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Barbados (2014)

Source: REEEP Policy Database (contributed by SERN for REEEP)

This policy & regulatory overview is not updated anymore since 2015. We decided to keep it online due to high demand but would like to make you aware of the fact that it might be outdated.

Energy sources

In 2010, the country’s electricity installed capacity of 239.1MW is 100% fossil-fuel based. Power generation is mostly based on heavy fuel oil (85% of generation, of which 21% in steam plants and 64% in low-speed diesel plants); the remaining 15% of generation is based on diesel fuel. Electricity peak demand in Barbados has been growing steadily over the past 10 years at around 3% per year, from 125 MW in 2000 to 166 MW in 2009, while total electricity consumption has been growing at around 3.6 % annually.

Barbados has no utility scale renewable generation capacity. RE generation is limited to a few small solar photovoltaic and wind systems installed by households, and experimental systems located at Government facilities. Currently, SEFB pilot projects in RE and EE are in implementation, including the installation of 25 PV systems and the provision of energy efficient lighting to 3,000 households.

Barbados has some oil production, but domestic demand, approximately 10,000-barrels of oil per day (bbl/d) greatly exceeds local supply (approximately 1,000-bbl/d). This results in imports in excess of 9,000-bbl/d, which represents a significant expenditure and drain on Barbados’ foreign reserves, particularly considering the degree of volatility in international oil markets.

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Reliance

Barbados’ energy sector is highly dependent on imported fossil fuels.  Barbados relies on imported refined product to meet approximately 95% of its power and transport fuel needs; domestic natural gas provides less than 5% of total energy needs. The country has some production of oil and natural gas; it produces slightly more than 1,000 barrels of oil and 1.7 million cubic feet of natural gas per day; however, the oil is exported to Trinidad where it is refined and shipped back as refined product.

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Extend network

The country’s electrification rate is 100% and BL&P supplies electricity to 119,000 customers.

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Capacity concerns

The dependence on petroleum products is almost complete. In a country with very limited fossil-based resources, this has serious and negative implications for foreign oil dependence, energy security, foreign spending and environmental impact. This results in imports in excess of 9,000-bbl/d, which represents a significant expenditure and drain on Barbados’ foreign reserves, particularly considering the degree of volatility in international oil markets.

Any strategy that seeks to address petroleum product consumption will, by default, contribute to the sustainability of Barbados and its mitigation efforts against harmful emissions and climate change.

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Renewable energy

The Government of Barbados has long been an advocate of developing renewable sources of energy. During the 1980’s and early 1990’s, BL&P purchased electricity produced from bagasse during the sugar crop season by a number of local factories. Since then the government has also experimented with wind turbines and photovoltaics.

Wind
Barbados has an involvement in wind energy going back to 1980s. Recently, as wind energy has become a more reliable and cost effective technology, BL&P have sought to develop a wind farm in the Lamberts area. There however continue to be impediments to the project due to issues related to the leasing of the land.. BL&P have now been given the go ahead to develop the land in Lamberts for wind but there are still negotiations to be undertaken. Barbados has not chosen to go for compulsory acquisition of the land as was done in St. Lucia. BL&P and Sagicor will be required to agree on a price for BL&P to lease the land.. (Morgan Ince, 2013)

Solar
Commercial solar water heating finds its origins in the 1970s as a simple local church initiative to provide vocational training for young men. A demonstration at the official residence of the then Prime Minister led to government implementation of initial fiscal incentives to promote the use of solar water heater (SWH) technology. Through the Fiscal Incentives Act of 1974, import tariffs for SWH raw materials had been waived and a 30% consumption tax was placed on electric water heaters (BIDC, 2010). Further, under a 1980 Income Tax Amendment, the full cost of SWH purchase and installation up to $BD 3500 was allowed as a home-owner tax deduction. This tax deduction was reinstated in 1996 following its suspension during a period of economic recession that extended from the 1980s. The government also actively engaged in purchasing over 1200 units for five different housing development projects since the mid 1970’s further stimulating the industry.

