Renewable Energy Sector Profile - Havana, Cuba
CubaFootnote i is the largest island in the Caribbean Sea, with a 109,884 km2 territory and 11.2 million inhabitants. Energy production, particularly power generation and its sustained growth, constitutes an indispensable element for the country’s economic and social growth.
According to the Cuban National Statistics and Information Office (ONEI), in 2020 Cuba’s foreign trade in goods and services amounted to CA$22.6B, of which 48% were imports.Footnote1 Main imports were concentrated in fuels (CA$2.2B), food (CA$2.2B),machinery and transportation equipment (CA$2.2B), and chemical products (CA$1.1B); while main exports were healthcare services (CA$5.4B); mining products (nickel, cobalt, zinc, and lead ores) (CA$ 1.6B est.); tourist services (CA$1.5B); beverages (rum) and tobacco (CA$439M), food (sugar, seafood, honey) (CA$339M), and healthcare products (biotech and pharmaceuticals) (CA$163M).Footnote2
Cuba is Canada’s largest export market in Central America and the Caribbean with a two-way bilateral merchandise trade in 2021 totaling $981 million. Before the pandemic, over 1 million Canadians visited Cuba in 2019. Canadian exports included mainly cereals (mostly wheat), machinery, vegetables, electrical and electronic machinery and equipment, and oilseeds. Canadian imports are mainly nickel ores, seafood, rum and cigars.
Energy production, particularly power generation and its sustained growth, is a key factor for the country’s economic and social growth. Cuba currently produces around 40% of its fuel needs and imports the remaining 60%, including more than 50% of the fuel consumed for electricity generation.Footnote3 From 2015-2020 these fuel purchases accounted for an average of 22% of Cuba’s total imports of goods and services and came mostly from Venezuela.Footnote4 However, deliveries of Venezuelan oil have dropped to approximately 60% and have become inconsistent as a result of the crisis in that country.Footnote5
Concerns over Cuba's dependence on Venezuela are translating into the need for a fundamentally redesigned energy sector and more flexibility for investors. The pandemic has accentuated Cuba’s need to diversify and move from oil-generated energy to renewable sources of energy (RES).
RES with large potential on the island include solar, wind, biomass (bagasse, agriculture and forestry), and hydropower. Cuba has in place a “Plan Nacional de Desarrollo Económico y Social” (the National Social and Economic Development Plan), which aims to increase the proportion of clean energy output to 37% by 2030 (2,000 MW).Footnote6
These goals are facing significant challenges given Cuba’s financial constraints. By the end of 2021, the program for 2030 was 40% behind schedule (only 303 MW installed compared to the 506 MW goal).Footnote7 In 2021, renewable sources still accounted for just 4.5% of installed power generation capacity.Footnote8
Under Cuba’s RES strategy, solar energy is deemed the most suitable for a fast expansion. There are currently 84 solar photovoltaic parks operational with a 227MW capacity, which account for 2.37% of daily electricity produced.Footnote9 There are also plans to install 100,000 solar water heaters on private homes and 33,000 more in factories, hotels and hospitals.Footnote10
By 2030, Cuba also plans to install wind parks with a 700 MW capacity.Footnote11 Four wind parks are currently operational, with an 11.8 MW capacity.Footnote12 They were built by state companies with cooperation from and with Chinese firms.
Trade of goods and services
Cuba is developing a domestic RES industry, including solar panels, wind turbines, hydro turbines, poles, and boilers for use in small bioelectric plants. This strategy is expected to enable Cuba to integrate domestic products into RES projects, thus reducing import costs and energizing the economy.
Canadian firms interested in supplying technology and consumables to Cuba can explore business opportunities with four import agencies dedicated to supplying the domestic RES industry: ENERGOIMPORT (main importer of the Ministry of Energy and Mines for power generation, transmission and distribution); BK Import/Export (main importer ofGESIME –A state-run holding for companies in the iron and steel industry); Azuimport (the import company of AZCUBA – the state-run holding for companies in the sugar agroindustry), and Cubaelectrónica (the import company for CCE - Empresa de Componentes Electrónicos. The latter manufactures 16,000 solar panels per year, capable of generating around 15 MW.
