efficiency at the mills in the past five years or so, in some cases by installing new boilers. So, Azcuba’s electric output rose from 439 gigawatt hours in 2011.
Have the mills always sold excess electricity to the grid?
Sales began after the reorganization of the sugar industry in Cuba. The 1990s were a tumultuous time for the industry worldwide. Prices dropped as low as 4.5 cents per pound, and companies merged, mills shut. We closed 100 of our 156 sugar mills and moved some of the more modern equipment to those that stayed open. The reorganization helped make our industry more energy-efficient. With the 2000 harvest, we became self-sufficient in electricity, and in 2002, began selling the excess to the grid.
What’s the plan to get to 14 percent of Cuba’s electricity produced from sugar waste and biomass?
The plan is to install 25 high-efficiency, co-generation plants in select sugar mills and to increase energy efficiency at all the mills. The new co-generation plants [with a combined 872MW capacity] are forecast to produce electricity year-round, both from stored bagasse and other biomass.
Initially, the new plants will burn sugar waste and marabu, the invasive plant that has taken over much of Cuba’s farmland. Longer term, there are plans through the Agriculture Ministry to grow bio-forests of eucalyptus and other plants to use as biomass.
Today, most of Azcuba’s electric generating units have a capacity to generate 2MW or less. The new co-generation plants will be larger, with capacities of 50 MW or even 62MW in the case of the Ciro Redondo mill in central Cuba. The joint venture Biopower with the UK’s Havana Energy already has started construction at the Ciro Redondo plant, which should come online by early 2020.
[Havana Energy’s CEO Andrew MacDonald has estimated costs for the Ciro Redondo co-generation plant, including studies, at $200 million. He hopes Biopower can develop a total of five similar biomass plants in Cuba at a cost of roughly $800 million.]
We’d like to have all 25 of the new plants start operations in 2027, so there’s a sense of urgency.
Besides Biopower, who will develop the 25 co-generation plants sought?
Azcuba has a unit called Zerus that can invest in joint ventures. It’s a partner in Biopower and is open to other partnerships with foreign investors. Some of the other 25 plants also may be built by the state without foreign partners. We’re now in negotiations to develop 11 of the 25 plants.
Is financing the biggest hurdle? Havana Energy took years to get funded for Ciro Redondo.
Yes. Financing is tough, partly because of the U.S. Helms-Burton law that can affect investors in Cuban sugar mills and other state properties formerly owned by U.S. citizens or Cubans who became U.S. citizens. Ciro Redondo falls under that law, but Havana Energy was willing to take the risk.
Project finance also depends on the reputation, experience, and credit history of the companies investing. Havana Energy was new to these projects, so it needed time. Plus, it had an additional setback: General Electric bought the energy business of Alstom, the French company set to supply Ciro Redondo. [Because of the U.S. embargo on Cuba] we had to re-evaluate that project with a new [non-U.S.] supplier. Shanghai Electric stepped in, and they’re now helping finance the Ciro Redondo plant.
At Azcuba, we’re trying to negotiate as much as we can with companies with a proven record in biomass and the ability to raise funding.
In some nations, biomass plants falter, because private utilities offer very low prices to buy their electricity. But in Cuba, where the state controls both sugar and electricity, it seems you could avoid those conflicts of interest. How does the pricing work to buy electricity from the mills?
The government’s interest is to buy the electricity at a price that ensures benefits both for the investor and the country. The price of a power purchase agreement is negotiated for each project. The foreign investor gets paid in the currency in which they invested, be that euros, dollars or others.
Our system has the advantage that state companies and the government all row in the same direction, so it’s a win-win, especially for the Cuban people. Our electric company shares the same goal to get 24 percent of Cuba’s electricity from renewable sources by 2030 and to reduce oil and gas imports. We all want to be as energy independent as possible and stem the environmental impact of fossil fuels.