baseline study of energy policies & legislation in selected caribbean countries, july 2009

8/2/2019 Baseline Study of Energy Policies & Legislation in Selected Caribbean Countries, July 2009

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CARIBEAN RENEWABLE ENERGY DEVELOPMENT PROGRAMME

Baseline Study of EnergyPolicies & Legislation in

Selected Caribbean

CountriesDraft Final ReportPrepared by: Cedric Wilson

7/31/2009


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DRAFT FINAL REPORT ON RENEWABLE ENERGY POLICY & LEGISLATION

Caribbean Renewable Energy Development Programme

Baseline Study of Energy Policy (July 31, 2009) Page 2

TABLE OF CONTENTS

1. Introduction ................................................................................ 10

1.1 Objectives ......................................................................................................................... 11

1.2 Organization of Report ..................................................................................................... 12

2. Renewable Energy PERSPECTIVE........................................................ 12

2.1 Global Renewable Energy Utilization ............................................................................... 13

2.2 Growth of Renewable Capacity..................................................................................... 2

3. energy status of selected countries ...................................................... 4

3.1 Bahamas ............................................................................................................................. 4

3.1.1 Background................................................................................................................ 5

3.1.2 The Energy Sector........................................................................................................... 6

3.1.3 The Electricity Sector...................................................................................................... 7

3.1.4 Legal & Regulatory Framework.......................................................................... 8

3.1.5 Renewable Energy........................................................................................................ 10

3.1.6 Conclusion .................................................................................................................... 11

3.2 Barbados ........................................................................................................................... 12

3.2.1 Background.................................................................................................................. 13

3.2.2 Energy Sector............................................................................................................... 13

3.2.3 Electricity Sector........................................................................................................... 15

3.2.4 Demand Side Management......................................................................................... 16

3.2.5 Financial Performance of Electricity Sector.................................................................. 16

3.2.6 Expansion Plan ............................................................................................................. 18

3.2.7 Legal & Regulatory Framework................................................................................... 19

3.2.8 Renewable Energy................................................................................................. 23

3.2.9 Conclusion .................................................................................................................... 25

3.3 Belize ................................................................................................................................ 26

3.3.1 Background.................................................................................................................. 27

3.3.2 Energy Sources ............................................................................................................. 28

3.3.3 The Electricity Sector.................................................................................................... 29



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3.3.6 The Petroleum Sector................................................................................................... 34



3.3.9 Conclusion .................................................................................................................... 41

3.4 Guyana .............................................................................................................................. 42

3.4.1 Background.................................................................................................................. 43

3.4.2 Energy Sector............................................................................................................... 43



3.4.5 Expansion Plan ............................................................................................................. 49




3.4.9 Conclusion .................................................................................................................... 61

3.5 St. Kitts & Nevis ................................................................................................................ 62

3.5.1 Background.................................................................................................................. 63

3.5.2 Energy Sector............................................................................................................... 64





The Federation of St. Kitts-Nevis is a part of the Global Sustainable Island Initiative (GSEII) in

the eastern Caribbean which includes St. Lucia, Grenada and Dominica. In 2007 a Sustainable

Energy Plan funded by the Organization American States (OAS) was developed. ................... 73

Biomass ..................................................................................................................................... 73

3.5.7 Demand Side Management............................................................................... 74

3.5.8 Conclusion ................................................................................................................ 74

3.6 Suriname .......................................................................................................................... 76

3.6.1 Background.............................................................................................................. 77

3.6.2 Energy Sources ............................................................................................................. 78


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3.6.3 The Electricity Sector.................................................................................................... 78

3.6.4 The Petroleum Sector................................................................................................... 80




3.6.8 Conclusion .................................................................................................................... 83

3.7 Trinidad and Tobago ......................................................................................................... 84

3.7.1 Background.................................................................................................................. 85

3.7.2 Energy Sector............................................................................................................... 86





3.7.7 Conclusion .................................................................................................................... 94

4. Comparative Analysis ..................................................................... 94

Conclusion ................................................................................................................................. 99

5. CASE STUDY: The Effect of Rising Oil Prices on the Transportation & other Key

sectors in Guyana .............................................................................. 100

6. The PetroCaribe Agreement ............................................................ 104

7. CARICOM ENERGY POLICY REVIEW ..................................................... 106

7.1 Background ..................................................................................................................... 106

7.2 Objectives of the CARICOM Energy Policy ..................................................................... 106

7.3 Development & Diversification of Energy Source (Ch. 2) ............................................... 107

7.4 Renewable Energy Sources (Ch.3) ................................................................................. 108

7.5 Electricity Sector (Ch. 4) ................................................................................................. 108

7.6 Energy Conservation & Efficiency (Ch. 5) ....................................................................... 108

7.7 Energy Investment (Ch. 6) .............................................................................................. 109

7.8 Intra-Community Trade In Petroleum (Ch. 7) ................................................................ 109

7.9 Energy & the Environment (Ch. 8).................................................................................. 109

7.10 Enhancement of Human & Institutional Capacity (Ch. 9) .......................................... 110

7.11 CONCLUSIONS AND RECOMMENDATIONS ................................................................ 110


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8. Renewable policies and best practices ............................................... 113

8.1 Background ..................................................................................................................... 113

8.2 Categorisation of Policy Instruments ............................................................................. 113

8.3 Description of Main Promotional Strategies .................................................................. 117

8.4 Assessment of Promotional Schemes ............................................................................ 122

8.5 Criteria for Measuring Success ....................................................................................... 123

8.6 Key Characteristics of Successful Policy Measures ........................................................ 124

8.7 Evaluation of Promotional Schemes .............................................................................. 125

8.8 Country Specific Results ................................................................................................. 134

8.9 Electricity Market Conditions in the Caribbean ............................................................. 138

8.10 Indicative Assessment of Relevant Barriers ............................................................... 139

8.11 Recommended Promotional Schemes to apply in the Caribbean ............................. 140

APPENDICES ..................................................................................... 141

APPENDIX 1: RENEWABLE ENERGY TECHNOLOGY ........................................... 142

1. renewable energy technologies ........................................................ 143

1.1 Wind Energy ................................................................................................................... 143

1.1.1 The Conversion of Wind Energy................................................................................. 143

1.1.2 Cost............................................................................................................................. 144

1.1.3 Assessment of Wind Energy Systems......................................................................... 145

1.1.4 The Global Status of Wind Power.............................................................................. 145

1.2 Hydropower .................................................................................................................. 147

1.2.1 Potential of Hydropower Systems.............................................................................. 148

1.2.2 Assessment of Hydropower Systems.......................................................................... 148

1.2.3 The Global Status of Hydropower........................................................................ 149

1.3 Bio-energy (Biomass) ...................................................................................................... 150

1.3.1 Biomass Energy Conversion Systems ......................................................................... 150

1.3.2 Potential of Biomass Systems .................................................................................... 152

1.3.3 Assessment of Biomass Energy Systems .................................................................... 152

1.3.4 The Global Status of Biomass Energy......................................................................... 155

1.4 Solar Energy .................................................................................................................... 155

1.4.1 Solar Energy Conversion............................................................................................. 156


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1.4.2 The Potential of SolarSystems ................................................................................... 158

