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Solving Jamaica's energy problem key to economic recovery, growth

Published:Sunday | October 27, 2013 | 12:00 AM

Dr Douglas Lawton, Contributor

In Germany, the Institute for Solar Energy and other partners recently announced a new world record for converting sunlight into electricity. This was in response to a growing challenge to the international competitiveness of Germany's export-based economy. Export of goods and services make up more than 50 per cent of Germany's gross domestic product (GDP). The issue of cheaper sources of energy impacts companies involved in the export and other sectors, and impacts the standard of living of Germans on the whole. Competitors such as the United States have been able to compete more effectively due to cheaper sources of energy.

Germany has managed to produce a solar cell with 44.7 per cent efficiency. These solar cells achieve more than twice the efficiency of conventional power plants. The technology is currently being used in solar-powered plants located in areas with a high percentage of direct radiation from the sun, in 18 countries including Italy, France and South Africa. Germany's successful management of its economy has enabled average annual GDP growth of 1.3 per cent, since 2003. Although modest, this is a remarkable achievement in light of the meltdown of the world's economies and other social factors.

Germany is not the only country that has successfully tackled the issue of energy. Bedevilled by ideological wars in years past, Chile has emerged an international game changer. Averaging growth in excess of four per cent annually for the past decade, Chile is now ranked the 30th most competitive country in the world, has the highest nominal GDP per capita in Latin America, and is regarded a high-income country.

Since the 1980s, Chile began the process of establishing legislation and a liberal framework, regulating the energy industry and encouraging competitiveness. This move enabled private investment in energy generation, transmission and distribution on a competitive basis. To date, Chile has the most diversified energy sector in South America. Sources of power include: hydro-electricity (33 per cent), oil (13 per cent), gas (30 per cent) and coal (20 per cent). Chile is currently building an LNG terminal, gas-fired and coal-fired thermal plants.

insufficiently harnessed energy

On the other hand, little has been done in Jamaica to diversify its energy sector. After 51 years of independence, Jamaica is approximately 90 per cent dependent on oil imports to satisfy its energy needs. Despite wind and sunlight in abundance, these sources of energy are insufficiently harnessed. Through photovoltaic installations, small companies and private individuals produce solar energy on a small scale to service personal and other needs. There is currently only one wind turbine in operation, initiated in 1996. Located in St Elizabeth, the wind turbine plant produces energy and sells it to the Jamaica Public Service Company (JPS). JPS has monopoly on the supply of electricity in Jamaica.

Monopolies are hard to break in Jamaica, for reasons best known by politicians. However, Digicel has proven that this is possible. In 2001, Digicel rescued Jamaica from the monopoly of Cable and Wireless, the then sole supplier of telephone services in Jamaica. Involvement in Jamaica's communication industry has worked out well for Digicel, and also for consumers. Jamaica is now a cash cow for Digicel, and phone services in Jamaica are significantly improved. A similar opportunity exists in the energy sector. There is grave need in the energy sector. Will the Government fly the gate? Will Jamaican millionaires put their money where their mouths are? Do we have to wait for a foreign investor to show us how to do business?

Jamaica's energy bill is enormous. Foreign exchange is used to purchase oil and other imports. Just imagine the cost of local supplies involving a foreign exchange component necessary to service the needs of Jamaica's three million people. At the personal or family level, electricity bills strongly compete with food and rent for scarce resources. At the business level, the manufacturing and service sectors struggle to compete with countries which have cheaper sources of energy. In my brief lifetime, I have witnessed the closure of several multinational manufacturing plants, two in which I worked. What is Jamaica doing to regain international competitiveness?

Jamaica's hope for resuscitating the manufacturing sector and regaining international competitiveness seems to lie in a dream to find treasures of oil and gas, a dream we all share. However, while holding on to our dream, we are obliged to look at other solutions.

It is a fact that solving our energy problem will solve a host of other problems, and is a key to Jamaica's economic recovery and growth. In this regard, there are lessons to be learned from Germany and Chile. In the meantime, we will be forced to blame the International Monetary Fund (IMF) once again for our economic misfortune.

But we cannot seriously blame IMF for our demise, can we? Ultimately, responsibility and accountability lie at the feet of our leaders.

Dr Douglas Lawton is a counselling psychologist, writer and publisher. Email feedback to columns@gleanerjm.com