The Anguilla Government should now be in a clearer position to move forward with the island’s Renewable Energy Integration Project aimed at reducing the cost of electricity. This follows the presentation of recommendations on Tuesday, this week, by Castalia Strategic Advisors, a consulting company based inWashingtonDC.
The project is to supportAnguilla’s efforts to implement key elements of its National Energy and Climate Change Policies. This is to be done by amending current electricity legislation to provide a clear framework for the integration of both customer-operated and utility-operated renewable energy sources into the national electricity grid. It is here where Castalia comes in with its recommendations.
The Anguilla Government is working in partnership with Castalia; the funding agent, Climate and Development Knowledge Network (CDKN); and the Anguilla Renewable Energy Office (AREO) of the Anguilla National Energy Committee.
Representatives of both Castalia and CDKN were in Anguilla for the second time (from Monday to Wednesday) for the presentation of the recommendations.
The Project Leader is Gianmarco Servetti, Castalia’s Principal and Project Director. Mr. Servetti, who was accompanied by his colleagues, Laura Berman and Barbara Vargas; and Patricia Leon, Project Manager, CDKN, presented his company’s recommendations at an Anguilla Stakeholder Workshop Consultation at Paradise Cove Resort on Tuesday. The event was attended by a large gathering representing the private and public sector organisations.
The opening ceremony was chaired by Director of Public Utilities/Telecommunications Officer, Crefton Niles.
Speaking at the ceremony, Chief Minister and Minister of Finance, Hubert Hughes, acknowledged the important role being played by the various sides in the partnership. He was particularly grateful to the British Government, through its Department for International Development (DFID), for financing the project.
“We are pushing ahead as fast and as responsible as we can with this project,” he said. “It will put in place the legislative and regulatory framework to allow the integration of renewable energy into our energy system, both at the utility and the distributed levels. This should bring relief on two fronts as the utility would now be able to freely procure a renewable energy plant. Thus we should see a reduction in electricity prices as they switch to renewable energy. On the other hand, the small house-holder would now be able to procure [a] renewable energy plant and feed into the grip, thus allowing him/her to reduce his/her electricity bill and at the same time sell excess generation back to ANGLEC.”
The Chief Minister continued: “This will only be the beginning. It is a deliberate top priority policy decision of my Government to develop renewable energy as fast as we can, so as to provide further relief to electricity consumers inAnguilla. At present, my Government is working on other initiatives whereby we are seeking Technical Assistance from theUnited Kingdomfor the reform of the entire energy sector.
“At the same time, we are also encouraging ANGLEC to forge ahead with the procurement of renewable energy plant, perhaps a 2 or 3 MW plant in the first instance and continued renewable energy procurement thereafter.
“Some of these initiatives will begin to bear fruit in the immediate term, and as we put more initiatives in place we will see further benefits being realised by the use of renewables in Anguilla and hence a corresponding reduction in the cost of electricity.”
The Chief Minister made the point that renewable energy integration could help to reduce both local and global environmental impacts by lowering greenhouse emissions. “Anguilla’s objective will be to pursue greenhouse gas abatement options as long as they are least cost; that is, they reduce the cost of electricity to the country as a whole,” he added.
Minister responsible for Energy, Evan Gumbs, who declared open the workshop, noted that electricity prices in Anguilla were among the highest in theCaribbean, causing undue stress and hardship to businesses and households. “Thus reducing electricity costs by integrating viable and least cost renewable energy would be a win-win for all stakeholders,” he observed.
Minister Gumbs went on: “Any savings achieved from integrating renewable energy into the national grid must be passed on to the consumer in the form of lower tariffs. This should improve the welfare of households and businesses since they would now pay lower electric bills. It would also allow them to remain connected to the grid; and reduce the need to invest in renewable energy systems.
“Let me make it abundantly clear that, while pursuing these goals, Government will ensure that ANGLEC continues to operate as a commercially viable utility that provides reliable and more cost effective electricity to all.
“In tackling these challenges, Government has recently taken steps to transition towards a more sustainable energy framework by developing National Energy and Climate Change Policies. However, the country’s legal and regulatory framework for the power sector must also be amended so that it effectively enables renewable energy integration in accordance withAnguilla’s top policy objectives.”