1.4.3 An Assessment of Solar Energy Technologies ............................................................ 159

1.4.4 The Status of Solar EnergyTechnologies ................................................................... 160

APPENDIX 2: RENEWABLE ENERGY IN ELECTRICITY GENERATION............. 163

2. renewable energy IN Electricity GENERATION ...................................... 164

2.1 Renewable Energy in Power Generation ....................................................................... 164

2.2 Renewable Energy Characteristics and Cost .................................................................. 165


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Abbreviations

AC Alternating CurrentBEC Bahamas Electricity Corporation

BEL Belize Electricity Limited

BNE Belize Natural Energy Limited

BELCO Belize Electricity Company Limited

BELCOGEN Belize Cogeneration Company

BGEC British Guyana Electric Company

BLP Barbados Light & Power Company Limited

CARICOM Caribbean Community

CARILEC Association of Caribbean Electric Utilities

CDB Caribbean Development Bank

CDE Centre for the Development of Enterprise

CO Carbon Monoxide

CO2 Carbon Dioxide

CREDP Caribbean Renewable Energy Development Programme

CRNM Caribbean Regional Negotiating Machinery

DC Direct Current

DSM Demand Side Management

EBS Energiebedrijven Suriname

EC Eastern Caribbean (Currency)

EJ Exa Joule

ESBI Electricity Supply Board International

FIT Feed-in Tariff

FT Fischer-Tropsch

GBP Grand Bahama Power

GDP Gross Domestic Product

GEA Guyana Electricity Authority

GEC Guyana Electricity Company

GEF Global Environment Facility

GHG Greenhouse Gas Emissions


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GPL Guyana Power and Light Inc

GSEII Global Sustainable Energy Islands Initiative

GTZ Deutsche Gesellschaft fr Technische Zusammenarbeit

GBP Grand Bahama Power

GWEC Global Wind Energy Council

GWh Gigawatt hour

HAWT Horizontal Axis Wind Turbine

HEI High Energy Input

HFO Heavy Fuel Oil

HML Hydro Maya Limited

IEA International Energy Agency

IMF International Monetary Fund

IPP Independent Power ProducerkWh kilowatt hour

LNG Liquid Natural Gas

MW Megawatt

MWh Megawatt hour

NEP National Energy Policy

NEVLEC Nevis Electricity Company Limited

NPC National Petroleum Corporation

OAS Organisation of American StatesOECS Organisation of Eastern Caribbean States

O&M Operation and Maintenance

OUR Office of Utilities Regulations

PPA Power Purchase Agreement

PCJ Petroleum Corporation of Jamaica

PUC Public Utilities Commission

PV Photovoltaic

REP Rural Electrification ProgrammeRES Renewable Energy Sources

RET Renewable Energy Technologies

RIC Regulated Industries Commission

R&D Research & Development

RPS Renewable Portfolio Standards


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SEP Sustainable Energy Plan

SICA Central American Integration System

SKED St Kitts Electricity Department

TGC Tradable Green Certificate

TNA Technical Needs Assessment

TOU Time of Use

T&TEC Trinidad and Tobago Electricity Commission

TWh Tera-watt hour

UK United Kingdom

UN United Nations

UNCED United Nations Conference on Environment and Development

UNDP United Nations Development Programme

UNFCCC United Nations Framework Convention on Climate ChangeUS United States

USAID US Agency for International Development

US EIA US Energy Information Administration

UWI University of the West Indies


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1. INTRODUCTION

Arising from a growing concern with regard to the threat of climate change andthe potential consequences for small island states and costal zones, CARICOM

established the Caribbean Renewable Energy Programme (CREDP) with astrong mandate to:

1. Support the implementation of policies, legislation and regulations thatcreate an enabling environment for renewable energy development;

2. Demonstrate innovative financing mechanisms for renewable energyprojects;

3. Build capacity of stakeholders in renewable energy field; and

4. Improve regional information network on renewable energy.

It is in this context that CREDP commissioned Baseline Study of EnergyPolicies and Legislation in Selected CARICOM and Caribbean Countriesatthe end of February 2008. The study is intended to complement a previousstudy1 done in five other CARICOM states2.

For this study the focus would be on seven countries:

Bahamas

Barbados

Belize

Guyana

St. Kitts & Nevis

Suriname

Trinidad & Tobago

According to the Terms of Reference for the Study, the project is intended tocontribute to:

an increase in the percentage of RE-based electricity generation.

reduction in green house gas (GHG) emissions.

1 The Status of Energy Policy in Selected Caribbean Countries (April 2004; updated February 2005)2 Dominica, Grenada, Jamaica, St. Lucia and St. Vincent and the Grenadines.


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reduction of the dependence on imported fossil fuels.

the creation of jobs in the energy sector (manufacturing, supply,

installation and after-sales services).

the mobilization of financing from local commercial and regionaldevelopment banks which are not yet involved in RE financing.

It is therefore with this in mind that this Draft Final Report is presented.

1.1 Objectives

The experience with respect to the data gathering exercise for this study variedfrom country to country in terms of the type and quality of the informationavailable. While the information was patchy in some places and quite good inothers, the evidence suggests that there was a genuine effort on the part ofstakeholders to assist. Nevertheless, in some instances the data had gaps

because:

1. no records are kept on the variable(s) requested

2. the information available was dated

3. the information was considered confidential

4. the contact was dependent on other sources that failed to deliver

Although there are varying degrees of gaps in data, there was adequateinformation to available for the study.

The aim of this Report is to examine the current status of the energy sector in theseven selected countries and to provide analyses of the policies and legislationswith respect to renewable energy.

The objectives off this report are therefore as follows:

To provide a review of trends in relation to renewable energy technologies.

To provide a review of the status of the energy sector and the legal andregulatory framework in the selected countries.

To identify the measures that can be taken in each of the selected country toaccelerate the implementation of renewable technologies.

To provide a comparative analysis of demand side management strategies adrenewable energy policies across the countries studied.


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To review the draft CARICOM Energy Policy

To examine some of the best practices used globally to encourage thedevelopment of renewable technology.

1.2 Organization of Report

The remainder of the report is organised as follows: The next section will providea definition of renewable energy and examine and provide a perspective on theglobal utilization of renewable energy technologies. Section 3 will review thestatus of the energy sector in the selected country. It will also assess the legaland regulatory frame work with respect to renewable energy. Section 4 willprovide a comparative analysis of the seven Caribbean countries in this Study.Section 5 reviews the Draft CARICOM Energy Policy. Section 6 looks at bestpractices global in regards to accelerating the implementation of renewabletechnologies.

2. RENEWABLE ENERGY PERSPECTIVE

There is no universally accepted definition of renewable energy and nationaland international agencies use a variety of definitions, some of which includespecific technologies such as large hydro, geothermal, municipal and industrialwaste and traditional biomass, while others exclude them. The broad definitionset down by the Renewable Energy Working Party of the International EnergyAgency (IEA) will be adopted in this report. The definition is given as follows:

Renewable Energy is derived from natural processes that are replenishedconstantly. In its various forms, it derives directly or indirectly from the sun, orfrom heat generated deep within the earth. Included in the definition is energygenerated from solar, wind, biomass, geothermal, hydropower and oceanresources, and bio-fuels and hydrogen derived from renewable resources.

