CLEAN ENERGY CENTRAL AMERICA & CARIBBEAN

www.RECAMweek.com

MARKET REPORT

ENERGY STORAGE
IN CENTRAL AMERICA
&
THE CARIBBEAN

Author: Mariyana Yaneva

Editing: Ivan Shumkov
Renewables Now - December 2017
CONTENTS

• MARKET DRIVERS AND TRENDS 3

• CASE STUDIES OF ENERGY STORAGE SOLUTIONS 4

• UTILITY SCALE ENERGY STORAGE SYSTEMS 5

• MICROGRIDS AND BMT ENERGY STORAGE SOLUTIONS 6

• POLICY & PRICE 8

2
 MARKET DRIVERS AND TRENDS

Many countries in Central America and the Caribbean rely heavily on

imported oil for their energy needs and even with current low oil prices,
electricity prices around the region tend to be three to four times more than
what is paid in the U.S. or other developed countries.

Furthermore, despite the high electrification rates (on average, above 90%,
according to World Bank indicators), off-grid self-generation is commonly
used by large hotels and some commercial establishments because of low
reliability of utilities and frequent power outages. The bulk of the power grids
are also old and not adequately maintained, leading to significant technical
and transmission losses.1

At the same time, the widespread destruction in Puerto Rico and the US
Virgin Islands after hurricane Maria made painfully evident the region’s
strong exposure to climate risks and the need to look for both more
sustainable and more resilient energy solutions. Here, energy storage
solutions come in the spotlight.

Energy storage is a cornerstone tool for enabling the transition from

fossil fuels to renewable energy supply as well as unlocking the benefits
of local generation and a resilient energy supply in Central America and
the Caribbean. What is more, thanks to plunging costs for solar, wind, and
battery storage, small distributed renewable energy systems and increased
efficiency would actually lower the electricity costs on the islands, which
now are some of the highest in the world at USD 0.20–0.50/kWh.2

Replacing or retrofitting the centralized electricity grid with decentralized

renewable power, combined with energy storage, will also reduce the
countries’ vulnerability to major storms, since individual microgrids are likely
to continue functioning even if the grid or other microgrids are knocked out.

This report will provide you with an overview of how energy storage
investment can enable better utilization of both new and existing resources
in the region as well as strengthen the grid against diverse threats, including
natural disasters.

Different use-case scenarios and real-life examples are also included to

demonstrate both the challenges and potential for energy storage in Central
America and the Caribbean.

www.RECAMweek.com 3
 CASE STUDIES OF ENERGY STORAGE SOLUTIONS

An increased development of distributed, intermittent generation sources

such as solar PV and wind power will naturally require increased load
balancing against demand. The good news is that energy storage solutions
find application both in front-of-the-meter (utility & wholesale electricity
market) and behind-the-meter (customer) applications.
The table below outlines some of the most common uses of energy storage
solutions and the associated sources of revenue.3

TYPICAL REVENUE SOURCES AVAILABLE TO DIFFERENT USE CASES

W holesale U tility C ustomer

Demand
Spin/ Distri- Trans- Demand
Energy Frequency Response Resource Bill Backup
U se C ase Arbitrage Regulation (Whole-
Non-spin
Adequacy
bution mission Response
Management power
reserve deferral Deferral (Utility)
sale)

Peaker
replacement
v v v v

Distribution v v v

Microgrid v v v v v v v v v

Commercial v v v v v v v v

Residential v v v

Source: Lazard’s Levelized Cost of Storage Analysis—Version 3.0

In a nutshell, there are currently three identifiable primary markets for

energy storage systems:

1. Utility-scale systems installed on transmission or distribution

networks providing services to grid operators;

2. Behind-the-meter (BTM) systems installed on the customer side of a

utility meter for commercial and industrial (C&I) or residential customers

3. Remote power systems or storage systems operating as part of

isolated electricity networks – nanogrids & microgrids;

www.RECAMweek.com 4
 UTILITY-SCALE ENERGY STORAGE SYSTEMS

As renewable energy generation is more widely deployed, energy storage

solutions are particularly well suited to smoothing the variable output of
renewables and aligning supply and demand to avoid unnecessary curtailing
and waste of energy.

Another major driver for deployment of utility-scale energy storage systems in

the Caribbean is also the need to improve the resilience of the electrical grid.
Recent natural disasters have painfully highlighted the fragility of centralized
grid architecture and this will most probably result in Caribbean communities
opting for more local generation and the use of microgrids to ensure that
they still have power during or after a disaster. A few good examples are
already setting the stage for wider deployment of utility-scale energy storage
systems.

20 MW for AES Dominicana

AES Dominicana, a unit of

AES Corporation, announced
in October that it has put into
operation 20 MW of new battery-
based energy storage systems in
the Dominican Republic. 4

Located on sites in the Santo

Domingo region, each of the two
systems supplied by AES Energy
5. AES Dominicana Los Mina DPP, Santo Domingo, Dominican Republic.
Photo by AES Energy Storage, all rights reserved. Storage has a capacity of 10 MW.
They are the first of their kind in
Central America and the Caribbean, AES said in the news release.

The systems contribute to improving the efficiency and stability of the

National Interconnected Electricity System (SENI) of the Dominican Republic.
They have already helped prevent power grid problems in September when
the island was hit by hurricanes Irma and Maria.

Praveen Kathpal, AES’s vice president of energy storage, said in an interview

that the batteries provided frequency control during the storms, ensuring
second-to-second balancing of supply and demand, and smoothed out
swings in frequency as the hurricane knocked out lines.

www.RECAMweek.com 5
 MICROGRIDS AND BMT ENERGY STORAGE SOLUTIONS

On the residential side, companies like Tesla and Sunnova have demonstrated
that an array of solar panels coupled with batteries can enable a group
of buildings, such as a hospital, or a whole neighborhood, to operate
independently in the case of an outage with the central grid.

