Hydroelectric power pitched as lower-cost renewable option

Former Central Bank Governor Dr Delisle Worrell has predicted that efforts to lower prices through the existing system of distributed power supply – currently used by Barbados – will fail.

He is urging Caribbean governments to consider hydroelectric power as a potentially lower-cost route to renewable energy, warning that Barbados’ distributed solar-and-wind model could leave consumers facing higher prices and costly grid upgrades.

“The cost of renewables may rise even further if the country chooses to go the route of distributed power, licensing individual consumers and businesses to supply power to the grid,” the former economic consultant to the International Monetary Fund (IMF) wrote in his September Economic Newsletter entitled Alternative Strategies are Needed to Lower Renewable Energy Prices. 

He said: “It is also evident that the objective of lowering energy costs to the consumer will not be achieved with a system of distributed power supply. 

“The way to afford consumers the benefit of low-cost wind and solar power is to provide incentives for power companies to invest in solar and wind farms with storage, and to distribute electricity through the existing grids in which investment has already been sunk over many decades.

“The less costly alternative is to opt for solar and wind farms operated by an already established power supply company. The company can store the power centrally for distribution through the existing system with no further cost.”

But he said Caribbean countries have mostly opted instead for distributed power supply, which comes with “very high” additional investment requirements.

Dr Worrell also contends that significant infrastructural changes will have to be made to present distribution systems.

“The existing distribution systems, which step down power from central generating stations via substations to consumers, have to be replaced in order to allow large amounts of distributed power to be fed into the grid. A new system must be installed, with sensors throughout the grid reporting to a central highly sophisticated controller, which modulates the balance of power produced and consumed at every node in the network at all times.”

Dr Worrell also cautioned against raising electricity rates to fund the costs of investing in storage and enhanced grids.

“The high costs of a renewable energy system using mainly variable sources, together with a distributed power supply, have now become apparent in many countries which have adopted this strategy. With energy prices already very high, raising electricity rates to cover the finance costs of investment in storage and smart grids may not be the best option for the Caribbean. An increase in tariff rates would lower standards of living and increase costs to domestic producers, making countries less competitive internationally.”

He said evaluation and adaptation in the light of experience are key to the success of the renewable energy strategy.

“The Caribbean experience suggests that the preferred option for the renewables strategy is hydroelectric power, either as the main element in the strategy or as the storage facility for systems that use solar and wind power.”

Dr Worrell noted that energy prices in the Caribbean are more than twice the world average for a majority of countries.

He noted that the most expensive electricity in St Kitts & Nevis, Bermuda, Saba and Bonaire is over three times the world average, adding that the only places in the Caribbean where electricity costs are relatively low by world standards are Suriname and Trinidad and Tobago.

The economist said most Caribbean countries have ambitious targets for switching to renewable energy sources in hopes of reducing energy costs.

“However, as of 2024 only three countries had achieved renewable energy production in excess of 30 per cent of usage  — Belize with 77 per cent, Suriname with 61 per cent and French Guiana with 44 per cent. Suriname has the lowest energy price in the Caribbean (along with Trinidad and Tobago) — about 80 per cent below the regional average — and prices in Belize and French Guiana are also substantially lower than elsewhere in the Caribbean. The thing that distinguishes these three countries is the fact that their main source of renewable energy is hydroelectric power.”

Dr Worrell pointed out that, in contrast, in countries where renewable energy strategies depend on solar and wind, the proportion of renewables in total energy consumption was no higher than 11 per cent and energy prices remained high.

He noted that the important distinction between a strategy based on hydropower and one based on solar and wind is that the latter sources are variable.

“Hydropower systems operate just like fossil fuel plants: full power is available on demand, to be turned on and off as needed. The power is supplied from central generating stations, just like fossil fuel plants, and is distributed through the existing grid.

“A renewable energy strategy based on solar and wind power is more complicated because it requires a form of storage. The power is produced during sunlit hours and when winds reach operational speeds, and it must be stored to be delivered as and when needed. As with hydropower, there are no fuel costs, but the costs of installing, maintaining and operating storage facilities adds to the total cost of delivering variable power to businesses and households.”

He noted that one form of storage facility is an artificial hydro system with two lakes, separated vertically so as to allow power to be generated by releasing water from the header to the lower lake.

He explained that variable power is used to pump the water back up to the header lake. This system is therefore referred to as pump storage.

Dr Worrell highlighted that in Germany variable power is used to pump water into existing hydro systems in Norway, to the benefit of both countries. In the Caribbean, he added, where similar ready-made pump storage options are not available, installing pump storage is a “very” expensive option.

He argued that battery storage is cheaper and more common. “However, batteries have a finite life and battery technology is still evolving. So, battery storage is more costly than first appears, once the risks and costs of obsolescence and replacement are taken into account.” 

Several Eastern Caribbean nations also boast significant geothermal energy resources. In January, Dominica became the first CARICOM member state to generate base load power from geothermal sources.  

 (EJ)