By NEIL HARTNELL
Tribune Business Editor
Renewable energy providers have voiced fears that the government's planned $170m financing vehicle will "squeeze out" the private sector and "kill an already-struggling industry".
Guilden Gilbert, vice-president of Alternative Power Solutions (APS) Bahamas, told Tribune Business that the government needed to "just open the space up and get out the way" rather than seemingly seeking to take full state control of the country's renewable energy sector.
He and others called for urgent "clarification" over the just-approved Inter-American Development Bank (IDB) project that proposes to inject $170m of solar project financing into an initially government-owned special purpose vehicle (SPV) to spearhead the roll-out of renewable energy throughout The Bahamas.
Project documents seen by Tribune Business reveal that this entity will then finance the development, construction and operation of utility-scale solar plants in the Family Islands that will then sell all the energy they produce to Bahamas Power & Light (BPL) via a power purchase agreement (PPA).
But the SPV will also provide financing to homeowners and businesses for the installation of roof-top and ground-mounted solar photovoltaic (PV) systems. The project calls for Bahamian firms and entrepreneurs to install these systems, but it is unclear whether they will be selected by the Government-owned vehicle - something that would raise concerns about certain players being excluded altogether.
"Why wait for such a vehicle to give solar 'free reign'," Mr Gilbert asked. "They're [the Government] competing with the private sector, which doesn't make any sense. I just don't understand why the Government wants to get into this industry. Just open the space up. That's really what should happen.
"The private sector can fund large solar projects, and some large-scale potential projects are not getting the support to allow them to go forward. Why restrict it now and then open it up once the SPV is in place? Just open up the market. If the client wants to do a utility-scale solar plant the Government needs to get out the way and let them do it."
Mr Gilbert said there would likely be "no issue" if the proposed SPV was a mere financing vehicle competing in an open market, as he warned that the "exclusive arrangements" he and other Bahamian providers hold with renewable equipment manufacturers would present an obstacle to its involvement in installations.
"All these questions need to be fleshed out to get reliable feedback from the industry on what they think about it. This is not something that can be driven down the throats of the public," he added. "If it's a matter of the Government competing for our business as well it doesn't make any sense. You will kill an industry; an industry that is already struggling.
"Maybe the IDB can speak out and advise how they see this. We have financing arrangements that, as a company, we will be announcing very soon. We've signed off an arrangement."
Mr Gilbert also pointed out that the Government's plans, as outlined by the IDB, "seem to oppose" the controversial "buy all/sell all" mechanism proposed by the Utilities Regulation and Competition Authority (URCA) for compensating renewable energy producer who sell power back to BPL's grid.
"On the surface, it's not a bad thing if it's being structured to support the industry. The Government will not get push back," he added of the SPV. "If it's being structured where the industry will be squeezed out of the market they will get push back, as they are killing the private sector and that does not bode well for the economy."
Philip Holdom, Alternative Power Supply's principal, told Tribune Business in an e-mailed response that the Sustainable Energy Association Bahamas wanted more information on how the proposed SPV will be structured "and be at the table during negotiations".
"Even though the Government may wish to incorporate PV into its generation mix, it should not hinder or obstruct private persons or businesses from installing a roof-top solar for self-consumption," he said.
"Our concern with public solar plants is the same with the public utility fossil fuel plant: The public pays the price but does not get the benefit. As a case in point, we welcome an explanation as to how the National Stadium PV system benefits the public with lower electric rates. Any power generated by the stadium goes straight to BPL. The public has no access to the production of the PV plant even though they technically own it and they derive no direct benefit."
Mr Holdom continued: "The current proposed URCA 'buy all/sell all' proposal for private solar systems is a win-lose proposition where the public utility wins and the public loses.
"The public is sick and tired of being overcharged for electricity, and now the government proposes to force private solar plants to sell all their clean solar electricity at half-cost to BPL and force the public to buy the utility's dirty electricity at twice that cost.
"How this could even be suggested as a way to promote solar in the Bahamas is completely absurd. An informed public will say no to a 'buy all/sell all' arrangement and will make their voice known to URCA," he added.
"The bottom line is that rules are being proposed to prevent the public from reducing their own electric bill by their own means through a solar system. The goal appears to be a reduction of the utility's cost without passing that savings on to the customer.
"If the public does not agree with this then they must speak up by contacting URCA and the Prime Minister's Office. If they do not speak up or act, laws will be passed to prevent the public from reducing their electric costs, with the promise that the utility will lower your costs once they have solar. Dependency on public utilities is being promoted over independence."