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Caribbean Renewable Energy Development Programme - Programme Component CREDP/GTZ - The Status of Energy Policy in selected Caribbean Countries A joint study of CREDP/GTZ and CARILEC On behalf of: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH Germany April 2004 (updated February 2005)

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Page 1: Caribbean Renewable Energy Policy Study

Caribbean Renewable Energy Development Programme - Programme Component CREDP/GTZ -

The Status of Energy Policy in selected Caribbean Countries

A joint study of CREDP/GTZ and CARILEC

On behalf of:

Deutsche Gesellschaft für

Technische Zusammenarbeit (GTZ) GmbH

Germany

April 2004

(updated February 2005)

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CREDP/GTZ: The Status of Energy Policy in selected Caribbean Countries (2005)

Authors of the Study: Detlef Loy, Loy Energy Consulting Christopher Farrell, Carilec GTZ Principal Advisor: Thomas M. Scheutzlich

Guyana Office CARICOM Secretariat Bank of Guyana Building P.O. Box 10827 Georgetown Guyana Tel ++ 592 226 9281-9 Ext. 2625 Fax ++ 592 225 7341 E-mail: [email protected]

Project Background CREDP/GTZ is a joint Project of CARICOM and the German Technical CooNEWABLE ENERGY DEVELOPMENT PROGAMME (CREDP). The project is implemented by the Consortium of Projekt-Consult GmbH, GeDeutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH GermaCooperation and Development (BMZ).

Legal Information

1. All indications, data and results of this study have been compiled and crostakes with regard to the contents cannot be precluded. Consequently, neitherdamage directly or indirectly resulting from the use of or reliance upon the infrom errors, inaccuracies or omissions in the information in this study. 2. Duplication or reproduction of all or parts of this study (including transferpurposes is permitted, provided that GTZ and the Caribbean Renewable Enersource of information. Other uses, including duplication, reproduction or disrequire the written consent of CREDP/GTZ.

Germany Office Projekt-Consult GmbH Limburger Str. 28 D – 61462 Koenigstein Germany Tel ++ 49 6174 24031 Fax ++ 49 6174 22985 E-mail: [email protected]

peration. This project is part of the CARIBBEAN RE-

rmany and Entec AG, Switzerland on behalf of the ny, financed by the Federal German Ministry of Economic

s-checked most carefully by the author(s). However, mis- GTZ nor the author(s) shall be liable for any claim, loss, or formation in this study, or directly or indirectly resulting

to data storage media) and distribution for non-commercial gy Development Programme (CREDP) are named as the tribution of all or parts of this study for commercial uses,

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CREDP/GTZ: The Status of Energy Policy in selected Caribbean Countries (2005)

Introduction

This study on the Status of Energy Policy in selected Caribbean Countries has been defined in the context of the Caribbean Renewable Energy Development Programme (CREDP) and its GTZ assisted project CREDP/GTZ. The work was done jointly with the Association of Carib-bean Electric Utilities - Carilec.

The mission team was composed of the consultants Detlef Loy (Loy

Energy Consulting, Germany), contracted by GTZ, and Christopher Far-rell (Trinidad), contracted by Carilec. The team visited jointly major stakeholders in the field of energy and environment during the period 15 to 24 of October 2003 in St. Lucia, Dominica, St. Vincent and Grenada. Christopher Farrell alone made a trip to Jamaica between November 9 to 13, 2003. On the occasion of a follow-up mission in October 2004 to Dominica, St. Vincent, St. Lucia and Jamaica the study has been up-dated and now provides for most of the countries the current status.

Main objective of this study is to provide an overview of the exist-

ing and planned legal and regulatory framework for the application of renewable energy technologies. Furthermore it intends to identify the gaps in the current legal system which should be closed in order to pro-mote and establish a sustainable energy regime. The study includes a brief review of some international and regional experiences and ad-vances with appropriate renewable energy policies.

This study is designed to be a starting point for shaping adequate

energy policies within the total CREDP project. It can therefore serve as an example for similar status-quo analyses in other Caribbean countries and hopefully act as a reference tool for interested governments, utilities and the private sector.

The mission team would like to thank Victor Poyotte, Executive Di-

rector of Carilec, and his staff and Thomas Scheutzlich, Project Manager of CREDP/GTZ, for all their help and assistance. It would also like to express its gratitude for the warm welcome and the enormous amount of information it received during all its visits to Government depart-ments, utilities and in meetings with many other institutions and indi-viduals.

Detlef Loy, Germany Christopher Farrell, Trinidad and Tobago April 2004 / February 2005

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Project Background

The CREDP/GTZ project is a parallel project to the GEF/UNDP-financed part of CREDP. Both projects of one programme are sponsored by different donors and coor-dinated by the programme’s political counterpart organisation, the CARICOM Secre-tariat, with its headquarter in Georgetown, Guyana.

The Caribbean region (CARICOM members) is currently heavily dependent on fossil fuels to cover its energy demand. Despite the substantial wind, solar, hydro-power and biomass resources, renewable energy sources, including hydropower, pro-vide less than 2% of the region's commercial energy.

It is notable that the Barbados Program of Action, concluded in 1994 at the United Nations Global Conference on the Sustainable Development of Small Island Developing States, required the participating countries, including many of the Carib-bean States, to

“promote the efficient use of energy and the development of environmentally sound sources of energy and energy efficient technologies, paying special atten-tion to the possibilities of using, where appropriate, economic instruments and incentive structures and the increasing economic possibilities of renewable sources of energy.”

Findings of a region-wide survey which was completed in 2000, pointed to a number of barriers in fulfilling this objective and included issues related to:

• inadequate policy • lack of awareness • inadequate capacity • lack of financing.

Based on these findings, the Caribbean Renewable Energy Development Pro-

gramme was launched in 2002 with the major objective of demonstrating and strengthening the ability of Caribbean countries to mobilise investors within the en-ergy sector to shift from conventional energy towards renewable energy investment. This shift will contribute to changing the national energy mix of Caribbean countries towards the increased utilisation of sustainable and indigenous energy sources and should result in:

• an increase in the percentage of RES based electricity generation; • reduction in GHG emissions; • reduction of the dependence on imported fossil fuels; • the creation of jobs in the energy sector (manufacturing, supply, instal-

lation and after-sale services); • the mobilisation of financing from local commercial and regional devel-

opment banks which are not yet involved in RES financing.

Regarding the various renewable energy technologies (RET), the programme concentrates on such technologies that have the widest chance of replication and strong potential for reducing GHG emissions. These are expected to comprise some or

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all of the following applications:

grid-connected renewable power (e.g. wind, biomass, mini and small hydro, geothermal),

(decentralised) rural electrification based on renewable energy (e.g. photovoltaic, micro-hydro),

solar thermal systems (e.g. water heating).

The CREDP/UNDP has been started in July 2002 with an extended PDF-B phase that ended December 31, 2003. In March 2004 the CREDP/UNDP received final clear-ance from the GEF Secretariat and UNDP for the full size project.

The CREDP/GTZ has been started in February 2003 as a financially and organisa-tionally separate project, which is closely coordinated with the CREDP/UNDP pro-gramme. While the CREDP/UNDP project will involve all Caribbean countries which have singed up for the CREDP, the CREDP/GTZ will concentrate on selected countries that can be taken as models for the situation in the Caribbean and hold out prospects of successful implementation and transfer of the experience gained to other countries. It is also aiming at the creation of a favourable framework for RES investments with a strong participation of the private sector.

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Table of Contents 1 Summary.........................................................................................................................9 2 Country Studies ............................................................................................................10 2.1 Dominica......................................................................................................................10 2.1.1 Background ............................................................................................................................................. 10 2.1.2 Electricity Sector ..................................................................................................................................... 10 2.1.3 Status and Perspectives of Renewable Energy Use ................................................................................. 12 2.1.3.1 Wind Energy ................................................................................................................................... 12 2.1.3.2 Solar Energy ................................................................................................................................... 13 2.1.3.3 Geothermal Energy ......................................................................................................................... 14 2.1.3.4 Biomass Energy .............................................................................................................................. 15 2.1.3.5 Hydropower .................................................................................................................................... 15 2.1.4 Renewable Energy and Energy Efficiency Policy and current legislative framework ............................ 16 2.1.5 Conclusion and specific recommendations ............................................................................................. 18 2.2 Grenada .......................................................................................................................20 2.2.1 Background ............................................................................................................................................. 20 2.2.2 Electricity Sector ..................................................................................................................................... 20 2.2.3 Status and Perspectives of Renewable Energy Use ................................................................................. 22 2.2.3.1 Wind Energy ................................................................................................................................... 22 2.2.3.2 Solar Energy ................................................................................................................................... 22 2.2.3.3 Geothermal Energy ......................................................................................................................... 22 2.2.3.4 Biomass Energy .............................................................................................................................. 23 2.2.3.5 Hydropower .................................................................................................................................... 23 2.2.4 Renewable Energy and Energy Efficiency Policy and current legislative framework ............................ 23 2.2.5 Conclusion and specific recommendations ............................................................................................. 24 2.3 Jamaica ........................................................................................................................26 2.3.1 Background ............................................................................................................................................. 26 2.3.2 Electricity Sector ..................................................................................................................................... 26 2.3.3 Status and Perspectives of Renewable Energy Use ................................................................................. 28 2.3.3.1 Wind Energy ................................................................................................................................... 28 2.3.3.2 Solar Energy ................................................................................................................................... 29 2.3.3.3 Biomass Energy .............................................................................................................................. 29 2.3.3.4 Hydropower .................................................................................................................................... 30 2.3.4 Renewable Energy and Energy Efficiency Policy and current legislative framework ............................ 31 2.3.5 Conclusion and specific recommendations ............................................................................................. 32 2.4 St. Lucia .......................................................................................................................34 2.4.1 Background ............................................................................................................................................. 34 2.4.2 Electricity Sector ..................................................................................................................................... 35 2.4.3 Status and Perspectives of Renewable Energy Use ................................................................................. 38 2.4.3.1 Wind Energy ................................................................................................................................... 38 2.4.3.2 Solar Energy ................................................................................................................................... 39 2.4.3.3 Geothermal Energy ......................................................................................................................... 40 2.4.3.4 Biomass Energy .............................................................................................................................. 41 2.4.3.5 Hydropower .................................................................................................................................... 41 2.4.4 Renewable Energy and Energy Efficiency Policy and current legislative framework ............................ 42 2.4.5 Conclusion and specific recommendations ............................................................................................. 44 2.5 St. Vincent and the Grenadines (SVG) .....................................................................45 2.5.1 Background ............................................................................................................................................. 45 2.5.2 Electricity Sector ..................................................................................................................................... 45 2.5.3 Status and Perspectives of Renewable Energy Use ................................................................................. 47 2.5.3.1 Wind Energy ................................................................................................................................... 47 2.5.3.2 Solar Energy ................................................................................................................................... 47 2.5.3.3 Geothermal Energy ......................................................................................................................... 47

