Opportunities for in

Policy Dialogue between the and the IDB Cahal Pech Room, Radisson Hotel, Belize City May 16, 2013 http://www.iadb.org

The Inter-American Development Bank Discussion Papers and Presentations are documents prepared by both Bank and non-Bank personnel as supporting materials for events and are often produced on an expedited publication schedule without formal editing or review. The information and opinions presented in these publications are entirely those of the author(s), and no endorsement by the Inter-American Development Bank, its Board of Executive Directors, or the countries they represent is expressed or implied.

This presentation may be reproduced with prior written consent of the author. Outline of the Presentation

Challenges

Current situation of the Energy Sector

Untapped Energy Efficiency (EE) and Renewable Energy (RE) potential

Main barriers to unlock Energy Efficiency and Renewable Energy

Conclusion and Possible Outcomes Challenges . Energy Planning. . Need for reliable baseline data to develop concrete action plans. . Limited Energy Efficiency and new Renewable Energy measures and projects. . Sustainability of Indigenous . Limited indigenous petroleum remaining, if no further finds are made. . Electricity Prices are high in Belize, by LAC Standards (2nd highest after Nicaragua in Central America). . Electricity Subsector Sustainability. Improve financial and technical performance. . Electricity Coverage is estimated at 90%. High cost and remoteness are the primary reasons for communities that do not have electricity. . Regional Integration . Interconnection with Mexico which has proven to be a reliable source in times of need. The GoB may seek an interconnection to SIEPAC as an opportunity to enhance a reliable power supply network in the country Current situation of the Energy Sector (1) Electricity generation and costs by source

MWh 600,000

500,000

400,000 CFE $0.15 BEL Diesel 300,000 Belcogen $0.12 Belcogen

200,000 BAL CFE BECOL $0.10 BECOL 100,000 Hydro Maya $0.07

0 $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 US$/KWh

Belcogen, BECOL, and Hydro Maya all generate below the cost of fossil energy from CFE (Mexico)

Source: 2011 BEL Annual Report Current situation of the Energy Sector (2) Electricity supply and electricity tariffs . Opportunities to diversify energy . Reduce energy costs, and total matrix, including EE energy expenditure 2011 Electricity Supply, by source BEL Diesel 1% $0.35

$0.30

$0.25 From Mexico 2011 Commercial Tariffs (USD) $0.20 CFE 35% $0.15 $0.10 BECOL 47% $0.05 $0.00

Belcogen 14%

Hydro Maya 3%

Sources: BEL 2011 Annual Report, OLADE Current situation of the Energy Sector (3)

Sustainability of Indigenous Petroleum . Belize’s crude oil reserves between 7 and 20 million barrels . 5 years of indigenous oil remaining, at the current production rate

Policy options: . Improving the royalty management in order to maximize the exploitation of the resource . Establishment of environmental safeguards to mitigate risks that will arise with the exploitation of the resource, particularly in off shore drilling

. To set up a solid institutional and regulatory framework to foster the attraction of investors Untapped Energy Efficiency (EE) and Renewable Energy (RE) potential

Lack of baseline data available, but using some assumptions: . Experiences in other Caribbean and Central American nations show that EE can reduce electricity consumption by 15-25%

Also opportunities to develop economically viable renewables ongrid and off grid to improve electricity coverage: . Hydro (in addition to existing) . Biomass cogeneration (in addition to existing) . Wind . Solar Photovoltaic (PV) panels, solar water heaters (SWH)

…however, resources must be documented first 4 barriers block Belize’s EE and RE potential:

• No reliable baseline of energy consumption Information • Lack information to make informed choices about EE and RE

• Need to improve regulatory framework Regulatory • Limited capacity to implement energy policy

Market • Limited affordable access to EE and RE equipment

Financial / Fiscal • Limited access to financing

…but they are not unbeatable. Options to overcome information barriers

Energy Efficiency Renewable Energy

Current Limited information on Lack of renewable resource Situation electricity consumption and assessments and feasible EE opportunities RE pipeline

Develop an energy baseline Conduct least-cost RE Potential assessment assessments, barrier analysis Measures Conduct EE audits to develop and identify pipeline an EE Action Plan Provide information on Provide information on • Financing mechanisms • Financing mechanisms • Least-cost EE technologies • Workshops to validate and • Outreach and awareness disseminate study findings

Potential EE Action Plan RE Action Plan Outcomes EE opportunities identified Feasible RE pipeline identified Options to overcome regulatory framework barriers

Energy Efficiency Renewable Energy

Current Lack of incentives for EE Lack of incentives for RE Situation

Develop a policy to transform Rules to transform distributed Potential EE into investment RE into investment Measures opportunities opportunities

Tariffs should promote EE while Credible framework for private preserving BEL’s viability sector investment in RE

Potential Government and households Utility taps into new investment Outcomes save energy opportunities while reducing Utility taps new opportunities costs Options to overcome market barriers

Energy Efficiency Renewable Energy Limited market development for Current Limited market development for RE equipment and skills Situation EE equipment and skills No connection with SIEPAC

Potential Building code that mandates EE Businesses becoming partners Measures with the developed financing Definition of skills and mechanisms equipment standards for EE Definition of distributed RE Audit guidelines, training, and standards institutional strengthening Information on costs and benefits of joining SIEPAC

Businesses can find new Potential Consumers will be able to opportunities to invest in RE Outcomes access more advanced EE skills and equipment Consumers can access dist. RE Options to overcome financing barriers

Energy Efficiency Renewable Energy

Current Limited financing for EE Limited financing for RE Situation

Financial tools to unlock EE Dedicated grants to spur RE Potential potential development Measures

Leverage of donor financing for Leverage of donor financing for EE RE

Use of financial tools to unlock Government or private sector EE potential can invest at net fiscal benefit EE measures in public buildings Greater access to finance for RE Potential and street lighting can free up Outcomes Reduce fossil fuels imports for fiscal space from energy power generation savings Reduce fossil fuels imports for power generation Conclusions and possible outcomes

. Preliminary estimations show potential savings of 6,800 GWh or US$ 610M of savings over 2013-2042 with the implementation of RE and EE (to be ratified by Technical Cooperation (TC) results (IDB- financed TC currently executing)).

. EE measures and RE projects can create fiscal space by: – Reducing energy costs, – Leveraging grant funding for piloting and start-up activities in RE and EE, and – Accessing concessional financing for national-level implementation. . Sustainability of indigenous petroleum could be a potential source of revenue, if environmental and social safeguards are in place Thank you

Christiaan Gischler Senior Energy Specialist – Energy Division Inter-American Development Bank [email protected] +1 (202) 623-3411