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Irina Slav
What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the…
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Cuba is turning into a solar-powered island because of the U.S. naval blockade that is preventing fuel from reaching it. Imports of solar tech from that same U.S. are surging despite the decades-old U.S. embargo on Cuba, and strengthening the case for solar energy—in the absence of any alternatives.
Bloomberg earlier this week cited U.S. Census data showing that exports of solar cells and modules from the U.S. to Cuba topped $6.3 million over the first seven months of the year. This is an annual increase of a whopping 1,070%, while solar imports from China are down by as much as 83% from a year earlier, according to the data.
China is still Cuba’s largest supplier of solar panels and modules, the report noted, but now the United States is emerging as an alternative for individual households and businesses on the island. It is a bit of an ironic situation given President Trump’s attitude to all alternative energy technologies and the fact this attitude prompted action that reduced subsidies for these technologies.
Some would argue this is the right way to examine the commercial viability of technology such as wind and solar. In the absence of a generous subsidy regime, Cuba is being forced by the U.S. blockade—and the embargo—to find alternative ways to generate electricity in order to continue functioning, even barely. And thanks to loopholes in the blockade’s regime, Cubans can buy solar modules from the United States. Related: U.S. and Russia Discuss Reviving Russian Gas Sales to Europe
Indeed, “It is somewhat ironic that Cuba could become an important export market for renewable energy for US companies,” John Kavulich, president of the US-Cuba Trade and Economic Council, told Bloomberg. “Especially considering the White House’s less-than-favorable stance toward renewable energy.”
There are now 144 solar installations in Cuba, with a combined capacity of 1,418 MW, which represents 20% of the nation’s total electricity needs, according to President Miguel Diaz-Canel. However, as one researcher from the University of Texas Energy Institute told Bloomberg, this solar expansion is not being done right.
The reason, according to Jorge Pinon, is that Cuba is not adding utility-scale battery storage to back up the panels during the night and cloudy days. In that, however, Cuba is not that dissimilar from Europe, where solar panel capacity significantly exceeds battery storage capacity. Besides, battery storage equipment is among the many goods that U.S. companies are banned from exporting to Cuba under the U.S. sanctions regime for the island nation. In other words, Cubans do not really have a choice in the battery matter.
This fact provides further evidence that solar technology without battery backup is far from the optimal option for an alternative to hydrocarbons—which is something that European solar-heavy countries have been discovering recently. Negative electricity prices resulting from excess capacity with no battery backup are hurting the profitability of the industry, and earlier this year caused the bankruptcy of the company operating the largest unsubsidized solar installation in Portugal. That installation operated for five years without battery backup.
Meanwhile, the U.S. is not letting up. This week, U.S. forces seized $3 million worth of biofuel that was en route to the struggling island. The fuel was distributed across 90 separate shipments, Reuters reported, adding that the U.S. government is allowing small fuel shipments to reach Cuba in a bid to encourage opposition to the Cuban government.
Apparently, this time there were too many of those. Cuba produces about 40% of the crude it needs for its fuel consumption, which has also helped keep it afloat, as previous suppliers get scared off by U.S. threats of massive tariffs if they continue supplying fuel to the island. Now, they have been replaced by the U.S. itself and its solar panels.
By Irina Slav for Oilprice.com
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