By NEIL HARTNELL
Tribune Business Editor
Renewable energy providers yesterday blasted proposed new regulatory guidelines as “the worst imaginable” solution that threatens to “set The Bahamas backwards as a nation”.
The Sustainable Energy Association of the Bahamas (SEAB), in particular, warned that the Utilities Regulation and Competition Authority’s (URCA) proposed guidelines (see other article on Page 3B) for approving renewable energy self-generation projects threatened to shrink the market at a time when it should be doing everything to encourage its expansion.
And Guilden Gilbert, vice-president of Alternative Power Solutions (APS) Bahamas, told Tribune Business that URCA’s proposals appeared to be designed primarily to protect Bahamas Power & Light (BPL), and its revenue and customer base, rather than incentivising greater use of renewable energy.
Producing a “back of the envelope” calculation showing that grid-tied homeowners and businesses would be worse off under the new guidelines, Mr Gilbert argued that URCA appeared to have performed a 180-degree turn and abandoned its primary mandate of consumer protection in favour of the state-owned utility monopoly’s interest.
Central to URCA’s proposal is a change in how both homeowners and businesses will be compensated for the energy their grid-tied systems will sell to BPL. The present Small Scale Renewable Generation (SSRG) initiative, launched in 2017, rewards such renewable producers through a “net billing” arrangement.
This enables persons with grid-tied systems to “net off” the difference between what they supply to, and consume from, BPL. However, the URCA proposal released on Friday proposes to change the compensation mechanism from “net billing” to a “buy all, sell all” approach for all renewable energy self-generation (RESG) systems.
This means, according to URCA, that homeowners and businesses will not be able to consume any electricity generated by their renewable systems. They will instead have to export all energy they generate to BPL, and consume all the electricity they need from the state-owned monopoly at the standard retail tariff levied on all its customers.
URCA is proposing that those who “sell all” to BPL under this arrangement are compensated by the equivalent of BPL’s monthly fuel charge, which normally accounts for 50-60 percent of customer bills. This will be paid via either credits to the utility bill or via cash
The regulator’s consultation paper suggests BPL’s fuel charge is equivalent to the “avoided cost” for those with grid-tied renewable systems, although it admits this “may not be adequate to actually compensate” homeowners and businesses because the utility will also recognise additional savings in its transmission, distribution and supply segments.
Conceding that it has yet to quantify these potential savings, URCA promised it will conduct a study to determine “a more appropriate avoided cost” to be paid to grid-tied renewable suppliers. The “buy all, sell all” compensation method is also what Grand Bahama Power Company and its owner, Emera, have been proposing for Grand Bahama.
It is unclear whether URCA’s proposed guidelines will move The Bahamas closer to achieving the National Energy Policy’s (NEP) 30 by 30 goal, which is to meet 30 percent of this nation’s energy needs from renewable sources by 2030.
The guidelines have also been released at a time of heightened concerns regarding climate change, and the need to move away from reliance on fossil fuels to renewable and sustainable energy sources, as a result of the devastation inflicted upon Abaco and Grand Bahama by Hurricane Dorian.
The “buy all, sell all” approach did not sit well with the Solar Association (SEAB), which said: “It is SEABs position that the proposed legislation (guidelines) is extremely harmful and detrimental to the Bahamian solar industry and their solar customers...
“It is the worst imaginable... for medium and large-size businesses wanting to lower their electricity costs with a solar system connected to the BPL grid. It is predicated on the existing utility structure with a continuation of the existing monopolistic governmental supply of electricity to the public and governmental control of pricing, inspections and approvals.
“It will create a ‘win-lose deal between..... BPL and Bahamian businesses. BPL will have the greater advantage, and businesses will not be incentivised to ‘sign on’ to the RESG projects as they would not be economically viable under the proposed programme rules.”
SEAB argued that URCA’s proposed guidelines would reduce demand for the installation of grid-tied renewable energy systems throughout The Bahamas, resulting in a loss of business for not only its installer and supplier members but associated professions such as electricians.
