Exploring the Energy Transition: A Q&A with Caribbean Utility Executives

Caribbean utilities play a critical role in promoting the energy transition in the region. Their challenges? Myriad. The potential for stranded assets, short-term capital expenditure, and how to ensure dependable service to customers in an era of increasingly severe climate change effects – to name just a few. In the final weeks before the 15th Caribbean Renewable Energy Forum (CREF 2023), David Gumbs, Co-Director of RMI’s Islands Energy Program, asked three senior utility representatives from Bermuda Electric Light Company (BELCO), Fortis TCI of Turks and Caicos Islands, and Bahamas Power & Light to shed light on how utilities are stepping up to the challenge.

David Gumbs, Co-Director of RMI’s Islands Energy Program

David Gumbs, Co-Director, RMI Islands Energy Program: What are you doing now to help transition to renewable energy and achieve national resilience and renewable energy goals?

Hon. Wayne Michael Caines, President, BELCO and Liberty Group Limited: As the utility industry is a regulated industry in Bermuda, BELCO, in partnership with the Regulatory Authority of Bermuda, are working on the next iteration of the island’s Integrated Resource Plan (IRP). The current IRP (2019) calls for 85% of Bermuda’s electricity to be generated by renewables, namely offshore wind, solar and biomass technologies, by 2035 with the aim of stabilising the cost of fossil fuels and inflation along with providing opportunities for jobs and training to support the renewable infrastructure. In order to update the IRP, BELCO experts are currently engaged in feasibility and data studies.

The Bermuda Government’s Department of Energy in partnership with the regulator has undertaken two initiatives regarding Bermuda’s energy transition which are (1) the introduction of the Energy Regulatory Sandbox, which is aimed at encouraging new renewable energy technology developers to invest and test their products in Bermuda; and (2) the introduction of a Green Energy Environmental Justice Fund, which is aimed at providing residents across the island with capital to invest in renewable energy solutions.

As we continue to monitor and assess improvements in alternative power-generating technologies, we remain focused on transitioning to a renewable power system. While this transition is ongoing, we are laying the foundation through our transmission and distribution upgrades and our Advanced Metering Infrastructure project.

Rachell Roullet, Vice President of Innovation, Technology and Strategic Planning, FortisTCI: The 2019 TCI Resilient National Energy Transition Strategy guides the renewable energy transition in the TCI. FortisTCI continues to expand its customer distributed solar program, alongside which we are currently developing utility-scale solar plus battery energy storage system (BESS) microgrid projects in several islands in the TCI. We also see potential for wind energy, so we have an ongoing wind data collection and analysis to study the feasibility of implementation.

Another major undertaking is the ongoing FortisTCI collaboration with the TCI government to reform the current regulatory framework. A well-designed regulatory framework is critical for the steady development and integration of renewable energy and their implications to electricity networks, with the final aim of maximizing the benefits of renewable energy deployment for all. If regulation and policy don’t adapt and enable the energy transition, it will still happen, just not fast enough and not in an orderly manner.

Shevonn Cambridge, CEO, Bahamas Power and Light: The Government of The Bahamas has made several policy pronouncements and legislative enactments to incentivize private and public adoption of renewable energy projects of varying sizes. Particularly, favorable duty and tax rates as well as concessions on renewable energy imports are seen as catalysts for small and medium scale renewable energy penetration in the country. For larger projects, the country has leveraged strategic relationships with international agencies such as development and export-import Bank (EXIM) banks to commission several microgrid renewable energy projects focused on building resiliency around critical/essential service facilities to supplement existing power grids and provide independent generation in the event of any disruption (e.g., hurricanes, etc.) to the main grid.

David Gumbs: What is the most efficient pathway toward a green utility future in the Caribbean? Should we step away from the fuel surcharge?

Rachell Roullet, Turks and Caicos Islands: The transition to net-zero or greater energy sustainability involves profound changes that we cannot simply ignore. A drastic shift might create a shock to the system – shock that could cause unreliability and instability of the grid, as well as inequity to all or certain stakeholders. I believe that the most efficient pathway toward a green utility future in the Caribbean is having a comprehensive energy resource planning study as a basis of a well-informed decision making. The study must be accompanied by a steadfast focus and balance short, medium, and long-term action plans. It also requires investments, a well-designed regulatory framework, and most of all commitment and accountability from all stakeholders particularly from the government and the utility.

Shevonn Cambridge, The Bahamas: The most efficient pathway towards a green utility future is through utility-scale solar complemented by battery storage. However, the transition must consider existing utility assets and the impact of those assets either becoming stranded or considered a sunken cost. Without fuel, the tariff model will require adjustment as we start to consider other potential revenue streams such as carbon credits, reduced maintenance costs, etc. Nonetheless, while a fuel charge may be terminated, I foresee that it will be replaced with other fees such as a renewables rider or an effective fuel surcharge.

David Gumbs: Can utilities leverage plummeting solar and battery costs to continue to provide reliable, competitive energy services, while also supporting sustainability and resilience goals?

Shevonn Cambridge, The Bahamas: I think the plummeting costs and improving efficiencies in renewable energy technologies bode well for their uptake by utilities. As more utilities adopt renewable energy solutions, market forces will dictate, and most utilities will follow the trend. The result will be that current conventional sources of energy production will become obsolete. Preparing for this eventuality, utilities can start to incorporate renewable energy systems into their Integrated Resource and Resilience Plans in the form of replacement and additional capacity requirements.

Hon. Wayne Michael Caines, Bermuda: While we continue to work to update the island’s Integrated Resource Plan, we are also simultaneously creating our plan to transition to a more sustainable method of generating electricity, which includes feasibility studies and planning to ensure we are able to maintain our high level of reliability through and post-transition while producing the supply via a sustainable method at a cost our customers can afford.

Our plan moving forward to support the country’s sustainability goals while maintaining reliable, cost-competitive energy services will include securing baseload generation and investing in additional battery storage while introducing renewables like solar and, hopefully, wind. The plan will allow for a staged approach so that costs can be absorbed over time allowing for electricity to remain affordable throughout the transition.

Simultaneously, we are and will continue to explore all utility scale, commercially viable options for renewable power as technology is constantly evolving. Our energy mix and available storage must be methodically planned out in order to maintain the high level of reliability we pride ourselves on.

In the meantime, before the plan is finalised and released publicly, we established a programme to achieve carbon neutrality for our entire team as well. In 2021 we began offsetting the carbon footprint of each of our team members and we are proud to boast that, to date, we have been able to offset 3,175.13 tonnes of CO2, which is equivalent to the emissions produced from driving a typical family car 15,428,908 miles.

The 15th Caribbean Renewable Energy Forum (CREF 2023) returns to the JW Marriott Marquis in Miami this April 26-28. We invite you to join us at the largest gathering of the Caribbean energy market on the annual calendar.