Opportunities to supply the domestic RES industry include:
- Industrial automation systems
- Boilers and spare parts
- Wind generators
- Photovoltaic cells
- Solar panels
- Welding systems
- Electronic measurement and testing equipment
- Electric vehicles
- Stainless steel profiles and frames
- Electronic components
Engineering consulting services to upgrade industrial process and boost efficiency.
Opportunities for Joint Ventures to manufacture ventilators, over-heaters, hydraulic turbines and other components.
Please refer to the end of this profile to find qualified local contacts.
For more details on how to export to this region, please visit:
Foreign investment promotion has become an important component of Cuba’s development strategy. The Economic Guidelines issued in April 2011 officially re-launched the foreign investment attraction program. This was followed by two important steps aimed at expanding foreign investment inflows: the creation of the Mariel Special Development Zone (Sept 2013), and the promulgation of a new Foreign Investment Law (April 2014). Both moves brought tax and operational incentives to foreign investors compared to previous legislation.
Renewable energy is among top priorities for the attraction of foreign investment and the Cuban government recently made rules more flexible to encourage their inflow. Foreign investors are now allowed 100% ownership of wind and solar farms, and foreign wholly-owned companies in clean-energy projects are now exempted from profit taxes for eight years, paying then a reduced profit tax rate (20%). These companies are also exempted from customs duties for equipment and material imported during the construction stage of their businesses.Footnote13
More details on business opportunities and key contacts can be found in the following link: http://www.procuba.cu/en/invertir/oportunidadesneg and https://www.minem.gob.cu/energias-renovables.
Key Cuban partners
- Regulator and designated Institution for Renewable Energy
- Minister of Energy and Mining (MINEM)
- Unión Eléctrica
- Development and Manufacturing Groups
- GESIME (Iron and Steel Industry Trust)
- GELEC (Electronics)
Market and sector challenges
While Cuba offers opportunities in this sector, it is a complex market and not one recommended for first-time exporters. Companies looking for a quick sale may be disappointed. Bureaucratic processes, including approvals, tend to be complex, slow and opaque. Historically, it has been difficult to secure payments in a timely manner, this tendency has considerably worsened making Cuba an extremely risky market. The deep economic crisis that Cuba is currently going through has greatly exacerbated its ability to pay foreign investors/exporters.
Other challenges experienced by foreign investors include absence of financing, given that Cuba lacks access to the world financial system, and the poor credit quality of UNE, which is the sole buyer of heavily subsidized electricity. The three “P”s to doing business in Cuba – and to achieving success in this market - are patience, perseverance and partnership. Due diligence is a must.
Two other factors which tend to work against greater Canadian trade interest in Cuba are the long payment terms often required by Cuban import companies (360-720 days’ terms are common) and Canada’s limited credit facilities. The Cuban market is very price sensitive; there is generally no willingness to pay more for better quality.
Prior to the COVID-19 outbreak, Cuba was going through an economic crisis caused by a number of factors including the tightening of U.S. sanctions, the disruption of oil supply from Venezuela, and stalled economic reforms. The country was already experiencing an acute shortage of hard currency, which has led to delays in payments to suppliers and investors. The measures taken to combat the pandemic and its impact on the global economy have taken a further toll on the Cuban economy, negatively affecting key hard currency earners, such as tourism, remittances, trade and investment.
As a response the government is accelerating the implementation of reforms to provide more autonomy to State enterprises and more room for private businesses. These reforms allow some state enterprises, including import companies, access to profits in hard currency to reinvest in their operational needs.
Current Canadian participation
Two Canadian companies are currently active in the RES sector in Cuba. Deltro Group Ltd. from Ontario has signed a BOO (build, own and operate) contract with UNE (Unión Eléctrica) to build and run a 100 Mw solar farm and a 50 Mw Battery Energy Storage System.
Brais, Malouin & Associates (BMA), a Quebec engineering firm specialized in combustion, energy efficiency and numerical simulation (CFD), is developing a modernization project for biomass steam generators operated by the Sugar Industry. The work will significantly increase the role of green energy in Cuba's energy production.”
Although attractive opportunities in the sector continue to exist for Canadian companies of all sizes, experience and a critical mass in terms of size (and investment capabilities) are required to be able to successfully tap into the Cuban market. Competition from other countries is strong, with the exception of the U.S. in light of the long-standing U.S. embargo against Cuba. Companies from Germany, the United Kingdom, France, China and Spain are currently participating in investment projects.
