Turkey's Karpowership Adds Fourth Thermal Power Barge In Cuba. Company Generating More Than 10% Of Cuba's Electricity. Good For Turkish Companies. Reinforces Cuba's Energy Production Issues.
/NOTE: On 2 December 2021, London, United Kingdom-based Reuters reported: “[In November 2021] An average of 77,000 bpd of crude, jet fuel and gasoline were shipped to Venezuela's top political ally, Cuba.” Unknown is if the four Karpowership vessels dispatched to the Republic of Cuba are accessing oil and/or natural gas produced in the Republic of Cuba.
Argus Media Group
London, United Kingdom
24 November 2021
Cuba obtains fourth power barge to ease blackouts
By Canute James
Turkish contractor Karpowership is installing a fourth thermal power barge in Cuba to help alleviate chronic outages. The barges run on fuel oil procured by the Turkish company, Cuban state-owned utility UNE said. The new barge is located off the coast of the capital Havana and in early December will begin delivering 130MW to the national grid through the Tallapiedra thermoelectric plant, UNE technical director Lazaro Guerra said in a statement.
The first three barges were installed in the bay of Mariel - 40km (24.8mi) west of Havana - since 2019, and the latest will bring total barge-based capacity to 330MW, representing 12pc of the island's current generation, UNE said.
Karpowership is part of Istanbul-based Karadeniz Energy Group. Neither has not responded to repeated requests for comment from Argus.
The additional floating plant will ease Cuba's long-standing power deficit that has worsened in recent months because of a fuel shortage and equipment breakdowns. Some of Cuba's Soviet-era plants burn domestic heavy crude and others use diesel. Cuba has 5.87GW of installed generating capacity, of which 3.2GW is operational, according to UNE. Power generation this week is 2.6GW.
Cuba's fuel deficit has gotten worse partly because of falling oil supply from traditional ally Venezuela. The island's government also blames US sanctions for blocking access credit to purchase parts and equipment to upgrade its generators. "Generation reserves are low and power cuts could get worse if there are other problems with power plants," energy minister Livan Arronte said in commenting on the arrival of the fourth power barge.
Cuba's Caribbean neighbor, the Dominican Republic, is also expanding the use of barge-mounted thermal plants through an agreement with Karpowership to install a 258MW gas-fired facility. The Dominican unit will be berthed outside Boca Chica in the country's south, the Dominican energy ministry told Argus earlier this month. This will be the country's second barge-mounted, gas-fired barge complex.
Independent power producer (IPP) Transcontinental Capital -- a subsidiary of diversified US firm Seaboard -- is installing the 145MW natural gas-fired Estrella del Mar barge to replace an older unit off the coast of the capital, Santo Domingo. Karpowership has not confirmed negotiations with Haiti's state power utility EdF for the installation of barges there.
LINK To Related Analysis
Karpowership From Turkey Extends And Expands Floating Electricity Generation In Cuba; Joining Turkey's Global Ports Holding Which Manages Cruise Ship Terminal In Havana November 19, 2021
Dialogo Chino
London, United Kingdom
25 November 2021
Can the Belt and Road help Cuba overcome its energy woes?
Highly dependent on fossil fuels and imports, Cuba joins the BRI's energy partnership, looking to China to support its transition amid economic troubles
By Gabriel López Santana
On 18 October, Cuba joined the Belt and Road Energy Partnership (BREP) of China’s Belt and Road Initiative (BRI), which seeks to strengthen connectivity in infrastructure and energy investment, and promote cooperation in clean energy and efficiency in participating countries.
Cuba joins Venezuela, Bolivia and Suriname as the only Latin American countries among the partnership’s 31 members, including China.
Cuba’s entry into the BREP comes as the government of Raúl Castro and Miguel Díaz-Canel faces up to the need to renew the country’s ageing energy system, and deals with a considerable decrease in the daily barrels of crude oil sent from Venezuela.
Dependent on fossil fuels
Around 95% of the electricity generated in Cuba comes from fossil fuels, mostly provided by eight thermoelectric plants with an average of more than three decades in operation. Accordingly, less than 5% of the electricity generated in 2020 came from renewable sources, according to data from the national statistics office (ONEI).
But Cuba’s energy system is not only fossil-dependent – it is creaking, too. The long and repeated blackouts experienced by Cubans this summer, caused by failures in their battered electrical system, were one of the main factors for citizens coming out in historic demonstrations across the country on 11 July. According to a study by two Cuban academics, in order to lower the cost of electricity generation and reduce its emissions of polluting gases, the government aspires to have more than 2,000 megawatts (MW) available capacity from renewable sources by the year 2030, with 755 MW coming from biomass plants, 700 MW from solar parks and 633 MW from wind farms. This could also help Cuba achieve greater energy independence, given that 53% of its current electricity generation depends on imported sources. However, project financing will be the main obstacle in an economy that, between January 2020 and September 2021, contracted by 13% (GDP), and has seen a 60% inflation in retail prices – as well as a 6,900% increase in the informal foreign exchange market. Cuba’s goal of generating 24% of its electricity from renewable sources by 2030 is made difficult by its economic circumstances.
