The Tribune

• IDB: Just 2% penetration for sustainable sources

• Provider has major 'doubts' 2030 goals will be hit

• Says 'sticking point' is consumer access to finance

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Renewable energy providers yesterday voiced significant "doubts" that The Bahamas will meet its 2030 goals after this nation was found to have the lowest penetration in the Caribbean at just 2 percent.

Guilden Gilbert, vice-president of Alternative Power Sources (Bahamas), told Tribune Business that the "availability of financing for the average consumer" is the main "sticking point" preventing a faster, wider roll-out of solar photovoltaic (PV) and other systems that would enable this nation to meet the National Energy Policy target of 30 percent of energy from renewable sources within six-and-a-half years.

The size of the chasm that The Bahamas has to bridge to hit that number is exposed in an Inter-American Development Bank (IDB) report on the next phase of a $170m project aiming to infuse renewables into the country's energy mix during the post-Dorian infrastructure rebuild.

The document, which notes The Bahamas still remains close to 100 percent reliant on fossil fuels despite efforts to introduce renewable systems at locations such as government buildings and schools, said the next stage is "to strengthen the energy sector institutional and regulatory framework for the transition" to sustainable power sources.

"Despite the potential for solar and wind power generation, and the steady cost decline of such technologies, The Bahamas ranks lowest in the region for renewable energy penetration [at] around 2 percent," the IDB report said. "Accelerating the transition to clean energy represents a unique opportunity for the country to enhance its energy security, meet its climate change action goals, and contribute to economic development and employment opportunities.

"To address these objectives, the Bahamian National Energy Policy 2013-2033 set in 2014 the target of reaching approximately 30 percent of renewable energy in the mix by 2030. In 2015, the Electricity Act of 1956 was repealed to allow renewable energy utility-scale power generation as well as self-generation.

"In recent years, there has been increasing interest from commercial entities to pursue renewable energy self-generation projects selling surplus energy to BPL. However, the current market governance and regulatory framework pose barriers to such developments in renewable energy and private sector participation."

Assessing the current Bahamian energy market, the IDB report added: "Final energy consumption in the country is dominated by gasoline (40 percent), followed by diesel with 28 percent and electricity with 24 percent. Transportation represents the largest energy consumption sector (around 40 percent of the total). Gasoline accounts for 76 percent of the total consumption in this sector followed by kerosene/jet fuel (12 percent) and diesel (11 percent).

"Together with an old power generation infrastructure, The Bahamas suffers from a high fuel import bill [equal to] 7 percent of Gross Domestic Product (GDP) and high electricity prices. Electricity prices are around $0.25 per kilowatt hour (kWh) compared to $0.142 per kWh in the Caribbean region."

BPL was branded as "financially challenged", and experiencing frequent power outages and high electricity losses from its system. "Volatile oil prices have contributed to making electricity tariffs among the highest in the Caribbean," the IDB continued.

"With a tourism and services-oriented economy, electricity is consumed by large commercial users 42.6 percent (mostly hotels); residential 34.8 percent; small commercial 8.3 percent; street lighting 1.9 percent; and other users, 2.7 percent, and is concentrated in New Providence (about 75 percent)."

Mr Gilbert, in response, told Tribune Business that the "very, very conservative" approach to financing renewable energy projects by Bahamian commercial banks was the greatest obstacle to increased penetration. Noting that few have "$20,000 and $30,000 lying around", he added that The Bahamas would "be very close" to its 2030 goals and on track to hit them if lenders were more proactive and reduce their collateral demands.

"I think the difficulty is project financing," he said. "It's difficult to find project financing. Locally, the banks don't issue loans against solar installations unless there is some collateral to be held. Most people don't have $20,000 or $30,000 lying around. In other markets the financing is relatively easy to secure. In this market it's not.

"The banks here are very, very conservative, and want lots of collateral. I think that's probably the biggest obstacle; banks. I think the demand is there if the financing is there. I think you would see a lot more penetration. I think we'll be very close to the 30 percent by 2030 if the financing is there."

Mr Gilbert said both residential and commercial renewable installations were being impacted by lack of accessibility to financing, but the latter to a slightly lesser extent because companies typically have more assets to pledge as potential security. He added that The Bahamas now needs to develop utility-scale solar plants, capable of supplying multiple Mega Watts (MW) of power, to hit the National Energy Policy targets.

"I have my doubts we'll get to 30 percent by 2030," Mr Gilbert told this newspaper. "We're half-way through 2023. Let's say we now have 5 percent penetration. That gives us six-and-a-half years to get the remaining 25 percent. I stand to be proven wrong, but I have my doubts it will happen.

"I think it comes down to the availability of financing for the average consumer. That's the sticking point right there. I don't think it's anything related to the Government. The Government has removed import duties on solar components. I don't think there's necessarily any concessions the Government can give at this point."

The Alternative Power Sources (Bahamas) vice-president said the company is currently working with a financier, who he declined to name, on a funding proposal for a client and was waiting to hear its response. "We have submitted something to an entity we're working with," he added. "We're waiting to hear back from them now whether they are prepared to finance 100 percent.

"We've submitted something on behalf of the client and are just waiting to hear what the feedback is from the financing entity we've been having discussions with for some time. We've had a number of conversations with a number of entities. We do have some ideas, but I think we may still be a ways off before we have that secured."

Mr Gilbert said the payback period for residential renewable energy investments was now typically "under five years". He added: "One of the things we don't do as a company is we don't market renewables as a cost savings. It's really energy independence."

As a result, the systems that Alternative Power Sources (Bahamas) installs are frequently not tied into BPL's grid and feeding excess energy back into that system. "We've had some clients who have registered [with URCA], but typically we don't set the system up to send power back to the grid because it doesn't make sense," Mr Gilbert said.

"We've done one or two grid-tied systems, but what we typically offer the client is energy independence. I think that's the way to go if we want to cut down. If we keep talking about cutting down the use of fossil fuels, getting clients off grid and using the utility as a back-up is the way to go." Mr Gilbert said Alternative Power Sources (Bahamas) has performed "well over 100" residential and small commercial renewable installations in this nation.

Regulators have also acknowledged The Bahamas remains a long way from generating 30 percent of its energy mix from renewable sources by 2030 even though last year saw a 26 percent increase in installed capacity from such systems.

The Utilities Regulation and Competition Authority (URCA), in its 2022 annual report and 2023 action plan, revealed that at end-2022 there were some 305 installed renewable energy systems in The Bahamas representing a combined 6,242 kilowatts (kW). These were split into 244 residential, and 61 commercial, systems with the former responsible for 1,859 kW of capacity and the latter some 4,383 kW.

The vast majority, some 291, were based on New Providence with a combined installed capacity of 4,931 kW. Of the 14 others, ten were located on Eleuthera. “The vast majority of renewable energy systems installed in the country are solar (photovoltaic),”URCA said. “ Since 2021, there was a 22 percent increase in the number of systems online and a 26 percent increase in the installed capacity. Most of this occurred on New Providence.

“Gekabi Chub Cay Utilities has commissioned a 4 MW (Mega Watt) solar plant with 10 MWh (mega watt hours) battery back up allowing them to become almost entirely independent of fossil fuels. In 2022, BPL commissioned a 0.4 MW solar plant with battery storage in Ragged Island. In 2022, BPL also commenced work on solar and energy storage projects on Abaco.”