The recent news of a large-scale power outage in Cuba has shifted global attention to the country that is most severely blocked by the United States - Cuba.
Cuba experienced a severe nationwide power outage on October 18, 2024, plunging the entire country into darkness.
Moreover, the scale of this power outage was extremely large, even the capital Havana was not spared. The Cuban National Electric Company announced the reasons and related content of this power outage through the media.
Firstly, the main reason for this power outage is the aging of the Cuban power system. The national power company has stated that the aging problem of the power grid system has existed for decades and has not been resolved.
Secondly, due to the severe economic blockade measures imposed by the United States for over 60 years, there are very few countries in the world that do business with Cuba due to a lack of funds, technology, and advanced power generation equipment. The Cuban economy is struggling.
This article will explore the opportunities and challenges facing the Cuban power transformer market with Martin from Hengfengshuai Electric.
I. Opportunities in the Cuban Power Transformer Market
1. The development of renewable energy:
On June 7, 2024, the handover ceremony of China's 12 MW solar photovoltaic power plant equipment project was held in the central Cuban city of Santo Domingo. The ceremony was presided over by Chinese Ambassador to Cuba Ma Hui and Cuban Deputy Prime Minister and Revolutionary Commander Ramiro Valdes Menendez. With the Cuban government actively promoting renewable energy projects, especially wind and solar power generation, the demand for efficient and reliable power transformers has significantly increased. These projects require high-quality transformers to ensure stable transmission and distribution of electricity.
2. Modernization of the power grid: Due to US sanctions, the country's transmission and distribution equipment is severely aging and technologically outdated. In order to improve the efficiency and reliability of the power system, Cuba is undergoing a large-scale modernization of the power grid. This includes replacing old equipment, upgrading transmission lines, and installing new distribution facilities. These renovation projects provide a broad market space for power transformer manufacturers.
3. International assistance and cooperation: Many countries and international organizations are willing to provide technical and financial support to Cuba to help it develop sustainable energy infrastructure. Through international cooperation, Cuba can introduce advanced technology and management experience to promote the development of its power transformer industry.
4. Tourism and service industry growth: According to the latest data from the Cuban tourism sector, as of April 26, Cuba has received over 1 million international tourists this year, and is expected to reach 3.5 million for the entire year of 2024. Cuban Prime Minister Marrero stated that in 2023, Cuba's tourism revenue will increase by over 50% year-on-year, and the government will continue to introduce support measures to accelerate the recovery of the tourism and related industries. Recently, our reporter visited multiple places in Cuba to personally experience the new vitality demonstrated by the tourism industry. With the increase in the number of tourists, the demand for electricity in hotels, resorts and other places is also constantly increasing. To meet this demand, newly built or expanded commercial facilities require more electricity supply, thereby driving the growth of the power transformer market.
5. Expectations for future economic development: With the decline of American hegemony, especially the Middle East war and the Russia-Ukraine conflict, the decline of American global hegemonism will be accelerated, the blockade against Cuba will continue to unravel, and Cuba will rise on the strength of China at that time, which will inevitably bring a lot of opportunities to Chinese power transformer manufacturers.
II. Challenges in the Cuban Power Transformer Market
1. Serious lack of funds: Despite international aid, Cuba's investment in infrastructure construction is still limited. Lack of sufficient funding may constrain the implementation progress of large-scale projects, affecting the scale and development speed of the power transformer market. The best option for Cuba is to join the BRICS system.
2. The domestic political environment is unstable: Although the Cuban government is committed to promoting reform and development in the energy sector, increasing investment in transmission and distribution infrastructure, and improving domestic livelihoods, there are still certain variables in the stability and implementation of relevant policies. In the first half of 2024, large-scale protests erupted in at least five regions of Cuba, including its second largest city Santiago. Many protesters took to the streets, shouting slogans of "power and food" in protest against the Cuban government. The dissatisfaction of these protesters mainly focuses on two aspects: food shortage and frequent power outages. The Chinese Ministry of Foreign Affairs also directly targeted the Cuban issue, pointing out the fundamental reasons for its emergence, namely the US blockade and sanctions and interference in Cuba's internal affairs. Changes in the political environment may affect investors' confidence and have adverse effects on related industries.
3. Economic growth is under pressure:
By the end of 2023, Cuba's inflation rate will reach 30%, the economy will shrink by 2%, and the Cuban currency will depreciate by more than 50% against the US dollar and the euro in the informal market.
Faced with deteriorating external environment: Cuban Prime Minister Manuel Marrero pointed out that Cuba is facing a "wartime economy" situation, which exacerbates the deterioration of the socio-economic situation caused by the strengthening of the US blockade. The global crisis caused by the COVID-19 and the intensification of global conflicts that have impacted the world economy and trade are also factors affecting the overall situation of Cuba.
III. Overall, the Cuban power transformer market is in a period of hope but also challenges. As the country continues to advance its energy transformation plan and seek more opportunities for external cooperation, this is undoubtedly a new blue ocean worth exploring for companies like China Hengfengyou Electric that can overcome existing obstacles and grasp the demands of emerging markets. However, successfully entering this market requires a deep understanding of specific local regulations, industry standards, and adopting flexible and adaptable strategic measures.
