ents per pound, and companies merged, mills shut. We closed 100 of our 156 sugar mills and moved some of the more modern equipment to those that stayed open. The reorganization helped make our industry more energy-efficient. With the 2000 harvest, we became self-sufficient in electricity, and in 2002, began selling the excess to the grid.
What’s the plan to get to 14 percent of Cuba’s electricity produced from sugar waste and biomass?
The plan is to install 25 high-efficiency, co-generation plants in select sugar mills and to increase energy efficiency at all the mills. The new co-generation plants [with a combined 872MW capacity] are forecast to produce electricity year-round, both from stored bagasse and other biomass.
Initially, the new plants will burn sugar waste and marabu, the invasive plant that has taken over much of Cuba’s farmland. Longer term, there are plans through the Agriculture Ministry to grow bio-forests of eucalyptus and other plants to use as biomass.
Today, most of Azcuba’s electric generating units have a capacity to generate 2MW or less. The new co-generation plants will be larger, with capacities of 50 MW or even 62MW in the case of the Ciro Redondo mill in central Cuba. The joint venture Biopower with the UK’s Havana Energy already has started construction at the Ciro Redondo plant, which should come online by early 2020.
[Havana Energy’s CEO Andrew MacDonald has estimated costs for the Ciro Redondo co-generation plant, including studies, at $200 million. He hopes Biopower can develop a total of five similar biomass plants in Cuba at a cost of roughly $800 million.]
We’d like to have all 25 of the new plants start operations in 2027, so there’s a sense of urgency.
Besides Biopower, who will develop the 25 co-generation plants sought?
Azcuba has a unit called Zerus that can invest in joint ventures. It’s a partner in Biopower and is open to other partnerships with foreign investors. Some of the other 25 plants also may be built by the state without foreign partners. We’re now in negotiations to develop 11 of the 25 plants.
Is financing the biggest hurdle? Havana Energy took years to get funded for Ciro Redondo.
Yes. Financing is tough, partly because of the U.S. Helms-Burton law that can affect investors in Cuban sugar mills and other state properties formerly owned by U.S. citizens or Cubans who became U.S. citizens. Ciro Redondo falls under that law, but Havana Energy was willing to take the risk.
Project finance also depends on the reputation, experience, and credit history of the companies investing. Havana Energy was new to these projects, so it needed time. Plus, it had an additional setback: General Electric bought the energy business of Alstom, the French company set to supply Ciro Redondo. [Because of the U.S. embargo on Cuba] we had to re-evaluate that project with a new [non-U.S.] supplier. Shanghai Electric stepped in, and they’re now helping finance the Ciro Redondo plant.
At Azcuba, we’re trying to negotiate as much as we can with companies with a proven record in biomass and the ability to raise funding.
In some nations, biomass plants falter, because private utilities offer very low prices to buy their electricity. But in Cuba, where the state controls both sugar and electricity, it seems you could avoid those conflicts of interest. How does the pricing work to buy electricity from the mills?
The government’s interest is to buy the electricity at a price that ensures benefits both for the investor and the country. The price of a power purchase agreement is negotiated for each project. The foreign investor gets paid in the currency in which they invested, be that euros, dollars or others.
Our system has the advantage that state companies and the government all row in the same direction, so it’s a win-win, especially for the Cuban people. Our electric company shares the same goal to get 24 percent of Cuba’s electricity from renewable sources by 2030 and to reduce oil and gas imports. We all want to be as energy independent as possible and stem the environmental impact of fossil fuel