The prayers of businessman Ralph Bizzy Williams and other renewable energy industry players, for the Fair Trading Commission (FTC) to establish a set price for electricity produced from renewable energy sources, could soon be answered.
Giving his support for a permanent tariff rate, Minister of Industry Donville Inniss said he would be engaging the FTC on that and other matters affecting the sector over the next two weeks.
“It cannot be temporary forever, in terms of the rate,” he said. “I think it is only fair that a time frame be given as to alteration for the rate.”
In addition, Inniss urged the Barbados Renewable Energy Association (BREA) to move with a sense of urgency in putting its case before the FTC for the raise it required.
The pressing issue for industry players is the lengthy delay by the FTC in setting a fixed rate for electricity sold under the Renewable Energy Rider (RER) programme, nearly a year after the regulatory agency announced a temporary rate in July 2016.
The FTC had said then that it would increase the capacity limit to 500 kW from 150 kW and set a temporary RER credit at $0.416/kWh for solar photovoltaics and $0.315/kWh for wind, “until such time as a permanent rate may be established”.
Earlier this month, Williams told Barbados TODAY that while his solar company was doing all it could to help drive down fuel imports and provide clean energy, the FTC seemed hell bent on wiping out “the Bajan investors”, arguing that investors were not prepared to invest based on a temporary tariff.
BREA recently held a state of the sector members’ meeting at the United Nations House, examining the issues surrounding financing of the sector in times of crisis.
Inniss, who has responsibility for the regulatory body, told the association’s members that the FTC was there to hear their arguments and they should move with urgency to get their concerns across.
“You have to make it a little easier for [the Barbados] Light and Power as utility and power producers to have a greater sense of clarity in which to function,” he said.
BREA President Aidan Rogers is yet to put forward a suggested tariff increase, but said his organization was also pushing for an extension of the Power Purchase Agreement from ten years to 20 years, to ensure investors could secure adequate financing to help grow the sector.
Rogers explained that financial institutions were “not prepared to offer loans for durations beyond seven years” for the licensing period of ten years, and this was therefore resulting in a loss to power producers.
“What that limitation in terms of the loan period means is that when you marry the loan period of seven years against the tariff currently being offered, most investments that secure financing, maybe to the tune of between 70 to 100 per cent, are in a negative return for the first seven years or the duration of that loan period,” he explained.
However, Rogers said if the power purchase agreement was extended to 20 years, it would make the venture more feasible, since financial institutions would be more inclined to extend the loan periods “to maybe 12 or 15 years”, which would then put investors in a cash flow position from inception.