“The Caribbean Case for LNG”

can make these questions impossible to answer – but you don’t have to go at it alone.

S&P Global Commodity Insights has integrated research and solutions to help you navigate the leagues ahead in the natural gas and LNG markets. Our insights span from real-time news, to outlooks out to 2050; from granular pipeline data, to global trade flow fundamentals. Use our data platforms to explore infrastructure developments, compare assets and develop long-term strategy. And, with benchmark price assessments, negotiate with the confidence that only true market value can bring

Where

There is a pragmatic case for incorporating LNG as part of the energy transition in the Caribbean. While sustainable energy has well-defined financial, social, environmental and economic benefits, the region faces significant challenges in making a transition to renewables. Not all energy transitions look the same -one size does NOT fit all. Small Caribbean islands cannot adopt wholesale a standardised model of transition to renewables, as they all have different geographical characteristics and economic circumstances.

While new renewable energy installations may be less costly than imported fossil fuel options, when the cost of energy storage is taken into consideration, the value proposition vanishes. While the use of rechargeable batteries has great future potential, costs have not yet fallen to the level that would make batteries viable for power supply throughout the night. Countries need dispatchable power sources that:

• are controllable (i.e. the generation source can operate to its maximum capacity, or anywhere in between, depending on the needs of the system);

• are firm (i.e. there is a high confidence that the generation capacity is available as needed); and

• have the required flexibility (i.e. power generation can ramp capacity up and down as needed to fulfil supply requirements).

Simply put, the need for dispatchable power and consistently supplied and stable energy at night, along with the cost of new infrastructure and technical capability/capacity issues, limits the economic viability of renewable power generation.

While some countries can potentially utilise continuous renewables such as geothermal energy or hydropower, not all countries have that advantage, only having access to non-continuous renewables.

This is where LNG comes in. CARICOM countries that want to eliminate the use of heavy fuel oil (HFO) and diesel but lack options such as geothermal and hydropower can choose natural gas as LNG to achieve lower emissions and cleaner power. Using LNG can extend the life of existing infrastructure at affordable and (through contracts) predictable costs. Moreover, LNG does not present the storage challenges of nondispatchable energy sources.

Trinidad and Tobago is uniquely poised by virtue of its location and infrastructure to continue to export LNG to both large markets, and eventually, to small-scale markets. Even for Caribbean countries with geothermal and hydro resources, where 100% renewable power generation may be eventually feasible, natural gas can still play a role in the transition. For other net fuel importers, natural gas in the form of LNG can be a cheaper, cleaner substitute than the diesel and HFO currently used, at least until battery storage becomes competitive for sustained night-time supply. For these countries, that time is still far away.