At least two U.K.solardevelopers are among firms targeting opportunities in Cuba following the relaxation of trade relations with the country.
Earlier this month, Hive Energy of Hampshire, England announced it had “become the first British company to secure a major solar project contract in Cuba.”
Union Eléctrica de Cuba, the state electric company, contracted with Hive to build a 50-megawatt solar farm in the Mariel Free Zone, for completion by 2018, the British firm said.
“The contract marks Cuba’s serious efforts to clean up its fuel supply and move away from a dependence on foreign oil to a portfolio of wind, sun and sugar cane,” Hive said in a press note.
“Combustible fuels are also the island’s primary source of contamination, and following five decades of a U.S. embargo, Cuba’s power grid and plants are costly and inefficient. All of these factors have forced the island to look for renewable solutions to support the economy.”
Another U.K. developer, Commercial Funded Solar (CFS), told GTM it hopes to seal deals for 5 megawatts of solar-plus-storage projects in Cuba worth $7.3 million by next March.
CFS last month signed a joint venture agreement with U.K.-based Cuban investment firm Leni Gas Cuba to gauge the market for hybrid renewable energy systems in the country.
CFS chief executive Tim Dobson said the company is targeting Cuba’s commercial and industrial solar sector, and is already looking to install renewable energy systems on three Cuban island holiday resorts.
The company may also target Cuban schools and hospitals in the future, he said. “Leni Gas Cuba will source the opportunities,” noted James Biddle, director of corporate finance at Beaumont Cornish, Leni Gas Cuba’s corporate advisor.
CFS identified Cuba as a potential solar-plus-storage market after a Cuban renewable energy delegation visited Bay Farm, then under construction, in 2013, when Dobson was working on the project on behalf of developer WHEB Infrastructure.
Since then, said Dobson: “We’ve been given a number of projects to look at, and we’re in the process of financing them.”
CFS expects the Cuban market for solar-plus-storage could be worth around $29 million within a year. Dobson said the nation’s network operator is willing to offer power-purchase agreements of between $0.10 and $0.15 per kilowatt-hour, “with storage on the higher end.”
Other U.K. solar firms are also investigating business opportunities in Cuba, he said. Alistair Marsden, commercial director for U.K. renewable energy professional services firm Dulas, said he thinks Cuba "is an interesting market.”
The country is aiming to increase its share of renewable energy from 4.3 percent to 24 percent by 2030, Marsden said. “So there is a commitment to renewable growth.”
This commitment could translate into a potential 700 megawatts of solar PV, he said. However, local content restrictions might hamper immediate growth in the market, he noted.
According to Hive, the country has a PV manufacturing plant with capacity for 14,000 panels a year, and the University of Havana “is studying the prospect of Cuba running its own verification, control and certification labs for photovoltaic cells and modules in the future.”
Nevertheless, Cuba is also likely to be facing increasing costs for importing oil from Venezuela, according to recent reports.
“I would judge that PV and storage ought to make sense," said Hugh Sharman, principal at the Danish energy advisory firm Incoteco.
The country wants to invest up to $3.5 billion in the coming years to boost renewable energy production. But sources say market growth could be difficult to achieve with locally made products alone.
Cuba already boasts a 4.5-megawatt solar plant near Guantanamo, plus a 1-megawatt plant in La Sierpe. A further 8.2 megawatts are being delivered from plants in Cienfuegos, Cantarrana and Cruces, according to local media reports.