Beth Barry spoke briefly on the work done so far by the Anguilla Renewable Energy Office working in partnership with Castalia, CDKN and the Government. Mr. Servetti, Castalia’s Project Director, with whom Ms. Barry is working closely, also outlined the work being undertaken by his company inAnguilla. He delivered his company’s recommendations, following the opening ceremony, during the workshop session.
The following is a statement he made regarding the recommendations to the Government:
“Castalia found that there are several economically viable renewable energy options: large and small solar photovoltaic (PV) technology that turns sunlight into electricity; large wind energy; solar water heating; and – provided there is enough waste – perhaps a very small plant to generate electricity from waste.
“However, these options are not happening. Why?
“The reason is not that they are not commercially viable (that is, that they cannot save or make money) because all they key ones do – they are good business for everyone, and don’t need any subsidy. So the reasons (or ‘barriers’ blocking projects that make sense) must be others.
“One barrier for small scale renewables is that new buildings may go up in a way that makes it impossible or very costly to install a solar water heater. The recommendation here is to make it mandatory: when a building has a water heater, that it be a solar one of a type appropriate for theCaribbean– just like it is mandatory for new buildings to have an underground water tank.
“Another barrier for small scale renewables is that customers are not allowed to interconnect to the grid to sell excess electricity from their systems, such as solar PV or wind. The recommendation here is to amend the Electricity Act by adding that you don’t need a licence to generate solar PV and wind for own use, and for selling excess electricity to a public supplier on agreed terms.
“For large scale renewables, there are already several options for ANGLEC or other private companies to do them: (1) ANGLEC can do them itself, just like any other plant; (2) an Independent Power Producer (IPP) can be assigned rights under ANGLEC’s public supplier licence without the need to get a licence of its own; or (3) ANGLEC can hire a contractor to Design, Build, Operate, and Maintain (‘DBOM’ contract) a renewable energy plant.
“Since ANGLEC can already do renewables itself, or get a third party to do them, the recommendation here is to create internal rules to ensure that ANGLEC does this in the best possible way. These would be rules to plan renewables based on least cost, on a par with diesel, and to do a competitive and transparent procurement process when involving third parties. ANGLEC is already going in this direction: it prepared a draft Request for Proposals (RFP) for a large solar PV plant. It’s a great initiative that should not be delayed further. The recommendation is simply to embed it in the ‘best practice process’ mandated by the recommended internal rules.
“For the sale of electricity from small renewables, the recommended way to go is a ‘package’ of four things: (1) a cap on the total and individual eligibility of systems. This is needed to preserve stability, reliability, and quality of the grid; (2) a grid code with technical interconnection rules so that everyone knows how to hook up to the grid, complying with safe but relatively easy arrangements; (3) a Standard Offer Contract (SOC) that offers a fair rate for a long term duration.
“A fair rate should be calculated at the avoided fuel cost, that is, the cost that ANGLEC does not have to incur, thanks to buying renewable electricity from customers. It fair because it pays no more, and no less, than what ANGLEC would otherwise spend. If it were to spend more, it would ultimately have to recover the extra cost from all customers via tariffs. A rate at avoided cost is a bit more difficult to calculate, but not too difficult, and is good from the entire country’s perspective.
“A long-term duration is needed so that customers can expect to sell excess electricity for the entire lifetime of their systems – otherwise they would face an uncertainty that would prevent them from even looking into a small renewable system; and finally (4) a new tariff arrangement…”
The Castalia Project Director recommended that there was a need to ensure that the utility could recover its investments. “Right now, thanks to the fuel surcharge, ANGLEC (like many other utilities in theCaribbean) is certain it can recover the cost of diesel generation. However, it is not certain that it can recover the higher upfront (capital) cost of renewables because there is no similar mechanism; and rate reviews are rare, and uncertain as to outcome.
“So the current framework acts as a disincentive to do renewables. The recommendation here is say that as long as ANGLEC plans and implements renewables in the best practice way outlined above, it will be able to recover those costs through tariffs. This seems like a little thing, but it has huge consequences: it ensures that renewables can be treated on a par with diesel, and that they can be a profitable business – and renewables in Anguilla can beat diesel and be a profitable business.”