Prudent investment from China
Given its six decades of diplomatic and commercial relations with the Caribbean country, a demonstrated willingness to assist economically and beyond, and the recent incorporation of the island into the BREP, China could help set Cuba on the path to its renewable energy goals. President Xi Jinping himself has described Cuba as “a good friend, a good comrade, and a good brother.” Even before the BREP was created, China had already invested in biomass plants, solar and wind farms in Cuba. But these have all run up against obstacles.
This October, Cuba became the 31st member of the Belt and Road Energy Partnership at a conference held virtually in Qingdao, China. The Caribbean nation hopes cooperation with China can help upgrade its ageing energy system.
According to the China-Latin America Finance Database, the first of these investments – a US$60 million loan from the Chinese Export-Import Bank – was approved in May 2015 for the construction of a biomass plant that would use residues from the Jesús Rabí sugarcane mill, in the province of Matanzas. The project, initially proposed to Cuba by the British company Havana Energy, included the construction of four similar plants but ran into financing problems after one of the main investors withdrew. The biomass plant was not built, but the project in general remained afloat after the British firm agreed in 2017 to transfer a majority stake to Shanghai Electric Group, in exchange for financing, technology and labour for another plant, this time at Ciro Redondo, in the central province of Ciego de Ávila. Four years later, this biomass plant is connected to the national energy system but runs below capacity due to delays around sugar harvesting, as well as instability, breakdowns and high temperatures in areas of the factory.
The once powerful Cuban sugar industry is in a deep crisis: of 56 sugar plantations on the island, only 38 participated in the most recent harvest, the result of which was the worst yield in 130 years. The business group Azcuba, the governing body of the sugar industry on the island, declared to the Cuban parliament last year that the construction of two further biomass plants belonging to the same project has been paralysed due to a lack of financing. There are also no reports to date of new Chinese investments in plants of this type on the island, despite Cuba proposing another 18 as part of its Portfolio of Foreign Investment Opportunities 2021. The state of the Cuban sugar sector could determine the future of foreign investments in biomass plants, and endanger the 755 MW that the government aspires to generate from them by 2030.
Mixed fortunes for renewables
In 2017, Shanghai Electric received another US$60 million from the Chinese Export-Import Bank to rescue a solar photovoltaic (PV) park project, Mariel Solar, that the British company Hive Energy had proposed to the Cuban government, and which was also waiting for financing. The park only reported its first results in 2020. According to Mariel Solar’s website, its operation has allowed the Cuban government to save more than US$11 million in diesel costs, as of September 2021.
Slow progress
The park’s official site specifies that, once it has reached its maximum potential, the park could extend these savings to US$20 million a year, even after paying the company for its operations – an amount that represents a third of the Chinese investment. Despite the success of the Mariel Solar park, a total of only 72 PV parks have been built in Cuba, out of 210 planned by renewables development and investment company EDIFRE, with just 12 projects currently under construction. Elsewhere, the La Herradura wind farm in the east of the country, built with Chinese technology and labour, is experiencing delays to imports of parts, and will be put into operation with lower capacity than planned, according to local press reports.
According to Cuban government data, of the 506 MW of renewables that they should have in operation at the moment, only 302 MW is currently doing so. Thus, the dependence on finding Chinese investors to provide significant sums to the island is evident.
Cuba's situation will not change with membership of the Belt and Road Energy Partnership
Will renewables be a sector where China invests further in Cuba? For Luis Carlos Battista, a Cuban lawyer specialising in economy and international business, it should be, but investment is likely to focus on ensuring domestic electricity supply, rather than projects that provide energy to develop local industry. “That this has an impact on the development of other industries in which to invest later is more for the long term,” Battista continues, adding that, for Chinese investors, the benefits of wind and solar are “much more indirect than when they have created refineries, dams or hydroelectric plants in other Latin American countries.”
However, according to Johannes Werner, the editor of business news site Cuba Standard, finding investment to correspond with Cuba’s priorities may be a challenge. He points out that Chinese companies may be reticent to engage in the country, given their preference - and that of most international businesses - to avoid “unreasonable exposures and risks in the pursuit of profit”.
One month after Cuba’s official entry into the BREP, there are as yet no reports of future projects that might help to resolve the country’s energy difficulties. Battista believes that this is because of Cuba’s “inability to pay credit” and to the island having “little potential to become a significant socio-economic partner” due to its current economic policies. Such circumstances leave Cuba with little leverage in negotiating investment. Werner, for his part, does not forecast any dramatic short-term changes. “I do not believe that this situation will change with the Cuban membership of the Belt and Road Energy Partnership,” he concludes.
