Investing in Cuba Renewable Energy

Investing in Cuba Renewable Energy
The #1 Reason to Invest in Cuba
Written by Jeff Siegel
Posted July 28, 2015

Sunday marked the 62-year anniversary of the day Fidel Castro sparked
the Cuban revolution.

In Cuba, it's called Día de la Rebeldía Nacional, or Day of the National
Rebellion.

In the U.S., most folks don't take too kindly to references of national
rebellions when they facilitate dictatorships and communist rule.

Though on the flip side, I don't ever remember my high school history
teacher criticizing the violent dictatorship of the overthrown Cuban
president Fulgencio Batista or mentioning the 20,000 or so people who
were tortured and executed during his reign from 1952-1959.

In any event, I'm not here today to celebrate or criticize foreign
government officials or political philosophies, particularly since I
live in a country that is run by tyrants and thieves. President Obama
and our elected officials are no angels.

However, I am looking forward to a new non-violent rebellion that's
taking place right now. And it's one that will pave the way for peace
and prosperity — a good thing for compassionate human beings and
investors that like to align their values with their investments.

¡Dos Oportunidades!

As I've written in the past, investing in Cuba is an exercise in
profitable, ethical investing.

Smart investments made in this stunningly beautiful Caribbean island
offer two important opportunities:

1. The opportunity to get in on the ground floor of new deals that will
facilitate wealth creation for both U.S. investors and the good people
of Cuba.

2. The opportunity to be a part of a peaceful solution to a 62-year-old
dispute that has separated families, sparked violent confrontations, and
wasted a lot of taxpayer dollars.

Now, when it comes to investing in Cuba, I see a handful of great
opportunities: tourism, infrastructure, telecom, agriculture, and
energy. But the latter is where I see some of the best long-term plays.

Fortune Favors the Daring

There are few greater locations for renewable energy than the Caribbean.

Blessed with superior solar resources and steady winds, most Caribbean
islands can generate nearly all of their power needs with renewables.

Throw in some energy efficiency and conservation measures along with
some battery storage, and it's really not out of the question to end the
incredibly inconvenient and highly inefficient reliance on oil — which
has long monopolized the energy economies of the Caribbean.

Today, about 96% of Cuba's power generation comes from imported fossil
fuels. President Raúl Castro has been very vocal about moving away from
this reliance that leaves the nation vulnerable to massive price swings
and, of course, foreign energy supplies.

With free and inexhaustible supplies of solar and wind, it's
understandable that Castro called to get 24% of the island's power from
renewable resources by 2030. He did this last year and has continued to
be a strong supporter of transitioning Cuba's energy mix to one that is
more sustainable, both from an economic and environmental point of view.

Of course, with the opportunity for U.S. companies to invest in
renewable energy development in Cuba, 24% renewables is not really a
lofty goal, and it's one that would likely be surpassed within 10 years.

Due to massive cost declines in solar and wind technologies, coupled
with the fact that much less needs to be invested in infrastructure if
solar and wind resources are utilized in a decentralized manner,
renewable energy is pretty much a no-brainer.

That's not to say Cuba will be totally run on renewables.

Truth is, Cuba is also looking to convert some of its older oil-burning
plants to natural gas. And it's no coincidence that one of only eight
recently approved LNG export permits in the U.S. was for a facility in
Martin County, FL, which is about 100 miles north of Miami.

Yet again, from a long-term perspective, investment dollars would be
better spent on energy efficiency, renewables, and battery back-up. But
I don't dictate these solutions — I merely report on them and, of
course, profit from them. And regardless of how much progress is made on
the natural gas front, there's no denying that there's huge opportunity
for renewable energy development with Cuba.

As relations improve, I suspect we're going to see more companies like
SolarCity (NASDAQ: SCTY) and SunEdison (NYSE: SUNE) setting up shop in
Cuba, utilizing creative financing mechanisms that will allow the people
of Cuba to use solar at a cost that will be within reach. And this will
enable these companies to generate additional revenue.

I also wouldn't be surprised to find GE (NYSE: GE) looking to take
advantage of Cuba's vibrant offshore wind resources in an effort to help
power the island nation.

These, of course, are also just the major players. There will be smaller
bit players that could present opportunities to take part in private
deals as well — some of which I'm sniffing around for right now.

Bottom line: While there remains significant risk this early in the
game, it's a risk I'm willing to take. Fortune favors the daring, and
I'm sure as hell not sitting on the sidelines while the daring get
first-mover advantage.

To a new way of life and a new generation of wealth...


Jeff Siegel

@JeffSiegel on Twitter

Jeff is the managing editor of Energy and Capital and contributing
analyst for the Energy Investor, an independent investment research
service focusing primarily on stocks in the oil & gas, modern energy and
infrastructure markets.

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