BL&P analyst warns of hike in electricity rates
Electricity costs could rise in Barbados as reliance on the Barbados Light & Power (BL&P) Company continues to decline over the coming months, accordng to BL&P market analyst Adrian Carter.
He has predicted that as the renewable energy sector continues to expand, the reliance on the electric utility could dwindle and this could result in an increase in the utility’s systems maintenance costs, which in turn could see customers being asked to pay more for the service. He also said this would result in greater scrutiny from the regulatory body.
Carter’s comments came during a presentation at the opening of the 34th annual review seminar on Caribbean Economies: At Risk Or On The Rise? at the Radisson this morning.
The 2014 De La Rue Scholar said, based on his research, there was “an explosion” in the distribution of photovoltaic systems, resulting in less reliance on the BL&P, and this trend was expected to continue.
He explained that the take-up of photovoltaic [PV] installation was due mainly to the introduction of the energy rider programme, as well as special incentives from Government.
Carter added that after the seven-megawatt limit was reached for intermittent power to the grid, it could create some issues for the regulator and the utility company.
“What that means is that when sales actually decline, when demand from the grid declines, the utility’s cost does not decline simultaneously. So it creates an issue of cost recovery for the utility, which is made worse by the intermittent nature of photovoltaic generation,” warned Carter.
He said one of the “more sustainable solutions” was to ask customers to install storage along with their PV installation. He quickly pointed out, however, that this could mean an increase in the cost of installing the systems.
“What is happening and what we need to address is that it can lead to a spiral of increased costs within the market because individuals install these systems, it reduces the utility’s sales, hence it reduces the utility’s revenue or contribution towards covering its fixed costs.
“The utility has no choice but to cover its costs by increasing rates to those customers who are purchasing utility from the system, and this will be [felt] more [by] customers who do not have PV installation,” explained Carter, adding that such a chain reaction was unsustainable.
Noting that there had been about 30 businesses created “in a very short space of time” to deal specifically with photovoltaic expansion, Carter said “this market segment is now providing direct competition to the incumbent electric utility within the region”.
Adding that the systems were economically viable at present, Carter said there was currently five megawatts capacity on the utility grid –– 60 per cent distribution from commercial customers and about 40 per cent from residential customers.
“And I expect by the end of this year we will reach about seven megawatts of installed capacity of distributed photovoltaic generation on the system, which will account for about four per cent of our peak generation, and we can achieve about US$3 million in foreign exchange savings by the end of this year,” added Carter.