Renewable energy technologies (RET) are special devices used to convertenergy from its natural form to a primary energy form which is directly useable or,to an intermediate energy form or by-product which may later be converted to adirectly useable form. Compared to conventional energy sources (including gas,oil, coal and nuclear), most RETs have just recently become widely available

commercially. There are some RETs such as off-shore wind turbines and waveenergy that are in still in either the development or demonstration phase. Table2.1 represents a categorisation of the main renewable energy technologies whichwill be reviewed in this report and provides an indication of life-cycle status.


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2.1 Global Renewable Energy Utilization

Renewable energies are utilised in the following sectors3:

Power Generation

Hot water and space heating

Transport fuels

Rural (off-grid) energy

Figure 2.1 and Figure 2.2 show the 2006 renewable energy share of global finalenergy consumption and share of global electricity production respectively. Thefigures show that renewable energies including bio-fuels, biomass, largehydropower, small hydropower, wind, solar and geothermal accounted for 18% ofthe worlds final energy consumption and 18.4% of electricity generation. Of the18% final energy consumption, 13% was due to traditional biomass which was

primarily used for cooking and heating.

3Much of the data for this section is taken from the Renewables 2009 Global Status Report whichwas prepared by the Renewable Energy Policy Network for the 21

stcentury

3and the 2008 IEA

Renewable Energy Status Report.


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TABLE 2.1 : CATEGORIES OF RENEWABLE ENERGY CONVERSION TECHNOLOGIESTechnology Energy Product ApplicationBiomass EnergyCombustion (domestic scale)Combustion (industrial scale)Gasification/power productionGasification/fuel productionHydrolysis and Fermentation

Pyrolysis/production of liquid fuels

Pyrolysis/production of solid fuelsExtractionDigestion

Heat (Cooking and space heating)Process heat, steam, electricityElectricity, Heat (CHP)Hydrocarbons, methanol, H2Ethanol

Bio-oils

CharcoalBiodieselBiogas

Widely applied; improved technologies availableWidely applied; potential for improvementDemonstration PhaseDevelopment PhaseCommercially applied for sugar/starch crops,production from wood is under developmentPilot phase, some technical barriers

Widely applied; wide range of efficienciesApplied; relatively expensiveCommercially applied

Wind EnergyWater pumping and battery chargingOnshore wind turbinesOffshore wind turbines

Movement, powerElectricityElectricity

Small wind machines, widely appliedWidely applied commerciallyDevelopmental phase

Solar EnergyPhotovoltaic energy conversion

Solar thermal electricityLow temperature solar energy use

Passive solar energy useArtificial photosynthesis

Electricity

Heat, steam, electricityHeat (water and space heating,cooking, drying) and cool

Heat, cool, light ventilationH2 or hydrogen rich fuels

Widely applied; rather expensive; furtherdevelopment neededDemonstrated, further development neededSolar collectors commercially applied; solar cookerswidely applied in some regions; solar dryingdemonstrated and appliedDemonstration and applications; no active partsFundamental and applied research

Hydropower Power, electricity Commercially applied; small and large scale

applicationsGeothermal Energy Heat, steam, electricity Commercially appliedMarine EnergyTidal energyWave energyCurrent energyOcean thermal energy conversionSalinity gradient/osmotic energyMarine biomass production

ElectricityElectricityElectricityHeat, electricityElectricityFuels

Applied; relatively expensiveResearch, development and demonstration phaseResearch and development phaseResearch, development and demonstration phaseTheoretical optionResearch and development phase

Source: (ref chapter 7)


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FIGURE 2.2: RENEWABLE ENERGY SHARE OF FINAL ENERGY CONSUMPTION, 2006

Nuclear, 3

Large Hydropower, 3

Traditional

Biomass, 13

Biofuels, 0.3

Renewables, 18.4Fossil Fuels, 79

Power Generation, 0.8

Hot Water / Heating, 1.3

FIGURE 2.3: SHARE OF GLOBAL ELECTRICITY FROM RENEWABLE ENERGY, 2006

Nuclear, 14

New Renewables, 3.4

Fossil Fuels, 67

Large Hydropower, 15


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Caribbean Renewable Energy Development ProgrammeBaseline Study of Energy Policy (July 31, 2009) Page 1

The growth of traditional biomass however is slowing and is even in decline insome areas. Large hydropower accounts for 3% of the final energy consumptionand was growing modestly, primarily in developed countries. The newrenewable energy sources (wind, solar, small hydro, bio-fuels and geothermal)

represent only 2.4% of the renewable energy consumption but saw rapid growthin developed countries and a few developing countries.

The new renewable technologies only accounted for 3.4% of the global electricityproduction and approximately 5% of power generating capacity. The moremature large hydropower technology still represents the bulk of the renewableenergy portfolio at 15% of global power production. Solar, biomass andgeothermal were primarily used in hot water, and space heating for homes andindustry. Bio-fuels are increasingly being used in transport especially in Brazil,where ethanol displaced over 40% of the countries gasoline consumption.


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2.2 Growth of Renewable Capacity

Between 2002 and 2006, grid-connected solar photovoltaic capacity grew at anaverage annual rate of approximately 60% and (by 70% in 2008) representing thefastest growing RET.

FIGURE 2.4 : AVERAGE RENEWABLES GROWTH RATES, 2002-2006

FIGURE 2.5 : TOP SIX COUNTRIES FOR RENEWABLE ENERGY TECHNOLOGIES


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Bio-fuels experienced the next fastest growth rate during the period at a 40% annualaverage for biodiesel and 15% for ethanol. Slower global growth rates of between 3-5% was experienced for large hydropower, biomass and geothermal technologieseven though the growth in some countries far exceeded the global average. In

general, new renewable energy technologies grew at rates of 15-30% as shown inFigure 2.3 which compares with growth in fossil fuels technology of 2-4%. TheCaribbean is one of the low growth regions in respect of renewable energytechnology; consequently the issues which inhibit its development must beunderstood to bring about the required changes.


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3. ENERGY STATUS OF SELECTED COUNTRIES

3.1 Bahamas

Map of Bahamas


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3.1.1 Background

The Commonwealth of the Bahamas extends 760 miles from the coast of Florida onthe north-west almost to Haiti on the south-east. The group consists of 700 islands

and 2,400 cays with an area of 13,878 sq. km (5,358 sq. miles). However, only thirtyof the islands are inhabited.

Latest estimates put the population at 335,000 and the GDP per Capita ofUS$4,3184. The Bahamas is ranked 49th of 177 country in terms of humandevelopment5.

The Service contributes 90% of the GDP, manufacturing 8% and agriculture a mere2%. The economy is heavily dependent on tourism which accounts for two-thirds ofthe value added in the service sector and directly employs one half of the countryslabour force. The Financial service sector is the second most important contributor to

the economy. It accounts for 15% of the GDP.

Fig. 3.1.

Source: Department of Statistic Bahamas (2006)

Over the period 2003 to 2005 the economy grew at an average annual rate of 2.5%.

The last five years have seen tourism growing at an estimated rate of 2% annuallyand a boom in the construction sector which has registered an estimated annualgrowth of 17%.

4 IMF Statistical Database5 The 2007/2008 Human Development Report (UNDP)


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Fig. 3.2

Source: IMF

3.1.2 The Energy Sector

The principal source of energy in the Bahamas is imported fossil fuels whichaccounts for virtually all its energy production. There are no sources of fossil fuelenergy and all energy sources are imported.