As interest in the new technology grew, other competitors quickly joined the market and by the beginning of the 1980’s SunPower Corporation and AquaSol Components Limited, had established themselves as industry players. By 2003 there were over 35,000 solar water heaters installed in Barbados. Of this consumer base, 70% of the systems are in residential homes and 30% in commercial properties, predominantly hotels. This represents 30% penetration across building properties in Barbados. More recent quotes put the total at 45,000 installations island-wide. Since the late 1990s Solar Dynamics has expanded to own manufacturing operations in Saint Lucia, a distribution centre in Jamaica and agents in the Bahamas, Belize, Dominica, Grenada, Guyana, St. Maarteen, St. Vincent & the Grenadines, St. Kitts & Nevis and the British Virgin Islands.

Geothermal/Hydropower
Unlike its geographic neighbours, Barbados has limited potential for utilisation of these energy sources. Popular movement suggests support for investment in geothermal power in neighbouring countries, but no official investment has been forthcoming from BL&P.

Biomass
Biomass Cogeneration has been used by the sugar cane industry in Barbados for years. Currently the sugar cane industry burns bagasse in their boilers to generate steam for their processes. The steam is also used to generate electricity for the plant. No excess electricity is generated. The BCIC has plans to consolidate the current Andrews and Portvale sugar mills into a single rehabilitated and refurbished factory at Andrew’s factory site. As part of these upgrades BCIC intends to optimize the co-generation of electricity for sale to BL&P, utilizing both bagasse from the cane and other biomass waste available from the Islands’ waste management facility.

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Energy efficiency

The most cost effective appliances for Barbados’ market are CFLs, power monitors, premium efficiency motors, efficient Air Conditioning (AC) systems, variable frequency drives and efficient chillers. If the population of Barbados used these technologies, the potential for EE would be 19.4% (in terms of MWh) saved compared to the total electricity consumption.

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Ownership

Electricity
The company Barbados Light & Power Company Limited (BL&P) is responsible for the generation, supply and distribution of electricity. It is an investor owned electric utility and is in operations since June 17, 1911. BL&P is a vertically integrated company which is now 80% owned by the Canadian company Emera, who invested in the company in 2010. The electricity supply network serves the entire island, with only a few exceptions. The electricity is supplied by diesel generator plants, and most of the electricity is produced from the least expensive residual fuel oil. Some locally available natural gas is burned in the steam boilers but this accounted for less than 1% in 2008.

Gas
The National Petroleum Corporation (NPC) is a public corporation established as successor to the Natural Gas Corporation by the National Petroleum Corporation Act, Cap 280. That Act came into effect on April 1 1981. The Corporation’s primary function is the sale of piped natural gas for domestic, commercial, and industrial use. Its mission is to provide an adequate, reliable, safe, and efficient gas service to customers at a reasonable cost. The Corporation’s general functions of production of crude oil, natural gas and liquefied petroleum gas are carried out by an associated company, the Barbados National Oil Company Limited (BNOCL). Since January 24 1996, the Corporation holds 24.5% of the equity in BNOCL, while the Government holds 75.5%. The Corporation is directed by a Board of Directors appointed by the Minister responsible for Energy.

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Competition

BL&P is the sole electricity provider in Barbados. The company started operations in the early 1920s under complete ownership of a London based holding company. In 1955 the company was divested is now owned by primarily Barbadian investors. The minority shares are owned by Canadian International Power Co. Ltd. The 1907 Electricity Supply Act gives BL&P sole rights to generate and transmit electricity and does not make provision for Independent Power Producers (IPPs), prohibiting sale or injection into the grid. Since 2001 the utility has been regulated by the Fair Trading Commission, which was preceded by the Barbados Public Utilities Board, established since 1955 (Shirley & Kammen, 2013).

BL&P has a license until 2028 and has a monopoly for power production, transmission and distribution. The Barbados electricity market is not liberalized and open for new entities yet.

Like others in the Caribbean, Barbados has a power market controlled by a vertically integrated monopoly utility that relies heavily on imported fossil fuels for electricity generation.

