The Tribune

By LEANDRA ROLLE

Tribune Chief Reporter

lrolle@tribunemedia.net

THE Davis administration unveiled its planned reforms for the country’s energy sector yesterday, pledging to modernise the electricity grid and introduce equity rate adjustments for more affordable and reliable electricity.

Energy Minister JoBeth Coleby-Davis explained the government’s proposal to transform Bahamas Power and Light (BPL) and usher in a new “energy era” during yesterday’s launch at the Office of the Prime Minister.

Yesterday’s event followed months of anticipation about what the administration planned for BPL.

Mrs Coleby-Davis said the government’s energy reform plan will focus on five key areas: building utility-scale solar power in the Family Islands, expanding solar projects in New Providence, moderating the electricity grid and the transmission and distribution network for New Providence, transforming energy generation through LNG implementation in New Providence and an equity rate adjustment programme.

The first point in the government’s energy reform plan addresses renewable energy production for the Family Islands.

Mrs Coleby-Davis noted that the government and BPL launched a request for proposals in December for Family Island New Energy Generation to create “more independence in energy generation” in those communities. 

She said ultimately, several companies were chosen to produce renewable energy-based independent power producer projects for several Family Islands.

“I am pleased to share that the recommended IPP for Abaco is Verdant and Consus, for Andros is Providence Advisors, for Eleuthera is Verdant and Consus, for Exuma is INTI Corporation and Osprey Construction, and Long Island, San Salvador, and the Berry Islands is Wilkem Technologies and Roswall Incorporation. Currently, we are negotiating the power purchase agreements for all of the named IPPs,” she said.

“Each island has unique energy requirements and geographical constraints, necessitating a customised energy solution. To ensure the most suitable approach, each island’s technical specifications were thoroughly reviewed for applicability. We have finalised the design criteria in terms of agreement and selected both the micro-grid controller and the communication profile. Long lead time supply chain equipment has been identified and their specifications have been submitted to the respective manufacturers. We anticipate that groundbreaking and works shall begin before the end of 2024.”

For New Providence, Mrs Coleby-Davis said Eco Energy, INTI Incorporation, and Compass were recommended to become the island’s independent power producers, with negotiations ongoing for the power purchase agreements.

“This initiative provides a green energy solution for the existing battery energy storage while adding renewable energy to the overall energy mix,” she said. “Approximately 70MW of solar power and 35MW of battery energy storage systems will be integrated into the existing grid. 25MW of the solar energy will be paired with the 25MWH of battery energy storage system that already exists at the Blue Hills Power Station.”

The government’s third area of focus speaks to modernising the Electricity Grid and T&D network for New Providence through a partnership with Island Grid.

Mrs Coleby-Davis said this is needed for several reasons, mainly because of BPL’s nearly $500m legacy debt, ageing infrastructure, and inability to meet generation demands based on local growth predictions for the next decade. 

“The partnership with Island Grid will extend the infrastructure capabilities beyond what BPL alone can do by bringing in a generation and T&D expert to pursue much-needed upgrades,” she said. “It is important to share that Island Grid has over 60 years experience in delivering best-in-class energy infrastructure under the company’s subsidiary, Pike. The company’s projects in the Bahama include projects on Walkers Cay, Grand Cayman, Grand Bahama, and Puerto Rico.”

She said the government’s partnership with Island Grid will also lower fuel cost and improve operating efficiency. 

She said ECF Consulting would independently oversee all projects to completion, coordinating between various stakeholders, including contractors, suppliers and regulatory authorities. 

She also assured BPL workers that the partnerships would not lead to layoffs, advising them that existing industrial agreements would not be impacted and that no voluntary separation programme would be offered. 

“It is our expectation that exciting new roles and training opportunities will emerge that BPL employees will have early access to,” she said. “Meetings will be held with all employees of BPL to ensure that all questions and concerns will be answered.”

As for transforming energy generation through LNG implementation in New Providence, Mrs Coleby-Davis said this will help “revolutionise” energy generation in the capital.

“By integrating LNG, we aim to reduce overall energy costs, enhance the efficiency of our generation assets, and minimise environmental impacts,” she said. “This initiative introduces LNG as a cleaner alternative to Heavy Fuel Oil and Automotive Diesel Oil.”

She said LNG will be primarily sourced from Shell, while other partners will include the Bahamas Utility Company (BUC).

“By 2026, we will construct a state-of-the-art 177MW combined cycle LNG plant at the Blue Hills Power Station,” she added. “This innovative facility will feature four natural gas units paired with two steam turbines, maximising efficiency by utilising excess steam from the gas units. This combined cycle configuration will be the most cost-effective generation solution in the BPL fleet. It will replace the 107MW of rented generation capacity and address the 63MW generation shortfall under contingency conditions, enhancing redundancy and resilience.”

In addition to these new units, she said BPL will convert two of its original generators at its Blue Hills Power Station, completing the transition to a more efficient and resilient system.

This fuel-switching initiative is also expected to save BPL and its consumers some $125m annually, she added.

Regarading equity rate adjustment, she said beginning next month, rates would be adjusted to allow more affordable bills. 

She said residential customers and SMEs are subsidising high-energy users under the existing tariff structure.

“All residential consumers with low and moderate electricity usage will benefit, as the base rate tariff for the first 0 to 200 kWh will be reduced to zero,” she said.

“The upper bands will stay the same, but even if you are a resident with a bill of around 600kWh you will still benefit from your first 200kWh being reduced to zero. Note that everyone will still have to pay for the fuel charge for every unit they consume.

“The commercial base tariff will drop slightly from 15 cents to 14.5 cents, and the temporary supply base tariff, which particularly affects the Family Islands, will drop from 16.38 cents to 15 cents. Again, they will both continue to also pay for their fuel charge.”

Mrs Coleby-Davis said the government is also amending the fuel charge by reducing the cost for the first 800kWh by 2.5 cents and increasing the charge above 800kWh by 1.5 cents.

This means consumers who use less energy will enjoy a lower fuel charge, she said.

She said the new rates will be in effect until a comprehensive tariff review is completed and the government and URCA approve new rates. 

“The general service base tariff will rise slightly from 8.7 to 10 cents for the first 900,000 units and from 6.2 to 9 cents for units above 900,000,” she said. “Currently, general service customers receive a subsidy of about $20m from other BPL customers every year, but they will still be paying less than all other energy classes and will still benefit from a more modest subsidy.”

She said energy costs should decrease over time due to efficiency upgrades at BPL, which include the installation of a new HFO boiler at Clifton Pier, two new 30MW LNG burning units and the conversion of BPL’s use debt to BSD.

“The positive effect of what we are kicking off now will not only be felt by our children and our children’s children generation but it will be noticed around the world,” she added.

Prime Minister Philip Davis said the government’s plans to reforms for BPL followed three years of hard work and represents his administration’s “big ambitions” for the country.

“We are determined to close the gap between our national potential and our national reality –– and with this very big and ambitious agenda of reform and investment, we believe we are well on the way to ensuring that a new energy era will lead also to a new economic era –– a new era of opportunity for all,” he said.