In 2008 the Bahamas consumed 6,055 barrels of fuel. Of this amount, 45% wasdiesel fuel and 21% Heavy Fuel oil (HFO or Bunker C) which was mainly used in

electricity generation. Gasoline used predominantly in the transportation sectoraccounted for 28%.

Fig. 3.3

Source: Central Bank of the Bahamas (2008)


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3.1.3 The Electricity Sector

Electricity service is provided in the Commonwealth of the Bahamas by twocompanies, the Bahamas Electricity Corporation (BEC) and Grand Bahama Power.

BEC is a wholly government-owned company. It accounts for 80% of the electricitygeneration in the Bahamas and serves the capital, New Providence, and the FamilyIslands. Grand Bahama Power Company supplies electricity exclusively to the islandof Grand Bahama, the fourth largest island in the commonwealth. The company ismain shareholders are Marubeni and Dubai Power.

Table 3.1 Net Installed MW Capacity by Plant Type 2008

GBP BEC Total Share

Steam 55.3 22 77.3 13.2%SS Diesel 26.0 171 197 33.7%MS Diesel 18.5 102 120.5 20.6%GasTurbine 35.0 155 190 32.5%

Total 134.8 450 584.8 100.0%Source: BEC & Grand Bahama Power

Fig. 3.4

Source: BEC & Grand Bahama Power


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Currently, all the electricity generation in the Bahamas comes from fossil fuel plants.The total net installed capacity is 584.8MW, of which BEC owns 77% and the GBPthe remaining 23%. The generating capacity in the Bahamas is dominated by dieselplants and gas turbine for electricity production. Steam plants account for only 13%of the total capacity and of this amount 70% is owned by Grand Bahama Power. The

highest non-coincident peak demand registered in the Bahamas was 325 MW.

Primarily because of the construction boom, the average annual rate of growth(3.1%) in generation has outstripped the growth in the real economy (see Fig. 3.4).With the Bahamas close to total dependence on imported fuel this has contributed toa widening of the countrys current account deficit.

System losses in the Bahamas are currently 12.3% with BEC registering losses of15% and Grand Bahama Power 8.9%. Most of the losses are of a technical natureand are associated with the BEC transmission and distribution network.

3.1.4 Legal & Regulatory Framework

The main legislative framework for the energy sector:

1. Electricity Act of (1959)

2. Public Utility Commission (1993)

3. Hawksbill Creek Agreement (1955)

The important players in the sector are:

1. The Bahamas Electricity Corporation

2. The Public Utilities Commission

3. The Grand Bahama Port Authority Limited

4. Ministry of Energy & Environment

The electric utility, the Bahamas Electricity Corporation, is a Government-ownedcorporation which was established in 1959 by the Electricity Act of the Bahamas.The Act provides for the establishment of a corporation -

for the exercise and performance by the Corporation of functions relating tothe supply of electricity and certain other matters; for the transfer to the

Corporation of electrical installations owned by the Government of TheBahamas; to amend and consolidate the law relating to electrical installationsand the generation, supply and use of electricity and for purposes connectedwith the matters aforesaid.

To facilitate development of the sector the Electricity Act 1959, by its ThirdSchedule, specifically exempted certain equipment and machinery from taxes andduties. While the Act, when it was framed, could not have anticipated the current


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interest in renewable technologies it provides a gateway for the use of cleantechnologies free of taxes by BEC.

However, additional legislation which allows tax-free status for renewable technologypurchased by entities other than BEC could provide a meaningful fiscal incentive for

the further development of renewable technology.

The Public Utilities Commission Act was enacted in 1993. This was before theregulatory agency was established. The Act was amended in December 1999.

The Act provided for the establishment of a Public Utilities Commission for thepurpose of regulating 'controlled public utilities' this encompasses the suppliers ofelectricity, telecommunications, water and sewerage, and propane gas services.

The Public Utilities Commission (PUC) in the Bahamas was established in March2000, but is authorized to regulate telecommunications services only. The scope of

the PUCs regulatory oversight will be extended to other services based on thedetermination of the Minister with portfolio responsibility for the relevant service.

Under Section 58 of the Electricity Act, 1959 the duty of the Minister with respect tomaking rules to govern the Corporation is specifically set out. The Act also allows forsome level of self-regulation by the Corporation subject to the approval of theMinister. As such, Section 60 of the Act provides for the Corporation, subject toministerial approval, to regulate aspects of its operations including its tariffs.Therefore, presently, the PUC does not regulate the electricity sector.

In the absence of an independent regulator for the electricity sector, the regulatoryframework does not provide an effective environment for the development ofrenewable energy technology. Regulatory oversight responsibility of the electricitysector should be extended to the PUC since an independent agency tends to bringgreater expertise, transparency and accountability to the regulatory process which isimportant for the setting and monitoring of renewable targets.

This legal framework should therefore be reviewed by the authorities with a view ofextending the oversight responsibility of the PUC as it relates to the existing status ofthe electric utility. In addition, there is a need to create an appropriate mix ofincentives to encourage the development of renewable technologies.

The Ministry of Energy & Environment was established in 2006. It has regulatoryresponsibility for electricity services (provided by Bahamas Electricity Corporation)as well as for the petroleum sector. The Ministry has been mandated to develop anational energy policy addressing the issues related to the more efficient usage oftraditional sources of energy as well as charting a process by which commercialapplications of RE will be facilitated. A draft National Energy Policy has beendeveloped by a committee, however, it was not available to the Consultant at thetime this Study was being prepared because it had not yet been approved by the


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Cabinet. Indications are that the draft Policy will emphasize solar and windtechnologies as the primary sources of renewable energy6.

The Hawksbill Creek Agreement (1955) as amended in 1960 and 1966 grants theGrand Bahama Port Authority the power and responsibility for the economic

development of the island of Grand Bahama. The agreement between thegovernment and the Port authority provides for:

1. the lease 50,000 acres of Crown Land to the Grand Bahama Port Authority or

development;

2. the exemption from Customs Duties on imports (except consumable stores)

and exports to and from the area for 99 years (until 2054);

In addition, the authority to grant licences to conduct business on the island fallswithin the domain of the Port Authorities.

Grand Bahama Power7, was originally owned by the Port Authority. In 1993, 50percent of the shares of the utility were acquired by Southern Company'sInternational (now Mirant) which took management control of the utility. Since thenthe ownership structure has changed with Marubeni Caribbean Power Holdings andDubai Power controlling 55% of the shares as well as the management of thecompany.

Under this arrangement the Grand Bahama Port Authority is effectively theRegulator for the electric utility and is responsible for approving applications for rateadjustments.

3.1.5 Renewable Energy

Wind Energy and Biomass

There is very little happening in the Bahamas in relation to renewable energytechnologies. The main initiative in this area is associated with two projectsdeveloped by the Grand Bahama Power Company.

The first project is a Wind Resource Assessment Project which was launched inApril 2009. The project which is estimated to cost approximately US$263,600 will

see the installation of wind towers at seven sites on the Grand Bahama. The projectinvolves a partnership with Emera, a US energy company and minor shareholder inGrand Bahama Power. If the feasibility study shows promise the electricity companyplans to install up to 15MW of wind capacity in 2012.