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2.5.3.4 Biomass Energy .............................................................................................................................. 47 2.5.3.5 Hydropower .................................................................................................................................... 48 2.5.4 Renewable Energy and Energy Efficiency Policy and current legislative framework ............................ 48 2.5.5 Conclusion and specific recommendations ............................................................................................. 50 3 Recommendations for policy and regulation changes ..................................................51 4 Comparative Analysis for the region............................................................................54 5 International and regional experiences with RES policies ..........................................58 6 Annexes ........................................................................................................................63 6.1 Annex I: References..................................................................................................64 6.2 Annex II: Stakeholders.............................................................................................69 6.3 Annex III: Questionnaire .........................................................................................76 6.4 Annex IV: DOMLEC – Policy for Working with Independent Power

Producers.....................................................................................................................79 6.5 Annex V: Policies for RES electricity in the European Union ............................85 Exchange rates (March 24, 2004) Dominica/Grenada/St. Lucia/St. Vincent: EC-$ 1.00 = 0.30 € = US-$ 0.37 Jamaica: J$ 100.00 = 1.34 € = US-$ 1.66

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Abbreviations

AIEL All-Island Electricity License

AOSOS Alliance of Small Island States

CARILEC Association of Caribbean Electric Utilities

CDB Caribbean Development Bank

CDC Commonwealth Development Corporation

DSEC Dominica Sustainable Energy Corporation

DSM Demand Side Management

EC Eastern Caribbean (Currency)

EdF Electricité de France

ESA Energy Supply Act

GDP Gross Domestic Product

GEF Global Environment Facility

GHG Greenhouse Gas Emissions

GOSL Government of St. Lucia

GSEII Global Sustainable Energy Islands Initiative

GTZ Deutsche Gesellschaft für Technische Zusammenarbeit

IMF International Monetary Fund

IPP Independent Power Producer

JPS Jamaica Public Service Company

LNG Liquid Natural Gas

OAS Organisation of American States

OECS Organisation of Eastern Caribbean States

OUR Office of Utilities Regulations

PPA Power Purchase Agreement

PCJ Petroleum Corporation of Jamaica

PV Photovoltaic

RES Renewable Energy Sources

REP Rural Electrification Programme

RPS Renewable Portfolio Standard

SEP Sustainable Energy Plan

SVG St. Vincent and the Grenadines

UN United Nations

UNDP United Nations Development Programme

UNFCCC United Nations Framework Convention on Climate Change

USAID US Agency for International Development

UWICED University of the West Indies Centre for Environment and Development

VAT Value-added Tax

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1 Summary

This study examines the energy policy framework and its implications on the ex-tended use of renewable energy sources in Dominica, Grenada, Jamaica, St. Lucia and St. Vincent and the Grenadines.

All of those island states are highly dependent on imported fossil fuels and face some of the highest electricity tariffs on the globe. Although in most of the countries per capita energy consumption is still low, covering of the future demand can be an enormous challenge, especially in economic terms. Two options should therefore be considered to prevent supply problems: The exploitation of indigenous renewable sources and the promotion of energy efficiency measures.

Renewable resources, like wind, solar, biomass and geothermal, exist in large quantities in all countries and can partially be accessed even in short term. In many cases potentials and sites have already been assessed in diverse studies, in other cases some more profound analysis and site measurement seems necessary. The cur-rent use of renewables for electricity generation is generally rather low, with the ex-ception of hydropower on some islands (Dominica, Jamaica, St. Vincent). But even the dissemination of technologically low-profile solar water heaters is still in its in-fancy, while the inefficient and problematic electric water heaters dominate this mar-ket sector almost completely.

One of the main barriers in the power sector is the monopolistic structure of the electricity sector and an outdated regulatory regime. Within this scheme, the en-gagement of independent power producers or the permission for self-generation is an exception and far from normal. Efficient decentralized electricity production, supply of excess power to the public grid and private participation in renewable electricity gen-eration is either unknown or outright prohibited. Utilities are still reluctant to pur-chase electricity from third parties, but this idea has gained more acceptance in the recent past (driven by the lack of investment capital), as the examples of Jamaica and Dominica show.

The Governments are generally inclined to develop further activities in the re-newable energy sector. Most administrations have already introduced preferential conditions for the import of certain components, like solar collectors. Dominica, Gre-nada and St. Lucia have developed Sustainable Energy Plans and are in the phase of elaborating and approving national strategies with fixed targets and a set of measures to enhance renewable energy and improve energy conservation.

This study recommends in first place the revision of the current Electricity Supply Acts and the introduction of mandatory renewable energy quota. In the solar thermal sector the requirement for such systems within building permits should be considered at least for larger constructions.

The general lack of public budgets for demonstration projects, public awareness campaigns and other measures in the context of renewable energies could be over-come with the establishment of a specific Fund that could be based on small incre-ments for the import of fossil fuels. International and regional experiences show that adequate energy policies are essential for the application of renewable energy tech-nologies.

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2 Country Studies

2.1 Dominica

2.1.1 Background

Presently, Dominica has no national energy policy or specific legal regulations for the expansion of renewable energy sources. Of major concern is the high dependence on fossil fuel imports mainly for energy needs and transportation and the increasing costs involved.

The Ministry of Communications, Works and Housing has completed a draft for a Sustainable Energy Plan (SEP), following the example of St. Lucia and with technical assistance from the OAS and the Global Sustainable Energy Islands Initiative. It sets two specific targets for the electricity sector until 2008: stabilizing the peak demand and increasing the RES share of installed capacity to almost 50%. The plan has been dis-cussed twice in consultation with stakeholders in 2002 and 2003. To be effective the cabinet has to approve the SEP. A long-term goal of the Government is to provide 65-70% of the electricity needs from hydropower by 2015. It is assumed that for electricity supply the country could be almost self-sufficient by tapping its enormous RES potentials (in particular geothermal sources), or even turn into a power exporter by connecting neighbouring Guadeloupe and Martinique via a submarine cable.

Dominica ratified the United Nations Framework Convention on Climate Change in June 1993 and presented its Initial National Communication on Climate Change in December 2001. The Kyoto Protocol was ratified on 25 January 2005, the country is therefore eligible for CDM projects. A Designated National Authority for CDM projects has not yet been appointed. The island contributes only a very small input to the green-house effect, but is mainly a victim of sea level rise and the change of seasonal climates, as for example the appearance of stronger tropical storms and changes in the length of the wet and dry seasons. The National Focal Point for all climate change issues is the Ministry of Agriculture and Environment.

2.1.2 Electricity Sector

The national electricity provider Domlec was acquired in May 2004 from the former owner CDC Globeleq by the Florida-based WRB Enterprise Inc. who took over slightly more than 50% of the shares.1 Partners in the ownership are the Dominica Social Secu-rity Scheme and the Government of Dominica. The original idea of re-nationalizing Dom-lec was rejected by intervention of World Bank and IMF.

The monopoly status of Domlec has been legally established with the enactment of the Electricity Supply Act of 1996 (see chapter 4.1.4). The company operates under an exclusive statutory license that will expire in 2025. By this Act self -generation is possi-ble with the consent of Domlec and is practiced by some companies.

1 WRB Enterprises Inc. also operates Grenada Electricity Services.

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Domlec had an installed generation capacity of 21.2 MW by the end of 2003, of which 13.6 MW are diesel engines, distributed between two different locations (Fond Cole and Sugar Loaf). The remaining capacity is shared among four hydropower plants (Lau-dat, Trafalgar Old, Trafalgar New and Padu (see chapter 2.1.3.5).

The firm capacity is only 14.0 MW, while the peak demand in 2003 was close to 13.0 MW (it was lower than in 2001 and 2002). Due to a weak economy and lower de-mand because of high energy prices, generation declined in the second consecutive year and was down to 78.4 GWh in 2003 (-2.1% against 2002).

