New Law in Cuba Makes Investing in Renewable Energy Sources Compulsory – Global Issues
HAVANA, Dec 12 (IPS) – With Decree 110, published on November 26, Cuba made it mandatory for large consumers, whether public or private companies, to invest in the use of renewable energy sources, while the country is facing energy difficulties. it’s bad.
By law, public and private economic players, representatives of foreign institutions and organizations must ensure in new investments that are considered “big consumers of energy companies” that part of the electricity they use during the hours of sunlight comes from renewable energy sources.
If they cannot install solar panels, due to the infrastructure of their buildings, these organizations must make contracts with the government’s Unión Eléctrica – guarantee of production, transmission and sale of electricity – and connect to photovoltaic parks.
Violation of these provisions may result in fines, interruption of electric service for up to 72 hours and other sanctions.
“This step shows the failure of the policy of incentives for investment in renewable energy sources. It may appeal to the general public, but it does not change the fact that the transformation of the power matrix has been imposed with an iron fist,” Daniel López, a self-employed Havana resident, told IPS.
Businesses that are considered large consumers – those that, in the last 12 months, use an average of 30,000 kilowatts (KW) or 50,000 liters of fuel – will have three years to make the investment to meet the 50% requirement for daytime use.
Reactions on social media followed the news quickly: many internet users celebrated the announcement, others were skeptical about its implementation, and a significant number feared the impact it could have on the private sector.
“Does it work to provide better service or increase my productivity so that I pay more (by investing in solar panels), not just taxes? How many businesses will we lose because of this decision? Investing in Cuba is getting harder,” commented user Horus in an article on the matter, published on Cubadebate, the country’s most controlled news website.
Indeed, the law may discourage business in small industries or production areas that tend to use a lot of electricity, or even make businesses raise the prices of some products and services to recoup investment costs.
As of 2020, this Caribbean island nation of 10 million people has been facing major difficulties in meeting its domestic electricity demand through its own generation plants.
The instability of the electricity system has been so evident that, in less than two months, Cuba has experienced three blackouts – the latest on Wednesday 4 December – leaving hundreds of thousands of people without power for days.
Where there are no incentives
The Patio El Triunfo project, located in the capital municipality of Regla, is an example of a private business that can be self-sufficient in renewable energy sources. It has installed photovoltaic panels with a generation of 10 kilowatts (KW), as well as solar heaters and dryers, and a 0.5 KW wind turbine.
This “clean” energy supplies the daytime needs of the house and the four businesses that are rented on the property, including an auto mechanic’s workshop and a wiring shop.
Although the workshops have been in existence since 2010, in 2018 the project started independent electricity production, more than what is sold to Unión Eléctrica.
The leader of this program, Félix Morfis, who is also the representative of Regla of Cubasolar, a non-governmental organization that has been promoting the use of renewable energy sources in Cuba since 1994 to replace the polluting environment, criticizes the prices of solar panels and the legal obstacles to obtaining credit and buying them.
“It seems that the Cuban government does not care about people who install solar panels. They advertise it, they hype it up, but in reality there is nothing in hand,” he told IPS.
In the retail markets of the state-owned company Copextel, a basic module to generate one kW costs 2,551 MLC, a freely convertible, real currency whose reference value is a dollar.
The average salary in Cuba is 4,648 pesos, about US$38.7, based on the official exchange rate of 120 pesos to one dollar.
In 2021, the Ministry of Finance and Prices issued Decision 359, which set the price of energy – from renewable sources – delivered to the National Electricity System (SEN) by private producers in the residential sector: 3 pesos per kilowatt hour (kWh) , about 0.025 dollars at the exchange rate official.
In October 2023, the same ministry approved Resolution 238, which doubled that amount.
“They pay us 6 pesos (US$ 0.05) per kWh, but what I use, they charge me with the standard system. They sold it to me at a high price and paid me less. There is no motivation,” added Morfis.
The “standard system” that Morfis talks about is the continuous fee that works in the residential sector, which after exceeding 450 KWh of accumulated consumption, starts to cost more than six pesos per KWh, until it reaches 20 pesos per KWh (approx. US$ 0.17). ).
In any case, it is a subsidized price, according to the authorities, so that the cost of paying for electricity through the national electricity system is slightly lower than importing or buying solar panels in foreign currency. In the end, it is more profitable not to invest in renewable energy sources.
However, more and more people are investing in solar panels with batteries, and private businesses selling these devices are expanding due to frequent power outages and fuel shortages.
With no new cards in hand, the government has put investment in renewable energy sources through Decree 110.
“The most difficult thing is how to make it easier for all companies to pay for these panels,” Néstor Pérez, a member of the Patio El Triunfo project, told IPS.
Overview of renewable energy sources
In addition to increasing energy production and reducing the burden on the government, this new law aims to reduce dependence on imported oil.
Since 2019, when the government issued Decree-Law 345 “on the development of renewable sources and efficient use of energy”, this policy has been important.
Cuba aims for renewable energy sources to make up 24% of its energy matrix by 2030.
President Miguel Díaz-Canel announced on November 27 that more than 2,000 megawatts (MW) of photovoltaic power, equivalent to two million KW, are planned for the next three years.
However, of the 19,825 gigawatt hours (GWh) generated by 2023, 46% will come from thermal power plants and 12.6% from using thermal energy from natural gas fired with oil, according to data from the National Statistics and Information Office (Onei).
Accordingly, 13.8% was produced by gensets, electric generators connected to the system that use diesel and fuel oil, and 22.7% by six floating factories provided by the Turkish company Karpowership.
Only 0.5% comes from hydroelectricity plants and 1.2% from wind and photovoltaic power.
© Inter Press Service (2024) — All Rights ReservedOriginal source: Inter Press Service
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