6 Based on a statement made by Minister of State for Public Utilities, Phenton Neymour, and reported in theBahamas Journal on May 31, 20087

Originally Freeport Power Company


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The second project is a landfill gas to energy assessment. Early in 2008 thecompany had discussions with Veolia Environmental Services, the fourth largestwaste services firm in the US, with respect to the strategic approach to the project.Preliminary assessment suggests that 1MW capacity of landfill gas to energy may

exist on the island.

Solar Water Heaters & Photovoltaic (PV) Solar electric system

In Nassau there are two main Energy Service Companies whose primary focus is onsolar systems water heaters and PV systems. They are:

1. Solar Power Concepts Ltd2. Nassau Hotel & Restaurant Ltd (an agent of Solar Dynamics in Barbados)

In 2008 the government lowered and simplified import tax on solar equipment which

is expected to boost the use of the renewable technology. While no statistics wasavailable on solar penetration, the evidence suggests that it is very low with the hotelsector showing the greatest interest in solar devices.

3.1.6 Conclusion

Bahamas is extremely dependent on fossil fuel to meet its energy needs. In addition,it has a relatively high Per Capita consumption of electricity. While there seems to bea thrust in the Grand Bahama to find renewable energy solutions this drive is, atbest, tepid in the rest of the Bahamas.

There is an incipient solar energy services industry in Nassau but apart from thehotel sector, the demand for solar devices is weak. The Ministry of the Environmentis currently fashioning an Energy Policy, but it is not clear when it will be published.

While in 2008 the government provided a small incentive on the importation of solarequipment much more needs to be done. The development of renewable energysources will only accelerate with a well conceived energy policy, the strengthening ofthe regulatory body, greater public awareness and timely fiscal incentives.

In addition, the multi-sector regulatory body, the PUC, ought to play a more activerole in the regulation of the electricity sector as this is critical to the financial health ofthe government owned electric utility as well as to the effective monitoring ofrenewable energy targets when a policy is in place.


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3.2 Barbados

Map of Barbados


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3.2.1 Background

Barbados is the most easterly island in the Caribbean archipelago. The islandcovers 432 sq. km (166 sq. miles). The population of the country is approximately270,000. The Barbados economy which is predominantly service-based, has

experienced sustained real GDP growth, averaging 3.5% from 2003-2008, movingfrom Bb$0.977 billion to Bb$1.158 billion8. The countrys per capita income isapproximately US$13,700; enough for it to be classified as a middle incomedeveloping country.

Fig. 3.5

Source: IMF

Barbados currently enjoys a life expectancy of 77 years and an adult literacy rate of97%. Since independence from British rule the country has attempted to diversify itsproductive base. Sugar manufactured from sugar cane is no longer its mostsignificant export product. This shift began during the 1970s, when manufacturingand tourism emerged as major foreign exchange earners. A stable economic climatehas provided an attractive environment for foreign investment and a vibrant servicesindustry.

3.2.2 Energy Sector

Barbados energy sector is produces approximately 1,100 barrels of crude per day,total crude reserves is estimated at 2 - 3 million barrels. It also has natural gasreserve is estimated at 5 to 6 billion cubic feet.

8In real Barbados $ at 2000 prices


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Barbados, like most other regional territories, is heavily dependent on theimportation and use of fossil fuels for energy and transportation requirements.Therefore while the country produces 1,100 barrels per day, crude oil consumptionis said to be in the region of 9,400 barrels per day. Additionally, the countrys

requirements of other fossil fuel derivatives (kerosene, gasoline, diesel and LiquefiedPetroleum Gas) are all imported.

The island energy sector is highly regulated; with central government exercisingcontrol over the pricing of all petroleum products (gasoline, diesel, kerosene, andliquefied petroleum gas). Electricity and natural gas pricing are regulated by the FairTrading Commission.

The distributive petroleum sub-sector is dominated by four companies while theretail sub-sector is comprised of independent dealers who operate under franchiseand licensing arrangements.

Fig. 3.6

The country has been experiencing steady growth in its GDP over the past twodecades. Coincident with this growth in GDP is a similar growth in the countrys per

capita energy consumption. The average energy consumption has increased from7,100 barrels per day in 2004 to 9,400 barrel in 2008 (source US EIA). This growthin demand along with spiraling world market prices have significantly increased thecost of fuel imports; placing considerable strain on the countrys foreign exchangeearnings.


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3.2.3 Electricity Sector

Electricity production and distribution started in Barbados in 1911 when the firstdiesel generating units were installed at the Garrison and a distribution network wasestablished in the environs. Since then, the transmission & distribution systems

have been expanded to cover the entire island.

Barbados electricity sector remains a virtual monopoly, with the Barbados Light andPower Co. Ltd (BL&P) controlling the majority of generation and all the distributionand transmission of electricity on the island. The sugar industry and a small numberof manufacturers generate electricity for their own consumption. Privately installedgenerating capacity is estimated to be about 3 Megawatts or 1 percent of theislands total installed capacity. The Island enjoys an electricity penetration rate of100 percent.

Fossil Fuel (fuel oil) accounts for 100% of the BL&Ps energy generation. Low speed

diesel engines burning heavy fuel oil accounts for 90% of the fuel consumed. Dieselfuel accounts for 7.5% with the remaining 2.5% being natural gas. The natural gasrequirement is supplied by National Petroleum Corporation (NPC) on an interruptiblebasis.

Over the past 5 years the BL&P has experienced an average growth in demand of3.2%; increasing from 806 GWh in 2003 to 944 GWh in 2008. This demand issatisfied by a total installed generating capacity of 239.1 MW with peak demand of164 MW and a base load factor of approximately 74%. Sixty-four percent of totalinstalled generating capacity employs Low Speed Diesel engines or SteamTurbines. The remaining 36 percent is supplied from Gas Turbines burning Dieselfuel.

Table 3.2 BLP Installed Generating Capacity by Plant Type 2008

PLANT TYPE CAPACITY (MW) % TOTALCAPACITY

FUEL TYPE

Low Speed Diesel 113.1 47 Heavy Fuel OilGas Turbines 86.0 36 Jet A1/DieselSteam Turbines 40.0 17 Heavy Fuel Oil

TOTAL 239.1 100

During 2007 total energy sales was 940.8 GWh, of which the companys 97,800

residential customers accounted for 300 GWh or 32 percent. The remaining 640.8GWh or 68 percent was consumed by the companys 18,857 commercial customers.

Average system losses during 2008 was 6.3%, this is 0.4 percentage points belowthe average for the period 2004 2008.


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3.2.4 Demand Side Management

With respect to demand side management, BL&P provides brochures at itscommercial offices which provide tips to residential customers on how to useelectricity efficiently. It also will do energy audits upon request by large customers.

In its May 2009 Rate Application BL&P proposed a Time-of-Use (TOU) rate pilot fora 3-year period for a maximum of 30 large customers. During the peak-demandperiod (10 a.m. 9 p.m.) the generation cost is significantly higher than the off-peakperiod. If the pilot is successful it could slow the growth in demand and lower thecountrys overall fuel bill.

