Introduction
What would you do with “free” land? The primary goal of any developing nation is the elimination of poverty in all its forms. They need your help and will make it easy for you to do business! In this article, you will learn how you can utilize any expertise to expand your market share in the Caribbean, particularly in the energy sector.
Current Challenges
In 2018, the Bahamian government released a report outlining its sustainable development goals, derived from the goals of the United Nations Economic and Social Council. Basically, nothing can function without a consistent supply of power, especially things essential to economic activity in a developing nation such as tourism, banking, and agriculture. This report goes on to describe, in lengthy detail, the problems which are summarized as follows:
Reliance on fossil fuels. The Bahamas’ electricity rates are among the highest in the Latin American/Caribbean region. This is primarily due to the exorbitant import cost of fossil fuels which accounted for roughly 10% of the national GDP in 2011, roughly a 1.2 billion dollar market. The consumers have notoriously protested their light bill like a civil right.
Old technology. Not uncommon to many third world countries, the power generation infrastructure is old. This fossil fuel-based infrastructure must be updated for the integration of renewable technology.
Training technical experts. The future generation must be able to begin, maintain, and enhance these sustainable efforts for development throughout the family islands. This is actually such a big issue, the Tribune, a Bahamian local paper, stated “The Bahamian economy’s inability to grow over the last four years is exacerbating the “brain drain” of this nation’s brightest minds and talents….gifted Bahamians “have no choice” but to stay abroad unless things change drastically.”
Being an archipelago. The unique nature of the Bahamian archipelago means the various power stations across each island operate in a silo, which replicates costs like facility maintenance of generation, transmission, and distribution systems.
Now that we have established the problems and it is time to think of solutions. Below are some solutions that take advantage of today’s existing technology.
Recommendations
Encourage Microgrids. As shown in the figure above, a microgrid in its simplest form can be thought of as a small-scale power grid that operates in a silo or connects to other power grids. Each microgrid is a node in the network and can communicate with one another in a centralized manner via the utility controller, or operate independently. Microgrids have the capability to resolve two of the previously mentioned problems: the reliance on fossil fuels and centralization from being an archipelago. The caveat is the need to store energy and standard for operation requires a technical expert's consultation, which is one of the challenges previously mentioned.
Reduce Brain Drain. Brain drain is a coined term referring to the migration of technical experts from their native country to foreign country indefinitely. How can it be stopped? Brain drain will never stop under a capitalistic society, which is good, and will continue as long as people have access to better opportunities. The keyword here is opportunity. The Bahamas is excellent at breeding talent but falls short in incentivizing the return of that talent. Just as foreign investment is incentivized with tax breaks or even “free land”, talent retention could be incentivized with jobs, startup capital, or crown land. Moreover, foreign investors should be encouraged to utilize local talent residing abroad which will incentivize return by essentially outsourcing both problems simultaneously!
What did the Government do?
The Bahamas, which was recently devastated from hurricane Dorian in the fall of 2019, puts climate change at the forefront of the country's reform policies summarized as follows:
- introduce zero tariffs on solar equipment to promote residential adoption
- implement performance tracking toward 30% renewable production
- promote competition in the generation, supply, and distribution of electricity
- provide a legal framework for the issuance and redemption of securitized rate reduction bonds
Partnerships
- Small Island Developing States (SIDS) gave grant funding to finance the achievement of at least 50% power share from renewables, a 25% increase in efficiency, and a 25% decrease in fossil fuel use.
- Carbon War Room (CWR), a non-profit organization based in Washington D.C in 2014, provided consultation with a 20MW developing solar farm across the various islands including (Eleuthera, Andros, Cat Island, Acklins, Bimini, Inagua, Exuma etc...)
What does the competition look like?
Ha, you are in luck because there is hardly any at the moment! Martin Vogton on Renewable Energy World stated,
“The Caribbean is a prime example of how traditional public procurement of infrastructure services can fail to deliver value for money. The use of public-private partnerships (PPPs) in the region offers the chance to build innovative and less expensive clean energy solutions like solar farms and wind parks."
Thus, countries like the Bahamas make political reforms to accommodate investors as a prime target, especially since their currency keeps pace with the US dollar, unlike any other Caribbean country. Similarly, MPC Capital on Renewable Energy World stated,
"MPC Capital aims to raise USD 90 million from US-based impact investors, institutional investors, and foundations by 2022. The CEO, Ulf Holländer, hopes his company’s commitment will make it easier for US investors to gain access to the Caribbean market."
Conclusion
In essence, this article describes the profitability of solving problems that already have answers in developing nations to profit substantially while dutifully correcting climate change. Commonly known issues such as a heavy reliance on fossil fuels are discussed and unique issues are presented as opportunities for anyone who can resolve them. There seems to be virtually little to no competition in this space, with a market size of roughly USD 1.2 billion waiting to be taken. Will you be the one who gets it?