Thursday, November 5 2009

In a TTMA article titled, “Renewable Energy Development and the Manufacturing Sector” published during September 2009 in Newsday’s Business Day, we expressed the view that given the non-renewability of fossil fuels, that conditions need to be created in Trinidad and Tobago to spur the growth of renewable energy industries over the medium to long term.

These conditions, the TTMA believes, should include the creation of a renewable energy policy and legislative framework which identifies the specific renewable options to be targeted for development. It was also expressed that there is a need for significant investments and incentives by the government, to encourage potential entrepreneurs to enter the industry and spur its long-term growth.

This article takes on a more regional slant, particularly in the context of the recently concluded Caribbean Renewable Energy Forum (CREF) held in October in Montego Bay, Jamaica. At this forum, there were representatives from various energy ministries and utility companies, renewable energy developers, entrepreneurs and lending institutions from across the Caribbean, the United States and Europe.

The forum was divided into ten panels, during which there were presentations on financing Caribbean renewables, defining innovative energy policy to drive investments and harnessing the renewable energy potential of the Caribbean. In addition, there were panel presentations which were structured along the lines of the various renewable options: biomass, solar, wind, waste-to-energy, hydro/ocean and geothermal energy. This forum certainly highlighted the need for the various region-wide initiatives to be coordinated into a seamless Caribbean approach, as the range of possibilities regarding inter-island trade, the funding that can be attained on a regional level and the eventual output that can be generated as a whole far outweighs that which each territory can achieve on its own.

From the point of view of harnessing our renewable energy potentials, the manager of the energy programme of the Caricom Secretariat iterated that renewable energy is the only indigenous supply option for most Caribbean countries. In addition, the importance of renewable energy as a hedge against oil price volatility and a clean energy source was highlighted. There is also the potential for increased employment in various sectors, and renewable energy is a useful means of lowering the carbon emission levels of our region.

Despite the clear rationale for and benefits to be derived by increasing use of renewable energy in the future, at present there are challenges to be overcome:

•There are streams of renewable energy initiatives taking place regionally, but they remain largely uncoordinated and this undermines their potential impact.

•The small size of our territories is a relative disadvantage, as far as economies of scale and least cost solutions are concerned.

•The absence of a national and regional policy framework acts as a deterrent to investments by funding agencies and renewable energy developers, which are ready and able to finance the sector.

•Region-wide awareness and stakeholder involvement on all levels is inadequate.

•There is need for much greater capacity building in all territories.

At the Caricom Heads of Government meeting held in July 2009, it was agreed that there is need for increased technical and financial support for the development of Renewable Energy in the Caribbean.

Financing

But where is this increased technical assistance and financing going to come from? It is instructive, to highlight some of the work that is taking place across the region as it pertains to financing and technical support.

The IDB has developed Sustainable Energy Frameworks and Programmes for both Barbados and the Bahamas. In Barbados, funding has been allocated for a Sustainable Energy (SE) Framework, a SE Pilot Programme funded by the Global Environment Facility, a SE Investment Loan, and an Energy Policy Based Loan.

The programme focusses on developing solar and wind energy, and it is expected to lead to significant savings in terms of megawatt hours of electricity on an annual basis.

It is also anticipated that the programme will foster, or otherwise necessitate, the creation of Renewable Energy and Energy Efficiency regulation, as well as tariffs and terms to promote Sustainable Energy.

The World Bank has established an Eastern Caribbean Energy Regulation Authority (ECERA), which has among its objectives to promote regional least-cost electricity solutions through economies of scale and scope and improve investment incentives for renewable energy projects and island electricity interconnections.

The World Bank is also conducting a study on Caribbean Regional Electricity Generation, Interconnection and Fuels Supply. In particular, the study also found that challenges for project development appear to be more political, regulatory, legal and institutional rather than being financial.

There are other financing options available through the International Finance Corporation, the Global Environment Facility, and the European Investment Bank in partnership with the European Investment Fund.

As far as Trinidad and Tobago is concerned, TTMA hopes that a Renewable Energy Policy will be developed and will adequately provide a framework that encourages both small and large-scale investments and projects locally.

It is further hoped that the policy will sufficiently incentivise entrepreneurs, and facilitate the growth of new enterprise within the sector. Ultimately, the policy should be couched within the context of a regional framework for Renewable Energy; our regional heads of government would therefore do well to work towards overcoming any political barriers that may be inhibiting our movement forward in the area of Sustainable Energy.

The benefits are clear — but the challenges remain.