VZCZCXRO8846
PP RUEHGR
DE RUEHWN #0483/01 2221449
ZNR UUUUU ZZH
P 101449Z AUG 09
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 7669
INFO RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS SECTION 01 OF 02 BRIDGETOWN 000483 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EINV PREL XL
SUBJECT: DOMINICA DEBATES THE FUTURE OF ALTERNATIVE ENERGY 
 
REF: A. A: BRIDGETOWN 465 
     ¶B. B: BRIDGETOWN 407 
 
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Summary 
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¶1.  (U) A recently concluded Strategic Speaker Initiative 
(reftel A) brought about a timely  debate within Dominica on 
the best way to manage future alternative energy projects. 
In Dominica, the elephant in the room is geothermal energy, 
which is seen by many as a savior for the country despite the 
significant problems of cost, timelines, rural connections 
and export risk.  Intermediary solutions that are urgently 
needed are downplayed and starved of resources, with the 
notable exception of oil imports from Venezuela.  While 
reducing reliance on foreign fuels and carbon emissions are 
important long term goals for a small cash-strapped island 
looking to brand itself as the Caribbean's 'Nature Isle,' 
possibilities for local job creation and local ownership of 
mini-renewable projects may end up driving the discussion. 
 
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Utility - Answering critics in Dominica 
--------------------------------------- 
 
¶2.  (U) In Dominica, critics frequently attack the U.S.-owned 
electricty company, DOMLEC for being environmentally 
unfriendly, although one-third of their electrical generation 
comes from hydro power, which is still underperforming due to 
damage by Hurricane Dean in 2007.  A recent Embassy-sponsored 
lecture by an expert of renewable energy solutions gave 
DOMLEC the opportunity to confront its critics and get its 
message out about future energy development and the obstacles 
confronting the company's plans.  According to Jason Timothy, 
the generation planning engineer at DOMLEC, the company is 
exploring other rivers for hydro power and testing sites for 
wind generation.  Timothy added that DOMLEC is also exploring 
a plan to allow businesses to generate their own electricity 
through renewable sources, and still be connected to the grid 
-- something they have been roundly criticized (with reason) 
for not allowing in the past under extremely favorable terms 
granted to them when they took over the utility. 
 
¶3.  (U) Geothermal energy has been the hot topic of late due 
to its low operational cost and the possibility of exporting 
energy to the French islands of Guadeloupe and Martinique, 
which could make geothermal production commercially viable 
even on a small island like Dominica.  The serious concerns 
are how to finance a $500 million dollar project with no 
available domestic funds.  There are also heavy risks 
involved in building such a large plant, around 150 
megawatts, that would rely heavily (in excess of 90 percent) 
on export sales, as the domestic market in Dominica is only 
15 megawatts.  There are also concerns that few jobs will be 
created and that, even with cheaper generation, the grid 
still won't reach remote residences that are minimal users of 
electricity.  According to DOMLEC's CEO Collin Cover, the 
average consumer averages a paltry 95 kilowatt-hours, making 
connections outside of urban areas cost prohibitive. 
 
¶4.  (SBU) In addition to the commercial risks, DOMLEC 
complains that the government has thrown obstacles in its 
path, cutting the duration of its exclusive license by ten 
years, from 2025 to 2015.  In an industry that relies on 
heavy capital outlays and a long-term horizon to recoup 
costs, DOMLEC maintains that this new timeline stymies growth 
and discourages spending on infrastructure improvements. 
Moreover, DOMLEC execs say the regulatory commission sets 
price targets that severely limit the amount that can be 
recouped from customers.  According to Bob Blenker, the VP of 
Renewable Energy for Florida-based WRB, the parent company of 
DOMLEC, the company is still exploring opportunities but is 
getting mixed signals from the government on how to proceed. 
 
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Investments by Venezuela 
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¶5.  (SBU)  Despite the general consensus to go forward with 
geothermal energy, Dominica is still increasing its fuel use. 
 With much fanfare, Hugo Chavez dedicated a $35 million 
dollar oil storage and distribution facility on the 13th of 
June (reftel B).  According to Ron Green, the leader of the 
opposition, a plan for an oil refinery is again being taken 
under consideration, despite vociferous local opposition by 
tourism and environmental groups that earlier pushed it off 
the table.  This is an unusual direction for a country that 
is actively pursuing a geothermal plant whose generation 
capacity is 1,000 percent of local consumption needs, and is 
clearly out of line with the 'Nature Isle' marketing strategy 
Dominica has chosen to carve out a niche in the 
highly-competitive Caribbean tourism market. 
 
BRIDGETOWN 00000483  002 OF 002 
 
 
 
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Comment 
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¶6.  (U)  Dominica is blessed with bountiful hydro power, and 
the potential for a large scale geothermal plant.  Still, the 
problems of a mountainous geography, dispersed population and 
minimal consumer use frustrate distribution efforts.  The 
allure of a foreign-financed plant is enticing, but the best 
approach to renewable energy may well rest in simple 
solutions of micro hydro units, residential mini wind 
turbines, and solar panels that would provide local ownership 
and a decentralized system. The efforts by Dominica to allow 
businesses and residences with small solar and wind 
generators to connect to the grid would be an important first 
step in this process.  Local ownership and sustainable 
development are the key to promoting renewable energy 
projects. 
HARDT