Submitted by Dr. Roland R. Clarke, Energy Policy and Utility Advisor
The Fair Trading Commission (FTC) of Barbados appears to be returning to best practice in economic regulation of the electric utility sector. In this instance, the return is by requiring the Barbados Light and Power (BLPC) to give a full assessment of the benefits (and costs) of the grid impacts of utility applied short term (4-hour) battery energy storage systems (BESS). Typically, such systems are used for operational purposes rather than energy purposes.
In particular, the FTC is requiring that the BLPC consider the benefits of the avoided costs of any deferrals in the installation of transmission and distribution assets precipitated by the installation of the BESS systems.
Notwithstanding, the FTC has failed to require consideration of avoided operations and maintenance costs, as well as avoided losses. It is presumed that the FTC has considered the obvious avoided energy cost.
This decision of the FTC would therefore requires in part a comprehensive benefit cost analysis in support of a least cost decision in respect to utility applied BESS.
This recent requirement by the FTC for best practice by the BLPC has been sorely lacking in recent years. For example, it seems to me that in the recent past, the FTC required the BLPC to implement renewable energy “at any cost”. During that period, I did not detected any consideration of a comprehensive benefit cost analysis with subsequent least cost decision making. That omission has been plain imprudent in my professional opinion.
In fact, it would be interesting to see if the current trajectory of Barbados in relying on distributed energy resources (DER), e.g. roof top solar photovoltaics (PV) is indeed the least cost option. As far as I am aware, the current trajectory has never been subject to a comprehensive benefit cost analysis of the type now being considered in part by the FTC.
Further, it is not obvious to me that the recent decision by the FTC would include a revisit and analysis of the current trajectory. My recommendation is that it should!
Benefits and costs matter!
Trade offs matter immensely!
Trade-offs must be considered when considering competing claims on scarce foreign exchange resources by other societal needs. The electric sector is not the only claimant on foreign exchange in Barbados.
Other countries like the USA can simply print hard currency. Barbados can’t. Barbados has to “earn” every penny!
On a “technical” matter, the article by Energy-Storage News forwarded below speaks about “cost benefit” analysis. That type of analysis is technically incorrect.
It should be “benefit cost” analysis. Why? That’s how the rigourous analyst (myself included) would avoid “divide by zero” errors. While benefits may be zero, by definition costs are always non-zero. QED.
See Relevant Link
FTC Website – Decisions and Orders
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