3.2.5 Financial Performance of Electricity Sector

Revenues and Sales

Between 2004 and 2008 Barbados Light & Power recorded steady growth in energysales and revenues. Energy sales in 2004 were 831,305 MWh and recorded anannual average growth of 3.2% reaching 944,036 MWh in 2008. System losses overthe same period were relatively flat averaging 6.7%, ranging from a low of 5.9% in2007 to a high of 7.2% in 2006.

Fig. 3.7

BLP Energy Sales & Revenues

760.0

800.0

840.0

880.0

920.0

960.0

2004 2005 2006 2007 2008

GWh

0.0

40.0

80.0

120.0

160.0

200.0

240.0

280.0

US$M

Energy Sales Revenues

Source: Annual report Light & Power Holdings

Total revenues grew from US$150.8M in 2004 to US$236.7M in 2008, an increaseof US$85.9M. This translates to an annual average revenue growth of approximately12%. Average growth in MWh sold of 3.23%, contributed approximately US$20.4Mto the growth in revenues. The movement in average tariff from US18.14 cents/kWh


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in 2004 to US 25.07 cents/kWh in 2008, consistent with changes in fuel cost,contributed US$65.5M.

Profitability and Return

During the period 2004 2008 Barbados Light & Power (BL&P) has proven itself tobe a financially stable power producing and distributing entity. The average return onshareholders investment during this period was 6.1%, ranging from a high of10.93% in 2007 to a low of 2.8% in 2003. The main factors contributing to the 2007high were; (i) a four percent reduction in non-fuel operating cost when compared to2006 and (ii) a write back of deferred taxes as a consequence of a reduction in thecompanys effective tax rate. These factors were not repeated in 2008 andconsequently the company was only able to generate a return on equity of 5.6%,which was more in line with the norm.

Financing and Investment

Over the five year period the company invested a total of US $164.7M in theupgrading and expansion of its plant facilities. The major portion of this investmentwas financed by the reinvestment of internally generated resources. Consequently,net borrowing over this same period amounted to only US$6.6M. While additionalcapital from equity injection amounted to only US$16.1M.

Of the US$164.7M in capital expenditure over the period, approximately US$70Mwent into the procurement of additional generating capacity. This expansion ingenerating capacity is represented by the two 30 MW Slow Speed Diesel enginescommissioned in 2005.

BL&P has also done very well in containing non-fuel operating cost. Although energysales have been growing at an average annual rate of 3.2%, the growth in non fueloperating cost was 2.2%. This means that the company was able to improve itsoperational efficiency over the period. This improvement is demonstrated in thereduction in non-fuel operating cost from US7.8 cents/kWh to US7.5 cents/kWhbetween 2004 and 2008. The utility has also done very well in the management of itsreceivables. Between 2004 and 2008 the average receivable days outstanding was38. This is fairly good by utility standards.

BL&P is a financially, fairly well managed utility and the company has been able tomaintain good financial health, despite not having an increase in base tariffs for overquarter century.


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Table 3.3 BLP Selected Operating & Financial Statistics

2008 2007 2006 2005 2004

Energy Sales MWh 944,036 940,845 903,398 884,708 831,305

Total Revenues US$000's 236,655 198,818 180,827 169,616 150,797Operating Expenses US$000's 219,631 175,323 163,098 157,405 139,310

Operating Income US$000's 17,024 23,496 17,729 12,211 11,487

Net Finance Cost US$000's ($1,092) ($681) ($890) ($3,127) ($1,725)

Taxes - US$000's US$000's 540 7,458 (256) (1,390) 3,646

Net Income US$000s US$000's 16,473 30,273 16,583 7,695 13,408

Capital Expenditure US$000's 26,433 32,098 31,238 21,437 53,480Net Borrowing Flows US$000's (6,364) 6,293 (6,921) (5,751) 19,354

Current Ratio 2.82 2.38 2.80 2.15 1.93

Total Debt To Equity 0.38 0.45 0.45 0.45 0.47

Receivable Outstanding Days 41 44 36 32 36

Return On Equity % 5.6 10.9 6.2 2.8 5.2

3.2.6 Expansion Plan

Barbados did not provide an expansion plan, however the average annual demandgrowth between 2009 and 2013 is forecasted at 2.3%, with lower growth rates in the

earlier years.

Table 3.4 Barbados Forecasted Demand 2009 2013

YearProjected

Sales Growth%

DemandMWh

Peak DemandMW

2009 2.0 962,916 167.3

2010 2.0 982,175 170.6

2011 2.5 1,006,729 174.9

2012 2.5 1,031,897 179.3

2013 2.5 1,057,695 183.7

Barbados current installed Generating capacity is 239.1MW. The projected peakdemand in 2012 will be in the region of 179.3MW. If Barbados is to maintain aminimum reserve margin of 25%, the country will need to add 15-20 MW of firmgenerating capacity by the end of 2012.


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3.2.7 Legal & Regulatory Framework

The legal instruments under which electricity services are provided in Barbados are:

1. Electric Light and Power Act (1899)

2. Fair Trading Commission Act (2001)

3. Financial legislations such as Fiscal Incentive Act (1974); Income Tax Act(1969) & Customs Act (1963)

4. Utilities Regulation Act, Cap. 2000-30

5. Barbados National Energy Policy, 2007

The legislative instruments that regulate the energy sector are listed above with

primary importance assigned to (1) the Electric Light and Power Act (1899) and(2) the Utilities Regulation Act (2001), and (3) the Fair Trading Commission Act(2001) which most directly affects the electricity industry, the dominant user of fossilfuel. The Third Schedule of the Electricity Act gives the Barbados Light andPower Co. the exclusive right to sell electricity for public and private purposes for aperiod of 42 years from 1986.

The current regulations do not specifically provide for power generation byindependent companies because BLP has been awarded monopoly rights tocommercial generation, transmission and distribution of electricity.

While the law does allow auto generation, i.e. the generation of electricity for in-house consumption, it prohibits sales by such private generators to other consumersor injection into the grid without specific agreement with BLP for purchase of theenergy supplied.

Electricity tariffs are determined by the Fair Trading Commission and are set inaccordance with the provisions of the Utilities Regulation Act (2001). The lawdefines the principles underlying tariff determinations as well as consumer servicestandards.

Energy Division Ministry of Energy

The Energy Division of the Ministry of Finance, Economic Affairs and Energy was

established in 1978 and is responsible for overseeing development of natural

resources; renewable energy portfolios; the Barbados National Oil Company Ltd; the

Barbados National Terminal Company Ltd; and the National Petroleum Corporation.

Its website proposes its vision for the energy sector in Barbados as placing

emphasis on principles, policies and strategies which encourage development, but


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recognize the strengths, weaknesses and opportunities which characterize the

Barbadian economy.

National Energy Policy

The Ministry of Energy & the Environment has prepared a soon-to-be implementedNational Energy Policy, for Barbados. In the policy the government sets itself theambitious goal of increasing the input of renewable energy (RE) sources tocontribute more than 10% of the islands primary energy requirements by 2012 and20% by 2026. The specific objectives of the policy are to:

1. Provide adequate and affordable energy to all sectors of society;

2. Enable the maximization of the efficiency of energy use in production,storage, distribution and end-use.

3. Make renewable energy technology a primary source of energy, therebyreducing dependence on traditional fossil fuels;

4. Promote competition, and the best industrial and petroleum practices in theelectricity and petroleum sectors, using a mix of regulation, economic andmarket-oriented approaches to achieve this objective.