While much of the generating capacity is old and will need to be replaced or retro-fitted in the coming years, there is no immediate plan for additional investments in gen-erating plants at this time. No new investments in hydropower generation have been made in the last decade.

Somewhat more than half of the generated electricity is consumed by the residen-tial sector. The demand of industrial customers is marginal (4.4 GWh in 2003).

Some operational figures of DOMLEC Installed capacity End of 2003 21.2 MW

Peak demand 2003 12.9 MW (-0.9 % against 2002)

Units sold 2003 62.7 GWh (-2.3 % against 2002)

Average sales price, incl. fuel surcharge 2003 EC-$ 0.82/kWh

(US-$ 0.30/kWh)

Average sales price, without fuel surcharge 2003 EC-$ 0.68/kWh

(US-$ 0.25/kWh)

Number of customers End of 2003 27,513

Line losses 2003 18.2 %

Source: Domlec, Annual Report 2003

Average generation costs reached a record high 57.1 EC-cents/kWh (21.1 US-cents/kWh) in 2003. Since fuel costs will cause an even heavier burden in 2004 with subsequent price increases for Domlec’s clients, the economic situation and competitive-ness for electricity generation from renewable sources has dramatically improved. Even if only avoided costs are taken into account, generation costs of below or slightly more than 10 US-cents/kWh would create favourable conditions for re-newable energy electricity.

The cancellation in July 2003 of the tax exemption given to Domlec for diesel fuel has increased the fuel price from EC-$ 3.34/imp. gallon 2 in June 2003 to EC-$ 5.75/imp.

2 1 imperial gallon = 4,546 litres.

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gallon by the end of the year.3 With an efficiency of 17.5 kWh (2003) produced per imperial gallon, fuel costs for each kilowatt-hour electricity on the basis of diesel are in the range of 12 US-cents/kWh.

The price hike resulting from the abolished tax waiving was transferred on to the consumers and raised electricity tariffs considerably (plus EC-$ 0.105/kWh, with an in-crease of the fuel surcharge from EC-$ 0.09 in July 2003 to EC-$ 0.20 in August4) above the already high levels.5 Residential customers paid an average of EC-$ 0.63/kWh (US-$ 0.23/kWh) in 2002. Even more was being charged to the commercial sector. In general, tariffs are among the highest in the Eastern Caribbean. A recent tariff study sug-gested that major cross-subsidies between the different consumer groups existed and should be abolished (see chapter 2.1.4).

Within the last few years electrification has reached close to 100% of the island. Grants and loans in support of rural electrification have been received in the past mainly from the Caribbean Development Bank (CDB), USAID and OAS. Domlec is of the opinion that it would be most economical to electrify the remaining non-grid areas using PV or micro-hydro.

2.1.3 Status and Perspectives of Renewable Energy Use

Dominica has a small population of 70,000 inhabitants and a relatively low energy demand. The conditions provide one of the largest potentials for RES in the Eastern Car-ibbean. In the 1950’s and 1960’s hydropower supplied approximately 90% of the elec-tricity requirements. This contribution decreased considerably in the following years, while the share of diesel power rose steadily. Other RES have not been tapped so far, with the exception of minor quantities of solar thermal energy.

In order to achieve the close to 50% RES target of installed electrical capacity by 2008 (SEP draft), an additional 5 MW RES capacity needs to be installed.

With combined efforts of the Government and the private sector, Dominica could act as a show case for transforming all its energy needs from fossil fuel de-pendency to indigenous renewable energy resources. Dominica could thus be-come the first country to rely completely on a sustainable energy system using its natural and inexhaustible potentials.

22..11..33..11 WWiinndd EEnneerrggyy

A Wind Energy Survey had been commissioned by OECS and the British Develop-ment Division in the Caribbean between 1990 and 1992 without measurements being recorded. Some potential sites were identified. In 2002 a new study was started by Al

3 For comparison: Transport fuels at petrol stations of Dominica cost EC $ 6.75/imp. gallon for diesel and EC-$ 8.00/imp. gallon for gasoline in October 2003. EC-$ 5.75/imp. gallon equals about US-$ 75 per bar-rel. 4 In October 2004 the fuel surcharge amounted to EC-$ 0.23/kWh, thus leading to average sales prices of more than EC-$ 0.90/kWh (US-$ 0.33/kWh). 5 Between October and December 2003 the additional fuel costs were partially absorbed by Domlec based on an agreement with the Government.

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Detlef Loy
Whittingham schreibt etwas von Messungen – was ist nun richtig ?
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Binger from the University of the West Indies Centre for Environment and Development (UWICED) entitled “The Potential of Renewable Energy Technologies – Diversifying Do-minica’s Energy Supply”, which concluded that wind power was the best short-term RES solution. Five possible sites were identified and examined, but without wind measure-ments being taken.6

A wind assessment study was carried out by CREDP/GTZ in December 2003, re-viewing and ranking the sites for a wind farm that were identified by the earlier studies.7 According to this study, the most promising site for a wind farm is Crompton Point which could accommodate a wind farm of up to 10 MW. The wind potential in Dominica along the East coast is conservatively estimated in the range of 20-30 MW.

The private sector is thought to be willing to finance a properly researched wind farm. For further detailed assessments, the Government sees a need for wind specialists and a complete and comprehensive feasibility study.8

According to its Annual Report 2000, Domlec in conjunction with Electricité de France (EdF) Guadeloupe, has been investigating the possibility of pursuing a joint ven-ture project in the development of energy from wind: “Primarily, Domlec would like to verify the wind potential existing on the island. EdF is providing the technical know-how in determining the extent and location for the establishment of wind generating farms on the island.” Those plans have not materialized so far, mainly due to the fact that the current legal situation does not allow the participation of independent power producers in the electricity market. Domlec’s current position is to give preference to own deployment of wind farms over buying wind power from independent producers.

The Domlec’s management has identified at least eight sites around the East and South coast as being suitable for wind energy.

A small pilot demonstration wind turbine of 1 kW was erected in August 2002 in the South-East village of Delices by the company Dominica Sustainable Energy Corporation (DSEC). In 2003/2004, DSEC has been involved in a one-year wind measure-ment at Crompton Point on the North East coast, funded by OAS. The only meas-urement equipment was moved in 2004 to a location near Pointe Mulâtre on the South-east coast. If the measurements show favourable results, DSEC would be interested in developing a wind farm.

22..11..33..22 SSoollaarr EEnneerrggyy

Despite abundant resources, at least during most periods of the year, the use of so-lar energy on Dominica is still in its infancy.

6 All five sites do not appear suitable for wind energy use. 7 CREDP/GTZ (Author: John Whittingham): Report on Wind Energy Assessment Dominica, Barbados, December 2003 8 According to Murray Rogers (former CEO of Domlec) banks would ask for three years of continuous wind assessment.

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A large number of homes are reported to be equipped with solar hot water heaters by a local company called Marinor Enterprises Ltd.9 A Barbados company Solar Dynamics also supplies solar water heaters to Dominica.

The application of PV-systems is so far limited to few exceptional cases for supply of remote lodges or specific electric devices.

All imports of solar systems benefit from duty tax exemption.

22..11..33..33 GGeeootthheerrmmaall EEnneerrggyy

US, French and other companies have done studies on the geothermal potential in the past. The French institute of geological investigations and mines, Bureau de Recher-ches Géologiques et Minières (BRGM), began the first integrated exploration of Domin-ica’s geothermal resources in 1977, identifying three areas of interest: Wotten Waven, Boiling Lake (both West of the capital Roseau10) and Soufrière (in the South of the is-land).

EdF carried out a study in the 80s showing a potential of over 100 MW in the South of the island, offering the option to export electricity to Martinique via submarine cable. In 1994 negotiations began with the Caribbean Power Enterprise with no results. The UNEC Group from Canada was also strongly interested in exploiting geothermal sources, but the Government did not approve an exploration license. UNEC wanted to drill a test hole and Domlec agreed to buy 2-4 MW. In 1995 a concession was assigned to the pri-vate joint-venture company Dominica Geothermal Power Co. (DGPC). DGPC received the complete concession for geothermal resources with all approvals, but failed to start the project.

The two principal geothermal sites are Soufrière (potential of 25 MW) and Wotten Waven (5 MW). The total electricity generation potential is estimated to be in the range of up to 300 MW 11, affording Dominica the opportunity to export geothermal electricity to either Martinique or Guadeloupe.12

Within a new comprehensive study with technical support by the OAS, possible sites for geothermal energy use are to be surveyed in Dominica, as well as on St. Lucia and St. Kitts. This Eastern Caribbean Geo-thermal Development Project (Geo-Caraïbes) was launched on Dominica in early 2005. Its first exploratory 12-months-phase (PDF-B) is funded by the Global Environment Facility (GEF) with US-$ 700,000. The full project phase is thought to last up to six years and will require GEF funding of US-$ 7.5 million for feasibility studies and commercial development of several geother-mal sites in the participating countries. It is planned to use part of the financial support for the establishment of an Eastern Caribbean Geothermal Drilling Risk Fund to at-tract private developers.

9 www.marinorsolar.com 10 Boiling Lake was ruled out for further study due to difficulties in accessing the site. 11 Other sources even indicate a potential of 1,390 MW. 12 Already plans exist to connect those two French territories with a transmission line.

