With international investors said to be clamouring to get into renewable energy here, attracted to favourable rates of return, Minister of Energy Wilfred Abrahams has appealed to local investors to get in on the ground floor of the burgeoning industry before it is “too late”.
Abrahams said that he recently met with a number of overseas investors who had expressed an interest in pumping cash into alternative energy after the Fair Trading Commission set new Feed-in-Tariff (FIT) rates for the sale of energy to the national grid.
He told a meeting of cooperatives that foreign investors were “excited to get into Barbados” and willing to earn between 16 cents and 32 cents, which was about half of what the FIT rates are currently.
The Minister said: “From an investment opportunity standpoint, a lot of the discussions we have been having with international people who are trying to do renewable energy in Barbados, those people are looking for a feed in tariff or a purchase in the vicinity of US$0.08 to US$0.16.
“So you are talking about BD$0.16 to BD$0.30.
“Our feed-in-tariff is 40 something cents.
“So there will not be a better time to actually get into this market than now because chances are in another year or two years that rate is going to plummet.
“The rate was set to encourage local investment and that local investors get excited and able to get in now and be able to guarantee themselves a supernormal return on their investment for a period of 20 years.”
The new FIT rate for solar photovoltaic systems up to 10 kilowatts’ capacity is 42.75 cents per kilowatt hour; solar systems above 10kW to 100kW is 44.75 cents/kWh; solar systems above 100kW to 250kW is 41.75 cents/kWh; solar systems above 250kW to 500kW 38.25 cents/kWh; while solar systems over 500kW to 1 megawatt is 36.25 cents/kWh.
Wind power up to 10kW now fetches 39.75 cents/kWh and wind turbines above 10kW up to 1 megawatt receive 38.25 cents/kWh. Biogas systems up to 1MW get 44.25 cents/kWh and the rate for solid biomass up to 1 MW is 52.25 cents/kWh.
The FIT rate replaced the Renewable Energy Rider programme, which was set at 41.6 cents per kWh for solar, and wind at $0.315 cents/kWh.
Financial Analyst with the FTC, Kellyann Belle, said the FIT rate now allows potential investors to go to the bank with a guarantee that they had access to the national grid and an estimate of income they could expect to generate based on the size of their system over a 20-year period.
Belle said: “It is long-term and it is stable.
“A feed-in-tariff also seeks to address some of the risk and concerns that were in place prior to that establishment, for example, interconnection, there is a clear path to licensing and a clear path to compensation.”
She said there was definitely room for more a lot more people to get involved in generating electricity in Barbados based on the capacity limits available, especially if the island was to achieve its 2030 goal of eliminating the use of fossil fuel.
The FTC analyst said: “Currently we have 239 MW of legacy plants, we have 10 MW of utility scale solar owned by the Barbados Light & Power.
“We have approximately 24 MW of distributed renewable energy owned by individuals, and you have 5 MW of storage.
“Where we need to be by 2030, we need approximately 625 MW of intermittent renewable energy.
“So imagine that gap from where we are to where we want to be and that is the investment opportunity that is available to everybody here,” adding that the FIT rates were set at a level to encourage businesses and individuals to invest.
Belle said she was aware of a number of licencs that were either approved or waiting to be approved in the Ministry of Energy and Water Resources, adding that “there is still a huge gap”.