Power policy

Jamaica is seeking to cut its dependence on oil by diversifying its electricity mix. The country’s Ministry of Science, Energy and Technology has unveiled a 20-year Integrated Resource Plan (IRP), committing Jamaica to generating half its power from renewables by 2037 with at least 1,600 megawatts (MW) of clean capacity.

The country has approximately 210 megawatts of clean power under development, including 176 megawatts of solar and wind, plus 34 megawatts of hydro, waste-to-energy and biomass. The government has yet to release details on how to respond to upcoming requests for proposals (RFP), although a draft version was submitted in 2021. The last time Jamaica issued an RFP was in 2015. The draft RFP states a 20-year duration rate for all power purchase agreements (PPAs) and auctions are scheduled to be held in 2022 for 437 megawatts of capacity, including PV and wind.

Jamaica has a tax package which exempts solar panels, inverters, wind turbines and support accessories, and other items from payment of general consumption tax (GCT) and VAT. A number of these items are also free from import duty, and others have been eligible for a reduced import duty rate of 5% since 2006. A specified list of items was exempt from import duty, although this subsidy ended on May 31, 2021.

Power prices and costs

Jamaica is home to some of the highest-priced power in the Latin America and Caribbean region. In 2020, the average commercial electricity price slipped 18% from the prior year to $210.53 per megawatt-hour (MWh). Industrial and residential electricity prices stayed relatively flat in 2019 but rose in 2020 to $235.78/MWh (+7%) and $309.90/MWh (+3%), respectively.

Power market

Jamaica consumed 4.7 gigawatts-hours (GWh) of power in 2021, with 13% generated by renewables. The country has replaced several inefficient oil plants, reducing dependency on oil and diversifying the energy matrix. It has also commissioned the 37-megawatt Paradise Solar photovoltaic project.

Private utility Jamaica Public Service (JPS) – in which the government owns a 20% stake – controls 60% of power generation and 100% of transmission and distribution services on the island. Other participants may enter as independent power producers (IPPs) and sell electricity to JPS. The largest IPP in the country, Jamaica Energy Partners (JEP), is responsible for 20% of the country’s generation, with six further IPPs responsible for the remaining 20%. All PPAs are set for a standard 20-year duration and with a “take and pay” clause.

Doing business and barriers

Jamaica’s national electrification rate in 2020 was 100%, according to the World Bank. The country’s peak demand dropped slightly, from 660 megawatt-peak (MWp) in 2019 to 632MWp in 2021. To achieve its longer-term clean energy target, the government is developing new frameworks for the power sector, including technical parameters developers can use in responding to planned RFPs.

Clean energy development in Jamaica faces the same challenges as other potential investments in the country: corruption, crime, and bureaucratic red tape. That said, official barriers to the development of renewables in Jamaica are relatively low. Consumers with rooftop solar PV systems may participate in the JPS net billing program and receive the JPS avoided-cost rate plus 15% for power delivered to the grid. As of the end of 2019, 803 customers with renewable energy self-generation were grid-connected, constituting 17 megawatts of capacity.

Jamaica attracted $345 million in new-build clean energy investment from 2010-21. Wind power accounted for the highest share, with $180 million, followed by solar with $130 million. Wind investment peaked in 2015 due to renewable energy auctions. In 2019-2020, Jamaica received no significant clean energy investment, but that is expected to change once the country issues RFPs to hit its clean energy target. In 2021, investments returned as Jamaica received $1.8 million for a solar project.

EV market

Jamaica is one of the largest markets for vehicles in the region with a total passenger vehicle fleet of over 550,000 units in 2021, and it is rapidly growing, creating an opportunity for EVs. The electric vehicle fleet is still under 100 units, representing under 0.0001% of the total vehicle fleet.

EV policy

Jamaica’s target for clean transport aims for 12% of the public vehicle fleet to be electric vehicles (EVs) by 2030. However, further policy developments are expected as the country expands its intention on advancing the EV market. The first step taken toward this was the completion of the EV Framework in partnership with the Inter-American Development Bank in 2020.

Battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hybrids are exempt from the special consumption tax in Jamaica, and BEVs are exempt from the general consumption tax. Import tax reductions (from 30% to 10%) are available for up to 1,000 EVs yearly until 2027.

Buildings market

As a Caribbean country, Jamaica does not have a significant heating market. Buildings measures focus mostly on improving current energy intensity levels.

Buildings policy

Jamaica’s National Energy Plan intends to reduce energy intensity by 50% by 2030 versus 2008 levels. To do so, the country has laid out several policies and measures that have both been implemented or are set to be. The Energy Security and Efficiency Enhancement Project was developed in partnership with the World Bank. The new Electricity Act is to be developed in following years.