HAVANA, Dec 12 (IPS) – With Decree 110 issued on November 26, Cuba mandates that major consumers, whether state or private companies, invest in the use of renewable energy sources. It gets worse.
According to the decree, representatives of foreign organizations and associations of state and private economic entities must ensure that for new investments considered “major consumers of energy carriers” half of the electricity consumed during the day comes from renewable energy sources.
If the infrastructure on the premises does not allow installation of solar panels, the company must enter into an agreement with the state-owned Unión Eléctrica, which guarantees the generation, transmission and commercialization of electricity, and connect it to a solar power plant.
Violation of these provisions may result in fines, disconnection of electric service for up to 72 hours, and other sanctions.
“This bill reflects the failure of incentives to invest in renewable energy sources. This may be beneficial to the general public, but it does not change the fact that changes in the energy matrix are being imposed with an iron fist,” Daniel López, a self-employed Havana resident, told IPS.
Businesses considered major consumers (those with an average consumption of 30,000 kilowatts (KW) or 50,000 liters of fuel over the past 12 months) must invest over three years to meet 50% of their weekly usage requirements.
As the news broke, reactions emerged on social media. Many internet users celebrated the decree, some were skeptical about its implementation, and many feared the impact it could have on the private sector.
“Is it feasible to provide better service or increase production if we have to pay more by investing in solar panels, as well as in taxes? How many businesses will we lose because of this ordinance? Investing in Cuba is becoming increasingly difficult,” said user Horus in an article on the topic published on Cubadebate, Cuba’s most widely read state-run news website.
In practice, the law may discourage entrepreneurship in small-scale industries or production sectors that typically consume a lot of electricity, or force companies to raise the prices of some products and services to recoup their investment costs.
As of 2020, this Caribbean island nation of 10 million people is facing major challenges in meeting its domestic electricity needs through its production plants.
The instability of the electrical energy system has led to three power outages in less than two months in Cuba, the most recent on Wednesday December 4, which left hundreds of thousands of people without electricity for several days.
Without incentives
The Patio El Triunfo project, located in the capital’s Regla borough, is an example of a private enterprise becoming self-sufficient in renewable energy sources. We installed 10KW solar panels, a solar heater and dryer, and a 0.5KW wind turbine.
This “clean” energy covers the weekly needs of the home and four businesses rented on the premises, including an auto repair shop and lathe shop.
The workshops have existed since 2010, but in 2018 the project began producing autonomous electricity, the surplus of which was sold to Unión Eléctrica.
Félix Morfis, the leader of the project and also head of Regla at Cubasolar, a non-governmental organization that has been promoting the use of renewable energy sources in Cuba since 1994 to replace pollutants, criticizes the price of solar panels and their energy costs. There are bureaucratic obstacles to accessing and purchasing credit.
“The Cuban government doesn’t seem to have any interest in helping people install solar panels. They advertise it, they hype it, but in reality there is nothing,” he told IPS.
A basic 1 kW power module costs 2,551 MLC in the retail market of the state-owned company Copextel. It is a freely convertible virtual currency with a reference value in dollars.
The average wage in Cuba is 4,648 pesos (120 pesos per dollar), which is about $38.7.
In 2021, the Ministry of Finance and Prices published Resolution 359, which establishes energy prices for renewable energy sources supplied by independent producers in the residential sector to the National Electricity System (SEN). It costs 3 pesos per kilowatt-hour (kWh), or about $0.025 at the official exchange rate.
In October 2023, the same ministry approved Resolution 238, doubling that amount.
“They are paying us 6 pesos (USD 0.05) per kWh, but the amount I spend is billed through the regular system. They sell it to me at a high price and pay me low. There is no incentive,” Morfis added.
The ‘normal system’ that Morfis refers to is a progressive tariff applied to the residential sector, starting from just over 6 pesos per KWh and reaching 20 pesos per KWh (about US$0.17) when cumulative consumption exceeds 450 KWh. ).
In any case, these are subsidized prices, according to authorities, so the cost of paying for electricity through the national electricity system is only slightly lower than importing solar panels or buying them with foreign currency. Ultimately, it is more profitable not to invest in renewable energy sources.
Still, more and more people are investing in battery-equipped solar panels, and repeated power outages and fuel shortages have led to a surge in private companies commercializing these devices.
In the absence of a new card, the government imposed investments in renewable energy sources through Decree 110.
“The most difficult thing is how to make it easier for all companies to pay for these panels,” Néstor Pérez, a member of the Patio El Triunfo project, told IPS.
Overview of renewable energy sources
In addition to decentralized energy production and reducing the burden on the state, the new decree aims to reduce dependence on imported fuels.
This policy has been a top priority since the government issued Decree No. 345 on ‘Development of Renewable Resources and Efficient Use of Energy’ in 2019.
Cuba aims for renewable energy sources to account for 24% of the total energy matrix by 2030.
President Miguel Díaz-Canel announced on November 27 that the country plans to produce more than 2,000 megawatts (MW) of solar energy, equivalent to 2 million kilowatts, over the next three years.
However, according to data from the National Statistical Information Institute (Onei), of the 19,825 GWh produced in 2023, 46% was produced by thermal power plants and 12.6% was produced using thermal energy from oil and natural gas.
Likewise, 13.8% was produced by generators, which are generators connected to systems using diesel and fuel oil, while 22.7% was produced by six floating power plants contracted by the Turkish company Karpowership.
Hydroelectric power plants accounted for only 0.5%, and wind and solar power plants accounted for only 1.2%.
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