Tesla-powered islands

In a Twitter exchange in early October, Tesla’s CEO Elon Musk said that his
company could rebuild the electricity network of Puerto Rico with its solar
and battery systems. 6
“Tesla has done this for many small islands around the world and there is no
scalability limit,” he noted.

7. Hospital del Niño is first of many solar+storage projects going live.

Photo by Tesla, all rights reserved.

The island of Ta’u in American Samoa, for instance, is powered by a Tesla

microgrid, featuring 1.4 MW of solar panels and 6 MWh of battery storage
from 60 Tesla Powerpacks.
Late October, Tesla announced it has successfully restored full power to San
Juan’s Hospital del Niño less than three weeks after Puerto Rico Governor
Ricardo Rossello tweeted on Oct. 6, “Great initial conversation with @
elonmusk tonight. Teams are now talking; exploring opportunities.”

www.RECAMweek.com 6
 MICROGRIDS AND BMT ENERGY STORAGE SOLUTIONS

Sunnova turns to storage in Puerto Rico

Sunnova Energy Corp, a residential solar provider in Puerto Rico, also

announced at the start of October it will be working to send energy storage
systems (batteries) to the island to integrate into existing solar installations.

“Prior to the storm, Sunnova had just under 10,000 systems installed. Right
now, we are working to get those systems back on line and to provide our
customers with battery storage to provide critical electricity services while
the work to restore and rebuild the grid commences,” Sunnova CEO John
Berger said in a statement. 8

9. Sunnova integrates batteries into existing solar installations.

Photo by Sunnova, all rights reserved.

www.RECAMweek.com 7
 POLICY & PRICE

Regulators and legislators in Central America & the Caribbean are

increasingly recognizing the environmental and operational benefits of
renewable energy generation coupled with batteries and have committed
to sustainable energy development to varying degrees. Costa Rica, for
example, is leading with its ambition to be “carbon neutral” by 2021. Many
islands have ambitious plans to transition to renewable energy. Aruba has
a goal of transitioning to a fossil-fuel free energy by 2020. St. Vincent and
the Grenadines plan to generate 60% of electricity from renewable energy
by 2020. St. Lucia seeks to reach 35% renewable energy penetration and
to increase energy efficiency by 20% by 2020. Grenada plans to generate
20% of its electricity and transport energy from renewable energy by 2020.
Barbados has a goal of generating 20% of its electricity from renewable
energy by 2026 and so on.

Most recently, Puerto Rico governor Ricardo Rossello announced that the
island will pursue a 20% to 25% renewables share when it comes to power
generation. 10

This flurry of regulatory activity is largely motivated by the increasing

affordability of renewable energy plus storage facilities.

Since 2010, the cost of batteries has decreased by more than 70% from
about USD 1,000 per kilowatt hour (kWh) to about USD 200 per kWh, at
present.11

At the same time, the levelised cost of energy (LCOE) for both utility-scale
onshore wind and solar photovoltaic (PV) power has contracted by roughly
6% from last year, according to Lazard’s latest annual Levelized Cost of
Energy Analysis (LCOE 11.0).12

“Energy industry participants remain confident in the future of renewables,

with new alternative energy projects generating electricity at costs that
are now at or below the marginal costs of some conventional generation,”
said Jonathan Mir, Head of Lazard’s North American Power Group. “The next
frontier is energy storage, where continued innovation and declining costs
are expected to drive increased deployment of renewables, which in turn will
create more demand for storage.”

www.RECAMweek.com 8
REFERENCES & PHOTO CREDITS

1. Caribbean Energy: Macro-related challenges, IMF Working

paper, March 2016, accessed on November 21, 2017
2. Rebuilding the Caribbean for a Resilient and Renewable
Future, Christopher Burgess, Justin Locke, Stephen Doig at
Rocky Mountain Institute, accessed on November 21, 2017
3. Lazard’s Levelized Cost of Storage Analysis—Version 3.0,
accessed on November 21, 2017
4. AES puts online 20 MW of storage systems in Dominican
Republic, article by RenewablesNow.com, accessed on
November 21, 2017
5. Picture of AES Dominicana Los Mina DPP, photo by AES
Energy Storage. All rights reserved.
6. Tesla can rebuild Puerto Rico grid, Musk says, article by
Renewables Now, accessed on November 21, 2017
7. Picture of Hospital del Niño is first of many solar+storage
projects going live., photo by Tesla, All rights reserved
8. Solar Provider Sunnova Working with Government
Authorities to Provide Power to Puerto Rico, press release
by Sunnova, accessed on November 21, 2017
9. Picture Sunnova integrates batteries into existing solar
installations., photo by Sunnova, All rights reserved
10. Puerto Rico aims at 20-25% renewable power generation,
article by by Renewables Now, accessed on November 21, 2017
11. For Slow-Growth U.S. Electric Utilities, Batteries Could Be
A Power Booster, accessed November 2, 2017
www.standardandpoors.com/ratingsdirect
12. Lazard’s Levelised cost of energy analysis – Version 11.0,
published November 2, 2017

9
 CLEAN ENERGY CENTRAL AMERICA & CARIBBEAN

6-8 MARCH 2018 | Hilton Hotel - Panama City

DISRUPTING DEPENDENCY
IN THE
CLEAN ENERGY PARADISE
RECAM offers a stream dedicated to STORAGE & MICROGRIDS

FOR MORE INFORMATION

ON GETTING INVOLVED
Please contact:
David Sansom Commercial Director
david.sansom@greenpowerglobal.com
+44 (0)203 384 5791

www.RECAMweek.com