“It will result in less revenues for solar companies because it will eliminate a potential solar market within medium to large businesses,” it said bluntly. “It will result in less sub-contracting from the solar companies to construction and electrical companies
“It will result in decreased job openings in the solar industry because it will decrease the number of projects available to work on. It will prevent local or foreign direct investment for medium-sized solar systems on businesses in The Bahamas.”
Urging the Bahamian public and private sector, especially medium-sized businesses, to “sit up, pay attention and understand what is about to legislated and take action in your best interests”, the Association said: “It is the unanimous conclusion of the leading Bahamian solar energy companies that the current proposed legislation (guideline) changes will increase the unfairness of the rules towards Bahamian businesses who want to ‘go solar’ , be harmful to the solar industry businesses and set us backwards as a nation.”
These concerns were echoed by Mr Gilbert, who told Tribune Business that the way in which URCA’s consultation document was written clearly showed that the main priority appears to be protecting BPL.
In particular, he cited section 4.2.2, which stated: “URCA must, where it proposes a regulatory initiative, consider the economic impact such an initiative may have on the viability of the business of regulated entities.
“In that context URCA is aware of legitimate concerns of BPL as to the potential impact on financial performance of economically significant existing consumers reducing their demand on, or consumption from, BPL, particularly where BPL is required to continue making power available to those consumers.”
“This section appears to us to show the desire of URCA to protect BPL,” Mr Gilbert argued. “Is it not incumbent on the utility to manage its own economic affairs? Why is this now being placed on the consumer? If a consumer already has a BPL connection, how is that consumer economically impacting BPL, except that the demand from BPL from that customer can be reduced with the installation of an RESG system?
“The only thing that happens is that BPL has a reduced revenue stream from that consumer. The demand is reduced because very few consumers will actually be able to get to a state of being completely off-grid, either due to cost or the lack of available roof or yard space for the installation of PV panels. There is nothing extra BPL needs to do to get power to the consumer.
“If the owner of the RESG must export every kilowatt produced from the system and cannot use anything from it for private consumption, how is BPL to reduce its reliance on fossil fuels? How do this policy tie into the National Energy Policy?” he continued
“Shouldn’t BPL be happy to receive the excess power from RESG systems while that system is also providing power to the residence? Is this not a better method to reduce consumption and by extension the demand for fossil fuels?”
Arguing that the intent “seems to be to dissuade persons from installing an RESG system”, Mr Gilbert asked: “If that is not the case perhaps URCA would be willing to explain the methodology behind this policy of ‘Buy All, Sell All. What this is saying is that the RESG owner is nothing more than an Independent Power Producer (IPP) as the only rationale for the system is to export power to BPL.
“Further, will URCA stipulate when the payment from the exported kilowatts be paid? Will they stipulate that just as consumers are billed monthly and expected to settle their accounts monthly, that the proceeds from the sale of this power will also be paid monthly?
“There has to be some form of payment because the consumer has gone into debt to install a system. That debt could be removing funds from their savings account or through a lending facility. Will there be a penalty in place if BPL does not pay on a timely basis, just as when a consumer fails to pay on a timely basis their power is disrupted?”
Calling on URCA to allow homeowners and businesses to operate renewable systems without needing a BPL connection, Mr Gilbert added: “Our biggest question, and hopefully URCA is willing to answer it, is: What is the underlying reason for this policy if it not to protect the revenues of BPL?
“This position by URCA, confusing to us as it is, appears that the interconnection method is more beneficial to BPL than to the RESG system owner. What is being proposed is concerning as most persons who install systems, from our experience, are doing so to be able to independently power their homes during the day and purchase from BPL at night, or to independently power their homes through the night using battery-based systems (the vast majority of installations).
“My understanding is that URCA, as the regulator, is charged with the protection of the customer - the end user - not the utility. This method does not appear to be protecting the consumer.”