In two months investors in renewable energy will have a decision on a standardized rate of return for the power they supply to the national grid.
This morning Minister of Energy and Water Resources, Wilfred Abrahams, revealed that the Fair Trading Commission (FTC) has been given the responsibility to define the feeding tariff for persons producing up to one megawatt of electricity.
The minister explained that investors would be locked into this rate of return for the next 20 years.
“By July 6, the FTC should have advised us as to what the proper feeding tariffs for renewable energy should be,” said Abrahams, who broke the news from his office at Country Road this morning.
Abrahams further revealed that the FTC would not be constrained by the feeding tariff pricing structure for larger systems producing over one megawatt.
Noting that he expected rates to fall below what is currently being offered, Abrahams gave the assurance that the new permanent rate would ensure that investors receive fair returns, in light of significant reductions in the cost of the technology over the years.
“I have no doubt that the feeding-tariff rate is going to drop from where it is now. I would have to await the advice of the FTC to see what it ends up being. Currently we don’t know because we are operating with old data and we did not want to make that decision using old data. So we thought it best to get a new market study that looks at the new developments in the sector and come up with a recommendation,” said Abrahams, who pointed out that the price of solar panels have come down by 60 per cent over the last seven years.
For some time, investors in renewable energy have complained that they were unable to secure financing for their projects, as lending institutions were deterred by the instability of rates, which were influenced by the fluctuation in oil prices.
In 2016 the FTC set a temporary rate for the power being sold to the national grid under the RER programme at $0.416/kWh for solar photovoltaic and $0.315/kWh for wind “until such time as a permanent rate may be established”. At the time, the FTC said
the decision was taken to increase the capacity limit to 500 kW from 150 kW.
The uncertainty in the sector has dampened appetite for new investment and with Barbados looking to be a carbon-neutral country by 2030, Abrahams made it clear that impetus was urgently needed.
“For us to get to the 100 per cent renewable energy target by 2030, our sector cannot grow incrementally. We require nothing less than a tectonic shift to get there. It has to be a radical transformation. So, this is our good faith gesture,” he said, revealing that under the feeding-tariff rate, the issuing of those licences will cut off after a total of 10 megawatts have been achieved.
The development represents a major step in the fulfillment of the promise to review the Barbados Electric Light and Power Act and the National Energy Policy 2017 – 2037, which was made to stakeholders last July. At the time businessman and renewable energy investor Ralph ‘Bizzy’ Williams welcomed a permanent tariff for power sold to the BL&P, saying while he did not know what the permanent rate would be, he was certain the industry would “take off” once the decision was made.