A Practical, Consistent Strategy for Renewables is Urgently Needed

The following was pulled from former Governor DeLisle Worrell’s website (thanks Amit) – David, blogmaster
delisleworrell

Dr. DeLisle Worrel

In an informed front page editorial on November 25, the Barbados Advocate had this to say about the power outage crisis in Barbados: “[Emera, the Canadian parent of the Barbados Light and Power Company] chose to invest in Barbados, acquiring control of the sole generator and provider of electricity, a private sector entity with an aging generation plant and distribution system. … [the] company.. was looking at a replacement programme for that generation plant, but was informed by the previous Government that they were going to lose nearly half of their generation business to renewable energy [RE] projects coming on stream from new investors within a few years. In the end, this never happened.

“Additionally, they were then told, when the present Government took office, that by 2030, all generation must be RE, and that other RE investors would be permitted.”

“… the single most important criteria in attracting investment is certainty, and these Government interventions surely created a lot of uncertainty for them. New generation capacity is a significant and long term investment, so we cannot fault Emera in their decision to be cautious, and look at investing to extend the life of the existing equipment, faced with these various Government commitments. Generation capacity equipment looks at a 25-30 year life for cost recoupment…”

What is needed to create certainty for investors is a practical, consistent policy document on alternative energy, with realistic targets and an action plan for tracking progress. This document should clarify the government’s target for renewables. Is it to generate all electricity from renewable sources, or to completely eliminate the use of fossil fuels? Neither of these objectives can now be attained by 2030. The BL&P has now ordered a new 33 MW generating plant which runs on fossil fuel, and which will still be in full operation in ten years’ time. In addition, most of the gasoline and diesel powered vehicles imported this year will still be on the roads in 2030.

Government’s RE policy document must also be clear on the chosen mix of technologies to be used in achieving the RE target. While solar PV is already in place and approval has been given for the first wind turbines, the expected contributions of biofuels and waste-to-energy remain uncertain. Government Ministers have also spoken of ocean thermal, offshore wind and other technologies which are not commercially feasible at the present time. If they are to be part of the mix, the target date will be pushed even further into the future. Also, no decision has been announced on energy storage options.

Government’s RE strategy document must include a timeline for bringing tax policy in line with the renewable energy target. Government Ministers admit publicly that the tax on imported electric vehicles is inconsistent with the RE target. There are no tax concessions or fiscal incentives for independent power producers; at least one potential investor in wind turbines has given up in frustration after failing to secure planning permission after years of effort.

The replacement of fossil fuels by renewable energy sources has the potential to transform the Barbadian economy, saving foreign exchange, liberating the country from oil price fluctuations, and creating new jobs and income. However, the changeover will not happen on its own; it must be guided by a fully informed, expertly crafted strategy document, with realistic targets, and an action plan for implementation. The policy document must be clear on the RE technologies to be adopted, and government must be clear on its own role, and on the incentives to be provided to private investors and energy users. The action plan must include intermediate targets and deadlines at 3-5 year intervals, with indicators for Government, investors and users, to make sure the programme stays on track.

The power outage crisis is a warning that a practical, fully informed strategy document with realistic guidelines, responsibilities and monitoring, is now of the highest priority.

Source: www.delisleworrell.com

34 comments

  • If they were not all so busy looking for SCAMS…that could generate BRIBES…which ALWAYS RESULTS in stealing BILLIONS from the populace to share with their fellow THIEVES…..all of that would have been done already…..but scams take time, you have to find the right foreign crooks first….Del Mastro went to jail and screwed up that one….now on to finding the next gang of crooks.

    it is their pattern and practice for decades, if they cannot connect with thieves like themselves, nothing gets done on the island, everything gets neglected…STEALING comes first..

    Has anyone noticed 18 months later and they best they did was pass an IMF test, NOTHING ELSE, nothing to generate billions for the people who pay their salaries…no job creation outside of the usual slave tourism….no UPWARD MOBILITY for the majority citizens…

    more BLP failure, they cannot even get the marijuana trade right…and everyone is “WATCHING MUH”….as asked..

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  • The blogmaster agrees with Worrell’s posit. The former government started the process and it flagged to the end. This government needs to step on the gas, there is a platform to build.

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  • There was a comprehensive document prepared by the last administration, in theory there should be consistency and certainty.

    Wait a minute- has this government moved away from that policy? This is our problem, no continuity.

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  • The government and parastatals are significant users of fossil consumption. Convert government subscribers as a priority!

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  • @David.

    Don’t mind the sweet talk government make real money off the sale of fossil base fuels. When they lose that revenue what they going replace it with?

    Why you think they been dragging their feet on this for so long.

    Liked by 1 person

  • @John A

    This is true, the same argument can be made for allowing the car dealerships to import at will, the supermarkets to import at will, the hospitality sector to import at will etc. the establishment must be protected at all cost. Mia has signaled she is willing to take it on?

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  • @David.

    Until government can find an alternate source of tax revenue to replace the massive amount they collect on the sale of petroleum products, there will be no large scale move to renewable energy.