5. Promote research and development in energy efficiency, oil and gasexploration and renewable energy technology.

6. Increase private participation and encourage the inputs of the major

stakeholders in ensuring that the objectives of policy and the expectedbenefits will be recognized by all.

The Government in promoting its so-called vision of "Green Economics" focuses itsattention on energy conservation and efficiency in all sectors of the economy. Theobjectives include:

a) Minimizing solid waste;

b) Promoting separation and recycling of solid waste components;

c) Promoting "Green" building techniques and standards;

d) Using RE resources wherever feasible;

e) Encouraging energy conservation in the public sector.


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The National Energy Policy also requires that Renewable Energy Legislationshould be enacted to facilitate the development and sustainability of renewableenergy projects. It is recognized that success of the Policy will require theGovernment to commit to certain specific actions, such as:

1. Creation of a Renewable Energy Investment Fund: In its 2006 budget theGovernment announced that it will encourage and contribute to such a fund tobe used to provide economic incentives for investment in RE systems.

2. Establishment of a Renewable Energy Centre staffed by public and privatesector individuals, and will mandate to review renewable energy policies andprograms.

3. Strengthening the Energy Division, which will have responsibility forrecommending and reviewing the effectiveness of economic instruments.

4. Extending the franchise to sell electricity to economically viable renewableenergy producers - connection to the grid being allowed at the source of theRE generator.

5. Guaranteeing that RE electricity will contribute up to 10% of total electricityconsumption, if the associated costs are within an acceptable range.

6. Mobilizing the funding needed for research and development with theobjective of leveraging investments in renewable energy.

7. Imposing a Carbon Tax on companies which emit green house gases. The

tax will be proportional to the global value of the emission traded under theKyoto Protocol and other mechanisms.

8. Introducing Green Power Investment Deductions, a form of tax-relief to beextended to companies which invest in government-sanctioned renewableenergy projects.

9. Establishing a Renewable Energy Investment Fund: In its 2006 budget theGovernment announced that it will contribute to a renewable energyinvestment fund to be used to provide economic incentives for investment inRE systems.

10. Establishing a Renewable Energy Centre.

The push by the Government of Barbados to increase exploitation of RE resourcesis based on sound economics and the proven success of earlier initiatives. The solarwater heater industry in Barbados is one of the best examples of legislationfacilitating exploitation of a RE technology in the Caribbean. As a reaction to the oil


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crisis of the 1970s, the Government of Barbados passed the Fiscal Incentive Act(1974) which allowed manufacturers to benefit from import duty preferences and taxholidays.

The solar water heater industry was encouraged by allowing companies in the

business to:

(a) Benefit from import preferences and tax holidays on the importedcomponents for the manufacturing of solar collectors. Raw materials usedin the manufacture of solar water heaters were exempted from the importduties which would otherwise have been applied;

(b) Imposing a 30% consumption tax on electric water heaters, to improve thecompetitiveness of the solar water heater;

(c) Offering tax concessions (in the 1984 Income Tax Amendment Act) for

the installation of solar water heaters whereby the purchaser of such asystem is allowed to fully deduct the associated cost from his/her incometax liabilities, up to a maximum of three thousand five hundred Barbadosdollars (BB$3,500) equivalent to about US$1,730.

As a result of these incentive schemes Barbados has the largest market penetration(40%) of solar water heaters in the Caribbean.

In 2006/2007 the government extended incentives to energy efficiency improvementdevices other than solar water heaters by waiving the import duty payable. Theseincentives are now applicable to RE systems such as:

Wind turbines

Solar Photovoltaic installations

Bio-fuel installations

Prior to this exemption the components associated with these systems were notshown as separate categories under the Customs Act (1963) and therefore enjoyedno reduction in the taxes which would normally have applied.

The Fiscal Incentive Act (1974) and the tax breaks it afforded, the 1984 IncomeTax Amendment and the tax exemptions granted on import duties are examples ofsuccessful enabling legislation in Barbados benefiting proliferation of REtechnologies.


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Energy Regulation

The energy sector is regulated under the Fair Trading Commission Act (2001) andthe Utilities Regulation Act, also promulgated in 2001. The Fair TradingCommission Act (2001) established the Fair Trading Commission which was

thereby entrusted with responsibility for regulating the provision of utility services inBarbados, inclusive of electricity services. Section 4 of that Act is intended toensure that regulated power utilities such as BLP comply with the provisions of theUtilities Regulations Act (2001).

Under the existing legal and regulatory framework there is no provision forindependent power producers to sell electricity to the grid. Given the fact that themaximum demand is currently less than 170 MW, the advantage of loweringelectricity cost by way of economies of scale might be lost with the introduction of acompetitive generation market. However, it is important that regulator creates thecondition in which the utility operates efficiently and the benefits are shared with

consumers.

Notwithstanding, the feed-in of excess energy generated from renewable sources islikely to encourage the growth RE technology if reasonably priced. In this respect theexisting legislation should be examined with a view of making the necessaryamendments to facilitate the feed-in of renewable energy to the grid.

3.2.8 Renewable Energy

Solar Water Heaters

More than any other CARICOM member state Barbados has been successful in theroll out of solar water heaters. While the no current statistics are available on thenumber of solar water heater installations in 2000 it was estimated at 32,000. It isestimated that solar water heaters installation accounts for electricity reduction 128GWh annually which translated to fuel savings of approximately US$10 million.

The popularity of solar water heaters in Barbados is largely explained by the earlypresence of Energy Service Companies, Solar Dynamics and Sun Power, in thecountry. Both companies have been active in Barbados since the early 1970s. Inaddition, the government created an enabling environment for the development ofsolar energy early in the game with the Fiscal Incentive Act of 1974. The Actallowed the solar water heater manufacturers to benefit from a preferential importand tax regime. An additional incentive was introduced in 1980 which allowed homeowners to receive tax rebates for solar water heater purchases.

Photovoltaic (PV) Solar electric system

In 2000 BLP commissioned a photovoltaic (PV) solar electric system at the SeawellGenerating Station. It was essentially an experiment to gain insight into the


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operation and maintenance of such systems, as well as to evaluate the potential forsolar electric power in Barbados.

Fig. 3.8

Photovoltaic Panels on the roof at Seawell Generating Station

The system fed power into the grid and produces 2kW on a normal day and morethan 2.5kW on clear sunny days. The experiment was considered successfulhowever the relatively high investment cost did not favour an expansion of theproject.

In addition, Barbados has about 37 KW of PV systems installed at various sites.

These include9:

1.1kW at the University of the West Indies (UWI) for solar cooling.

17.3kW at Harrison's Cave for running the lights.

3.0kW at Combermere School for operating a computer laboratory.

11.1kW at the Skeete's Bay fishing complex

Wind Power

BLP has plans to develop a wind farm at Lamberts, St. Lucy. This arises out of afeasibility study at Lamberts site conducted by Renewable Energy Systems of the

9Centre for Resource Management and Environmental Studies, UWI Cave Hill Campus - Barbados

Renewable Energy Scenario Current Status and Projections to 2010


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UK. The study was partially funded by a grant from the Centre for the Developmentof Enterprise (CDE) in Brussels.The investment will require approximately US$ 15 million. It should have a capacityof 10 MW using and is expected to create three (3) new jobs.

