Barbadians will be able to own nearly one-third of a $350 million hybrid renewable energy power plant that promises more stable electricity bills but not necessarily cheaper ones, Barbados TODAY can reveal exclusively.
The plant, jointly owned by Hydrogène de France (HDF Energy) (49 per cent) and Rubis Caribbean Holdings Inc. (51 per cent), is being developed by Renewstable (Barbados) Inc. (RSB) — a special purpose vehicle that will act as an independent clean energy producer selling the electricity to the Barbados Light and Power Company, the operator of the national grid.
The project, slated to start between year-end and early next year, is expected to fully contract its capacity through a 25-year power purchase agreement with Light and Power to supply energy to the grid 24 hours a day.
Currently, RSB has an application before the Fair Trading Commission (FTC) requesting approval for the kind of rate it can charge BLPC for buying its power.
The FTC recently handed down a decision in a separate confidentiality hearing in which it denied RSB most of the information it requested to be kept secret during the pending consultation, to determine the tariff the BLPC will have to pay for the clean energy.
The commission is expected to make its ruling on the tariff by June.
Aidan Rogers, the power plant project’s strategic adviser, addressed the issue of what that rate would mean for consumers:
“The filter down to the consumers would be from the perspective of price stability. And, over the upcoming week, you are going to hear a lot of discussion about affordability. Because, there is this misconception that renewables automatically translate into cheaper costs. They don’t necessarily. What they do is that they allow you not to see volatile spikes in your light bill up and down. They would add stability.”
“The filter down may not directly come by virtue of people seeing almost like a five or 10 per cent reduction in their bill; but the project is slated to supply six per cent of the island’s total energy demand; and you know, the island’s energy demand has been fluctuating over the last two years with a lot of hotel developments coming onboard. So, whereas that six per cent would have been calculated when the project was conceptualised five years ago and in development, we would have seen and heard recently from the general manager of the utility, that their demand has grown. So, that six per cent could very well trickle to three or four per cent.”
Rogers, a former president of the Barbados Renewable Energy Association (BREA) continued: “The overall impact on the consumer, would be somewhat almost negligible. But what the project represents, is a trend towards the future direction of the island’s transition, where we are now trying to invest in more renewable sources that would stabilise the overall price of electricity.”
The clean energy expert then turned his attention to the innovative approach of spreading the ownership of the green energy industry: “The net benefit of this project, which is also a key feature that a lot of persons may not be aware of, is the diversification of the ownership base in the energy sector. This project will be offering a minimum of 30 per cent equity to Barbadian entities. We have been in discussions with several entities as well…the credit union movement, the National Insurance Scheme. And what this will really mean, is that this can add as an additional layer of benefit to consumers.”
Rogers explained that when Light and Power buys oil, only overseas fuel suppliers make any money. “But,” he contended, ”when you invest in a renewable energy project that has some connection to local investors, whether it is persons who are beneficiaries to the [national insurance scheme], or persons in the credit union movement, that is another avenue where benefits would be remaining in the country and not going overseas, that you would not necessarily see from, if you just had to be paying the fuel clause adjustment that goes up and up.”
The overall cost of the project, especially in relation to the final tariff to be determined by the FTC, will be fixed and would not be influenced by any fossil-fuel energy shocks, Rogers stressed.
“This project will have no impact on the cost over the life of it,” he added. “Once the tariff is produced… it will be spread, obviously, at varying levels across the 25-year horizon; but it will be a fixed cost. So, there will be no volatility as we see with the Iran crisis and the fuel clause adjustment going up and then coming down, and it will not be tied to the volatility in the oil price.”
The tariff is to recover the cost and operational expenses of the project which incorporates 120 megawatts of battery storage, Rogers said.
The clean energy project adviser said the project had no issues with the FTC’s decision earlier this month on the confidentiality request, and in fact, has already started to comply with the utility regulator’s order.
Rogers said: “The FTC’s decision, which the company has decided to comply with, is that we will share some of the information that we had previously shared with the FTC last year, as part of the original rate application and that had been deemed confidential; the FTC had ruled they didn’t think all of the information was confidential. So, the decision basically had ordered us to release some of the information, which we have already complied with as recently as last Wednesday.”
He revealed that not only has that information now been shared with the commission, but also with all the interveners and others who participated in the consultative process. “There is some additional information which they deemed confidential, so obviously that is only going to be shared with the FTC,” he said.
“This project is the first renewable energy project that is going through a tariff application process here on island, with the utility being the only other entity that would have to go through rate applications or other utilities. So, it was somewhat novel in this instance. So, all we see the decision as doing is enriching the jurisprudence as it relates to the regulatory process that other large-scale projects, seeking an independent tariff which would – outside a feed-in tariff programme or a competitive bidding programme – have to go through.”
“In terms of next steps, the intervenors would have obviously granted the opportunity now, to submit any further submissions on the whole consultative process around the application in response to this new information; and given the new urgency the prime minister would have placed on the entire energy sector, it is hoped we can get some responses soon, as the project is keen to try and maintain the green climate fund concessional financing that would have been secured for the project back in 2023.”
He continued: “Time is of the essence in terms of completing any further interrogatory between the intervenors and the project company with the FTC; and then the final substantive decision coming from the FTC, which they have officially promised should come by early June. We are hoping sometime during the course of next month, but obviously that is contingent on what responses come from the intervenors, now that this additional information has been shared.”
(EJ)