    Look at what they collected when the licensing fee for vehicles was abolished and put on at the pump alone!

    There is lip service and then there is financial reality. I am not saying there will not be some token moves made to RE, but don’t expect to see any massive move as the tax dollars from petroleum ” too sweet” as we say in Bim. Added to this right now they need every tax dollar they can get to keep the IMF happy.

    As I said there are pipe dreams and then there is financial reality.

    Liked by 1 person

  • @John A

    Regrettably there is truth in your position.

    Liked by 1 person

  • @ David December 18, 2019 8:39 AM

    Is this what the $90 million in additional balance of payments support recently borrowed from the IMF will be spent on?

    The importation of second-hand vehicles out of the Far East to further clutter up the Bajan makeover donkey cart roads and contribute to the escalating rise of bronchial and skin diseases in Barbados?

    This country really has its developmental knickers in a twist of knotted economic mismanagement.

    Can you imagine a country- with one of the densest road network (for its Lilliputian size) on the globe- can place its developmental priorities on the importation of fossil fuel-powered mechanical steel donkeys on ICE (and a clear environmental existential threat and a known agent of manmade climate change) but refuses to maintain and upgrade the very network needed for their efficient operation?

    Liked by 1 person

  • @Miller

    The government has the opportunity to stop purchasing petroleum fueled vehicles. What have we been seeing instead?

    Liked by 1 person

  • Miller
    Your use of words and terms.🔥🔥

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  • @Dr. Worrel: Thank you for your essay.

    I agree with you completely — there must be explicit (and logical) policy defined by Government, which will then allow businesses and homeowners to make decisions based on the economic calculus.

    There should be input from all stakeholders, examining “best practices” currently being successfully used elsewhere to migrate away from burning dead dinosaurs to power our civilizations.

    I hear John A’s argument about the realities of tax revenue from fossil fuels. But, at the same time, I would argue that since we don’t produce enough indigenously for our own needs, this will always be a foreign exchange drain. Yes, the “CapEx” involved in renewables will also be procured from “away”, but it’s mostly a one-off.

    I haven’t really kept up on the current policy with regards to “grid-tied” photovoltaics (PV) here in Barbados. But my understanding is an owner of a PV deployment is required to sell all power generated to BL&P, at less per kWh than what the same owner can buy power back at.

    If this is true, I would argue this is a policy that should be revisited. I believe it makes investing in PV less attractive to an independent investor than it should be.

    Also, are there any taxes currently levied on RE equipment? I would argue there shouldn’t be — and even possibly, tax credits for such investment.

    This is an important discussion for Barbados’ future. I hope there will be some good strong signal here — and elsewhere — which leads to real progress in this domain.

    Liked by 2 people

  • Agree Chris but as usual our so-called intelligent people prefer the salacious vacuous back and forth.

    Liked by 1 person

  • @ Chris.

    Further complicating the issue is that the government has guaranteed Emera an ROI net of 10 percent. So the new generators on the water will benefit from all of this. Now if the ROI is guaranteed over the asset period until it is fully depreciated, one can see how the move to RE would be hindered.

    Added to this with government being the only importer of fossil based fuels and with more that half the price of every litre of gasoline sold being taxes, you can see how this will pose a “slight” income issue for the state.

    So yes a few token measures may come to keep the masses happy, but no grand move to RE will be made in the near future. Unfortunately it’s about states tax revenue being protected here not environmental concerns.

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  • @John A

    Is it fair to say the government has guaranteed a 10% rate return if approved by the FTC?

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  • @John A: “Further complicating the issue is that the government has guaranteed Emera an ROI net of 10 percent.

    As I said earlier (on another thread), the BANGO team relied on Douglas Skeete for the financial dimensions during the FTC rate hearings (literally thousands of pages of documents; weeks of testimony).

    I could be wrong on this, but my understanding is BL&P is allowed to earn up to 10.48% RoR on Rate Base. It’s not guaranteed this (and probably won’t “make their numbers” this year).

    And I hear you loud and clear about the legacy momentum of tax revenue from fossil fuels. Also, the Government /wants/ to keep BL&P “happy”, in-so-far as they want to present an environment where this mission-critical company remains interested in continued investment.

    But I would argue that moving to RE would be a long-term economic advantage for Barbados.

    And for a tiny little nation surrounded by water, the environmental arguments don’t really hold that much relevance. If Barbados went 100% renewables today it would have no real impact on the global climate change problem. (We are, of course, going to still have to deal with the results — rising water, higher temperatures, strong storms, etc.)

    As always, this is not going to happen over-night. But if the policies are smartly designed, individuals and businesses could be the actual drivers for much of the RE deployment.

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  • @ Chris.

    I support the move 100 percent to as much RE as humanly possible. I have said here I see 2 things helping us out the hole we are in along with increased tourism activity. They are a major green house push to reduce our food import bill and greater use of renewable energy. What I mentioned above however is the reality that will stand in the way of such a move.

