THE CARIBBEAN ENERGY PROGRAMME programme is one which places a high value on the issue of financing and the mechanisms for supporting financing for energy projects. CARICOM states remain dependent on oil and oil products for a little more than 90 per cent of their energy requirements. There are a lot of opportunities for energy efficient and renewable energy projects within the region, most of which remain untapped.
While all of us wish to move the issue of sustainable energy forward within the region, understanding the importance of sustainable energy matters for development and are tangibly engaging in activities to drag things along, there is that issue of cash and how we can, in a sense, access monies that come at the right price and the right conditions. It’s not just the price of money, it’s not just the cheap money, you want money that is affordable but comes at the right price. And typically, you want monies that will also come at the right time to support your project development in various stages.
Within the CARICOM energy programme, the work activities are aligned along four main thematic parts. Part one is that of information and knowledge management because to a large extent the issue of information and knowledge management is critical to project financing in the sense that it usually costs money to find the information that is required to develop a good project. So, invariably, a lot of what is being done, even in information and knowledge management, links to financing.
The second component is related to capacity building and instituational strengthening, and capacity building also goes to the core of transaction cost reduction for projects. We all understand that it is cheaper to hire somebody in our own countries to do something than to fly in a consultant from outside and that is a significant cost to many projects in early stages. It costs us more and our transaction costs are higher.
The issue of climate resilience and economic resilience is the third component. Adaptation costs money, and the place where the most significant amount of money will come to support our adaptation requirements is going to be from the savings that are derived from the transitioning of our energy systems from the current dependence on oil, which is costing the region on average over US$22 billion per year, to one that is more robust, efficient and dependent on energy from other sources, keeping significant amounts of that foreign exchange in our region and moving those monies into development.
The last issue is the issue of finance. There are many areas that projects require financing for and there are many gaps, many gulfs, in some instances where we have to be systematically deliberate in the way in which we inject financing to support project development. That is why we are working directly with the Caribbean Development Bank and other institutions to identify a project preparation facility that will help to move projects from concept to bankable stage. That is why we are working with multiple partners to coordinate management and identify the opportunities for us properly resourcing our member states, our developers, and our institutions which are involved in project development.
Dr Devon Gardner is programme manager, energy, at the CARICOM Secretariat. He raised these issues at last week’s regional renewable energy financing workshop.