New Law in Cuba Mandates Renewable Energy Sources
HAVANA TIMES – A new decree, published on November 26, requires high-energy consumers in Cuba, whether state-owned or private entities, to invest in renewable energy sources amidst the worsening energy crisis in the country.
According to the regulation, state and private economic actors, foreign institutional representatives, and associative forms must ensure investment so that half of the electricity consumed during daytime hours by “high consumers” comes from renewable energy sources.
If entities cannot install solar panels due to infrastructure limitations, they must establish contracts with the state-run Unión Eléctrica – the entity responsible for generating, transmitting, and marketing electricity – and connect to photovoltaic parks.
Failure to comply with these provisions can result in fines, power outages of up to 72 hours, and other penalties.
“The measure reflects a failure in the government’s policy of incentivizing investment in renewable energy sources. It may benefit the general population, but it doesn’t change the fact that the shift in the energy matrix is being imposed with a heavy hand,” said Daniel Lopez, a self-employed worker in Havana, told IPS.
High-energy-consuming entities – those averaging 30,000 kilowatts (KW) or more of electricity or 50,000 liters of fuel consumption over the past 12 months – will have three years to make investments meeting the 50% daytime consumption requirement.
Public Reaction
The decree sparked immediate reactions on social media: many celebrated the measure, some were skeptical about its implementation, and others feared its impact on the private sector.
“Is it viable to offer better services or increase my production only to have to pay more (by investing in solar panels), in addition to taxes? How many businesses will we lose due to this decree? Investing in Cuba is becoming increasingly difficult,” commented user Horus on an article about the issue published on Cubadebate, the country’s most-read state news portal.
The law could discourage entrepreneurship in small industries or productive areas that typically consume significant electricity. It might also force businesses to raise prices on certain products and services to recover the investment costs.
Since 2020, this Caribbean Island nation of 10 million people has struggled to meet domestic electricity demand with its production facilities.
The instability of the electrical system has been so evident that Cuba has suffered three nationwide blackouts in less than two months – the most recent on Wednesday, December 4. These have left hundreds of thousands of people without power for days.
Challenges and Incentives
The Patio El Triunfo project, located in the Havana municipality of Regla, serves as an example of a private business that self-supplies renewable energy. It has installed photovoltaic panels generating 10 KW, along with solar heaters, solar dryers, and a 0.5 KW wind turbine.
This “clean” energy meets the daytime demand of the residence and four businesses on its premises, including a car repair shop and a lathe workshop.
Although these workshops have existed since 2010, the project began autonomous electricity production in 2018, selling its surplus to Union Electrica.
Project leader Felix Morfis, also a representative of Cubasolar – a non-governmental organization promoting renewable energy in Cuba since 1994 – criticizes the high prices of solar panels and bureaucratic hurdles in obtaining loans to purchase them.
“It seems the government has no real interest in people installing solar panels. They make announcements and give lots of ‘lip service,’ but in practice, there’s nothing concrete,” he told IPS.
At state-run Copextel retail stores, a basic 1 KW generation module costs 2,551 MLC, pegged to the US dollar.
The average salary in Cuba is 4,648 pesos (approximately $38.70) based on the official exchange rate of 120 pesos to one dollar. However, with dollars not for sale, the street price is 328 pesos to one dollar making the average wage just over $14 USD).
In 2021, the Ministry of Finance and Prices issued Resolution 359, setting the price for renewable energy fed into the National Electric System by independent residential producers at three pesos per kilowatt-hour (kWh) (about $0.025 at the official exchange rate).
In October 2023, the ministry approved Resolution 238, doubling that amount.
“We’re being paid six pesos ($0.05) per kWh, but they charge me for electricity at the regular system rate. They sell it to me at a high price but buy it cheap. There’s no incentive,” added Morfis.
The “regular system” he refers to is a progressive tariff applied to the residential sector. After exceeding 450 kWh of accumulated consumption, each additional kWh costs more than six pesos, reaching up to 20 pesos ($0.17) per KWh.
In any case, it is a subsidized price, according to the authorities, so the cost of paying for electricity through the national electrical energy system is infinitely lower than that of importing or buying solar panels in foreign currency. In the end, it is more profitable not to invest in renewable energy sources.
Even so, more people are investing in solar panels with batteries, and private businesses selling these devices have proliferated due to frequent power outages and fuel shortages.
Without new incentives, the government has resorted to mandating investment in renewable energy through Decree 110.
“The hardest part will be facilitating payment methods for these panels for all companies,” said Nestor Perez, a member of the Patio El Triunfo project, to IPS.
Outlook for Renewable Energy Sources
The new decree aims to generate decentralized energy, reduce the burden on the state, and lower dependence on imported fuels.
Since 2019, when the government issued Decree-Law No. 345 on “the development of renewable energy sources and efficient energy use,” this policy has been a priority.
Cuba aims to have renewable energy sources account for 24% of its energy matrix by 2030.
President Miguel Díaz-Canel announced on November 27 that the country plans to achieve more than 2,000 megawatts (MW) of photovoltaic energy within the next three years, equivalent to two million KW.
However, of the 19,825 gigawatt-hours (GWh) produced in 2023, 46% came from thermoelectric plants, and 12.6% from thermal energy using natural gas associated with oil production, according to data from the National Office of Statistics and Information (ONEI).
Additionally, 13.8% came from generator sets operating with diesel and fuel, and 22.7% from six floating plants (barges) contracted to the Turkish company Karpowership.
Only 0.5% came from hydroelectric plants and 1.2% from wind and photovoltaic energy.
This is so wag the tail socialist leadership. Detracts from the fact the government blew away 24 billion on chasing tourism hotels to line their pockets and forgot hotel operations need water, food, and electricity. Wow we are doing something to fix the energy crisis…wag the tail.
Solar is very expensive to install also requires a battery system a store of 25000 sq ft would require a investment of over $400 000 U S in solar panels and$200 000 U S in battery and inverter and charger this not affordable for most small businesses in Cuba