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22..11..33..44 BBiioommaassss EEnneerrggyy

Dominica has large biomass resources from agricultural residues as well as other organic waste. No further information is available to what extent those resources are currently used for energy purposes.

22..11..33..55 HHyyddrrooppoowweerr

Dominica has presently four hydro power plants with an installed combined capacity of 7.7 MW.13 However, in 2003 only three plants were operational with an available ca-pacity for electricity generation of 6 MW. All existing hydropower plants are exploiting the potential of the Roseau River and its tributaries and are located in close distance to the capital.

The current average hydro load is 3.3 MW, with a peak of 5.5 MW during the rainy season. Hydropower generation varies significantly from year to year, depending on the annual precipitation. In 2002, overall hydro-generated energy was well above average. The 35.9 GWh produced by hydropower represented 44.8% of total production for 2002, compared with only 27.0 GWh or 33.4% in 2001. In 2003 hydro generation was down to 28.5 GWh or 36.4% of total generation, resulting from a below average rainfall year.

CREDP/GTZ carried out an assessment study of the existing hydro power capacity and future potential.14 According to this study, the additional hydro potential is – conservatively estimated - in the range of at least 10 MW, mainly from new run-of-river schemes due to the permeability of volcanic rocks, which does not allow for the construction of storage basins, and from upgrading and reactivating existing power sta-tions.

Additionally, a couple of micro and mini hydro plants could be installed of 100 – 500 kW each. A pump storage plant between the Boeri and Fresh Water Lake could also be an interesting option to be looked at in more detail.

Domlec’s Annual Report 2000 mentioned that “preliminary discussions have been held with Dowasco 15 with a view to harnessing the energy potential on some of the is-land’s water distribution systems. The Padu to Newtown (fresh-water) pipeline is one of the primary projects for consideration.” In 2001, Domlec conducted an international tender on the development of a hydropower site in Newtown16, without subsequent deci-sion on one of the two offers. The CREDP/GTZ study came to the conclusion that a 140 kW plant in Newtown could be installed with investments of some US$ 350,000 resulting in production costs of about 0.05 US$/kWh, including costs of amortisation, which would be far below the present average generation cost of Domlec (see chapter 2.1.2).

13 The plants are: Laudat (1.3 MW rated capacity), New Trafalgar (3.52 MW), Old Trafalgar (0.96 MW; out of operation) and Padu (1.88 MW). 14 CREDP/GTZ: Report on Hydro Power Assessment Dominica, Dominica/Switzerland, December 2003 (First mission) and May 2004 (Second mission) 15 The water supplier of Dominica 16 The pipe was installed in the 1990s as part of a water supply project, but showed insufficient water quality at the outlet.

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2.1.4 Renewable Energy and Energy Efficiency Policy and current legislative frame-work

Renewable Energy systems are exempted from import taxes. Other initia-tives have not so far been undertaken by the Government of Dominica to enhance the use of RES. Domlec is not in principle opposed to renewable sources other than hydro-power, mainly because of the high generation costs of its current facilities, but is at pre-sent mainly focussing on the expansion of the diesel power system.

On the grounds of the existing Electricity Supply Act (ESA) of Dominica, which is mainly a copy of its St. Lucian counterpart, RES electricity from new market actors faces severe barriers mainly by the status of the national utility as single producer and supplier of grid-based power and the preferences linked to this monopoly. There is no legal door opened yet for any third-party generation of electricity, except for self-supply.

Some years ago, Domlec investigated purchasing power from independent power producers to diversify its sources of supply. In 2002, Domlec obtained government au-thorization to enter into an agreement with an independent power producer to provide power to Domlec at a lower rate than Domlec’s own cost of production.17 The govern-ment agreed to amend the ESA to enable such a deal, but the plans did not materialize.

Also in 2002, Domlec published a policy paper for working with independent power producers (see Annex IV). According to this paper, Domlec would have favoured RES electricity if the proposal were otherwise equal to other options. The payment was to be based on 90 % of the avoided costs, only in special cases the proposal provided for com-pensation in cases where firm capacity is supplied. In the course of the ownership change in 2004 this policy strategy was revoked. Domlec is now eager to maintain its monopoly status and to avoid competition amongst different electricity producers.

Additionally the policy paper of 2002 announced the introduction of a load man-agement tariff for customers with more than 0.5 MW of peak demand. Under this scheme Domlec offered a compensational payment for the right to temporarily disconnect the load from its supply and thus save generating capacity at peak times.

Legislative and tariff issues have been under review lately with World Bank assis-tance. An amendment of the Electricity Supply Act of 1996 was enacted in January 2004, introducing performance targets in respect of plant efficiencies and line losses and a new definition for excess fuel costs in order to cap electricity prices by introducing stricter rules for the calculation of the allowed rate-of-return.18

Other recommendations of the World Bank on changes of the electricity legislation provide for the establishment of a regulatory commission, a change of the tariff structure, unbundling of Domlec and the entry/licensing of independent power producers into the electricity market. It further contains a clause for energy effi-ciency measures in the power sector.

17 Murray Rogers, former CEO of Domlec, mentioned that a company from Antigua wanted to operate generation plants over 15 years. All negotiations had been completed, PPA was drafted, but the project did not get off the ground. The PPA draft has also been sent to several other interested electricity companies. 18 Commonwealth of Dominica, Electricity Supply (Amendment) Act 20 of 2003, enacted on January 19, 2004.

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The proposed restructuring of the tariff system 19 is mainly based on the criteria that electricity consumers should generally pay for their use of both capacity and energy and that consumers should be encouraged to use power and energy efficiently regardless of their consumer status. Within the newly defined consumer classes, especially the me-dium-sized industrial sector would face considerable price increases, but also the residen-tial sector (mainly medium and large-scale consumers with more than 50 kWh/month) would be further burdened.

The Government would like to have the draft of the new electricity act ready by the end of 2004 to get parliament approval in early 2005, before it is resolved for the upcoming election in summer 2005. The current proposal is not re-garded as satisfactory (neither by the Government nor by Domlec), since with the abol-ishment of existing cross-subsidies, tariffs for the domestic and small-consumer sector would be further increased.

The most relevant sections of the current ESA are the following:

Chapter Content Explanation Long Title An Act to retain an exclusive licence to Dominica Electricity Services

Limited, for the more efficient exercise and performance of the func-tions relating to the supply of electricity and for purposes connected therewith and to repeal the Electricity Supply Act.

Sect. 3 Domlec has sole and exclusive licence to generate, transmit, distribute and sell electricity in Dominica until midnight on December 31, 2025, with the option for Domlec to renew the licence for a further period of 25 years.

Licence until 2025

Sect. 4 The Minister may with the consent of Domlec authorise any person during the whole or any part of the period of the licence to generate electricity for their own consumption upon the terms and conditions and within the area specified in such authority.

Self-generation allowed under certain terms

Sect. 9 All plant and equipment imported by Domlec for the purpose of Dom-lec’s business of generating, transmitting, distributing or supplying electricity or for the purposes of any capital project are exempt from all duties and taxes on importation or any sales tax.

This will refer to any RE equipment as well

Sect. 10 During the continuance of the licence Domlec is exempt from payment of all stamp duty including stamp duty on arbitration awards from transfer fees, company transfer fees and appreciation tax..

Exemption from stamp duty

Sect. 11 The Government shall, whenever requested by Domlec, acquire in accordance with the Land Acquisition Act any land reasonably re-quired by Domlec for the purpose of its business of generating, trans-mitting, distributing or supplying electricity, and shall transfer the land to Domlec at the actual cost of acquisition.

Exclusive right for Domlec, could be important for wind sites. Does not apply to any other electricity genera-tor.

Sect. 15 Domlec may erect, place or replace pipes and electric lines along or under or over any road in Dominica without payment of any way-leave, rent, fee or other charge.

Sect. 19 Subject to Government approval, Domlec may without making pay-ment therefor, harness water power throughout Dominica at such sites as the Government may from time to time reserve for public electricity supply purposes and the Government shall reserve for the generation of

Water rights

19 See Donald I. Hertzmark, Memo on „Proposal to Reform Electricity Tariffs and Regulation in Domin-ica”, September 22, 2004 (this memo refers only to the restructuring of the tariff system)

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Chapter Content Explanation electricity by hydroelectric work for public electricity supply purposes the water power rights of the Roseau and Mural rivers and their respec-tive tributaries from their sources to a point one mile downstream from the confluence of the two rivers below the waterfalls, and no develop-ment for any other purpose of those stretches of the above rivers or their tributaries shall be allowed.

Sect. 21 - (1) Subject to Section 4, during the continuance of the licence no person except Domlec shall generate, transmit, distribute or sell electricity within Dominica.

Exclusive licence for Domlec

Sect. 23 Domlec shall use reasonable efforts to endure that sufficient firm gen-erating capacity is maintained in order that peak demand may be met, assuming that the largest single thermal generating unit is unavailable for generating electricity and operation of the hydro-electric system are restricted to firm power criterion. This constraint may be varied by agreement between Domlec and the Government in the event that a higher level of reliable supply is determined than the estimation of firm generating capacity dictates.

High reserve mar-gin.

Schedule 3, Part B

Target Rate of Return - … is that level of annual rate of return to be attained on the equity of Domlec which shall be not less than the aver-age twelve month deposit rate paid by commercial banks in Dominica plus an additional ten per cent provided that such return on equity shall be at a rate not less than fifteen percent per annum.

