By NEIL HARTNELL
Tribune Business Editor
The Government has been urged to “exclude” renewable energy devices from Value-Added Tax (VAT), a leading sector provider suggesting this would incentivise their use and match existing tax policy.
Guilden Gilbert, vice-president of Alternative Power Sources (Bahamas), told Tribune Business such action would “send a clear message” that the Government supports the increasing use of renewable energy.
And he suggested it would boost the Bahamas’ near-rock bottom ranking in the Inter-American Development Bank (IDB) affiliated Climatescope 2014 report, adding that the Government’s proposed net billing policy was not enough to induce greater renewable energy take-up among Bahamian households.
“I will say this,” Mr Gilbert told Tribune Business via e-mail. “Government policy has removed all import duties on solar products and system components (with the odd exception being charge controllers), and in a consumption-based tax environment there really is nothing more the Government can do as far as financial incentives for end users.
“When VAT is implemented it will effectively increase the cost of renewable energy by the amount of the tax, 7.5 per cent, so maybe the Government can consider excluding renewable energy from VAT in an effort (tax incentive) to entice the use of renewable energy.
“That would definitely have a positive impact on the Bahamas position with regard to renewable energy versus others on the list, because in excluding the sector from VAT it sends a clear message of the Government’s support of a move to increased use of renewable energy.”
Mr Gilbert said he was “not surprised” by the Bahamas’ 52nd out of 55 countries ranking in the Climatescope report, as “we really have seen no push” by the Government to drive renewables as part of the Bahamas’ energy mix.
“We have seen the beginnings of a net billing policy, which will allow small amounts of power produced by renewable energy sources to be sent back to the grid,” he added.
“I do not believe the proposed net billing policy is, in and of itself, attractive enough to entice a large percentage of homeowners to install renewable energy solutions ,as the amount of power to be sent back through the meter (the exact amount is still unclear) is very small.
“As a company, our number one focus with our clients is not on cost savings or ‘selling’ power back to BEC,” Mr Gilbert said. “We try to get clients to think along the lines of energy independence with a lower cost of energy as a by-product of this independence.”
Mr Gilbert told Tribune Business that the Government could “send a clearer message” via having its own, broad ‘internal’ policy to drive better energy efficiency.
He suggested: “Stand-alone Government buildings should see a move toward the use of solar, even if it is only for offsetting the overall energy usage. Government schools should operate as much as possible off solar, as it can lend to the education of renewables for the next generation of leaders.
“These things will show the Government leading by example, and will help the country to move up in ranking in reports such as Climatescope.”
The Alternative Power Sources executive said the newly-released National Energy Policy will not improve the Bahamas’ ranking unless it was broadly implemented by the Government itself.
“Encouraging commercial entities to self-generate power using renewables should also be encouraged, as it would reduce the likelihood of a repeat of the situation where commercial building owners were asked to run their generators to help to support BEC,” Mr Gilbert said.
“If a commercial entity is virtually free of the grid, that reduces the power production requirement of BEC. I note that BEC has begun an exercise of installing LED cobra heads on street lights. While the cost of operating them is reduced, they still use power generated by BEC.
“There is no reason why the street lights cannot be converted to solar so that over time all street lights are fully independently powered from solar, and there is no cost to operate them,” he added.
“Doing this will reduce the demand load from BEC generators and thus reduce the volume of fuel required. When you think about it, if the street lights operated under solar there would a day power demand savings of quite a few Mega Watts (MW), which equates to reduced fossil fuel usage. Surely this would send a clear message of how sincere the country is about reducing fossil fuel demands.”
Mr Gilbert concluded: “In a nutshell, the Bahamas will remain where it is from an energy perspective unless there is a clear and concise effort by the Bahamas Government to encourage the widespread use of renewable energy.”