By NEIL HARTNELL
Tribune Business Editor
The Bahamian energy sector is being targeted for an $80m post-Dorian investment that seeks to combine better storm-resilient infrastructure with increased renewable energy penetration.
Documents seen by Tribune Business reveal that the Inter-American Development Bank (IDB) Board is due on January 29, 2020, to discuss approving a project that is intended to convert the category five storm’s natural disaster into an opportunity to advance The Bahamas’ energy reform goals.
Promising that “the main beneficiary... is Bahamian society”, the IDB papers detail how two-thirds of the $80m - some $53.5m - will be dedicated to rebuilding Abaco and east Grand Bahama’s generation and transmission and distribution networks after they were smashed by Dorian’s winds and rain.
A further $20m is being allocated to improving energy reliability and costs throughout New Providence and the Family Islands, with a focus on developing “models” for solar photovoltaic (PV) plants as well as rooftops and microgrids. And the $5.5m balance is targeting legal and regulatory reforms to support this renewable roll-out, in addition to strengthening the local solar industry’s supply chain.
Explaining the rationale for its intervention, the IDB said: “The devastation brought by Hurricane Dorian has signalled a new sense of urgency for the need to craft a comprehensive reconstruction and resilient infrastructure programme that addresses the climate challenges The Bahamas is facing, as well as those related to high electricity costs, poor reliability and an overwhelming dependence on imported fossil fuels.
“The focus on renewable energy resources is critical as the steady cost of solar PV and wind technologies has declined, and renewable energy is becoming an increasingly competitive way to meet new generation needs. The objective... is to advance renewable energy within The Bahamas, improving the reliability, resilience and costs of supplying electricity in the country.
“The objective of the first operation is to support the government of The Bahamas with the rehabilitation of critical energy infrastructure, enabling a resumption of livelihoods and productivity sectors while facilitating introduction of a renewable energy programme to improve the cost, reliability and resilience of the electricity system in The Bahamas.”
The project’s main $53.5m component, according to the IDB, aims to “ensure renewable energy and resilience are built into all systems” in Abaco and east Grand Bahama as they are rehabilitated and recover from Dorian’s devastation.
An environmental and social assessment conducted on the IDB’s behalf by Washington D. C.-based Environmental Resources Management (ERM), which has also been seen by Tribune Business, details some $21m worth of potential investments in Abaco and $5.4m in east Grand Bahama with a heavy focus on the roll-out of microgrids to support small communities.
Besides rebuilding Bahamas Power & Light’s (BPL) transmission and distribution network in Abaco, the ERM report also suggests that some $10m be invested in creating a 3 Mega Watt (MW) microgrid be installed between Marsh Harbour’s clinic and government complex using roof-top and ground-mounted solar panels.
A $1.5m spend on solar carports at these two government buildings, complete with electric vehicle charging stations and batteries, is also on the list of recommendations as are multiple microgrids for storm-ravaged east Grand Bahama.
Finally, the ERM report also suggests allocating some $12m-plus for the “solarisation” of Exuma. It suggests this could be kick-started by the installation of a 3 MW solar system, complete with a 2 MW hour battery storage system at the island’s “old airport”, together with two 100 kilo watt (kW) rooftop installations on government buildings.
While all this has yet to be approved, the IDB documents show that $20m in project funding will “support the introduction and implementation of new models to develop resilient solar PV installations in The Bahamas.
“This will include an assessment of energy systems in Nassau and the Family Islands with a view to improve reliability, resiliency and cost. This component.... will finance individual projects that will include deployment of decentralised solar PV plants, rooftop systems and microgrids with storage capacity and grid modernisation technologies to improve the reliability and resiliency of the power network in the islands,” the IDB said.
“It aims to increase the contribution of clean energy sources, such as solar PV, by strengthening the institutional capacity to regulate and modernise the energy sector.”
The $80m loan is part of a total $170m facility being readied to enable The Bahamas to meet its long-cherished ambition of deriving 30 percent of its total energy mix from renewable sources by 2030.
The IDB document says the full sum is to be drawn down over a 12-year period as part of an initiative to “transition the power sector In The Bahamas to a more resilient and sustainable sector”, even as many Bahamas-based renewable provider express scepticism that the 2030 goal will be met because this nation has left itself too much to do.
Apart from strengthening the energy industry’s regulatory framework, the IDB project documents also reveal plans to create a special purpose vehicle (SPV) that will be used to “deploy renewable energy solutions”.
“The SPV could take the form of a licensed electricity supplier or generation company under the Electricity Act, and for distributed generation it could provide financing directly or via intermediary institutions,” the IDB suggested.
“This component will also support capacity building and technical assistance to establish the SPV, to improve access to capital and to strengthen entrepreneurship and job creation opportunities in the energy sector.”
The $170m sum and SPV mirror almost exactly the Government’s renewable energy strategy, as set out in the 2019-2020 Budget and recently-unveiled Fiscal Strategy Report, which both spoke to renewable energy investments in the Family Islands.
With BPL estimating that repairs to its Abaco transmission network will cost $90m alone, the IDB paper added: “The provision of quality, cost-efficient, and climate-resilient infrastructure in The Bahamas is critical to positioning the country for the reconstruction efforts and higher and inclusive economic growth.
“The electricity system in The Bahamas was already vulnerable and faced structural challenges even before the hurricane. With an electricity generation based on fossil fuels, The Bahamas suffers from a high fuel import bill (7 percent of GDP) and high electricity prices. Volatile oil prices have contributed to make electricity tariffs among the highest in the Caribbean.
“In addition, the state-owned utility BPL has been financially challenged and its operation has been affected by frequent power outages and elevated system losses. The power infrastructure lacks resiliency in its design, and as such is highly exposed to climate-related hazards, further compromising reliability of electricity and limiting productivity.”
Despite the Electricity Act reforms and publication of the National Energy Policy, the IDB paper said the Government effectively realises that more support is required to convert talk of embracing renewable energy into action.