Potpourri of policy and pricing in Caribbean PV markets

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Archipelagos with high levels of irradiation are often the perfect fit to PV. Where limited domestic energy sources exist, this is even more the case with PV competing against expensive diesel generation.

The 27 nations of the Caribbean largely meet these criteria, however other conditions for a prosperous solar industry may not be present. These are the findings of a new GTM Research and MCG white paper into the solar industry in the region that found wide variations in system pricing and relevant policies in the region.

Limited transparency and competition amongst industry players in the region is one of the drivers of the price variability in the residential sector, the report finds, with a lack of experience driving up installation times and costs. Regulatory costs such as local tariffs, duties and administrative costs also add to the variability and to overall costs in the residential space.

While Jamaica had the most widely ranging residential system pricing, Antigua sported the lowest, with system costs of $1.50/W having been reported.

Commercial system prices also range significantly, however the report finds that the commercial segment has the most competitive pricing. The GTM and MCG analysts report that a commercial system costs average $2.88/W, with a high of $4/W in Martinique and a low of $2/W in Barbados.

Increased economies of scale, better access to capital and more competition in the sector is due to the competitive pricing, the report finds.

Costs in the utility scale sector are forecast to fall over time, with average system prices coming in at $2.76/W, only slightly below commercial costs. This is due to the application of a range of technologies at this early stage of the market. The use of single technologies, streamlined development process and the entry of large financial players is predicted to be cost-reduction driver. High interconnection costs in countries such as Puerto Rico has increased the average figure.

On the regulatory front, the GTM/MCG report has founded a mixed bag for solar developers. While some countries have solar market caps, such as Antigua and Barbuda, while others import duty exemptions, such as Jamaica, incentive structures “have failed to provide strong enough value propositions for PV in some countries.” Vertically integrated monopoly utilities are also reported to be resistant to PV, with concerns over grid impacts having been expressed.

In terms of financing, project debt is expensive and tenors short, constraining market growth. A lack of experience with PV and high regulatory and political risk thought to be drivers of the high cost of capital.

The White Paper is available for free download.

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