This Tuesday, a decree published in the Official Gazette mandates that private, foreign, and state-owned companies in Cuba implement stringent energy efficiency measures. The new regulation, aimed at "establishing controls for the efficient use of energy carriers and renewable energy sources," outlines specific strategies for maintaining stability in the electrical system and addressing contingency scenarios.
A pivotal element of Decree 110/2024 is the requirement for "large consumers" to generate at least 50% of their peak hour energy consumption from renewable sources by 2028. The term "large consumers" encompasses those entities consuming an average of 30 megawatt-hours per month or 50,000 liters of fuel.
The decree insists these users must adopt "a management system for the efficient control and use of energy carriers and renewable sources, aligned with their social purpose, functions, and approved mission." According to the decree, these measures should be part of a “program for the development, maintenance, and sustainability of renewable sources and efficient energy use, with a five-year scope.”
Implementation Challenges and Requirements
New economic entities planning to operate in Cuba must integrate these programs into their initial planning. Existing companies will have a window of three to five years to comply. If structural limitations prevent the installation of photovoltaic panels, companies must enter into agreements with solar parks managed by the Electric Union (UNE).
For investments requiring substantial energy amounts, the government will adopt a more stringent approach regarding tariffs. These new rates will be calculated based on the “actual cost of diesel generation at the official exchange rate approved by the Central Bank of Cuba.” However, the Mariel Special Development Zone (ZEDM) will not be affected and will continue under current tariff regulations.
Penalties for Non-Compliance
The decree also outlines a series of penalties for companies failing to adhere to the new rules. Infractions range from maintaining poorly conditioned facilities to not meeting peak hour consumption plans. Fines can reach up to 15,000 pesos, and electricity supply may be interrupted for up to 72 hours.
In instances of "electrical contingency regime"—defined as planned disruptions exceeding 72 hours—penalties rise to 20,000 pesos. Specific violations include:
- Lack of a peak hour electricity consumption plan.
- Using air conditioning in non-technological spaces below 24 °C.
- Operating refrigeration and air conditioning systems in poor condition or without proper sealing.
- Selling equipment without an Energy Efficiency Label.
- Misuse of prepaid fuel cards.
Establishment of "Energy Councils"
An additional feature of the Decree is the creation of "Energy Councils" at national, provincial, and municipal levels, comprising representatives from political, social, and mass organizations, along with economic actors. These Councils will have the authority to oversee and enforce the measures set forth in the Decree.
Their roles include monitoring consumption plans, implementing renewable energy sources in their regions, evaluating high-energy consumers, and proposing measures for non-compliance within their jurisdiction. The decree comes as the Cuban regime intensifies its focus on renewable energies, particularly solar panel installations.
However, the obligations imposed by the regulation have sparked skepticism among small business owners and Cuban entrepreneurs, who question the economic feasibility of complying with the new rules due to their high costs. While official media have barely touched on the topic beyond a brief television report, it is expected that this measure will stir controversy in the coming weeks.
Decree 110/2024 emerges during an unprecedented energy crisis, which the government attempts to mitigate with austerity and efficiency measures. This new legislation not only highlights the Cuban government's inability to ensure an efficient and sustainable electrical system but also shifts the burden of its failure onto economic actors, including small businesses and micro, small, and medium enterprises (MSMEs), who already face challenging economic conditions.
Instead of introducing structural policies to modernize state electrical generation and genuinely incentivize the transition to renewable energies, the regime opts to impose obligations that will be costly and unfeasible for many. The Decree, announced this Tuesday in the Cuban Gazette, will become effective 30 days after its publication.