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Energy Policy and Planning

approaches throughout the


Region
Dominica, March 25, 2009

Detlef Loy
CREDP/GTZ
Energy Policy Advisor
Energy Situation in the Caribbean Region
Main Characteristic of electricity markets (1)

9 High dependence on imported fossil fuels (93% of electricity production)


9 Only 3 % of electricity produced from RE sources
9 Remaining sources: own fossil fuels
9 Electricity coverage on Islands > 98%
9 Monopoly situation (most Caribbean electric utilities enjoy universal
licenses for generation, transmission, distribution and sale of electricity
until beyond 2025, mostly no IPPs allowed)
9 Small Islands: installed capacities < 100 MW (small markets)
9 Electricity costs from 0.24 to 0.37 USD/kWh (in 2006)
9 Main electricity consumers:
(i) hospitality sector
(ii) domestic households
(iii)commercial sector
(iv)industrial sector
Energy Situation in the Caribbean Region
Main Characteristic of electricity markets (2)

9 Most Caribbean countries still have no established National Energy


Policy, no long-term Energy Strategy and no Energy Actions Plans.
9 In the 70 - 80ties: utilities were privatized without setting the rules of the
game for the buyers (5 out of 8 GTZ partner utilities are private
companies).
9 Energy forecasting, planning and energy policy were left in the hands of
utilities.
9 Inefficient policy decision procedures due to split energy portfolio in
Ministries for alternative energies and public utilities.
9 Lack of energy expertise in responsible Ministries .
9 No transparent and consistent political decisions.
9 Electricity Supply Acts in many Caribbean states guarantee fixed rate of
return on investment for utilities.
9 No incentives nor sanctions for utilities to explore and exploit RE.
Current donor initiatives in the region

9 IDB: Barbados - Preparation of Sustainable Energy Framework (coming)


9 WB/OECS: Regional Energy Planning and Regulation Authority (ongoing)
9 WB: Study on Electricity Supply Options in the Caribbean (ongoing)
9 CARICOM (CREDP/UNDP): Energy Policy Study (ongoing)
9 IDB: Energy Innovation Contest (Deadline May 15, 2009)
9 WB: Dominica – Alternative Energy Legislation (coming)
9 CREDP/GTZ: 2008-2012 (2nd phase), RE and EE, Policy and Technical
Assistance (ongoing)
9 OAS / ACP-EC Energy Facility): Caribbean Sustainable Energy Program
9 EU Interreg III: Feasibility of Geothermal power production in Dominica and
electricity export to French Territories (ongoing)
9 ACP-EC Energy Facility: Geothermal Energy Dominica (ongoing)
9 Special Facility for Assistance (SFA)/European Development Fund: Energy-
related support in St. Lucia (and possibly St. Vincent) (coming)
9 WB: Funding for IRC Dominica (ongoing)
New Energy Policies in Place or Discussion

• Anguilla – National Energy Policy 2008-2020


• Barbados – National Energy Policy, draft of Dec. 2006
• St. Lucia – National Energy Policy, draft of Feb. 2009
• St. Vincent - National Energy Policy, approved by Cabinet in March
2009; Action Plan as draft (40 actions defined)
• Grenada – Energy Policy, draft of Aide Memoire, Feb. 2009
• Jamaica – Energy Policy 2006-2020 (Green Paper) and Energy
Efficiency Policy (draft of 2008)
• CARICOM – National Energy Policy Framework, draft of Dec. 2006
• OECS – Renewable Energy Policy, draft of March 2007
Main points in the St. Lucia NEP:
Power Sector

9 LUCELEC will maintain monopoly for transmission and


distribution of electricity
9 Single-buyer principle for independent power producers (power
has to be sold to LUCELEC)
9 Self-generation allowed, but limited to 500 kW per facility and only
in cogeneration; LUCELEC can only deny approval on technical
grounds.
9 Quota for transmission grid operator: 5% RE power in 2010, 10%
by 2012, at least 25% in 2020.
9 If quota is not fulfilled (through own capacity of LUCELEC or
purchased RE power), Regulator may put RE capacity out for
tender and invite IPPs.
Main points in the St. Lucia NEP:
Regulatory Commission…

9 …issues Licences for all electricity facilities individually


9 …approves Tariff structures and Rates (except for consumers
>2000 MWh/a)
9 …determines specifications for Net-metering and supply of
Excess Electricity from self-generators
9 …determines Tariffs for back-up and reserve power in case of
self-generation
9 …establishes and monitors Tendering Procedures for major
investments
9 …sets and monitors Performance Standards
9 …elaborates Power Expansion Plans
Dominica – Power Sector

9 Electricity Supply Act (ESA) was amended with support of the WB and
approved by Cabinet and Parliament in 2006. Liberalized supply sector (at
least on paper).
9 New ESA in effect since January 2007, no change of general supply pattern
occured in the mean-time.
9 Independent Regulatory Commission working with Exec. Director since July
2008, financed for initial year by WB.
9 So far only limited activity by the IRC in regulating the sector, low level of
guidance by the Govt.
9 Tariff study of Dec. 2008 (by Ester Montgomery) points to deficits in the ESA.
9 Investments into the sector are blocked (for private sector neither technical
nor economic rules are clear; for DOMLEC future of the supply sector is
undecided)
9 Uncertainty of the supply market will keep DOMLEC away from signing any
long-term PPA
9 High risk of deterioriation of the electricity sector, as long as Govt. Is
undecided about longer-term supply strategy.
Electricity Regulation in Dominica

