By NEIL HARTNELL
Tribune Business Editor
“Pioneering” Bahamian solar firms are being “bypassed” on the “big piece of the pie” due to how government tenders for utility-scale renewable energy are being structured, one provider is asserting.
Philip Holdom, the Sustainable Energy Association of the Bahamas (SEAB) president, told Tribune Business that local companies are being restricted from leading bids on one megawatt (MW) plus system contracts due to how the government treated the industry in the past.
Having refused to approve the installation of utility-scale systems by Bahamian providers “for the past 20 years”, Mr Holdom said the government was now demanding that bidders have experience on “a minimum” of three such projects in the renewable energy Request for Proposals (RFPs) it issues.
Describing this as a government-created “dilemma”, he added that it forced Bahamian companies to partner with overseas providers if they wanted to participate in utility-scale solar tenders rather than lead bids themselves.
This, Mr Holdom argued, will ensure Bahamian solar companies “remain small” and earn little reward for their efforts in developing renewable energy, as foreign firms were more likely to partner with local construction companies on their bid submissions.
Suggesting that the Government will ultimately end up taking over the solar industry, a suspicion many other providers voiced when its $170m special purpose (SPV) renewable energy financing vehicle was unveiled last year, the Association chief said: “From a business standpoint, the more the Government does large-scale solar systems and not include Bahamian companies, it doesn’t benefit and trickle down into the Bahamian economy.
“They will say they put out RFPs, but the RFP is worded in such a way that it’s difficult for Bahamian companies to meet the requirements. Part of it is historic. When we as Bahamian companies in the past tried to do large-scale solar projects, they refused to approve them.
“But in the RFP, they want you to have a minimum experience of three large-scale projects. Every Bahamian company has to team up with international companies to bid, which is why it’s so difficult to do that,” Mr Holdom continued.
“For the pioneering companies in The Bahamas, it’s a difficult situation because when they prevented us for the past 20 years, we had projects that were MW scale, including projects desired by Bahamian companies, Bahamian businesses. They wanted MW scale projects. Once again it’s difficult to grow as a company when you have these restrictions historically and currently.”
Arguing that the current set-up favours the participation of local construction companies on solar projects, rather than specialist renewable firms, Mr Holdom said: “You won’t have a cadre of solar experts, just a cadre of electricians. They won’t have training as solar installation experts.
“What’s happening is the solar companies are doing very small jobs. When they’re talking large-scale solar, they’re talking about the Government doing stuff or the Government with their select companies. It’s a dilemma. It means the solar companies will remain small and not get a big piece of the pie.
“It’s unfortunate because they were pioneering stuff in The Bahamas. Yes, they’re [the Government] doing more solar, but in the process they’re bypassing the small solar industry that started the whole thing. It’s the way the RFPs are being written up, and I just don’t see anything substantially changing. The big projects will go to companies that really never did solar.”
Speaking after Dr Donovan Moxey, Bahamas Power & Light’s (BPL) chairman, last week revealed the utility’s plans to have distributed battery technology “in place in New Providence by summer 2022”, in a bid to ensure improved grid stability for the integration of utility-scale and roof-top solar, Mr Holdom said “quite a large capacity battery will be needed to match the fluctuations in the grid”.
Agreeing that BPL’s transmission and distribution system requires significant investment and upgrades, he likened the arrival of distributed battery technology to “putting in a new engine on an old chassis and asking the chassis to perform. There’s still a lot of work to be done on the national grid”.
Dr Moxey had voiced optimism that improved grid stability will increase demand for the small-scale residential generation (SSRG) initiative introduced in 2017, which has seen only 380 of BPL’s 100,000-plus customers apply to connect their solar systems to the utility’s grid and sell power to it.
However, Mr Holdom said the SSRG initiative itself needed to be restructured by drastically slashing the approvals time for grid integration of roof-top solar. He added that the compensation owners receive for connecting, and supplying power, to BPL provided too little incentive and return on investment.
Noting that the returns had decreased even further due to the COVID-19 slump in global oil prices, the SEAB president said: “It’s back to the delays in getting SSRG projects approved. It’s still a lengthy process, and since COVID-19 it’s become even worse.
“We’re not getting responses. It’s a seven-step process. The first goes through BPL, and used to take two weeks. It’s now beyond that. No customer wants to wait eight months for a solar system to be approved. We have a spread sheet, and are keeping track of the problem.
“We’ve sent years of communications on how to structure the SSRG, how to make it simple and improve the ease of doing business. Nothing has changed.” There are currently two renewable energy initiatives depending on the size of the system involved.
While the SSRG is for those of 100 kilowatts or less, the Renewable Energy Self Generation (RESG) programme covers systems up to one MW and which are primarily designed for medium-sized and large businesses. Mr Holdom, though, said most firms will “not engage” with the latter initiative because of the way compensation is structured for systems of 500 Kw or more
The latter are paid on a “buy all, sell all” arrangement, which means the business cannot consume any of the energy it produces and has to sell it all to BPL. The latter will pay the so-called “avoided cost”, or the fuel charge rate, for the energy it purchases, meaning that companies are credited for roughly 50 percent of their electricity bill.
Noting that it “still takes three months for BPL to adjust the customer’s bill” for this once approval is obtained, Mr Holdom said last year’s decline in global oil prices meant some companies with renewable systems lost out and “there’s even less reason” to participate in the RESG.
“All these factors are a complete disincentive to the rapid installation of solar in the country,” he told Tribune Business.