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Energy framework

National Strategic Plan of Barbados for 2006–25
The National Strategic Plan of Barbados for 2006–25 was designed to help eliminate the reliance on fossil fuel, with a specific focus on increasing the number of household solar water heaters by 50% by the end of 2025. To date, solar water heaters are used extensively in Barbados, with installations in nearly half of the island’s dwelling units (Barbados Light and Power Company Limited Annual Report 2012). More recently, the Barbados Light and Power Company Limited, with the approval of the Fair Trading Commission and technical support from the IDB, introduced the Renewable Energy Rider initiative in mid–2010. This initiative allows customers to connect to the grid and sell any excess electricity generated from renewable sources to Barbados Light and Power Company Limited. Thus far, more than 200 customers have benefited from the initiative.

The renewable energy industry is also supported through a series of tax incentives introduced by the GoBA. Some of these incentives are a zero value-added tax rate on all renewable energy and energy-efficient systems and products produced in Barbados; an income tax holiday of 10 years for developers, manufacturers, and installers of renewable energy products; and a 150% deductible on expenditures for staff training, marketing of products for the sale of electricity, and product development or research that is related directly to the generation and sale of electricity. To facilitate renewable energy generation on the island, the GoBA is also expected to pass renewable energy legislation in Parliament in October of this year. This new legislation will help reposition Barbados’ economy and establish a complete renewable energy sector in the country. 

The National Energy Policy was published by the Government in 2007 and in 2010 the Fair Trading Commission approved a Renewable Energy Rider pilot project which allows eligible customers with renewable power sources to sell excess power to the grid. The program currently limits size to 5kW for domestic and 50kW for other tariff brackets. All kWh supplied to the grid are credited for 1.8 times the Fuel Clause Adjustment or 31.5 cents/kWh, whichever is greater.

The country is committed to reducing its oil dependency and in May 2012 hosted the Achieving Sustainable Energy for All in Small Island Developing States conference where it announced an ambitious renewable energy target of 29% by 2029. It is now one of the few countries in the Caribbean to have such a mandate.

The Implementing Energy Efficiency and Renewable Energy Projects under the Sustainable Energy Framework for Barbados is an example of a climate change mitigation project which is currently under implementation in Barbados. The general objective of the project is to promote renewable energy (RE) and energy efficiency (EE) in Barbados, thus reducing the country’s dependency from imported fossil fuels enhancing security and stability in energy supply, and improving overall environmental sustainability in the country.

Specifically the project will help the Government of Barbados to develop a Sustainable Energy Framework (SEF) and achieve institutional strengthening in the areas of RE and EE, achieve EE in the country’s key sectors, implement energy efficiency pilot projects, identify, and promote the most effective alternatives for RE generation, and implement renewable energy pilot projects.  The expected outputs of project include the distribution and installation of 15,000 compact fluorescent lights in 3,000 households along with the installation of 28 solar photovoltaic systems and one micro wind turbine. The project will also carry out energy efficiency audits in seven public sector buildings, 25 residential buildings, and eight audits in commercial (non-tourism) buildings.

In 2010, Barbados’s power utility established a net metering program, which included 25 consumer generators as participants until the end of 2012. Last year, a private company financed the purchase of 1.4MW of solar photovoltaic panels to help reduce its electricity bill and carbon footprint.

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Energy debates

Minister in the Barbados’ Prime Minister’s Office with responsibility for energy, Senator Darcy Boyce has disclosed that a study would be undertaken, in partnership with the European Union, to establish "the marine potential within the limit of our territorial waters, by undertaking an assessment of the technical and commercial viability and sustainability of these marine resources". "We are particularly interested in OTEC (Ocean Thermal Energy Conversion) systems which, not only produce base load electricity, but also cold water which may be used for air-conditioning, which creates a heavy demand for expensive electricity," he noted, while adding that this would be of particular interest for the tourism-driven national economy, as a heavy user of air-conditioning.

With OTEC also of interest because of the potentially beneficial by-products produced by electricity, the minister said that it was critical that the technology be explored. He disclosed that Barbados was already a recipient of a desk-top study on this technology through the SIDS-DOCK (Sustainable Energy Initiative) mechanism, using Japanese experts. The study, he added, suggests that a 10 MW OTEC plant is technically viable but, given the heavy investment required, its commercial viability would have to be investigated carefully.