Guaranteed rate of return, minimum 15 % on equity.

Sect. 26 (4) Where the interim rate of return for any financial year is less than the allowable rate of return calculated in accordance with Part A of Sched-ule 3 then with respect to that financial year, Domlec shall in respect of the month in which the relevant interim return is submitted and in re-spect of subsequent months, increase the basic energy rates chargeable for each kilowatt hour consumed.

Tarif adaptation

Sect. 37 The Governent may require Domlec to implement rural electrification programmes from time to time and Domlec shall accede to any such requirement, on terms and conditions agreeable to both Government and Domlec which shall include the provision of funds by the Govern-ment for this purpose.

Rural Electrifica-tion

The SEP draft proposes the implementation of several Energy Efficiency Initiatives, for example, the launch of a comprehensive National Demand-Side-Management (DSM) programme for the domestic sector. Already, energy saving tips have been disseminated by Domlec on the back side of monthly bills, in newspapers and through TV/radio spots, starting in 2003 and throughout 2004. So far the utility has not been involved in any other major DSM activity.

Significant potentials for reducing the specific electricity consumption are seen in the residential building sector. Government buildings should act as show-cases for simi-lar measures in other fields. A major concern is the transport sector and the lack of regulation and fiscal schemes to provide incentives for the purchase and use of efficient vehicles.

2.1.5 Conclusion and specific recommendations

Dominica has the largest RES potentials of all countries examined within this study compared to its energy demand. The island could therefore act as a showcase and pro-vide up to 100% of its energy needs from renewable sources.

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The small market size and the need for secure long-term investments and electric-ity supplies limit the perspectives for full competition among different electricity generat-ing companies. Despite those facts, certain fractions of the electricity supply market should be accessible by independent power providers producing on the basis of indige-nous energy sources, either alone (in the case of export opportunities to neighbouring Martinique and Guadeloupe or for direct supply to certain facilities, like hotels and indus-tries) or in close co-operation (joint ventures) with Domlec (see also considerations in the context of the SEP).

In order to increase the share of RES and reduce fossil energy consumption in gen-eral, major political and legal changes will be necessary, including the amendment of the ESA.

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2.2 Grenada

2.2.1 Background

Grenada spends a large proportion of its income generated from exports on the purchase of imported fuel.

The country is thought to have abundant gas and oil resources off its coast which have not been explored so far.

Grenada has ratified the UN Framework Convention on Climate Change in August 1994 and accessed the Kyoto Protocol in August 2002. A Designated National Authority for possible CDM projects has not yet been appointed.

Grenada has no formal energy policy, plan or strategy. One of the recom-mendations from the First National Communication on Climate Change, submitted in No-vember 2000, is the development of such a plan. In 2002 the Government has published its first draft of a Sustainable Energy Plan and is currently preparing an Energy Sector Strategy.

Since late 2003 responsibility for the energy sector is under the Ministry of Agricul-ture, Lands, Forestry, Fisheries, Public Utilities, Energy and the Marketing and National Importing Board (MNIB).20 Grenada is so far the only country in the OECS with a special-ized energy desk within the Government.

The country has limited industrial activities and these lie mainly in the food & bev-erage sector and garment trade. Energy-intensive activities are non-existent.

Grenada was struck heavily by hurricane Ivan in September 2004 and will most certainly face economical drawbacks from the devastating damages on infrastructure and property.

2.2.2 Electricity Sector

The national electricity company Grenlec supplies electricity throughout the island of Grenada. Grenlec supplies electricity for almost all of the 90,000 inhabitants and is the sole provider of electricity in the Grenadine islands of Carriacou and Petit Martinique. The exclusive right to generate, transmit, distribute and sell electricity has been granted to Grenlec in 1960 before it commenced operation as a private company (fully owned by the State) in 1961. The company was partially sold in 1994. Shareholders are the Gov-ernment (10%), WRB Enterprise (50%, US-based private company)21, employees and smaller private owners from Grenada.

20 Formerly: The Ministry of Works, Communications and Public Utilities 21 WRB is also majority owner of Domlec and of Caribbean Wind Power, Inc.

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Grenlec had an installed capacity of 39 MW by the end of 2003, exclusively powered by diesel-engines in the range of 1.2 – 7.4 MW each. In 2004 another two diesel units of 7.5 MW each were installed. In 2003 the utility provided 138.3 GWh of electricity for more than 36,400 Customers. By far most of the electricity is being used in the com-mercial (tourism) and residential sector, while the industry plays only a very minor role. The average consumption per customer (about 3,800 kWh) is considerably higher than on other island states of the Eastern Caribbean.

All major hotels and tourist resorts have their own stand-by generation systems in case of electricity supply outages (emergency). According to the current legal regulation those systems may not be used for auto-generation, while the grid is operating.

The country is almost completely electrified (99.5%).

In 2003, generation costs were in the range of US-$ 0.10/kWh, while the average revenue amounted to about EC-$ 0.62/kWh. The fuel adjustment charge stood at EC-$ 0.22/kWh.

Grenlec is of the opinion that there is some potential for independent power pro-ducers, but the total load would be too small for introducing full market competition.

Some operational figures of GRENLEC Installed capacity End of 2003 39 MW

Peak demand 2003 25.45 MW (+12.9% against 2002)

Units sold 2003 138.3 GWh (+ 7.0% against 2002)

Average sales price, incl. fuel surcharge 2003 EC-$ 0.62/kWh

(US-$ 0,23/kWh)

Average sales price, without fuel surcharge 2003 EC-$ 0.40/kWh

(US-$ 0.15/kWh)

Number of customers End of 2003 36,437

Line losses 2003 13.2%

Source: Grenlec, Annual Report 2003

The tariff structure allows Grenlec to keep 90% of any savings resulting from im-proved efficiencies. The other 10% has to be passed on to the consumer through the fuel cost adjustment clause of the tariff. Also the reduction of fuel prices has to be shared with its customers.

Generation efficiency has been increasing continuously in recent years, reaching 19.2 kWh of electricity produced per imperial gallon of diesel fuel in 2003.22

22 1 imperial gallon of diesel fuel contains an energy equivalent of 48.84 kWh.

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2.2.3 Status and Perspectives of Renewable Energy Use

Grenada’s current use of non-conventional RES is mainly limited to solar water heaters. Additional available short-term potentials exist mainly by tapping the wind resources along the east coast of the main island. In the long run, solar electricity could be a viable option for tourist resorts on Grenada and the power supply on Carriacou and Petit Martinique.

22..22..33..11 WWiinndd EEnneerrggyy

Wind resource assessment has been undertaken at various sites for several years. Wind measurements have been done on Carriacou.23 The owner of a selected site for a wind turbine was not willing to sell his property. Peak on that island is only 0.5 MW.

Grenlec expects to have wind speed measurements at three sites completed as soon as possible and will use its own funds for these assessments. About 3 MW could be brought on line without any technical problems. For the investment Grenlec seeks a partner and has already identified an interested company. However, the utility prefers in-house operation of any wind turbines and is not likely to outsource such activity.

22..22..33..22 SSoollaarr EEnneerrggyy

Solar thermal collectors are already common in the tourism sector. Most new pri-vate homes are nowadays equipped with plumbing for solar heaters, even if they are not installed from the beginning. Fiscal incentives exist for hotels (duty-free conces-sion), which include solar water heaters, but not for the residential sector. Collec-tors are mainly imported from Barbados and Dominica.

PV systems are not yet common, but could be viable for off-grid applications in re-mote areas or for specific purposes (like telecommunication). On-grid systems might be accepted in keeping with the current ruling, that is if the electricity generation is limited to own consumption (no feeding of excess electricity into the grid) and the installation takes place on residential properties.

Within the Caricom member states special or zero-tax concessions are available for manufactured products.

22..22..33..33 GGeeootthheerrmmaall EEnneerrggyy

Most geothermal sources in the region have low or medium enthalpy, which is not sufficient for electricity generation, but can be used for thermal water supply. Non-drilling investigation of the geothermal potential has been executed by an American com-pany in 1990.

23 See also Grenada, First National Communication on Climate Change, p. 54

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22..22..33..44 BBiioommaassss EEnneerrggyy

There is some interest for biogas production from nutmeg shells.

22..22..33..55 HHyyddrrooppoowweerr

The hydraulic potential is marginal (150 – 500 kW) and competes with other uses of the water resources, mainly potable water and irrigation. The potential was examined by GTZ in the mid eighties and the rivers were ranked by their water resources. A pilot project had been selected and was about to go to tender, when GTZ quit its engagement in the energy sector of Grenada. French plans to sponsor this project did not materialize.

2.2.4 Renewable Energy and Energy Efficiency Policy and current legislative frame-work

To the present time there is no official Government policy encouraging the use of RES. Grenlec’s interest in the past has been mainly focussing on securing and expanding the electricity supply by using “traditional” technologies. On the other hand, some ele-ments of the Electricity Supply Act present a stringent barrier to the involvement of third parties in the electricity sector and the application of RES technologies.

The most relevant sections of the current ESA are the following:

Chapter Content Explanation Long Title An Act granting exclusive licence to the Grenada Electricity Services

Limited, for the performance of functions relating to the supply of electricity throughout Grenada and for connected purposes, and making provisions in the event of revocation of the licence.

