Keron Niles, What Role for Renewable Energy Policy in the Caribbean Power Sector, 6-2011

7/31/2019 Keron Niles, What Role for Renewable Energy Policy in the Caribbean Power Sector, 6-2011

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What role for renewable

energy policy in the Caribbeanpower sector?

Responding to Peak Oil and Climate Change

Keron Niles

Responding to Climate Change in the Caribbean

13-14 June, 2011. London, UK.


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Outline

Caribbean Energy Consumption & Power

Production

Peak Oil & Climate Change Impacts

Renewable Energy Policy in CARICOM

Key Considerations

Summary


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CARICOM Energy Consumption

Fossil fuel dependence

(transport & electricity)

CARICOM Countries

consume approximately

240,000 boepd and

approximately 95% from fossil

fuels (Draft CARICOMEnergy Policy)

Primary energy consumption

in SIDS can be described as

petroleum intensive

Relatively high per capitaconsumption of petroleum

products

Limited use of Renewable

Energy Sources (primarily

hydroelectric power)

2%5%

93%

Oil Natural Gas Other

Primary Energy Consumption in the

Caribbean (KEMA, 2010) 3


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Electricity Generation in SIDS can also be described as

petroleum intensive

Source: Energy Information Administration, 2006

1

10

100

1000

10000

Niue

Kiribati

CookIs

lands

N

auru

Vanuatu

T

onga

SolomonIslands

Dominica

AntiguaandBarbuda

Sam

oa

St.KittsandN

evis

St.Vincentand

the

Gren

ada

St.Lucia

H

aiti

Barbados

Fiji

Baham

as

PapuaNew

Guin

ea

TrinidadandToba

go

Jama

ica

Electricity Generation in Selected SIDS (2005)

Geothermal, Solar,Wind, Wood andWaste

Nuclear

Hydro

ConventionalThermal

Gigawatthours(GWh)on

LogScale

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WHY THIS IS IMPORTANT

Assessing Peak Oil & Climate Change

Impacts in the Caribbean

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Peak Oil

Refers to a transition from a period of easilyattainable and affordable oil, to a period characterisedby a declining annual supply of petroleum.

Not brought about by the absence of fossil fuels (thatbrings about a shortage of supply), but rather, it is thedepletion of easily attainable petroleum, especially oil.

Historical supply of oil (from BP Statistics) suggeststhat supply of liquid fuels may have reached a plateau(at around 87 million barrels of oil/day)

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Peak Oil

Energy returned on energy invested (EROEI) foroil is declining

Increasing Consumption in emerging economies &oil producing developing countries, accompaniedby population growth (in spite of decreasedOECD Consumption)

Data shows that increased income levels areusually accompanied by heightened levels of

demand for electricity 7


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Peak Oil Impacts

Declining oil supply could lead to price increases,which, by extension, can lead to global economicrecession/collapse Which often has notable impact on economies of SIDS

(especially those primarily supported by tourism)

Likely to increase cost of electricity production

Electricity tariffs in the Caribbean for commercial andindustrial use are among the highest in the world

though residential rates in some cases depressed by governmentintervention (such as cross subsidies)

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Peak Oil Impacts

Diseconomies of scale may also lead to higher thanworld average fuel price increases for SIDS

Exacerbated by

fact that SIDS are price takers remote & relative geographic isolationcan result in increased

transportation costsespecially in multi-island states

Many SIDS also do not own petroleum storagefacilities

this can also have an inflationary effect on prices

Affects their ability to keep large reserves (in order to

reduce frequency of shipping) 9


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Climate Change Impacts:

Fourth Assessment Report of the IPCC

Small Islands have characteristics which make themespecially vulnerable to the effects of climate change.

Sea level rise: flooding, beach erosion

Changed weather patterns: more intense/extremeweather (e.g. drought, floods), more intense hurricanes

Coral Reef Damage, Biodiversity Loss

SIDS are not large [absolute] contributors to theproblem of climate change but are the group of countriesestimated to be impacted the most (Nurse et al)

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Climate Change Impacts onEnergy Sector in SIDS

Implications of Climate Change Impacts include:

