Economic Considerations for Renewable Energy Application in Trinidad and Tobago's Power Sector

Abstract

Renewable energy (RE) is noted for its socioeconomic benefits as a sustainable source of energy particularly for small island developing states. However, for a country such as Trinidad and Tobago which is relatively rich in fossil fuels, this truism is severely tested. At current costs, RE technologies cannot compete with natural gas for power generation, especially when the latter is relatively cheap and easily available. However, this paper uses a widened economic envelope for assessment of RE, that takes into account the cost of natural gas and the potential benefits of participation in the carbon business. Lost government revenues from incremental gas export plus carbon credits from RE projects that are structured as clean development mechanisms are enough to offset the higher cost of RE. This has implications for the country's energy policy direction in terms of diversifying and sustaining the country's energy sector. We explore the economic, technological and market conditions which are necessary to support RE's penetration into the future energy matrix of the country.