Sect. 3 Grenlec has sole and exclusive licence to generate, transmit, distribute and sell electricity in Grenada until December 31, 2073.

Licence until 2073

Sect. 4 With the consent of the Government, Grenlec may authorise any per-son during the whole or any part of the period of the licence to gener-ate, transmit, distribute and/or sell electricity upon the terms and condi-tions and within the area specified in such authority.

Sub-licence for all market activities possible

Sect. 5 No person except Grenlec or a sublicensee shall generate, transmit, distribute and/or sell electricity. This does not apply to a person gener-ating electricity for his own consumption and use a) on any premises used exclusively for private residential purposes; b) solely during peri-ods of interruption of supply of electricity by Grenlec; c) and located in an area not supplied with electricity by Grenlec

Self-generation allowed under certain conditions

Sect. 13 All plant, machinery, equipment, meters, instruments, vehicles, fuel, lubricant and materials imported by Grenlec for the purpose of Grenlec’s undertaking shall be exempt from all customs and other import duties and landing tax.

This will refer to any RES equip-ment as well

Sect. 14 All losses incurred by Grenlec at any time in relation to Grenlec’s undertaking may be carried forward indefinitely for the purpose of being set off against the profites of Grenlec arising in any subsequent year or years.

Income tax con-cession.

Sect. 25 It shall be lawful for Grenlec, without making payment therefor, to harness water power or wind power throughout Grenada at such sites as the Government may from time to time reserve for public electricity

Cost-free water rights and use of wind power for

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Chapter Content Explanation supply purposes. Grenlec

Sect. 26 The Government shall, whenever requested by Grenlec, acquire under the provisions of the Land Acquisition Act or any other Act amending or replacing the same, any land reasonably required by Grenlec for the purpose of its business of generating, transmitting, distributing or sup-plying electricity in Grenada, and shall transfer the land to Grenlec at the actual cost of acquisition.

Exclusive right for Grenlec, could be important for wind sites. Does not apply to any other electricity genera-tor.

Sect. 28 The government shall be entitled to revoke the licence on the day thirty years from the commencement date or on the day fifty-five years from the commencement date

Revocation of licence after 30 or 45 years

Sect. 30 Grenlec shall be exempt from payment of all stamp duties. Exemption from stamp duty

The Government is determined to actively promote energy efficiency and conserva-tion, mainly by disseminating information, setting standards for energy efficient products and encouraging the rational use of energy. Grenlec already provides some elementary information on electricity conservation mainly for its residential customers. Energy effi-ciency campaigns have been organised with the association of hotels and assistance for energy audits will be offered.

2.2.5 Conclusion and specific recommendations

Grenada offers in first place prospective wind energy potentials which could be ex-ploited in the near future.

A new Electricity Supply Act is in draft form since 2001, but has not yet been approved. It provides for separate licensing of generation, transmission and supply of electricity, an optional preference for RES electricity generation within the licensing procedure and the establishment of an RES Electricity Trust Fund to compensate for any extra costs incurred by RES electricity.

According to Government statements the new Act needs to be closely related to the existing Public Utilities Commission Act. This regulating entity is composed of adminis-trative staff for the water, electricity and telecommunication sectors and is also responsi-ble for revising the tariff system. But since its establishment the Commission has never been really functional, at least not for the electricity sector.

In order to increase the share of RES and reduce fossil energy consumption in gen-eral, major political and legal changes will be necessary, including the amendment of the ESA which is still pending. According to the draft ESA, no licence would be needed for the generation of electricity of up to 50 kW.

The 2001 draft for a new ESA refers to our recommendation of setting defined RES targets with the provision, that “the Minister may include as a condition in the Licence of any electricity provider and generating entity a requirement to give preference to RES electricity generators whenever additional or replacement capacity is required”.

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The establishment of a Renewable Energy and Energy Efficiency Fund has already been examined by the Government of Grenada and will hopefully be approved in the near future.24 The 2001 draft for a new ESA provides for a RES Electricity Trust Fund, where

“Every electricity provider and generating entity shall contribute to the RES Electric-ity Trust Fund in addition to any other contributing parties including foreign donors, GEF and others as specified by the Minister.

The Minister shall …specify the percentage of the gross revenue derived from elec-tricity sales which an electricity provider and generating entity … shall contribute to the RES Electricity Trust Fund. The percentage of their gross revenue derived from electricity sales to be contributed shall be the same for all electricity providers.

The RES Electricity Trust Fund shall be used to compensate any electricity provider and generating entity for the extra cost which may be incurred by him from his obli-gation to accept RES Electricity Generators in the grid …

The amount of compensation … shall be based on a competitive bidding procedure as called for by the RES Electricity Trust Fund Operator among eligible RES Electricity Generators.”

24 See Grenada Sustainable Energy Plan, Draft, August 1, 2002, p. 9

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2.3 Jamaica

2.3.1 Background

Jamaica depends for about 90% of its primary energy requirements on fossil fuel imports in the form of petroleum or oil derivates and coal. Explorations of oil and gas reservoirs on Jamaican territory have not resulted in positive findings. For diversifying the energy spectrum, the Government sees some perspectives in importing LNG, mainly for electricity generation. Indigenous renewable energy sources contribute roughly 7% to the (commercial) energy needs of the country. The by far most important renew-able energy sources are bagasse (for cogeneration in the sugar industry) and wood (for domestic cooking and frying), while hydropower and wind energy play only a minor role.

Jamaica’s energy consumption is relatively high, due to a large and energy-intensive bauxite and alumina industry. Energy intensity (energy usage per Gross Do-mestic Product) increased considerably during the last decade. In 2004 import spending for petroleum products and crude oil was above US-$ 1.2 billion.

Jamaica became a Party to the United Nations Framework Convention on Climate Change (UNFCCC) in January 1995. The Kyoto Protocol was accessed in June 1999 and the Initial National Communication on climate change issues submitted in November 2000. The Ministry of Land and Environment has been appointed as the Designated Na-tional Authority for CDM projects.

2.3.2 Electricity Sector

Jamaica’s dominant power utility is the formerly state-owned Jamaica Public Ser-vice Co. (JPSCo25), which was privatised in 2001 and is owned (80%) by the US-company Mirant. JPSCo is a vertically operating company, acting as single-buyer of elec-tricity and with a monopoly for transmission and distribution over a period of 20 years under a licence of April 2001. The licence gave JPSCo the exclusive right to expand its generation facilities until April 2004. Since this date, all further power plant construc-tions are subject to a public and competitive tendering process, in which JPSCo can par-ticipate as well as any other interested party.

Currently the public supply of electricity is supported by four independent power producers, working under licence of the entity Office of Utilities Regulations (OUR)26 and under long-term contractual arrangements (PPA) with JPSCo. IPPs in this definition can also provide only parts of their generated electricity to the public grid and deliver the balance directly to an (industrial) customer located next to the production facility (as in the case of Jamalco). All four IPPs operate a combined contracted capacity of about 160 MW, JPS itself has about 620 MW of generating plants.27 Some energy-intensive indus-tries run their own plants exclusively for self-generation with a total capacity of 800 MW.

25 Also abbreviated as JPS. 26 Established in 1995. 27 The installed capacity is higher, but about 40 MW were not available as of June 2004.

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Some operational figures of JPSCo (including IPPs) Installed capacity End of 2003 approx.. 800 MW

Peak demand 2003 593 MW

Units sold 2003 2.996 GWh (+ 3,7% against 2001)

Average sales price, incl. fuel charge and taxes

2003 approx. 19 US-cents/kWh

Number of customers End of 2002 508,000

Line losses, unmetered consumption and theft 2003 18.6 %

Source: JPSCo, Annual Report 2003

The total public electricity sector (JPSCo and IPPs) produced 3,700 GWh in 2002. JPSCo’s power plants contributed with 72.3% to the total electricity output, with the re-maining delivered by IPPs. Technical losses (about 9%) occur mainly in the distribution network, while non-technical losses (more than 9%) are mainly caused by electricity theft. Close to 3,000 GWh were delivered to final consumers. By far the most important customer group are private households (with a high average consumption of 2,430 kWh/a), followed by the commercial sector.

Generation costs for 2005 are estimated to be between 6 and 7 US-cents/kWh for JPSCo’s steam plants, 5 US-cents/kWh for diesel generation and 6 US-cents/kWh for combined cycle generation. For purchased electricity from JPPC and JEP a high 11.5 re-spectively 11.0 US-cents/kWh have to be paid.

Electricity tariffs are regulated for all customer groups by OUR after proposals from JPSCo, based on expected expenses and a requested return of investment. Tariffs con-tain a basic connection and electricity charge (non-fuel base rate), a variable IPP charge and a flexible fuel charge (fuel rate) which is adjusted monthly according to international fuel price changes, inflation and exchange rate of the Jamaican Dollar. Fuel price varia-tions are therefore directly transferred on to the consumers. System losses are capped for tariff calculation at 15.8%. Due to fuel price increases and the devaluation of the Jamaican Dollar, generation costs and tariffs have moved upward considerably in recent years. The average price per Kilowatt-hour was about 19 US-cents for households in 2003, including taxes and fuel costs. A new tariff scheme came into effect in June 2004.

