The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tibunemedia.net

Family Island resorts were yesterday introduced to an initiative designed to lower the upfront cost of renewable energy investments and make them more affordable.

Fidel Neverson, senior project manager at the Rocky Mountain Institute, acknowedged to the Bahamas Out Island Promotion Board’s annual general meeting (AGM) that solar installations costing up to an initial $300,000 were likely deterring small hotel properties from embracing renewable energy.

To counter this, the Institute is proposing an initiative where - rather than the resorts themselves incurring the upfront investment cost - this will be borne by the energy services provider doing the installation. The hotels would then reimburse the provider via a monthly fee.

Mr Neverson said: “The programme that we are proposing to you, and is actually being proposed to all hotels within The Bahamas, is what we call our solar energy savings programme. And this is where you will be able to subscribe to the programme, and as a member of the programme have these types of clean energy systems installed at your establishment to help you to reduce your electricity costs and become more sustainable.

“With the solar energy savings programme, what we're trying to do is provide you with a solution that has no upfront cost and that, rather than you having to make investment yourself, we would get an energy services provider to make those investments, do the installation of those technologies at your establishment, and you will essentially be paying them at the base cost for the solution.”

Mr Neverson explained that the energy service provider will charge a monthly fee for the energy consumed similar to current Bahamas Power & Light (BPL) payments, but resorts will not have to make the initial large investment into renewable infrastructure.

He added: “So basically the monthly fee will be paid to the energy services provider. They will do, in addition to the installation, all of the operation and maintenance of the system. Therefore you are going to be paying a monthly fee in the same way that you will pay your electricity bill, as opposed to having to pay for that large upfront investment cost in order to get the system installed at your property.”

Mr Neverson said Family Island resorts have been quoted up to $300,000 for the installation of renewable energy systems that would cover their needs. He added that these high costs exceed the budgets of many small resorts, while traditional lending institutions do not offer special interest rates to assist businesses in making the switch.

He said: “There are a lot of advantages to going to clean renewable energy, but there are also a lot of impediments. For those of you who may have investigated this already, it is the high upfront costs. So there's a high investment cost.

"Based on what I've seen from information received from some of your hotels, you will probably need an installation costing between $20,000 and upwards to $300,000 if you want to make a significant dent in your electricity costs, so there is a high investment cost related to it.

“Also, there could be unattractive financing options. You know, in my experiences, banks don't tend to offer any special types of loans with lower rates that would allow you to invest in these types of solutions. And, you know, some of you may find the regulatory environment a little complex to navigate. So, you know, with these types of stuff, you know, you may shy away from it.”

Mr Neverson said energy costs on the Family Islands can be up to four times' higher than those on the nearby Florida Cays, driving up their operational costs and making it "difficult to compete".

He said: “We recognise that Caribbean hotels, including the hotels in the Family Islands, electricity cost is a major component of your operational costs. If you just compare yourself to hotels in the Florida Cays, what you pay in terms of your electricity rate on the Out Islands is about four times what they would pay in Florida.

“So it makes it difficult to compete when you have such a major differential in costs." Mr Neverson added that many Family Island hotels face energy shortages and have to rely on diesel generators, creating more costs and burning fossil fuels.

He said: “On small islands, just like on the outer islands, power quality is also a problem, and reliability of your power supply is also a problem. Many of the hotels and Family Islands have to use diesel generators to produce either their own power full-time or for back-up purposes and, of course, that's a very noisy polluting proposition and also very expensive.

“So our idea is to help you to transition away from this 100 percent use of fossil fuels for your energy needs towards using clean energy to help support supplement those needs.”

Mr Neverson said the programme must have a number of hotels involved to work successfully, and that it can be way to reduce energy costs, improve reliability and be more environmentally sustainable.

He said: “What we're trying to do is to help you to invest in these solutions so that you can reduce your energy costs, you can produce your energy more safely, you're producing energy in a more sustainable, environmentally friendly way and, of course, in a more reliable way.

“What is very important in making this work, though, is aggregation. We need not just one or two hotels. We need a number of hotels involved. And that's how we're able to bring the cost down for everyone. By taking advantages of economies of scale.”