In 2014, the Cuban government announced plans to generate 24 percent of the country’s electricity from renewable sources by 2030, with an installed capacity of up to 2GW. It was an ambitious goal — and in order to achieve it, Cuba would need capital investments of approximately US$3.5 billion. The government’s designation of technology-specific targets and departments in charge suggested that it did not take the challenge lightly.
In the three years since, much has changed geopolitically. For a time, it appeared that the world might be witnessing a thaw in U.S.-Cuba relations, culminating in then-President Barack Obama’s historic visit in 2016 and the death of Fidel Castro a few months later. Now, the inauguration of Donald Trump — a U.S. president who has promised a decidedly less-friendly approach toward Cuba — has cast uncertainty over the future.
Facing a fiscal crisis and with scant foreign reserves, Cuba has little choice but to turn to international investors to achieve its renewable energy targets.
Opportunities and risks abound. Understanding why renewable energy should be developed in Cuba and what the major risks and policy obstacles are will be critical for international investors to assess their potential operations in the country.
Here are four key reasons to be optimistic about the future of renewable energy in Cuba — as well as three potential pitfalls:
1. Cuba Has Abundant Renewable Energy Resources
2. Energy Security Concerns Rise as the Supply of Oil from Venezuela Falters
3. Sky-high Electricity Prices Put Stress on the Cuban Economy, Making Renewable Competitive
4. Cuba’s Growing Reliance on Tourism Means It Needs Cleaner and More-stable Power
There are three major potential pitfalls for international renewable energy investors who consider operations in Cuba.
1. Private Ownership of Renewable Energy Power Plants Remains Uncertain
2. Cuba’s Dual-currency System Poses Difficulties for Electricity Tariff Collection and Convertibility
3. Cuba Is Not a Member of International Finance Institutions