The continued dependence of the Government on JPSCo’s experience is character-ized by the long-term Least Cost Expansion Plan (LCEP) for the electricity sector, out-lined by JPSCo and submitted to OUR in October 2003. The LCEP as approved by OUR in November 2004 sets a timeline until 2017 for the addition and retirement of generation capacity in the public electricity grid. It is based on the assumption that the prospec-tive growth rate will be on average 4.57%/year.

The percentage of electrification of the country was about 86% in 2001. Grid ex-pansion and connection of remote villages and dwellings is coordinated by the state-owned entity Rural Electrification Programme Limited (REP). With the remaining

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non-electrified population living far away from the grid, decentralized systems like PV are becoming more attractive for REP.

2.3.3 Status and Perspectives of Renewable Energy Use

Since October 2002, the Ministry of Commerce, Science and Technology (MCST) is responsible for all energy matters, except energy policy formulation (dele-gated to the Prime Minister’s Office).

The main driver for the expansion of the renewable energy sector is the state-owned Petroleum Corporation of Jamaica (PCJ), with a dedicated interest in reducing the import of fossil fuels and thereby to save spending of foreign currency. PCJ has been mandated in 1995 with the development and application of renewable energy technolo-gies.

With full operation of the Wigton wind farm in 2005, renewable electricity (hydro and wind) will account for about 5% of the expected total output of 4,020 GWh in this year.

22..33..33..11 WWiinndd EEnneerrggyy

Since 1995, the PCJ has been studying the feasibility of a wind farm project. Wind speed assessments have been conducted at various sites across the island. Most of the wind measurements were not continuous or were not conducted over a sufficiently long period. Until early 2004 the application of wind power had been marginal, with one grid-connected demonstration turbine of 225 kW operating since 1995.

A wind farm of 20.7 MW started operation in April 2004, located in the South of the island near Wigton (parish of Manchester) with an average wind speed at hub height of 8.3 m/s, contributing with about 2% to the current production of electricity (JPSCo and IPPs). The project has been initiated by PCJ and is operated by a 100% subsidiary. In-vestments for the Wigton wind farm amounted to about US-$ 25 million, including finan-cial assistance from the Dutch Government.

By 2010 wind power could contribute between 45 to 70 MW to the power system, i.e. about 3 to 5% of the total production of the national grid. The economic potential is estimated to be of the order of 110 MW.

A long-term Power Purchase Agreement with JPSCo provides that the delivered electricity will be remunerated with US$-ct 5.6/kWh during the first five years and US$-ct 5.051/kWh during the following 15 years.

Since JPSCo has declared explicitly that it will not invest in wind energy, further wind farm projects will depend on third-party engagement by private developers and operators, possibly in joint-venture with the state-owned PCJ.

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22..33..33..22 SSoollaarr EEnneerrggyy

With an average daily irradiation of 4.1 – 5.6 kWh/m² Jamaica has excellent solar conditions.

There are an estimated 7.000 Solar Water Heaters (SWH) installed in Jamaica, mainly on private homes. Compared to the approximately 450,000 residential houses on the island, the penetration rate of SWH is still rather low.

Solar water heaters have been promoted for hotels and domestic use. A fiscal in-centive (exemption from a value-added tax) was introduced in 1994, but later abolished and reintroduced in June 2004. Also an import tax reduction was put in place. The promotion of thermal collectors was also part of pilot DSM measures, executed by JPSCo in the late nineties, targeting residential homes, hotels and student dormitories.

More recently PCJ has imported SWH systems in bulk directly from Israel for a large housing project. Home owners are offered a two-year loan to ease the burden of high up-front costs.

Potentials for SWH exist in particular in medium- and high-income house-holds and in the tourism sector. The hotel industry alone provides for about 14,000 rooms with 30,000 beds across the island and has an occupancy rate of well above 50%, indicating that there is a hot water need throughout most of the year. In this specific case solar water heating has to compete against LPG, since this is the common energy source for hot water generation in hotels. Other niche market potentials can be found in the industrial sector, mainly in food-processing, and for sporting facilities.

The Jamaica Bureau of Standards (JBS) no longer has the capacity to evaluate solar water heaters as it did up to the mid-1990s.

PV applications are marginal with the exception of some 50 Solar-Home-Systems for remote dwellings which were installed in the framework of the same demon-stration DSM programme of JPSCo and a minor pilot project of PCJ for PV street lights. After 5 years the systems for rural electrification show significant failures, mainly due to water damages and a lack of maintenance and spare parts. Most PV panels are out of operation, the repayment scheme is cancelled.

Despite this negative experience, there is a continuous need for PV electrification of remote settlings and individual houses as well as for electricity supply of off-grid appliances. A growing market is also expected for grid-connected PV systems of high-income households on the basis of net-metering and possibly purchase agreements with JPSCo for delivery of excess electricity to the public grid.

22..33..33..33 BBiioommaassss EEnneerrggyy

Biomass for energy purposes is mainly used in the form of (fresh) wood or charcoal in the domestic sector (cooking) or in the form of sugar cane residues (bagasse) for co-generation in the sugar industry.

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All seven sugar factories use their bagasse for heat and electricity production (self-supply), but not with the best efficiency available. Also the production process itself is working with energy requirements higher than necessary. If bagasse would be used in combination with modern high-efficient boilers and the energy demand of the sugar mills reduced, electricity in excess of own consumption of at least 220 GWh could be supplied to the public grid during the harvest period. Another 280 GWh could be provided from burning fuelwood during the rest of the year.

By extending the sugar plantation to its former size, bioethanol could be produced to replace at least 10% of the gasoline consumption in a first step. Such measure would at the same time increase the amount of bagasse suitable for cogeneration.

The municipal solid waste has a high share of organic material and is dumped on several landfill sites with subsequent methane generation and spontaneous flares. If collected the gas could operate electric generators and provide surplus electricity for the public grid.

Further potentials for biomass energy exist in the agro-industrial sector and in the use of organic waste from the food processing industry.

22..33..33..44 HHyyddrrooppoowweerr

The total technically feasible potential is estimated to be in the range of 100 MW. The hydrological and geomorphologic situation allows almost exclusively small-scale ap-plications for hydropower. With the exception of one potential plant at the Black Rio Grande of about 50 MW, all other possible hydro plants would have capacities of approx. 10 MW and in most cases below 5 MW.

Currently the combined hydro capacity of 21.4 MW is feeding into the grid, with all stations operated by JPSCo and contributing about 2% to the net generation of electricity of the national grid. The last plant went into operation some 15 years ago and all facili-ties have recently been rehabilitated and updated.

While the technical feasibility has been proven in most cases, the economic as-sessment resulted in negative decisions in the past, with high specific investment costs involved and low comparative electricity costs from conventional plants. This picture may change nowadays on the background of boosting oil prices and subsequently in-creasing electricity generation costs. It could now be economically feasible to ex-ploit another 60 MW, but JPSCo has no plans for any hydropower expansion in the near future.

Legislation requires a license for all types of water uses, issued by the Water Resources Authority. The license is granted for a period of 5 years, but can be extended thereafter. In competing situations preference is given to fresh-water use over any energetic purposes. All environmental aspects have to be solved with the National Environment Protection Agency (NEPA).

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2.3.4 Renewable Energy and Energy Efficiency Policy and current legislative frame-work

The basic elements of the national energy policy have been outlined in the Energy Policy Paper of 1995. A revised strategy paper is expected to be published in early 2005.

The Energy Policy states, that JPSCo “is prepared to pay up to 15% more for elec-tricity generated by renewable sources than the average price paid for fossil fuel gener-ated electricity”.

On the basis of massive budget constraints due to the importation of fossil fuels, the Government has announced in 2003 its enforced backing for the exploitation of re-newable energy sources and mandated the Department for National Energy Effi-ciency, established within PCJ, to take over responsibility for this target. The objective was set to produce 8% of all electricity requirements (public grid) from renew-able energy sources by 2010 and 12% by 2020.

The legal basis of the electricity sector is enacted in the Electric Lighting Act of 1893 (with subsequent amendments) and the Electricity Development Act of 1974. Most important for the present time is the All-Island Electricity Licence 2001 (AIEL) under which JPSCo operates. This licence has the same legal status as a law. An initia-tive for a new Electricity Act has been stopped in the late nineties. A new draft was pre-sented for discussion and parliamentary approval in 2004.

As already indicated, JPSCo is the single-buyer of electricity and will keep its mo-nopoly for transmission and distribution until 2021. Self-generation is permitted, but supply of excess electricity to the grid is not allowed so far. Delivery of electricity by independent power producers needs to be licensed by OUR and is charged under contrac-tual agreements with JPSCo (long-term PPA). A separate JPSCo stand-by tariff applies to companies owning and operating generators for their own power requirements, i.e. for additional electricity needs or in the case of outages of their facilities. For those months during which the customer generates its own power, JPSCo bills the customer a reserve capacity demand charge and a customer charge only.

The most relevant sections of the AIEL are the following:

Chapter Content Explanation Long Title All-Island Electricity Licence, 2001 Cond. 2/2. JPS is hereby granted the Licence, right and privilege to generate,

transmit, distribute and supply electricity for public and private pur-poses in all parts of the Island of Jamaica.

Licence for all market activities

Cond. 2/4. a) In the first three years from the effective date of this Licence, JPS shall have the exclusive right to develop new generation capacity. Upon the expiry of this period JPS shall have the right together with other out-side persons to compete for the right to develop new generation capac-ity.

