Thursday, April 18, 2024

The alternative energy crisis


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​​One year almost to the date after the Fair Trading Commission (FTC) ruled that the capacity to be afforded the renewable energy rider (RER) be modestly increased to seven megawatts, the crisis warned of has materialised.

Capacity has virtually dried up, leaving the companies that invested in this fragile, emerging sector with little work and the likelihood of employee lay-offs.

The renewable energy rider is the mechanism adopted in 2010 whereby businesses and householders invest in grid-tied renewable energy systems to reduce or eliminate their electricity charges and make a return on investment.

The company, the monopoly Barbados Light & Power Company (BL&P), also wins as additional, non- fossil fuel electricity is generated from a clean source, namely the sun.

But the FTC failed to heed concerns that the sector would shrivel up and die an unnatural death at a time when Government had set a target of adopting renewables to replace 29 per cent of its oil imports-based electricity generation by 2029.

The Barbados Renewable Energy Association (BREA) and several interveners had argued that 20 megawatts could easily be accommodated without harm to the grid. The concern was raised on behalf of installers, encouraged by Government’s stated policy goal, to invest in this business and consumers, who will now have difficulty getting applications approved, possibly after they have committed to interest-bearing loans that could turn out to be stranded investment.

The FTC agreed with BL&P that a study should first be undertaken on the implications of using photovoltaic solar and wind under the RER. It has been a year now and that study is yet to be completed, while some of the estimated 34 installers have become jittery over work drying up and the prospect of business closures.

And it’s not that the FTC wasn’t given sound advice and encouraged to conduct its own research rather than rely on the findings of a regulated company whose study would not be regarded as independent, given that the power company was paying the piper.

The death of the RER has dire foreign exchange implications for the Barbadian economy, what with electricity rates expected to rise globally, fossil fuel being a finite resource, and local rates being recognised as among the highest in the world.

The International Monetary Fund, the Caribbean Development Bank and the research of the Inter-American Bank all conclude that these high rates are directly correlated to the Barbadian economy being uncompetitive.

For consumers and businesses seeing their electricity bills on the rise, the prospective death of the renewable energy sector is also bad news, not only for Government.

The FTC has been urged to free up the solitary one megawatt available under the rider, but even if it acted with unusual haste to do so, this would be commensurate with applying a plaster to a burst artery.

Government has provided tax and duty free incentives, while training of technicians is being implemented. Yet, consumers may need to look for the best advice to plan urgently for the next round of electricity rate increases.

• Hallam Hope is a researcher and student of utility regulation and policy. 




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