Nicholas Newman

Cuba’s power generation capacity is hampered by a severe lack of investment and the continued trade sanctions imposed by the United States, but in typical style it has improvised to make the best of a bad situation. Nicholas Newman looks at how distributed generation has brought some respite to the Caribbean island’s power struggles.

Cuba’s Juragua nuclear power plant, which would have consisted of two 440 MW Soviet VVERs, was under construction in 1992 when its abandonment was announced following the withdrawal of Soviet economic aid
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Cuba’s power sector is in crisis. Despite a recent multimillion dollar investment in a distributed power network, its customers are facing rolling blackouts and desperate orders to save electricity, as Cuba attempts to weather its dire economic crisis.

Current government spending cuts have forced the state-owned utility Union Electrica (UE) to downsize its budget for power station oil imports. For its hard-pressed customers this means regular nights without air conditioning and television.

The main problem is that Cuba lacks a sufficient economic base, which in turn means it is unable to afford and attract sufficiently adequate energy sector investment necessary to increase its gross domestic product (GDP).

The Cuban government would like to blame US trade sanctions as the cause of all its problems. Yes, these trade sanctions, since the 1960 Cuban revolution, have had a devastating effect. The embargo makes it not only difficult but costly for UE to obtain new foreign investment, technology, goods and services necessary to maintain operations.

In 1990, Cuba saw the sudden termination of aid from the Communist Bloc. No longer could UE gain access to cheap imported oil for its power stations, not to mention investment and support for plants that had been built since the revolution.

The resultant economic crisis led to extensive power cuts nationwide, and as a consequence Cuba was forced to make, as Jorge Piñon, energy fellow at the Centre for Hemispheric Policy at Miami University, says, “the myopic decision to switch from fuel oil to heavy high sulphur Cuban crude oil in order to save hard currency.”

Oil was discovered in Cuba in the 1970s, but the nearest refineries capable of converting this heavy oil into fuel suitable for its power stations were located at US-owned refineries on the neighbouring islands of Aruba and St. Croix. The decision to burn this highly corrosive oil caused severe damage to its primarily Soviet era power stations, and resulted in frequent breakdowns and long periods of maintenance shutdowns.

However, by 1998 UE had managed to improve its main oil powered plants availability to around 60 per cent of installed generating capacity, where it remains today.

Cuba’s current capacity

Currently, Cuba’s total installed generating capacity is around 5766 MW, while its seven main oil fired power stations have an installed capacity of 2960 MW. In 2005, these main plants were described by Cuba’s industry minister Yadira Garcia as “obsolescent” and requiring “complex maintenance that would cause blackouts”.

Juan A.B. Belt of the United States Agency for International Development describes UE as “an inefficient enterprise by international standards, with very low labour productivity, high losses and over reliance in liquid fuels”. In many ways it appears to share the same inherent problems that forced Mexico’s president Felipe Calderon to close down the Mexico City state-owned power operator Luz y Fuerza in October of this year.

As stated earlier, the power sector has problems accessing new foreign capital investment, technology and spare parts. However, the European Union suspended Cuban sanctions in 2005 and terminated them in 2008.

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In addition, Cuba has signed deals with its old allies including Russia, China and Venezuela. This has aided UE in its ongoing modernization plans to improve the reliability of its systems, including the modifications to Felton, its largest and newest plant, which is equipped with two Skoda units each with an installed capacity of 250 MW.

Energas – A success story?

Energas SA, a joint venture with Sherritt International Corporation of Canada, operates a small fleet of power stations fueled by domestic gas, and is a recent example of what can be achieved when foreign investors are willing to invest in joint ventures in Cuba, despite the problems of US sanctions.

The Energas scheme consists of three combined-cycle power plants, which have a total generating capacity of 376 MW. Sherritt International expects capacity to increase to 526 MW by 2011. The gas comes from Cuba’s developing offshore oil fields, which were previously flared off and visible from the tourist resort of Varadero, east of Havana. No doubt further expansion will probably depend on the pace of expansion of the country’s oil industry as a whole.

Furthermore, Cuba has other independent powers producers operated by either state enterprises or foreign concession in the island’s mining and sugar cane industries. In 2007, these producers supplied around 446 MW of surplus power to the grid. Cuba is well known for its sugar industry, but what is less known is that the industry has been using sugar cane waste as a fuel for generating electricity for some time. Today, around 22 sugar mills sell power to the grid.

According to Piñon, in future years such biomass technology could make a greater contribution to Cuba’s power generation. He suggests that once the US trade embargo is ended, investors from the United States would be interested in investing in the sugar industry because it would be cheaper to produce ethanol from Cuban sugar cane, than from US corn. The resultant increase in waste could be converted into extra power for Cuba’s future growing economy.

Renewables – hurricane problems!

In addition, at various locations, some 117 MW of power are provided from various renewable power sources technologies, including wind, solar and hydropower

Cuba has a small sized 43 MW hydropower plant at Manicaragua in the central part of Cuba, and in addition there are 26 small hydroelectric plants linked to the grid. Two of these plants date back to 1912 in Pinar Province and 1917 in Guantanamo province. However, further expansion is limited by topography and shortage of sites with sufficient water flow.

