Ensuring fairness in the energy transition

Many have wondered for years why it was taking so long to roll out the new renewable energy industry. Calls have been made in various quarters for a diversification of the local economy from the heavy reliance on tourism. Renewable energy (RE) appeared to have been identified by the current government as a response to that call, to assist with the diversification strategy.

 

The promise of a 100 per cent RE future in Barbados seemed constrained by a single, stubborn limitation within the electricity grid. This was not merely a technical inconvenience; it became a significant economic setback for firms including micro, small, and medium enterprises (MSMEs). The new RE industry portended for MSMEs reduced operating costs and potential revenue from selling electricity back to the grid via the Feed-in-Tariff (FIT) or Renewable Energy Rider (RER).

 

Despite government’s encouragement for the private sector to invest millions in solar energy, the grid could not absorb their power. The result was a prolonged “gridlock” that stalled both innovation and cash flow.

 

The policy-reality divide: Loans without returns

Hundreds of MSMEs, however, heeded the initial call, investing in equipment and taking on loans. However, the non-smart grid soon reached its safe capacity limit, recognised to be approximately 100 MW of distributed solar, beyond which intermittent energy posed risks to national grid stability. These small businesses soon found themselves unable to connect systems that were already purchased, installed, and fully inspected. Their expected energy savings vanished while loan repayments continued. What should have been a smooth clean-energy transition became a cash-flow crisis and a setback for national progress.

The response by government through the Energy Smart Fund (ESF) II, to provide MSMEs a financing solution in the form of low-interest loans for solar photovoltaic (PV) systems, was a lauded solution but late in the game. The Loan Refinancing Facility under the ESF II, effective April 2025, was intended for MSMEs that obtained financing from other institutions but were unable to connect their systems to refinance their loans. Delivered through partners such as Fund Access and the Enterprise Growth Fund Limited, the refinancing option typically carried an interest rate of 3.75 per cent and was designed to ease immediate repayment pressures. However, many businesses were already saddled with payments to financial institutions, loss of revenue from planned projects and non-earning assets simply deteriorating by the week.

 

A $500 million turning point: Unlocking the technical solution

The recent signing of new operating licences between the government through the Ministry of Energy and the Barbados Light & Power Company (BLPC) marks a decisive turning point. It is more than a regulatory formality; it is the moment when MSMEs can finally access the RE benefits they invested in. The priority now is to ensure rapid interconnections and full utilisation of the financial measures established to correct this long-standing imbalance.

The signing of the new 30-year operating licences will facilitate the utility to secure the long-term financing required for large-scale grid modernisation. With regulatory certainty restored, over BBD$500 million in investment can now be mobilised for Battery Energy Storage Systems (BESS). These systems will absorb excess daytime solar generation and stabilise the grid, enabling hundreds of waiting MSME projects to be safely connected. This marks the moment when the physical limitations of the grid can finally be expanded, releasing MSMEs from their long period of enforced inertia.

 

Clearing the path ahead: Priorities for a fair and efficient rollout

With the new licences now signed and the grid modernisation process officially underway, the next phase depends on clear, coordinated action. For MSMEs that have waited, some for years, the following priorities are essential to ensure that the benefits of renewable energy finally reach those who invested first.

 

1. Immediate interconnection

A transparent timeline is needed for lifting the connection pause and commissioning the hundreds of stalled MSME systems. Early adopters, many of whom have already met all regulatory requirements, should be among the first to access renewed grid capacity once BESS systems begin coming online.

2. Effective promotion of the loan refinancing facility

The Loan Refinancing Facility can provide substantial relief, but only if MSMEs are fully aware of the support available and can access it without undue administrative hurdles. Clear communication and a streamlined process are essential to ensure the facility delivers the stabilisation it was designed to provide. It is counterproductive to introduce relief mechanisms and embroil them in tedious bureaucratic processes such that the intended beneficiaries are discouraged from accessing the support.

3. Strong and transparent oversight

With a 30-year licence in place, consistent oversight from the Fair Trading Commission and the Ministry of Energy will be critical. This includes ensuring fair access to the grid, preventing punitive tariffs, and guaranteeing that national energy policy goals, particularly regarding MSME inclusion, remain central during implementation.

 

A fair transition must honour its early builders

Barbados now stands at a pivotal point. The regulatory certainty is in place, the technical solution is within reach, and the financial mechanisms have been strengthened. Yet the success of this new era will not be measured by announcements or infrastructure alone, it will be measured by whether the MSMEs who invested early, and at considerable risk, finally receive the returns they were promised.

These enterprises stepped forward when the nation set its renewable energy ambitions. They borrowed, built, and innovated in alignment with Barbados’ vision of a low-carbon economy. They endured delays not of their making. As the country embarks on its next stage of grid modernisation, ensuring that these early contributors are meaningfully prioritised is both an economic necessity and a matter of principle.

A just transition is not only about deploying clean technology; it is about fairness, accountability, and restoring confidence. With momentum building and the path ahead finally clear, Barbados now has the opportunity, and the responsibility, to deliver on its commitments.