- Despite low electricity tariff rates, Trinidad and Tobago is facing energy security concerns and the need to diversify its energy mix due to an over-dependence on natural gas and a highly indebted utility.
- A commitment to sourcing 20% of its electricity from renewables by 2030 would mean scaling investments in solar farms and repurposing natural gas from electricity generation. Achieving this target requires significant legal changes to ensure competitive procurement and enhance transparency throughout the PPA procurement process. This could improve cost-competitiveness, and encourage price reductions and broader sector reforms.
Summary
Trinidad and Tobago has one of the lowest electricity tariff rates in the Caribbean and Latin America. This has contributed to the inertia in its power sector’s development and transition away from dependence on natural gas. Power generation in Trinidad and Tobago is entirely dependent on natural gas as a fuel source. Natural gas has however become increasingly expensive over time, leading to the subsidization of natural gas for power generation. The country’s over-dependence on natural gas for power generation is a cause for concern, as is the centralization of generation in two large power plants located at Point Lisas (Central Trinidad) and Union Estate (South Trinidad). Two national blackouts in 2022 caused by failure of transmission infrastructure have raised energy security concerns and the need to diversify the generation mix.
Trinidad and Tobago’s renewable energy policy is rooted in its COP21 Paris Agreement commitments, which include a target for sourcing 20% of its electricity from renewables by 2030. Renewable energy investments will allow Trinidad and Tobago to redirect its natural gas to higher-value commercial activities such as ammonia and methanol production while meeting its climate commitments. Although the government has made some efforts to realize this target, it is unlikely to be met — especially with a lack of public pressure on the government.
However, there has been some progress. In 2022, a consortium of Lightsource BP, Shell, and BP signed a power purchase agreement — the only one of five existing PPAs that was competitively procured — for the construction of two solar farms. Additional renewable energy investment beyond these installations will be dependent on policy and legislative changes to ensure competitive procurement of future PPAs and enhance transparency throughout the PPA procurement process. This could improve cost-competitiveness, and encourage price reductions and broader sector reforms.
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