Jamaica which depends on fossil fuel for its energy sector has performed well to lower its oil dependency. It is estimated that Jamaica to reduce its oil dependency to 50 per cent in 2019.
Jamaica aims to give a boost to its energy sector with a plethora of initiatives that include new energy policy, funding from global peers and a platform to make environment-friendly energy sector. Jamaica’s National Energy Policy is scripted for a boost in investments to implement energy efficiency and renewable energy projects.
Jamaica, which depends on fossil fuel for its energy sector, has performed well to lower its oil dependency. It is estimated that Jamaica will reduce its oil dependency to 50 per cent in 2019. This major shift in energy sources came after Jamaica’s Energy Security and Efficiency Enhancement Project were approved which improved the macro-fiscal situation. As a result, the World Bank directed the limited resources available mainly towards technical assistance, focusing on energy efficiency and renewable energy potential.
Key facets of this policy:
- Technical assistance aided in updating the Electric Lighting Act of 1890 with the modernized Electricity Act in 2015, which encompasses a comprehensive energy strategy that includes renewable energy, biofuels, energy from waste, energy consumption and efficiency, and carbon trading.
- Energy sector agencies were realigned, resulting in better-defined roles, responsibilities, and coordination and updating key players to international best practices.
- Market conditions were established for developing an Integrated Resource Plan (IRP) that projected electricity demand over a 20-year period to help determine generation capacity and technologies needed.
- Expanded and refurbished energy efficiency testing chambers aided compliance with the country’s new energy efficiency standards.
- Renewable energy generation doubled from 9 per cent at project start to 17 per cent (15.4 per cent from large plants) by the end of 2017.
What affects Jamaica’s energy growth
Jamaica’s energy sector had been characterized by high energy costs and high dependence on imported petroleum products (in 2008, 94 per cent of all energy used was imported). In addition, the energy sector was a mix of several private and public institutions, resulting in complicated decision-making processes and coordination challenges. The resulting high levels of inefficiency led to high electricity costs and tariffs.
The country’s goals for improvements included reducing the cost of electricity and eventually lowering prices; lowering the sector’s vulnerability to oil price fluctuations by reducing its reliance on imported petroleum products; strengthening the sector’s regulatory framework by providing clear policy directions, regulations, and incentives; mobilizing private sector financing for energy infrastructure; and reducing greenhouse gas emissions.
How to lead it forward?
When the Jamaica Energy Security and Efficiency Enhancement Project was approved, Jamaica’s fiscal situation prevented any large full-scale approach to address the issues. As a result, the World Bank directed the limited resources available mainly towards technical assistance, focusing on the core issues affecting the sector. These included:
(i) Strengthening the regulatory and institutional framework to improve sector performance, increase private investment, and transition to cleaner fuels (for example, by introducing a liquefied natural gas (LNG) program to support off-oil diversification).
(ii) Developing energy efficiency and renewable energy potential (for example, by expanding the energy efficiency lab testing centre in the Bureau of Standards, carrying out feasibility studies for small hydro sites, promoting wind and solar generation, and providing a line-of-credit for private sector investment in energy efficiency and renewable energy investments).
The population of Jamaica has benefited from:
(i) Having greater energy security through the diversification of the energy matrix and reduced reliance on imported oil.
(ii) Reducing energy costs for the Jamaican population, with the average tariff falling from US$0.40 per kWh to around US$.23 per kWh.
(iii) Reducing the energy cost burden for small- and medium-sized enterprises through energy efficiency measures.
(iv) Providing the overall population with options for obtaining appliances with improved energy efficiency.
The World Bank, through the International Bank for Reconstruction and Development (IBRD), provided US$15 million, of which US$14.5 million were disbursed. Absent prevailing macro-economic constraints, the amounts would have been higher. Under the DBJ line-of-credit, however, a private sector financing market was created, leading 12 additional lenders to participate by extending the financing for energy efficiency and renewable energy of 3.08 billion Jamaican dollars (approximately US$28 million).