Dominica’s geothermal energy project could be facing a major set back in light of French media reports of a supposed withdrawal by Electricite de France (EDF) from the project.
According to France Antilles, the main daily newspaper in Martinique, reports surrounding that move by the Paris-based, largest utility company in the world, have left other project partners startled about the reasons for the withdrawal and fearful about the effects of that decision.
With €65.2 billion in revenues in 2010, EDF operates a diverse portfolio of over 120,000 megawatts(MW) of generation capacity in Europe, South America, North America, Asia, the Middle East and Africa and has been identified as a possible major partner in facilitating the export of Dominica’s geothermal power to Martinique and Guadeloupe.
EDF started on a path towards privatization some years ago but as of 2008, the French government still owned 85% of the company’s shares.
News of the company’s decision to withdraw from the project has evoked strong reaction from politicians in Martinique. President of the Regional Council on Martinique, Serge Letchimy, has written to French President Francois Hollande, stating, “It is with surprise that I learnt that the president EDF has announced the discontinuation of this public enterprise from the project to build a geothermal plant in Dominica in which it had as partners the State of Dominica, Guadeloupe and Martinique regions, L’ADEME, BRGM, AFD and several private French enterprises”
L’ADEME is the French agency responsible for the environment and the control of energy, BRGM, Office for Geological Research and Mining and AFD, the French AID Agency.
The letter continues, “this project which aims to provide 50 MW to Martinique and 50 MW to Guadeloupe, thus reducing their dependence on fossil energies while at the same time saving CSPE (a French taxing mechanism to subsidize electricity rates where necessary) close to 100 million Euros per year, would allow our neighbour, Dominica, to be supplied entirely with green energy.”
Dominica has stated its intention to target a potential output of about 120 MW of geothermal power, 100 MW of which, is to be exported.
Letchimy points out in his letter, “the main reason invoked by the president of EDF has to do with the low profitability of this investment in Dominica…..another reason is that EDF seems to want to concentrate its investments in other projects.”
Some people with knowledge of the energy industry in the OECS believe that the “other projects” include a pipeline by Eastern Caribbean Gas Pipeline company (ECGP) that will bring natural gas from Trinidad and Tobago through Barbados on to St. Lucia, Martinique and Guadeloupe, construction of which is scheduled to begin next year.
A World Bank report on Caribbean Regional Electricity Generation , Interconnection, and Fuels Supply Strategy concludes that the cost to Martinique and Guadeloupe of receiving their fuel from this pipeline would be marginally more than the cost of geothermal power from Dominica.
The President of the Martinique Regional Council admonishes President Hollande that “a decision of such magnitude taken without previous consultation seems to be an unacceptable condescension towards the entire group of partners in this operation, starting with the Dominican State, and in total contradiction with the political engagements which you have taken towards the overseas departments.”
Letchimy expresses complete disagreement with EDF’s decision, reminding Hollande of his stated desire for the development of regional co-operation.
“I will take at the appropriate time, in accord with the Martiniquans, the initiatives which are authorised by economic diplomacy in order to further the economic and social recovery of Martinique.” Letchimy’s letter concludes.
However, one energy industry observer told DNO that Dominica still has a good negotiating position since both Regional Councils have actually put finances into the Dominica geothermal project and also because the project is actually on stream while the ECGP has yet to break ground. He further pointed out that gas is a non-renewable resource which means that the supply could diminish in the future with costs of recovery going up while geothermal power has potentially perpetual life .
DNO will seek comment from the Dominica government on this latest development which threatens to affect the country’s geothermal project.