Some RES foreign companies with a presence in the Cuban market include Iberdrola SA, Hive Energy Ltd, Vestas Wind Systems, Shanghai Electric Group Ltd, Yingli Goldwind International Holding HK Ltd, Indian state-run energy company NTPC Ltd and Havana Energy.
Special relationships established by Cuba with other “like-minded countries” play an important role in making business decisions. Therefore, favourable treatment can sometimes be granted to operators from China, Russia, Iran and other countries offering soft credits.
Payment terms in Cuba vary, but expect payment terms of between 360 days and 720 days on unconfirmed letters of credit, which are the norm. Economic reforms allow some State enterprises, including importing firms, access to profits in hard currency to reinvest in their operational needs, which to some extent have positively impacted payment terms to foreign trade partners. However, the impact of Covid-19, combined with U.S. Sanctions have worsened its payment capacity.
Export Development Canada (EDC) is active in Cuba, but their mechanisms to support Canadian exporters are limited. You should speak to EDC about your needs but also speak to your bank in parallel. If there is no bank or EDC involvement, then Canadian companies exporting to Cuba must be comfortable in assuming Cuban government payment risk.
The Canadian Commercial Corporation (CCC) manages revolving contracts that facilitate sales of certified Canadian exporters to selected Cuban buyers in the tourism and sugar industries. As part of this program, CCC actively helps to match Canadian suppliers with Cuban customers, arranges for the transfer of Cuba payment risk to Canadian financial institutions, and assists in resolving contractual issues. Contact firstname.lastname@example.org to verify if your company meets the preliminary requirements to participate in the program.
Trade events offer the best and fastest way for Canadian companies to promote their goods/services in Cuba, to explore business leads and to liaise with Cuban importers and key government officials. The following trade events are related to Clean Technology and might be of interest for Canadian exporters and investors in the RES sector:
Renewable Energies Cuba
Subject: Use of RES technologies and products
Dates: June 24-26, 2022
Venue: Pabexpo Exhibition Hall
Remarks: Specific sector fair
International Fair of Havana (FIHAV 2022)
Subject: Multisector trade fair
Dates: November 14-18, 2022
Venue: Expocuba fairground
Remarks: International multisector fair.
Canadian government contacts
Embassy of Canada to Cuba
Trade Commissioner Service
Senior Trade Commissioner: Ada Luz Rodríguez
Trade officer: Ernesto Victorero
Trade Assistant: Marianne Arrue-Urra
Ministerio de Energía y Minas (MINEM) – Ministry of Energy and Mines
Dirección de Energías Renovables
Contact: Rosell Guerra Campaña, Director
Unión Eléctrica (UNE) – State-run electricity generation, transmission and distribution monopoly
Dirección de Negocios
Contact: Pedro Barbachán, Director
Energoimport – Main import enterprise for electricity generation, transmission and distribution equipment and inputs.
Departamento de Inteligencia Comercial
Contact: Neida Martín, Especialista
AZCUBA (Grupo Empresarial Industrial del Azúcar) – State-run holding for companies in the sugar agro-industrial sector
Dirección de Negociaciones
Contact: Lourdes Castellanos, Director
AZUIMPORT –Import enterprise for the AZCUBA state-run holding company
Dirección de Gestión Comercial
Contact: Elizabeth Padrón, Especialista
GESIME (Grupo Empresarial de la Sideromecánica) - State-run group of companies in the steel and mechanics industry
Dirección de Negocios
Contact: Raúl Díaz Cordeiro, Director
BK Import/Export – Import enterprise of the state-run group of companies in the steel and mechanics industry
Dirección de Mercadotecnia
Contact: Clara María Estrada, Directora
Cubaelectrónica - Import enterprise of the state-run group of companies in the electronics and home appliances industry
Dirección de Mercadotecnia
Contact: Abel Delgado Riesgo, Director
Empresa de Componentes Electrónicos – State-run company manufacturing electronic components
Contact: Sergio Paz Fuentes, Director
Ministerio de la Agricultura (MINAG) – Ministry of Agriculture
Dirección General de Ingeniería
Contact: José Suárez, Director Deneral
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