‘No Ponzi scheme here’

The Barbados Renewable Energy Association (BREA) has dismissed suggestions that the island’s national energy policy could turn out to be another “Ponzi scheme” if some changes are not made.

Responding to the charge levelled by the Barbados Association of Professional Engineers (BAPE), president of BREA Khalid Grant took issue with the contention that the current feed-in-tariff (FIT) arrangement for solar energy was unsustainable and likely to negatively impact Barbados Light & Power (BL&P) revenues as more people are added.

In a statement issued last Friday, BAPE president Colonel Trevor Browne warned that as more people are added to the FIT arrangement, “the only source of the utility’s income will then be those who are left without photovoltaic systems”

“These are likely to be the least able to pay the increased rates required to pay the early investors, and so the scheme will collapse. Carried to its ultimate logical conclusion, when all Barbadians have installed PV systems on their roofs and are paying minimum bills and awaiting returns from their FIT contracts, the utility will be required to create money ‘from nothing’ to pay these investors, as well as to cover their own operating expenses.

“Obviously, investors will lose the income needed to repay their investment loans, and perhaps even lose their loan security, such as their mortgaged homes,” he warned.

Browne also criticised the implementation process of the island’s national energy policy, which is aimed at weaning Barbados off fossil fuel use by 2030. He said there was a need for a “deep understanding of all the underlying science and enough experience and technical depth” for the energy plan not to end up like the Spain energy experiment or the failed CAHILL and Four Seasons projects.

However, Grant dismissed those concerns saying, they were “very inaccurate and unfortunate”.

“Fortunately, when setting up the billing mechanism for renewables in Barbados, the utility and the Fair Trading Commission (FTC) had the foresight to set up the billing mechanism where today, the vast majority of solar photovoltaic (PV) capacity is on the ‘buy all/sell all’ billing arrangement. This mechanism allows the utility to continue to collect adequate revenue from persons who have systems greater than 3 kW installed on their homes and businesses to help cover the cost of strengthening and maintaining the electricity grid without impacting on other customers,” Grant said.

“It is therefore untrue that, as stated in the article, the ‘only source of the utility’s income will then be those who are left without PV systems’. As stated, under ‘buy all/sell all’, customers will still be billed for all the electricity they consume regardless of whether they have solar panels or not.”

The BREA president explained that what is changing in this renewable energy transition is how electricity is being generated.

“The generation side of the utility’s business is changing as more entities generate electricity; however, a utility is more than generation. Once the electricity is generated, whether by the utility or by FIT projects, the transmission and distribution systems are still required to deliver that electricity around the country. The wires and poles side of the business will remain an income stream for the utility,” he added.

Agreeing that there should be caution in future decisions regarding FIT rates, Grant acknowledged that if unchecked, this could create problems.

However, he said the impact as described by BREA “is only likely to occur if a significant portion of customers were net metered or on sale of excess or if any other mechanism were used, like in Spain, where the utility is not able to recover the majority of the revenue that it has to pay out to the Renewable Energy (RE) provider for producing energy or to recover the loss in revenue they incur from the energy that these systems offset”.

“Set up the way that it is, this mechanism is neutral to the utility as it does not impact on its revenue base, and if the Feed-in-Tariff (FIT) is set right it will continue to encourage investment into renewables by allowing persons investing in these systems to earn an adequate return on their investment,” Grant added.

He argued that the FIT framework was put in place after extensive research and consultations among the utility company, the FTC, BREA, and other stakeholders prior to and since its introduction in 2010.

“We will continue to engage with the Ministry of Energy, FTC, BL&P and other stakeholders to implement the best solution for the energy needs of Barbados. As a result, we cannot sit idly by as misinformation is spread about a mechanism that has been working for Barbados to get us where we are today and, with continued examination and tweaking, will help us to reach a sustainable energy future by 2030,” insisted Grant.

marlonmadden@barbadostoday.bb/PR