Govt takes street to 20% energy use cut

By Neil Hartnell

Tribune Business Editor


Bahamas Power & Light (BPL) will start installing over 30,000 energy-efficient street lights during the 2019 first quarter in a bid to save the Government $3m per year.

Dr Donovan Moxey, pictured, the state-owned utility’s chairman, told Tribune Business that the initiative will help cut its operational and maintenance expenses, with some estimates suggesting it will reduce the Government’s energy consumption by 20 percent.

The project is being financed by a $14.5m loan from the Caribbean Development Bank (CDB), which suggested that the benefits will include reduced fossil fuel imports and greenhouse gas emissions, while also lessening the demand on The Bahamas’ foreign exchange reserves.

Daniel Best, the CDB’s director of projects, said street lighting accounted for 30 percent of the Government’s total energy consumption and 3 percent of nationwide demand. He predicted that slashing this load by replacing 30,500 existing street lights with light-emitting diodes (LED) will result in significant savings that will rapidly pay back the loan.

“The project is expected to reduce the cost of street lighting to the Government of the Commonwealth of The Bahamas by about 20 percent when it is implemented, saving the country approximately $3m a year,” the CDB said in a statement.

Its $14.5m loan, approved on December 13, 2018, “will cover project preparation assistance, infrastructure works, engineering services, goods and project management associated with the initiative”. Some $8.9m of the loan came from financing provided to the CDB by the European Investment Bank (EIB) under the Climate Action Line of Credit (CALC).

Mr Best was quoted as saying: “Currently, street lighting accounts for more than 30 percent of the Bahamian government’s electricity consumption and, in fact, takes up 3 percent of the country’s overall consumption.

“By implementing energy-efficient street lighting, The Bahamas will be able to save money, reduce its fuel import bill and cut its greenhouse gas emissions.” The project was touted as helping The Bahamas meet its targets of reducing greenhouse gas emissions by 30 percent by 2030, in accordance with its commitments to the Paris climate change agreement. 

Dr Moxey, when contacted by Tribune Business, confirmed that the LED lighting’s installation is due to start during the 2019 first quarter and may take between 18 to 24 months to complete.

He was unable to detail the exact savings that BPL and the Government will see once the project is complete as they were still “running our own numbers” and conducting a cost/benefit analysis.

“The main benefits for us are going to be reduced costs on the operations and maintenance side. Those are expected to go down with the new street lights,” Dr Moxey told Tribune Business. “And when you look at energy consumption we’re looking to reduce that as well.

“The Government pays BPL for the cost of street lighting, both costs and maintenance. The Government is looking at reducing their costs as well with this programme.”

Asked how long the project will take to implement, Dr Moxey replied: “We’ve had estimates of where it will take between 18 to 24 months to get everything implemented. We have to look at the resources available to us in terms of scheduling and timing. It’s going to take quite a while.”

He added that BPL was also focused on promoting its 100 kilowatt (kW) Small Scale Renewable Generation (SSRG) programme to residents and businesses during the 2019 first quarter, plus securing a long-awaited multi-million dollar refinancing that will create consumer savings and free-up the financing needed to upgrade its infrastructure.

Dr Moxey pledged that the Rate Reduction Bond (RRB) was “moving forward”, with internal discussions over its structuring and placement taking place at Board and executive management level.

“That’s all part of the strategy to reduce the cost of electricity,” he told Tribune Business. “As we reduce the cost of operations those savings can be passed on to consumers. We are moving forward with what needs to be done.”

Describing it as a ‘Debt Reduction Bond’ rather than the “rate” variety, Dr Moxey continued: “We’re looking to reduce the debt BPL has and pass those savings on to the customer. It’s extremely important.

“These are legacy costs that have been around for a long time. We want to retire those legacy costs and focus on upgrading the transmission and distribution (T&D) network and the generation agreement with Shell.

“This goes hand in hand with what we want to do to reshape BPL. I don’t have a date [for the RRB] but it will be some time in 2019. We’re still analysing what the options are at this point and making some decisions internally.”

Dr Moxey also declined to place a figure on the amount of capital BPL will need to raise, although past estimates have placed this as high as $650m.

BPL is currently handicapped by around $350m in bank and bond debt, plus liabilities such as its $100m pension deficit and the need to clean up past environmental pollution. To address this, the former Christie administration’s plan involved issuing RRB bonds, via a special purpose vehicle (SPV), to Bahamian and international capital markets investors.

The proceeds would take out the legacy debts while keeping the new financing off BPL and the government’s balance sheets, enabling the state-owned utility to raise new capital to invest in badly-needed network upgrades.

The Minnis administration initially seemed reluctant to adopt the long-term financial restructuring tool left behind by its Christie predecessor, but the RRB’s placing has become critical to raising the nine-figure sum required to restructure BPL’s legacy debt.

It will likely add an additional charge to consumers’ electricity bills, representing monies that will be used to pay interest to investors in the RRB, but this will be a small component of the overall bill. And the increase may well be offset by BPL’s interest savings on its new debt, plus the anticipated reduction in energy costs when Shell’s multi-fuel power plant becomes operational in 2021-2022.


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