Govt, Light & Power sign licences to unlock $500m in renewable projects

Barbados has secured its electricity supply for decades to come after the Ministry of Energy signed new licences with the Barbados Light and Power Company, clearing the path for more than $500m in financing for renewable energy projects and averting the risk of grid failure after 2028.

Owing to a lack of energy storage, the system has been on what can be described as in “gridlock”, Minister of Energy Senator Lisa Cummins said at the signing ceremony at the Warrens Office Complex on Friday,
The new licences will pave the way for power purchase agreements for renewable energy projects, she said.

Sen. Cummin said: “It is important for projects to not just have connections to the grid, but to have signed power purchase agreements that establish the relationship between independent power producers as part of the democratisation of the energy process, and the off-taker, namely the Barbados Light and Power Company.

“On that basis, the renewable energy team is quite happy to be a part of this process… but certainly in the last few months to get to the stage where we have completed negotiation of the licences for the operations of the Barbados Light and Power in Barbados. That’s significant for the renewable energy sector.”

The new licences also allow banks to unlock millions for renewable energy projects.

“It allows the bankers represented here by Scotiabank to have those $500m … that we’ve talked about so often to be unlocked through those power purchase agreements,” she said.

Sen. Cummins highlighted the Electricity Supply Act and its significance to the existing licences:
“The original legislation governing the electricity sector was the (ELPA) Electric Light and Power Act. When that Act was repealed, it was replaced with the Electricity Supply Act, and the Electricity Supply Act then needs to correlate to licences which have been negotiated prior to its passage. So we had to take the time, then, to make sure that we went through the negotiated licences as they existed prior to last year, and make sure that they aligned.”

Light and Power’s managing director, Roger Blackman, said the new licences represent a modern framework and called the signing “an important milestone”.

“They cover all aspects of our operations, from generation and storage to transmission, distribution, sale and dispatch of electricity. And that’s important because it sets a framework for us to be able to operate, to create certainty for us and investments that are being made in the sector, not just by us, but as the minister would have indicated independent power producers and the bankers who are financing them and so on.”

The new power purchase agreement will take effect after the old one has been revoked and will last for 30 years.

“Having new licences that go out 30 years in the case of the [transmission and distribution lines] or for the life of legacy assets is an important and necessary step to ensure that the investment is coming in to maintain and to build new infrastructure.”

The energy minister noted that the signing comes during Energy Month.

“We’ve had a genuinely aggressive period over the last two years of lining up the sector in all its parts, ensuring that we have the behind-the-scenes work done for the battery energy storage system project.”
The new licences will take effect once the existing orders have been revoked.

“The instructions have gone from Cabinet to the Chief Parliamentary Counsel to revoke the existing orders and as soon as that is done, there will be no lacuna. The signature of the licences this morning will allow for a smooth transition that will take effect immediately as the orders are revoked, and so we’re quite happy that we have been able to set this up for today.”

Blackman noted that the existing franchise, which expires in 2028, is a single franchise covering all operations. The new framework consists of two licences.

“One that covers generation and storage, and that will cover the legacy assets of generation that we have at the moment and install and provide a safe, reliable service to customers over time as new generation comes on board, whether that is from an independent producer or from us, those will be licensed individually and separately.”

“The second licence will cover everything else, essentially transmission and distribution as the poles and the wires that you see and all the associated equipment, but also the back office, the sales and the dispatch. More importantly, in dispatch we have always dispatched plant, but in the new framework and market going forward, dispatch takes on a new important dimension in that we will now be dispatching not only our assets, but independent assets that are providing services to the grid.”

The energy minister stressed the importance of renewing the licence to ensure the reliability and safety of the electricity grid.

“By renewing licences that were meant to expire in 2028, you remove the challenges that Barbadians don’t want to have to navigate with infrastructure failing, or blackouts occurring because you don’t have investment, new investment, financed onto the legacy assets, and that you’re not making investments in modernisation because you only have a short window.”

She concluded: “We’ve removed that 2028 hurdle, having already intended to do so since 2021, 2018, and even before that, and now make sure that we have finalised once and for all the new licences for the Barbados Light and Power to allow for that financing to take place and to allow for the investment in infrastructure and new investment in infrastructure that we as Barbadians all want to be able to see and benefit from.”

(LG)