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Energy studies

Barbados is a member state of the Caribbean Renewable Energy Development Programme (CREDP), which is a joint project of CARICOM and the German International Cooperation GIZ, formerly GTZ.

CREDP originates from an initiative of the Energy Ministers of the CARICOM member states, established to improve the political, legal and regulatory framework conditions for the use of Renewable Energy and Energy Efficiency in the Caribbean Region.

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Role of government

Ministry of Finance, Economic Affairs and Energy (MFIE)
The Ministry of Finance, Economic Affairs and Energy is responsible for decisions regarding natural resources, public utilities, the National Petroleum Corporation and the Barbados National Oil Company (Loy 2007). Besides that, the Ministry is gearing toward “promoting energy conservation practices and the use of renewable energy technologies, where possible, and becoming self-sufficient in oil and gas production; plans to develop renewable sources of energy are focused on wind energy, solar photovoltaic, solar thermal, fuel cell and biogas/biomass”.

The Energy Division within MFIE has the responsibility for monitoring and regulating energy supply by interacting closely with all of the institutions involved in the energy sector. In particular, the Energy Division is responsible for developing policy and administering such policies with respect to the sector’s participants. Some of the Energy Division’s specific responsibilities include:

  • Issuing licenses and leases for all oil exploration and production
  • Advising on petroleum product prices
  • Promoting the use of renewable energy technologies
  • Promoting the effective use of energy.

The Fair Trading Commission (FTC)
The Fair Trading Commission (FTC) was established in January 2001 under the Fair Trading Commission Act. The FTC evolved from its predecessor, the Public Utilities Board, which was responsible for regulating public utilities (such as electricity and telephone services) from 1955 until 2001. The further development of Barbados saw the need for a new body with a broader mandate to deal with other areas that had become important such as fair competition and consumer rights. The FTC is responsible for utility regulation, ensuring fair competition and ensuring consumer protection. The Utility Regulation Division of the FTC regulates two utility companies: Cable & Wireless (Barbados) Ltd. and The Barbados Light & Power Company Ltd. This Division oversees rates and service standards, and investigates queries and complaints.

Barbados National Oil Company (BNOC)
BNOC is the local oil company whose operations are governed by a statutory board. The company is responsible for the drilling and exploration for crude oil within the country. Barbados produces about 1000 bbls of oil per day of crude which represents about one fifth of the countries local demand. The crude produced in Barbados is shipped to Petrotrin in Trinidad for refining and resold to the country. In spite of their role in fossil fuel development, the government has identified this agency to be a leader in terms of bringing renewable energy to commercialization. (Morgan Ince, 2013)

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Government agencies

The Future Centre Trust (FCT) is an environmental organization that aims to work with wider organizations such as UNCED to concentrate on economic and tourist activity in Barbados that is based on sustainable development for future generations on the island.

The FCT is acknowledged in Barbados as an important group for sustainable development on the island, and is a significant contributor to political decisions over environmental issues as they are actively involved in the process of decision-making and working on multi-sectoral committees.

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Energy regulator

The Fair Trading Commission established on January 2, 2001 is the independent regulator of the supply and distribution of electricity as well as domestic and international telecommunications services and natural gas.

The Utility Regulation Department currently oversees two utility companies – the Barbados Light& Power Company Ltd. (electricity) and Cable & Wireless (Barbados) Ltd. (telecommunications).

http://www.ftc.gov.bb

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Degree of independence

FTC is an independent agency with 11 part-time commissioners appointed by the Minister of Commerce and Trade for a period of five years. It is funded mainly by government grants, 25% levies. (Abbot & Ma, 2013)

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Regulatory framework

Laws and Regulations that govern the electricity sector in Barbados are:

  • The Electricity Act, Chapter 277 of the Laws of Barbados
  • The Electric Light and Power Act, Chapter 278 of the Laws of Barbados
  • The Fair Trading Commission Act, Chapter 326B of the Laws of Barbados
  • The Utilities Regulation Act, Chapter 282 of the Laws of Barbados.
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Regulatory roles

The Utilities Regulation Act enforced by the Fair Trading Commission in Barbados outlines its functions as follows:

  • establish principles for arriving at the rates to be charged;
  • set the maximum rates to be charged;
  • monitor the rates charged to ensure compliance;
  • determine the standards of service applicable;
  • monitor the standards of service supplied to ensure compliance; and
  • carry out periodic reviews of the rates and principles for setting rates and standards of service.”