Infrastructural damage (due to increased intensity ofhurricanes, and sea level rise) Damage to power infrastructuree.g. electricity transmission

overhead lines

Frequent hurricanes/cyclonic activity could increase costof insurance for transport Could also result in greater delays, in terms of fuel delivery

which tend to be critical importance in responding toemergencies and natural disasters

to operate emergency earth moving and food distributionvehicles and equipment

To generate electricity for emergency communications and topower hospitals

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Regional

Strategies

Petroleum Supply &Optimization Study andDatabase

Strategic reserves of crude oil

Petroleum Supply & PricingArrangements

PETROCARIBE

Eastern Caribbean Gas Pipeline

Increased uptake of RenewableEnergy

Integration of energy systems(particularly for cross border

electricity transmission)

CARICOM ENERGY POLICY

JANUARY 2007

[DRAFT]

Member states will develop

comprehensive national energy policies

that seek to increase the use of

commercially viable RE sources to 10%

of primary energy by 2010

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National RE Policies - Quotas

Country Target Sector / Subsector Deadline

St. Vincent &

theGrenadines

30 % Electricity 2015

60% Electricity 2020

St. Lucia At least 5% Electricity 2013

At least 15% Electricity 2015

At least 30% Electricity 2020

Jamaica 11% Overall Energy Sector 2012

12.5% Overall Energy Sector 2015

20% Overall Energy Sector 2030

Guyana 32% Hydro Power

11% Bagasse

57 % Diesel

Electricity - Installed Capacity 2015

80% Hydro Power

10% Bagasse

10% Petroleum

ElectricityGeneration Mix 2015

St. Kitts &

Nevis

100% Electricity (Phase 1 - of

Geothermal Project)

2011


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National RE Policies (Non-quota)Country Policy Measure

St. Vincent & the

Grenadines

(GTZ Study, 2007)

Components for RE systems exempted from customs duties on case by

case basis

Compact Fluorescent Lamps are fully exempt from excise tax and VAT

Jamaica (National

Energy Policy )

Import Duty reduced from 30% to 5% on all RE devices

Zero rating for GCT purposed on RE equipment

St. Lucia (National

Energy Policy)

Net metering: Regulatory Commission to determine specific rate to be

paid by LUCELEC

Reg. Commission also approves operation of IPPs (In cases of quotas not

being met by LUCELEC

Trinidad & Tobago

(National Budget:

October 2010 -

September 2011)

Solar Water Heaters

No VAT

Tax Credit: 25% value of equipment (for Residential Use)

150% wear & tear allowance (acquired by Commercial enterprises)

Wind Energy:

No VAT or import duty on turbines & supporting equipment

150% wear & tear allowance (on turbines)

Energy Efficiency:

150% tax allowance on cost of energy audit75% accelerated depreciation on energy efficiency systems


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RE Policy: Key Considerations

Renewable Energy (RE) Policy now on theAgenda, however:

Legal & Regulatory framework governing operation

of IPPs still uncertain in many nations (reform on-going)

Fossil-fuelled electricity generation still subsidised in anumber of SIDS

Aims/objectives of energy and climate change policies:in some cases inconsistent or incompatible

energy planning and investments in energy technologies

should consider adaptation to climate change.16


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RE proliferation motivated largely by fuel savings,

rather than by government policy Motivated by concerns related to competitiveness, not

necessarily those related to the environment

Peak Oil Impacts acts as natural incentive to invest in

alternative energy technologies & in energy efficiency

Investments in Energy Efficiency & RE technologiesas well as introduction of Independent Power

Producers (IPPs) often due to budgetary pressures

Limited demand and diseconomies of scale makesinvestment in the power sector unattractive (even

via Clean Development Mechanism). 17


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Increased donor interest in Renewable Energy &Energy Efficiency in the Caribbean (and Pacific) isnotable Particularly for rural electrification

To build resilience to oil price volatility or technology promotion?

Power Sector Reform in and of itself an opportunity toboost transition to RE Use of competitive & transparent Power Purchase

Agreements with IPPs; a key mechanism to transition sectorto RE

Legislative reform necessary to diversify energy mix Even more so for electricity market harmonisation to be realised

in order to export or swap power. 18


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Summary

Caribbean nations are extremely dependent upon fossil fuels

Aligning aims of energy & climate change policies is critical.

Peak Oil & Climate Change Impacts likely to adversely affect

energy security: along with electricity & other key sectors(such as Tourism) in SIDS

RE Policy on the agenda, but driven by concerns related tocompetitiveness (fuel shortages & price volatility)

Power Sector Reform is an opportunity to: enhance the uptake of Renewable Energy

to create an enabling environment to facilitate the operation of

IPPs 19

Keron Niles, What Role for Renewable Energy Policy in the Caribbean Power Sector, 6-2011

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