Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.
by Trevor Browne
The Barbados Association of Professional Engineers is heartened that some level of discussion has evolved on the topic of Barbados’ energy future. We have insisted all along that this subject is much too vital to everyone on this island to be allowed to evolve in secrecy and obscurity behind closed doors.
The BAPE commentary about Barbados taking steps to avoid a possible energy “Ponzi scheme” is intended to encourage all Barbadians to become interested in the multi-billion dollar transformation that is currently in progress, and to become aware of the benefits as well as the dangers of such a national undertaking.
Our intent of course was that responses would have been based on the actual concerns that were raised in the article, rather than on misguided perceptions about what BAPE is actually saying. So that whereas the whole focus of the BAPE concern is that we need to take some basic steps in Barbados to avoid the possibility of a Ponzi scheme, we are having responses admonishing that ‘there is no Ponzi scheme”, or that “BL&P are not losing money” as a result of solar installations.
While we understand the reaction to the use of the term ‘Ponzi’, even in avoiding it, there is no question that we must deal with the complex engineering concerns, or suffer the consequences.
In simple English:
The transformational energy policy targeted for Barbados is much too technically complex to be undertaken without a clear, concise, detailed, professional plan and associated implementation program.
Currently, no such ‘plan’ exists – at least not in the public domain, nor to BAPE’s knowledge.
BAPE is therefore calling for such a plan to be articulated by the lead stakeholders in the process, unfortunately we have also been challenged to determine who has been taking the lead in this critical project.
What is a Ponzi scheme?
A Ponzi scheme is simply an arrangement that lures investors, and pays profits to earlier investors with funds from subsequent investors. However, all BL&P customers are compulsory ‘investors’ in energy in Barbados.
As a simple example
In transforming Barbados from fossil to renewable energy sources, a combination of energy types will be needed. Some of these are more complex and more expensive than others.
Energy from solar panels is probably the simplest and least expensive form of renewables, however it is also unreliable, productive only for specific times during sunlight, and very exposed to damage from various hazards.
Wind and bio-fuel systems have better availability profiles, but tend to be more costly and to require more maintenance attention.
At present, there is a massive thrust in Barbados to install the easy solar systems, and for those investors to lobby for as high feed-in-tariff (FIT) rates as they can. Rates are also currently ‘guaranteed’ for 20 years once approved. This is very useful for investors who need to borrow money to fund these investments, however it will also constrain customers to bear this cost for twenty years – even if technological changes continue to force dramatic reductions in price, as has been the case in recent years.
• What then is the correct FIT in our circumstances?
• How are the interests of the ordinary customer protected, to ensure that they get the best deal on their electricity bill?
• Who represented these customer interests in the planning?
• What is the correct energy mix between these technologies, that provides the best all-round results for everyone concerned, and that best guarantees the overall success of the energy change-over?
The methodology that is accepted globally for dealing with such complex issues, is for competent professionals to conceptualise system models (Plans) that can be fine-tuned to produce the very best outcomes for all involved, and for these to then be transparently reviewed and approved before being implemented.
Since every resident of Barbados will succeed with this project, or will suffer the consequences of its failure, it is vital that the general public be fully included at all levels of conception and development.
Another obvious reality is that with an estimated CAPEX cost of near to $5 billion, it is vital that major stakeholders are forced to cooperate as much as possible, and to have a common focus on success. To this end, a single National Energy Entity is the very best format to encourage such cooperation.
BAPE would therefore like to suggest the following as important steps in guaranteeing the success of the innovative Barbados National Energy Policy 2019-2030.
1. Create a new National Energy Authority to replace BNOCL. (The Barbados National Energy Authority).
2. The BNEA is then granted a full monopoly for energy and electricity sales in Barbados.
3. The BL&P is assigned 40 per cent of the shares in BNEA.
4. The BNOCL is subsumed into BNEA and holds 30 per cent of its shares.
5. 10 per cent is assigned to the Barbados Water Authority.
6. The remaining 20 per cent is permanently assigned to a National Energy Co-operative whose membership is open to all Barbadians.
The new BNEA can then be commissioned to finalise a professional plan for the energy transformation, and to have that plan approved via the National Planning and Development Process – including all Environmental Impact Assessment (EIA) requirements.
All interactions of the various stakeholders such as BL&P and other Independent Power Producers (IPP) such as BREA, with regard to sub-licensing, Power Purchase Agreements (PPA) and other contractual arrangements, would then be coordinated through the BNEA.
The BNEA would be regulated by the FTC and supervised and licensed through the Ministry of Energy as before.
This is just a simplified, off-the-cuff example of what a properly conceived process for such a complex project normally looks like – when success is the key focus.
One commentator asked BAPE to give an example of the kind of successful planning and execution that represents our position.
Denmark did it correctly
Back in 1998, when Denmark agreed to play its part in the global fight on Climate Change, that country commissioned a pilot study to understand how such conversions from fossil energy to sustainable sources could be successfully executed.
They invited proposals for pilot projects and selected a proposal from a small island called Samsao, population
4 000, to be executed.
A review of the Samsao project is illustrative of the correct process to be followed in the execution of modern complex technology transformations.
A project leadership team, and a competent and professional project leader were identified to manage the transformation.
The project was executed as a comprehensive exercise, rather than expecting that various stakeholders would somehow happen to work synergistically together, despite their own individual biases.
All stakeholders were fully included in all aspects of the transformation – to the extent that everyone felt a sense of ownership of the concept. This involvement was centered on the creation of energy cooperatives, and other people-centered opportunities to share in the benefits of the energy transformation.
Barbados can also do it right.
It is always important that the narrow interest of key stakeholders are balanced against the overall national best interests.
The BNEP that has been endorsed by the Government of Barbados is very innovative, in that even within the policy itself, is captured the importance of wider public involvement and clear target-setting.
With such large sums of money involved, and with the critical value of energy, and electricity in particular, to the national well-being, BAPE is happy to play its role in ensuring the the public understands the issues involved, and even more so, the consequences that may result if we don’t.
Trevor Browne is president of the Barbados Association of Professional Engineers (BAPE).