This suggests that new regulatory agencies will need to be established to deal with issues related to renewable energy where more sustainable development goals are to be addressed. (Ince Morgan, 2013)
 

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Energy regulation role

The FCT is involved in the regulation, proposal and planning of alternative energy projects.

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Regulatory barriers

In Barbados, it is noticeable the number of experiments with renewable energy that the state controlled utility has made thus far. While few of these projects have come to fruition in a major way (except for solar water heaters), the tendency highlights utility, and by extension, government interest in energy security and power sector functionality. However this intention is not supported by significant legislative and comprehensive policy backing. This may be part of the reason that, aside from Solar Water Heating technology, it has actually been difficult to integrate other technologies into the market. It would seem that while the necessary components are present, there needs to be a more structured plan in the near and long term future and greater consistency in the delivering of incentives such as the tax credit. Strides are indeed being made, but a more concrete structure and outlined plan of action and implementation would ensure that the more useful avenues for energy mix expansion are explored.

The 1907 Electricity Supply Act and the 1951 Public Utilities Act of 1951 are to date the only major pieces of legislation that govern the power sector, making it difficult for IPPs to potentially market themselves to the utility company.

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References

Shirley, Rebekah a & Kammen, Daniel (2013): Renewable energy sector development in the Caribbean: Current trends and lessons from history Energy Policy 57 (2013) 244–252. Available at https://rael.berkeley.edu/sites/default/files/Shirley%20Kammen%20Energy%20Policy%20Vol%2057.pdf Accessed 26th February

Bloomberg New Energy Finance (2013): Climatescope 2013: New Frontiers for Low-Carbon Energy Investment in Latin America and the Caribbean Available at http://www.offnews.info/downloads/ClimateScope2013.pdf Accessed 17th February

IDB (2013): Caribbean Region Quarterly Bulletin Available at http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=38175715 Accessed 17th February

IDB 2011 (2012): Second Generation of Reforms in Support for Sustainable Energy Framework for Barbados (SEFB) Available at http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36857218 Accessed 23rd February

CREDP/GTZ (2010): Analysis of the Potential Solar Energy Market in the Caribbean Available at http://www.credp.org/Data/Solar_Market_Analysis_Caribbean.pdf Accessed 23rd February

IDB (2010): Sustainable Energy Framework for Barbados Available at http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=35232784 Accessed 23rd February

GEF (2012): Barbados and the GEF Available at http://www.thegef.org/gef/sites/thegef.org/files/publication/Barbados%20Country%20Fact%20Sheet_English.pdf Accessed 23rd February

Jamaicaobserver.com (2014): Ocean energy of interest to Barbados and the region Available at http://www.jamaicaobserver.com/environment/Ocean-energy-of-interest-to-Barbados-and-the-region_16147514 Accessed 23rd February

Morgan Ince, Philip David (2013): Drivers and Barriers to the Development of Renewable Energy Industries in the Caribbean Available at http://theses.ucalgary.ca/bitstream/11023/1091/2/ucalgary_2013_ince_philip.pdf Accessed 5th March.

CREDP (2013): Caribbean Renewable Energy Development Programme Available at http://www.credp.org/index.php?option=com_content&view=article&id=19&Itemid=27 Accessed 5th March

Abbot, M & Ma, X (2013): The regulatory governance of the telecommunication and electricity industries in small, island nations Utilities Policy 26 (2013) 7-16 Available at http://dx.doi.org/10.1016/j.jup.2013.04.002 Accessed 7th March

IDB (2014): Barbados Energy Market Available at http://blogs.iadb.org/caribbean-dev-trends/2013/11/22/barbados-energy-market/

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