The Caribbean offers startling contrasts in infrastructure development, from gleaming new cruise ports to power plants bringing electricity to millions of people for the first time. The disparities within the region show how much needs to be accomplished in the infrastructure sector. The Inter-American Development Bank has already invested $2.2 billion U.S. dollars in the Caribbean, with another $165 million to come during the next year.
The need to preserve the Caribbean's natural beauty for tourism also makes clean energy a high priority. Renewable energy technologies are often preferred for new power plants. The challenges posed by coronavirus containment efforts have transformed rather than eliminated the demand for new infrastructure in the region. For example, while demand for electricity and public transport decreased, the need for digital infrastructure and water resources increased. In the long run, we have a positive outlook for infrastructure investments in the Caribbean.
Jamaica is one of our favorite investment jurisdictions in the region. Jamaica managed to continue building its infrastructure during the last decade, despite constraints on spending imposed by fiscal responsibility laws in 2010. Special economic zones and privatizations offer new opportunities, and U.S. firms are highly competitive in the initial design phase. There is an emphasis on increasing power generation capacity and efficiency, but seaports, water facilities, and sewers are also under development.
Jamaica set ambitious targets for using sustainable energy, with a goal of 30% renewable power by 2030. The nation made substantial progress toward that goal, and Jamaica has been a regional leader in the development of wind energy.
The Wigton Windfarm is one of the largest wind power facilities on a Caribbean island and reached a capacity of more than 60 MW in 2016. Jamaica also gets 20 MW of solar power from Content/WRB Solar, and a new 51 MW solar park developed by Eight Rivers Energy Company began operations in 2019.
Haiti faces some of the most formidable infrastructure challenges of any nation in the Caribbean. However, those challenges also represent opportunities for developers and investors. For example, Haiti has over 2,500 miles of roads, but only 600 of those miles have been paved. Work on building a better infrastructure for Haiti is already beginning. Haiti received a $225 million grant from the Inter-American Development Bank to construct roads and bridges.
Haiti's infrastructure needs are not limited to roads. Just 39% of Haitians have access to electricity, and it typically only functions during part of the day. The Inter-American Development Bank is also involved in a $31.5 million program to improve electricity access in Haiti. Moreover, the coronavirus crisis may have a silver lining for Haiti because it reduced the price of oil. Lower fuel prices will help Haiti to deal with the energy crisis that started in 2018 when Venezuela stopped sending subsidized oil.
The Dominican Republic
The Dominican Republic had one of the best performing economies in Latin America and the Caribbean over the last decade. That economic growth led to a significant increase in the demand for new infrastructure in the country. Highlights include a four-lane highway from Santiago to Puerto Plata. More importantly, there is an ongoing demand for more energy.
The Punta Catalina thermal electric power plant adds 750 MW of new power generation capacity and the country also has a 900 MW liquefied natural gas project under construction. Recent plans for 300 MW of renewable energy have also been tendered. Also supportive of the backdrop for investors is the development bank activity in the country. The Inter-American Development Bank recently dedicated $39 million toward improving energy efficiency in the Dominican Republic.
Seizing the Opportunities
Although larger projects get most of the attention, there are Caribbean infrastructure opportunities for firms of all sizes. Even with the challenges that we face during the coronavirus pandemic, the demand for infrastructure in the Caribbean remains strong. However, many firms lack the local knowledge and connections that are necessary to compete effectively. At Latam Energy Advisors, we can help businesses find, evaluate, and manage infrastructure projects in the Caribbean.