9 Still no licences issued


9 How many self-generators are operating ?
9 No clear procedure for grid-connection and parallel operation of RE
systems (wind/PV)
9 DOMLEC has licence only until 2015
9 Any long-term power sector investment blocked due to uncertain Govt.
policy
9 No transparent process for concessions for geothermal exploration and
use
9 ESA gives no indication regarding integration of (new) RE resources
9 IRC has very limited capacity, financing not secured beyond June 2009
9 Unclear attitude of Govt. towards grant/loan of Venezuela for new fossil-
fuel plant
9 ESA gives no clear guidance, under which conditions licences should be
issued or disapproved
Intervention in Dominica by
CREDP/GTZ on Wind Energy

• 2003/4: review of the existing wind site studies (Binger, Sutherland


et. al. and CDC/OECS studies of the 80ies)
• 2004: Identification of potential wind sites (Mr. Whittingham)
• 2004: Capacity building: Wind Study tour to Germany: participation
of the head of the NGO DSEC (Dominica Sustainable Energy
Corporation, Bevin Etienne)
• 2005 - 2007: assistance to DOMLEC in wind development: capacity
building, site identification, advice in wind measurement.
• 2008: sponsoring of a staff member of DOMLEC (Jason Timothy)
for the participation in the Husum Wind Fair in Germany and
afterwards participation in the TERNA Wind dialogue in Berlin.
Intervention in Dominica by
CREDP/GTZ on Hydropower

9 2003/4: Review of existing hydropower plants


9 2005: Pre-Feasibility study on Rehabilitation and Upgrading of the hydro
power stations New Trafalgar, Old Trafalgar and Padu.
9 2005: Review of New Town hydro power project and project proposal, with
DOMLEC
9 2006: Capacity Building: regional hydro power workshop
9 2006: Identification of new hydro power sites in 5 rivers, proposal for
gauging stations and flow measurement
9 2007: update of the PF study for the New Town project, at this time for
DOWASCO
9 2007: review and update of the identification of new potential hydro sites
9 2009: advice to DOMLEC on river gauging for new hydro sites (visit of new
hydro site with DOMLEC)
Main Energy Policy Issues in Dominica (1)

¾ Strong move towards geothermal energy (WIP, EdF, DOMLEC) with inter-
connection to Martinique and/or Guadeloupe (and possibly beyond)
¾ A Geothermal Bill has been proposed by consultants in 2005, but was
never approved
¾ Unclear what the new WB initiative for RE legislation wants to achieve.
¾ Long-term Electricity Sector Planning needed (see ongoing WB study),
but this requires sufficient knowledge about costs and potentials of
different options
¾ More statistical information is needed on the energy sector.
¾ Know-how improvement on Govt. level essential
¾ Power Purchase Agreement, draft model contracts
¾ Guideline for licencing and operation of self-generators
¾ Determination of tariffs for backup and reserve power
¾ Tariffs for supply of excess electricity to the grid
Main Energy Policy Issues in Dominica (2)

¾ Technical rules for grid-connection of self-generators and small-scale RE


installations
¾ Rules for net-metering and remuneration of excess electricity in case of
small-scale RE installations
¾ Development of EE guidelines for buildings (regional)
¾ Regulation for mandatory installation of solar water heaters
¾ Banning of incandescent light bulbs (regional)
¾ Rules for import, taxation and standards of energy-consuming appliances
(regional)
¾ Development of public awareness and information campaigns
¾ Energy Audits for public, commercial and service buildings
¾ Integration of energy issues into all levels of school education, vocational
and higher training and courses for professionals
Dominica Power Sector - Scenario 2020

¾ 100 MW Geothermal (4-5 blocks), 5 MW Wind power, 10 MW Hydro power (5 MW in


dry season), 10 MW Diesel (back-up) + self-generation
¾ Capacity Demand (incl. reserve) 30 MW
¾ Peak Demand 20 MW, “rest” is being exported to Guadeloupe /Martinique
¾ One foreign company in geothermal active, another utility operating wind farms +
hydro power + back-up
¾ Wind + Hydro will be dispatched with priority, base load mainly by geothermal
¾ Grid stability mainly secured by integration to French Territories (grid study
needed!)
¾ Only one company should get concession for exploratory drilling (costly and risky
adventure)
¾ Dominica+Martinique/Guadeloupe should be seen as one system
¾ Investment into Hydro and Wind will need long-term purchase agreements,
irrespective of alternative costs, if Govt. wants to diversify
¾ Only very limited investment in fossil-fuel plants in the near future (is back-up
diesel later really needed?)
Common Approach within OECS

Initiative needs to be taken by OECS to call upon Heads of States /Ministries


of Energy for achieving …

¾an integrated, inter-connected electricity market


¾common rules for private investments in exploring and using geothermal
resources
¾a common, harmonized approach on setting standards for electrical
products (mainly domestic appliances and CFLs)
¾step-wise banning of incandescent light bulbs
¾common strategies for lower fuel consumption in the transport sector
¾a joint representation /membership within IRENA (International Renewable
Energy Agency).
Thanks for your attention !

Contact:
Detlef Loy / Loy Energy Consulting
Berlin/Germany
E-Mail: dloy@loy-energy-consulting.de