For Cuba wind power technology is proving to be challenging when it comes to delivering affordable and reliable power, as operators in other countries have discovered. Unlike Germany and the USA Cuba cannot afford to give massive subsidies to their operators.

Cuba has several wind farms despite not being able to afford the massive subsidies that the USA or Germany give to their operators
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At present, the country has several wind farms, with technology being supplied by a number of countries. The latest to be constructed this year is at Punta Rasa, which has six Chinese-built Golwind S-50 machines, with an installed capacity of 4.5 MW.

However, wind power technology has to overcome two main issues, intermittency and the ability to withstand the hurricanes that hit the island. Currently, Cuba has no way to store the power for later use. Furthermore, the wind power technology UE has bought requires the wind turbines to be packed away when warnings of extreme wind speeds occur during its four-month hurricane season.

However, the US Department of Defence, in partnership with Noresco, an energy service company based in the US, seems to have solved the hurricane problem. In 2005, at the US base at Guantanamo Bay it installed a $12 million, 3.8 MW wind farm on top of a mountain at in 2005. The plant is designed to withstand winds of up to 225 km per hour.

As for solar power, despite a high potential current schemes are only being used on a small-scale as an additional source for buildings including hospitals and schools, and in remote rural areas to power water pumps.

So far the country has installed 7098 photovoltaic systems, with a combined capacity of 2.57 MW. For such technology to be developed on a larger scale however, intermittency issues will again need to be tackled.

The 2005 Energy Crisis

In 2005, after years of insufficient investment and neglect, the power system collapsed once again, causing rolling power cuts, similar to those experienced in the early 1990s. The main cause was the frequent interruptions to supply caused by breakdowns at the country’s main oil fired power stations, and the impact of hurricanes on its long-neglected national grid, which resulted in 130 transmission towers being knocked down in Pinar Province.

This crisis caused widespread economic damage and social unrest. It was not helped by the fact that Cuba’s power system was not only poorly designed but also maintained, with half the transmission and distribution lines being over 25 years old.

Many power plants are distant from main consumption centres, requiring long power transfers with resultant losses. Nor has it helped that a steepening pricing tariff system has resulted in an increasing number of illegal connections to the electricity grid.

Distributed Power in Cuba

In 2005, Cuba began a programme to create a distributed power network consisting of all its small and medium power plants to supplement the power from its main oil fired power stations. This included clusters of new small-sized generators linked at strategic locations, as well as power from independent power producers such as Energas and from renewable power plants.

Today, Cuba’s distributed power network supplies 40 per cent of Cuba’s power capacity. This policy has several ambitions. The first is to remedy the country’s initial power crisis quickly, and the second to create a more robust power system thatis able to meet immediate changes in demand and damage caused by hurricanes.

The most visible response to the 2005 crisis was Havana’s decision to spend $1.2 billion between 2005 and 2008 on several thousand oil and diesel powered 2 MW gensets, from foreign companies such as South Korea’s Hyundai, Daimler Benz of Germany and Spain’s Guascor.

These units are clustered at 116 locations throughout Cuba and are located close to demand centres, as part of a policy to reduce losses in transmission and provide power when the national grid is damaged.

However, due to US sanctions, additional costs were incurred in the delivery, as the ships involved were banned from visiting US ports for at least a year after visiting Cuba. These gensets, which are are grouped together at various locations, are referred to as ‘Grupos Electrogenos’ by UE, which in 2007 had an installed capacity of 1887 MW.

Nevertheless, Cuba’s distributed power network has helped improve the robustness of the network against breakdowns and natural events. While it has not resolved the island’s long-term problems, and does little to reduce its reliance on fossil fuels, the investment in distributed generation has certainly brought about a quick, if short-term, solution to the country energy needs.

Certainly, the Energas project has demonstrated that when foreign investment is authorized to take part, some surprising results can be achieved. Perhaps if other sectors are opened up to foreign investment, similar results could be achieved.

Cuba’s future

Overall, Cuba’s electricity future does not look very promising until an improvement in relations between Havana and Washington takes place. Recent policies have solved short-term issues but not the long-term problems facing Cuba’s power sector. It is clear that it has an insufficient GDP to provide the investment itself and so it will have to look to its big neighbour to the north to provide the scale of investment and technology needed for its power sector if it is to meet its growing economic ambitions.

However, energy experts, such as Piñon, suggest the current power infrastructure will need many billions of dollars of investment, together with significant institutional reforms in order to provide sufficient installed capacity to meet the country’s growing long-term needs.

Cuba will have to start investing in major power infrastructure just in order to maintain sufficient baseload and reserves of power to meet increases in demand. Current investment policy does little to substantially increase total reliable power capacity, even with the economy expected to grow following Fidel Castro’s standing down as president last year.

This means some of the questions that investors will be asking themselves, once sanctions are lifted, is to what extent will Cuba’s new replacement power plant be fuelled by gas, oil, coal? And will the building of the Juragua nuclear power plant be restarted?


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