Based upon the feasibility study it should generate approximately 32 GWh per year.This means annual fuel savings of around US$2.5 million and a reduction in CarbonDioxide emissions of about 20,000 tonnes per year. The plan is now before theregulators for approval.

Other Renewable Sources

Given the size of the rivers in Barbados there is no scope for hydro power. It isbelieved however to have the potential for 10MW waste to energy plant.

Renewable Energy Rider

In its May 2009 Rate Application, BL&P proposed a Renewable Energy Rider whichinvolves the introduction a 3-year pilot which would allow for the supply of energy tothe grid by small customers with their own renewable energy sources. BL&P hasproposed that the purchase price be set at a level that reflects the avoided cost ofenergy supplied from the grid and the cost of the metering cost.

3.2.9 Conclusion

Barbados is unique among the selected countries, since it is the only one which hasan Energy Policy, albeit, it has not yet been implemented. In addition, the solar waterheater business is fairly active in the country. It is estimated that one in every threeresidents has solar installations. Studies have shown that it also has the potential forwind energy.

While Barbados produces approximately 1,000 barrels of oil per day, it consumesover 9,000. As such it is still highly dependent on imported fuel. As such theproposed introduction of a TOU rate pilot and a Renewable Energy Rider should beencouraged.

In addition, the government should move quickly to implement the policy as well asexamine further fiscal incentives that may accelerate the use of renewable sources.It is also important that the legislation be revisited with a view to facilitating theexpansion


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3.3 Belize

Map of Belize


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3.3.1 Background

Belize is the only CARICOM member state in Central America. It has a total land

area of 22,972 sq. Km (8,867 sq. miles) and is bounded to the east by the CaribbeanSea, to the west and south by Guatemala and to the north by Mexico. Belizespopulation is estimated at 311,50010 with a GDP per Capita of US$4,31811. Thelevel of human development achieved in the country was ranked 80 out 177countries in the 2007-2008 Human Development Report.

As far back as 1992 Belize signed the United Nations Framework Convention onClimate Change (UNFCCC) at the United Nations Conference on Environment andDevelopment (UNCED) in Rio de Janeiro. It ratified the Convention in 1994. Belize isalso a signatory to the Kyoto Protocol.12 In addition, as a member of both CARICOMand Central American Integration System (SICA) it is party to the May 2007

Agreement which includes cooperation in energy security through the diversificationof energy sources as well as energy conservation.

Fig. 3.9

Source: Statistical Institute of Statistic of Belize

Over the period 2003 -2008, the economy grew at an average annual rate of 3.5%.

Approximately, two-thirds of the economic activity in the country is attributable to theservice sector, while the manufacturing and the agricultural sectors accounts for20% and 13% respectively.

10Abstract of Statistics Belize 2008 produced by Statistical Institute of Statistic of Belize

11IMF Statistical Database

12Belize signed the Kyoto Protocol on September 26, 2003


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Over the four-year period 2003 -2007 the countrys agricultural sector declined at anaverage annual rate of 4.4%. However, the economy experienced rapid expansion inthe manufacturing sector, a boom in the real estate and financial services andgrowth in the tourism sector at a rate of 4.2% annually. The growth in the economyexperienced over the last five years has resulted in unemployment fall from 12.9% in

2003 to 8.5% in 2007.

Fig. 3.10

Source: Statistical Institute of Statistic of Belize

3.3.2 Energy Sources

It is estimated that approximately 71% of Belizes energy requirement is importedfuel and although the country has recently started to produce oil, all of its fossil fuelrequirements are met through import.

Approximately, 29% of Belizes energy needs are satisfied by three indigenoussources. Hydropower employed for electricity generation, bagasse used forcogeneration in the sugar industry and wood mainly used for cooking in poor

communities.


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Fig. 3.11

Source: PUCEnergy Policy Recommendations

3.3.3 The Electricity Sector

The Belize Electricity Limited (BEL) is the sole distributor of electricity to the nationalgrid and currently provides service to over 74,000 customers. Prior to 1992, thecompany (then called Belize Electricity Board) was completely government-owned.Approximately 70% of the interest in the company is privately-owned, by Fortis Inc.of Canada. Another 27% of the shares are held by the Social Security Board and theremaining owned by a number of small shareholders. BEL now operates under itssecond 15-year licence; the first expired in January 2008.

Table 3.5 BEL Capacity & Net Generation (2003 -2008)

2003 2004 2005 2006 2007 2008

CompanyPlantType

Capacity(MW)

Net Generation (MWh)

BELDiesel &

GT 27.0 97,889 78,850 81,553 30,136 36,078 10,704

CFE Diesel 50.0 188,714 235,796 253,995 209,814 225,227 248,396BELCO Hydro 29.8 61,154 63,215 68,275 177,733 166,727 191,589HydroMaya Ltd. Hydro 3.0 - - - - 10,676 12,898

Total 109.8 347,757 377,861 403,823 417,683 438,708 463,587Source: BEL


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While BEL presently commands 109.8 MW of capacity, it only owns 27 MW. Therest is contracted through independent power purchase agreements (IPPs).Comision Federal de Electridad of Mexico provides 50 MW of capacity. The BelizeElectricity Company (BECOL), a subsidiary also owned by Fortis provides 25.2 MWof hydro capacity from its plant at Mollejon and another 7.3 MW of hydro capacity

from Chalillo, both in the western district of Cayo. Hydro Maya Limited (HML) in thedistrict of Toledo in the south accounts for approximately 3 MW of capacity.

Electricity generation over the period 2003 2008 has grown at an average annualrate of 5.9% outpacing the 3.5% growth registered by the economy. However, theproportion of renewable generation in the mix has also grown. Hydro plantsaccounted for 44% of the total generation in 2008, while in 2003 it represented 18%(see Fig.4.10). This is largely attributable to the commissioning of the hydro dam atChalillo in 2005 and the introduction of HML in 2007.

Fig. 3.12

Source: BEL

There are also small pockets of self-generation, not connected to the national grid, inBelize. These include:

The Farmers Light Cooperative(3.75 MW Diesel capacity): which supplies

power exclusively to the Mennonite community at Spanish Lookout;

The Citrus Company of Belize at Stann Creek

The Five Sisters Lodge (Resort) in San Ignacio which operates a run of the

river mini-hydro plant.


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Of significance, is the fact that electricity consumption has grown at virtually thesame average annual rate of generation over the last five years, with peak demandclimbing from 57.4 MW in 2003 to 74.3 MW in 2008. In keeping with the dynamismof the economy, Commercial and industrial consumption has increased at anaverage annual rate of 7.8% over the period with the residential growth lagging

behind at 5%. Electricity penetration is currently estimated to be 90%.

Total line losses in 2008 were 12.2%. Non-technical losses account for a mere 1.5to 2% of total losses. The high level of technical losses is attributable to themovement of imported power over long distances from Mexico to the load centers inBelize.

Fig. 3.13

Source: BEL

3.3.4 Demand Side Management

In 2006 and 2007, the Government of Belize benefited from a gift of florescent lamps undera special programme sponsored by the Cuban Government. Under the programmethousand florescent bulbs were distributed to households to replace the less energy effici

baseline study of energy policies & legislation in selected caribbean countries, july 2009

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