Integration of the Caribbean energy services markets could help to make businesses more competitive and reduce costs for project development and hence, eventual prices to consumers. This should be a focus for CARICOM in the implementation of the Single Market and Economy.
Except for Trinidad & Tobago and Suriname, the Caribbean region has very high electricity prices, with electricity mainly being generated from expensive imported fuel oil or diesel power stations. Many governments and businesses in the region argue that these high electricity prices negatively effect the competitiveness of their businesses and make it difficult to compete with other countries.
Most regional governments are looking to renewable energy sources and to imports of natural gas as a means to reduce electricity pricing. Jamaica, in particular, has been successful in switching from fuel oil and diesel generation to wind, solar and imported LNG for its electricity generation. They have also made investments in battery storage to help deal with the intermittency of the renewable sources of electricity generation.
There has been a lot of emphasis at CARICOM on helping governments get the right national policy and legal environment to make this switch to renewables and to natural gas. International lending agencies have also provided a lot of technical advice and expertise to help get the right national policy framework.
There has been a lot less emphasis on making sure that energy services are able to be traded freely across CARICOM countries. The Energy Chamber of Trinidad & Tobago believes that this is a major missed opportunity and focus in this area will help to make energy services more competitive and reduce costs and increase efficiency.
There needs to be a focus on really empowering the free movement of people, and in particular skilled energy sector workers. Workers in this sector often have skills developed on the job or through vocation qualifications and may not have the typical academic certification anticipated by a “skills certificate” regime.
The energy industry in Trinidad & Tobago has placed a lot of emphasis on developing vocation qualifications for workers in the sector based on their actual hands-on competency. Getting these national competency qualifications recognised as Caribbean Vocation Qualifications and accepted for CARICOM skills certification would help facilitate the free movement of skilled workers, create new job opportunities for CARICOM citizens and enable better project execution.
There also need to be regulatory changes to allow the free movement of equipment around the region. Service companies often face huge swathes of red tape in moving equipment across borders in the region. Given the small size of economies in the region and the fact that there are limited projects in any given country, it makes good sense to allow pieces of equipment, such as specialised cranes or drilling support equipment, to be able to move freely between countries. Barriers to moving equipment increase costs for project development and make it much harder to plan and execute developments, in both the traditional hydrocarbon sectors and newer renewable sectors. Access to cranes, for example, is a major barrier for wind turbine erection.
Beyond these project-related services, there is the obvious opportunity that exists with the integration of electricity grids. This will be crucial to the effective development of geothermal projects, which have high initial capital costs and require a reasonable sized electricity market to generate the returns needed to attract the necessary investment.
Integration of energy services markets should be a key objective for CARICOM. The Energy Chamber has advocated for this shift at the regional level and we will continue to highlight this opportunity in all our regional engagements.