Haiti today faces two major energy challenges: a completely dysfunctional electricity sector and a heavy dependency on charcoal. Over 70% of the Haitian population lacks access to electricity, while the remaining 30% are connected to an incredibly unreliable grid. The state-owned utility, EdH is riddled with issues from years of underinvestment and corruption that have resulted in weak distribution and collections infrastructure. In 2017 the Haitian Government established an electricity sector regulator, The National Regulation Authority for Energy (ANARSE), whose mission is to ensure fair and reliable operation and modernization within the industry. Prior to the establishment of ANARSE, there had been no regulating agency to oversee EdH, giving the utility little incentive to operate efficiently. The previous 20 years have been characterized by almost non-existent collections infrastructure, under-maintained generation and delivery assets, and highly inept operations that deliver electricity at exorbitantly high costs.
Haiti has a population of just over 11 million, 55% of whom live in poverty. It has no centralized grid, rather EdH operates 9 regional grids, each servicing major population centers or smaller city clusters. This leaves vast swaths of the country without any hope of access to electricity. Regional grids range in size from 2MW to 20MW, all owned and operated by EdH. Haiti also has 30 village-level microgrids each with less than 500kW of generating capability. Even for those who are connected to the grid, however, NONE receive reliable electricity from EdH on a 24/7 basis. As a result, those who have the means to do so disconnect from their grid and operate independent diesel or heavy fuel oil generation.
Electricity ‘losses’, which in Haiti include technical losses, theft by unauthorized users, lack of payments from authorized customers, or ‘skimming’ of proceeds collected from customers by agents working on behalf of EdH, are a major problem, making it difficult to attract any private investment in the energy sector. In addition, one of the major challenges for many developing countries is the fact that un-electrified populations have limited commercial and industrial opportunities which lowers the demand for electricity. This lack of economic activity makes it difficult for energy projects to be sustainable/financially viable. Project developers therefore need to work closely with the government and local communities in order to capitalize on existing capacity and increase productive uses.
Haiti depends on fossil fuels for 85-90% of electricity generation. Current spend on importing fossil fuels amounts to about 7% of annual GDP, making Haiti highly vulnerable to volatile oil prices. The government’s announcement in July 2018 for the immediate removal of fuel subsidies meant price increases of 38% on gasoline, 47% on diesel and 51% on kerosene. Due to the inevitable social unrest following this announcement, these increases were cancelled, however the elimination of fuel subsidies will occur regardless. While details are still unknown, incremental price increases over a gradual period is recommended by the IMF. The removal of these fuel subsidies creates a stronger argument for increasing renewable electricity generation.
The government has embarked on a plan to develop at least 300MW of natural gas capacity, despite the fact that the country has no existing import or regasification capacity, let alone gas-fired turbines. The costs to build this infrastructure would necessitate unsustainably high power prices and a reliable transmission and distribution network when even a semi-reliable one doesn’t really exist at this time. The government would be better served promoting development of private sector solar plus storage. Unfortunately, the government appears unable to develop adequate incentives which will offset the high degree of risk associated with investment in Haiti.
In addition, falling prices for clean energy portfolios (CEP), in particular, solar photovoltaic and wind power, have allowed renewable generation to become cost competitive with that of traditional, dirtier energy resources. Technology advancements have also led to greater efficiency and higher capacity factors for both technologies. These cost declines make solar PV business cases significantly more attractive even in places like Haiti with weak incentives and non-existent and unsophisticated electricity markets. From 2012 to 2018 solar cost declined by 62%. Haiti’s proximity to the equator leads to long days of high intensity sunlight with little variation throughout the year creating ideal conditions for solar generation.
The spread of Coronavirus poses an existential threat to Haiti. While the country will receive six months of debt relief from the IMF, we have sadly seen some crucial international aid cut off by the US. The development of sustainable energy infrastructure is crucial not only to ensuring long term viable economic growth but a resilient public health system.
Zoe Dawson and Adrian Varga
Both Adrian and Zoe are recent graduates of the NYU Center for Global Affairs Energy Policy graduate program. Before the COVID19 lockdown, they were working with a Caribbean Telecom to study renewables in Haiti. Their interests include power markets, clean electricity, storage, and energy geopolitics.