EARTH, WIND AND FIRE: ST. KITTS GOVERNMENT

C O N F I D E N T I A L BRIDGETOWN 000691

SIPDIS

E.O. 12958: DECL: 11/21/2018
TAGS: ENRG PREL EINV KTDB IR XL
SUBJECT: EARTH, WIND AND FIRE: ST. KITTS GOVERNMENT
PURSUES ALTERNATIVE ENERGY

Classified By: POLECON Chief Ian Campbell, reasons 1.4 (b,d)

--------------
SUMMARY
--------------


1. (SBU) The early success of a geothermal project in Nevis,
a budding interest in wind energy, and a shortage of suitable
land is diminishing the Government of St. Kitts and Nevis'
(GOSKN) earlier interest in pursuing bio-fuels. Nevis,s
geothermal reservoir, which is capable of generating more
than three times the current electrical energy demands for
St. Kitts and Nevis when fully developed, is scheduled to
begin producing electricity in late 2009. Currently, all
power on St. Kitts and Nevis is generated by diesel
generators, leaving the small nation venerable to petroleum
exporting powers and generator malfunctions. Electrical
energy produced using domestic sources will substantially
reduce this influence, and could lead to downstream
investment opportunities for U.S. companies. End Summary.

--------------
ST KITTS GOVERNMENT COOLING ON BIOFUELS
--------------


2. (SBU) According to the Minister of Sustainable
Development, Nigel Carty, the GOSKN,s enthusiasm for
bio-fuels is fading. A recent study by a Brazilian NGO
revealed that 5000 acres of land is needed in order to make
the bio-fuels project feasible. The GOSKN has only
identified a potential 4000 acres for bio-fuel crop
production; this 4000 acres may be further reduced due to a
government push for food security. Farmers previously
producing sugar cane have switched to food crops, with
government support, after the government,s decision to close
down the sugar cane industry.


3. (SBU) The GOSKN,s diminished interest in the bio-fuels
initiative is also due to the recent success of the
geothermal project on Nevis. The Nevis geothermal project
has the potential to generate 150 megawatt hours of
electricity when fully developed. This far exceeds the
country,s combined demand of 40-45 megawatt hours. GOSKN
officials are optimistic about seeing electricity generated
from the project in mid- to late 2009. All electricity in
St. Kitts and Nevis is currently generated by diesel
generators, with consumer electric rates closely linked to
the price of oil. Recently damaged by fire, two of the
generators are not functioning, driving the cost of
electricity even higher. Today, consumers pay approximately
25 cents per kilowatt hour. When geothermal energy comes
online, GOSKN expects to cut that rate in half.

--------------
EXPERIMENTING WITH WIND
--------------


4. (SBU) GOSKN is also conducting a feasibility study of
wind-generated electrical power. Minister Carty said that an
American company, Northstar, has already shipped 14 wind test
turbine towers to St. Kitts in order to conduct the study.
These test wind turbine towers are smaller than the
production turbines and are easily installed in prospective
sites. If the study is successful, the GOSKN plans to
install 15 production turbines, each capable of generating
900 kilowatt hours. Carty believes that, on average, at
least 10 megawatt hours can be generated through wind
production.

--------------
COMMENT
--------------


5. (C) Because of St. Kitts and Nevis current complete
dependence on oil for electric power, they have been open to
influence by petroleum exporting countries such as Venezuela.
As a result, the GOSKN signed on to Petrocaribe and ALBA and
is currently receiving shipments of fuel from Venezuela.
Prime Minister Denzil Douglas, in a recent conversation with
the Ambassador, stated he recognizes Venezuela will expect
payment for this fuel in the future. If GOSKN can achieve
energy independence through wind and geothermal sources, it
will reduce Venezuelan influence and lessen the financial
energy burden on its citizens. The recent cooling towards
bio-fuels is disappointing, but should not be catastrophic in
terms of St. Kitts and Nevis' energy independence. Although
ongoing geothermal exploration appears promising, and wind is
emerging as a strategic back up, it remains to be seen when
electricity will actually be delivered into the power grid.

The bigger question could end up being, what will St. Kitts
and Nevis do with the 100-plus megawatts of excess production
capacity? Therein may lie an investment opportunity for
distribution within the region.

HARDT