    After all a USD saved is one earned.

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  • @John A: Again, I copy you. Loud and clear.

    BTW, I’m big into “Blue Sky” thinking. If there were no constraints (beyond physics), what could one do?

    A couple of things I think could be really cool (joke half intended) to see here in Barbados (over the next ten to twenty years) would be:

    A “Solar power tower”. Please see https://en.wikipedia.org/wiki/Solar_power_tower

    These things are almost “Commercial Off The Shelf” (COTS) now. They use molten salt as the “working fluid”, so can storge energy (in underground tanks) for generation after the Sun sets.

    Absorption refrigeration / air conditioning. Please see https://en.wikipedia.org/wiki/Absorption_refrigerator

    Uses heat (like, from the Sun) to cool spaces. This is actually an active area of Research and Development (R&D) around the world. No reason some smart Bajans couldn’t make a break-through here, or even just make a business out of deploying existing COTS options…

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  • @ David.

    I would say Emera will try their best to get the 10% return if not this year say in 2 years time.

    Thing is this year the will have some unusual expenses like the rental of the 4 smaller generators and such like. Rental expenses can not be capitalised so they will have to be booked as expenses in this year’s expenses.

    Now where these ROI guarantee thing gets interesting is in the fine print. So does the agreement allow for a short fall on ROI to be made up over the following year for example? So if because of expenses I only made an ROI of 5% in 2019 will I be allowed an ROI of 15% in 2020? I don’t know the fine print so I am only drawing a possible scenario that MAY exist.

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  • @Chris

    Our possibilities as a result of our location in the Caribbean are limitless. We have solar, wind, sea currents, all on basically a daily basis which we can harness.

    The only thing as I say standing in our way is the good old Tax revenue replacement issue. God knows you can’t tax bajans more to make up tax revenue lost on petroleum. Secondly if the electricity sold by emerra falls significantly, because of the ROI guarantee they will simply Jack up the KW price to those that are left.

    It’s a true Catch 22 no doubt.

    Liked by 1 person

  • @John A: “It’s a true Catch 22 no doubt.

    I respectfully disagree.

    It’s a “non-trivial problem space”, which will take time and careful thought to solve.

    Personally, I find those types of problems to be the most interesting to work on… 🙂

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  • @ Chris.

    Well when you working on it try and don’t come up with a formula that calls for increased taxation in some new form to make up for the lost revenue on petroleum please. Lol

    Next thing the Boss lady might do is institute a “Clean Air Breathing Tax” based on lung size or some other madness!

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  • We are a tiny island with a tiny population, how difficult can it be.

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  • John ADecember 18, 2019 1:51 PM

    @ Chris.

    I support the move 100 percent to as much RE as humanly possible. I have said here I see 2 things helping us out the hole we are in along with increased tourism activity. They are a major green house push to reduce our food import bill and greater use of renewable energy. What I mentioned above however is the reality that will stand in the way of such a move.

    After all a USD saved is one earned.

    ++++++++++

    Seems simple enough, doesn’t it????!!!!! Not rocket science at all!

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  • DavidDecember 18, 2019 2:50 PM

    We are a tiny island with a tiny population, how difficult can it be.

    +++++++++++++++++++++

    I maintain that it should not be difficult at all. Smallness has its benefits. We prefer to see its disadvantages.

    Liked by 1 person

  • @Donna: “Not rocket science at all!

    Nope.

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  • A
    If you are not using oil to produce the electric then you are saving a lot of money. “A USD saved is a USD gained” therefore no need to raise more taxes.

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  • The widespread implementation of RE will not ‘explode’ in Barbados until/unless Government & BL&P are the protected front-runners….. and what they will miss out on taxes collected from petroleum products, will then be replaced by equivalent taxes on RE.

    The technology for solar, wind, and wave energy is there to implement off-the-shelf… and we have all three mode of energy year round.

    Pity …. but we seldom elect engineers & scientists….lol.

    Instead, I am sure our politicians (mainly lawyers) consult with some engineers & scientists but then ask their financial consultants to scrutinize the recommendations of the engineers & scientists…. opps, ball gone out of play!!! Game over!!

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  • @David

    “We are a tiny island with a tiny population, how difficult can it be.”

    You forgot to mention the TINY POLITICAL MINDS, which means it’s IMPOSSIBLE.

    Liked by 1 person

  • Dr.W usually on target.
    Blogmaster his currency suggestion of months ago, would render your frequent Fx concerns, null & void.
    Some interesting discussions.
    His comment on consistency and continuity is VERY important on a wide variety of topics. You cannot ‘race way people’ and expect them to be knocking down the door, each time the administration changes.

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  • David
    Aren’t the new BL&P generators temporary? Has anyone here worked with implementing RE policy? It’s a long slog.

    Liked by 1 person

  • @enuff

    If we go by the press conference the generators are temporary and BL&P have agreed to eat the cost:

    Like

  • Simon Paul Buxton

    Very nice article! Thanks for sharing.

    Like

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