Exclusive right for generation expan-sion until April 2004

Cond. 2/4. b) JPS shall have the exclusive right to transmit, distribute and supply electricity throughout Jamaica for a period of 20 years.

Exclusive Licence for transmission and distribution until 2021

Cond. 2/5. JPS shall have the right to purchase electricity in bulk from private JPS as single-

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Chapter Content Explanation suppliers for transmission and distribution through the All-Island Elec-trical system.

buyer.

Cond. 14/1. JPS shall, save where it enters into special contracts with customers for the supply of electricity, charge its customers for such a supply accord-ing to published tariffs, approved by OUR, as updated from time to time. Such published tariffs shall be cost-reflective, unless otherwise directed by OUR. Each tariff category will apply uniformly across the Island.

Tariffs regulated by OUR

Cond. 19/1. JPS shall purchase electricity at the best effective price reasonably obtainable having regard to the sources available, contractual arrange-ments and Government policy.

Least-cost obliga-tion for JPS

Cond. 26/1. JPS and Rural Electrification Programme Limited (REP) shall periodi-cally agree on the development plans proposed by REP. Such plans will include an approximate timing and cost of such facilities that JPS would be expected to acquire.

Rural electrifica-tion

Currently no fiscal incentives exist for solar thermal collectors, but the introduction of new support schemes is in discussion.

An internationally funded demand side management project was started by JPSCo in 1994. It comprised different components targeting residential as well as commercial customers and included programmes for energy auditing, retrofitting, the dissemination of price-reduced energy-efficient compact fluorescent lamps and low-flow shower heads and the installation of solar water heaters and photovoltaic systems. Unfortunately the utility commitment has declined after the support ended and the transformation of JPSCo into a private company. Government initiatives have not been able to fill this gap.

2.3.5 Conclusion and specific recommendations

The natural conditions of Jamaica offer some opportunities for the enhanced use of RES in an economically viable framework, mainly biomass, wind power, hydropower and solar thermal energy. In combination with efficiency measures the increased exploitation of such indigenous resources could lead to a significant reduction of the specific fossil fuel input per energy unit. Major activities are expected to come from private independent producers, as far as the framework conditions are transparent and reliable. A favourable pre-condition for any grid-access by third parties with clear rules and tariffs (determined and supervised by OUR) would be the introduction of a separate accounting system of JPSCo for generation, transmission and distribution.

In order to increase the share of RES and reduce fossil energy consumption in gen-eral major political and legal changes will be necessary, including the approval of the new Electricity Bill.

The regulator OUR will need to take care that the RES target for the electricity sec-tor will be achieved on a least-cost basis through tendering procedures mainly for wind and hydropower as well as e.g. the improvement of cogeneration plants in the sugar in-dustry and by reducing line-losses. Long-term PPAs with JPSCo should secure private investment in the wind and hydro sector. JPSCo should be allowed to pass on additional

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costs to its customers within its tariff scheme up to a certain limit (see already existing provision to purchase RES electricity at prices of up to 15 % above avoided costs).28

28 In some cases and under certain conditions, like for wind power at favourable sites, already today gen-eration might be cheaper than with conventional sources.

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2.4 St. Lucia

2.4.1 Background

St. Lucia imports almost all its energy needs or about 120,000 toe 29, mainly in the form of oil derivatives30. Despite sufficient potentials for renewable energies (mainly wind, solar, biomass and geothermal) indigenous energy sources have not been exploited so far with the exception of solar energy for hot water production and drying of crops as well as traditional use of biomass for cooking.31 Imported diesel oil is almost exclusively used for electricity production (14.74 million imp. gallons in 2001), which is the second major energy consumer on the island behind the transport sector.

It is the expressed hope of the Government as well as by the utility Lucelec that the bulk fuel supply can be diversified either by piped or liquefied natural gas from Trinidad and Tobago.32

As early as in 1999, the government of St. Lucia expressed its intention to be-come a “Sustainable Energy Demonstration Country” by 2008-2012, requiring a minimum of 20% of the total energy demand to be contributed by renewable energy sources. This commitment was repeated in November 2000 during a meeting of the Alliance of Small Island States (AOSIS) at the 6th Conference of the Parties to the United Nations Convention on Climate Change in Den Hague (COP 6).

In May 2001 the government published and approved its Sustainable Energy Plan (SEP)33. Targets were set to reduce the projected electricity demand by 5% in 2005 and 15% in 2010. 5 MW (7%) and 17 MW (20%) of the installed electri-cal capacity were to be delivered from RES by 2005 and 2010 respectively. Other objectives have been established for the transport sector. The Plan outlines some initiatives and actions necessary to achieve the targets in the areas of grid-tied renewable energy, independent solar energy, energy efficiency and transportation.

In July 2001 the Government published its National Report to the World Summit on Sustainable Development that took place in Johannesburg in Septem-ber 2002. During this conference the commitment was reiterated in a press briefing by the Foreign Minister of Saint Lucia together with officials from Grenada and Domin-ica.

St. Lucia ratified the United Nations Framework Convention on Climate Change in June 1993 and presented its Initial National Communication on Climate Change in 2001. The Kyoto Protocol was ratified on 20 August 2003. The nomination of a Designated National Authority for CDM projects is still pending. The island con- 29 tons of oil equivalent 30 There is no processing of primary oil in the country. 31 According to the National Communication on Climate Change in 2000 only an estimated 1 % was met from indigenous sources, mainly in the form of firewood, charcoal and agricultural residues. 32 A gas pipeline between Trinidad and Guadeloupe is in discussion. 33 The draft had been elaborated in partnership with the Climate Change Institute, Washington, and with the assistance from the Organisation of American States, UNDP, the US Department of Energy and other international institutions, members of the Global Sustainable Energy Islands Initiative formed in No-vember 2000 (GSEII).

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tributes only with a very small share to the greenhouse effect, but is mainly victim of sea level rise and the change of seasonal climates, as for example the appearance of stronger tropical storms and extended changes to the wet and dry seasons.

The most recent governmental approach has been the drafting of an Energy Sector Policy and Strategy that was published in May 2003. This paper identifies and develops short to medium-term energy sector policy options in the areas of Re-newable Energy as well as Energy Efficiency and with respect to the institutional set-tings. A revised version of this paper was displayed for discussion in October 2003. Stakeholder consultations were still on-going at the end of 2004.34

As a consequence of negative experience in the past, the Government is particu-larly reluctant to accept any unsolicited proposals for RES electricity generation from independent power producers.35 Instead, the Government prefers to receive genera-tion proposals after an international competitive bidding process according to its re-source plans and terms.

The Ministry of Planning, Development, Environment and Housing is the government entity responsible for the development of energy policy, programs and projects, while the Ministry of Communications, Works, Transport and Public Utilities oversees the operations of the power utility Lucelec. The former Public Utili-ties Commission was abolished in 1994 with the enactment of the Electricity Supply Act.

2.4.2 Electricity Sector

The company St. Lucia Electricity Services Ltd. (Lucelec) has the exclusive right for generation, transmission and distribution of electricity since its formation in 1964. It went public in 1994. As of April 2004, shareholders of Lucelec are the UK-based Commonwealth Development Corporation (CDC, 24.87%), the Caribbean Basin Power Fund St. Lucia Ltd. (CBPF36, 20.0%), the Castries Town Council (16.33%), the Na-tional Insurance Scheme (12.51%), the Government of St. Lucia (12.44%) and other private and institutional shareholders.

The monopoly of LUCELEC has been legally established with the enforcement of the Electricity Supply Act of 1994 (see chapter 2.4.4). The company works under an exclusive statutory license that will expire in 2045.

The installed capacity dropped from 66.4 MW in 2002 to 56.5 MW in 2003 (the Union Power Station had to close), while the firm capacity remained stable with 47.8 MW. The average base load is about 27 MW. At present only the power station at Cul de Sac (south of the capital Castries) is operating, although with several units.

34 See also CREDP/GTZ, Review of the Energy Sector Policy and Strategy – Chapter IV, October 2004. 35 See attachment III of the Energy Sector Policy and Strategy paper: “Brief Guidelines for Treatment of Unsolicited Proposals”. 36 This fund is managed by the Energy Investors Funds Group of the US (www.eifgroup.com).

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Some operational figures of LUCELEC Installed capacity End of 2003 56.5 MW

Peak demand Oct. 23, 2003 44.9 MW (+2,5% against 2002)

Units sold 2003 252.1 GWh (+5.3% against 2002)

Average sales price, incl. surcharge 2003 EC-$ 0.59/kWh

(US-$ 0.22/kWh)

Average sales price, without surcharge 2003 EC-$ 0.41/kWh

(US-$ 0.15/kWh)

Number of customers End of 2003 50,253

Line losses 2003 11.7%

Source: Lucelec, Annual Report 2003

After the set-back of 2002 as a consequence of the 9/11 events in 2001 which severely hit the tourism sector, electricity consumption in St. Lucia recovered in 2003 and reached a new record high with 252 GWh sold (+ 5.3% above 2002) and close to 300 GWh produced, leaving the difference to own consumption (11.8 GWh) and mainly transmission and distribution losses (35.1 GWh; 12.2% of net gen-eration). Despite such recovery it is unlikely that the average consumption growth rates of 7.5% as in the second half of the nineties will occur again in the near future.

The electricity yield per imperial gallon consumed has reached a high 19.4 kWh. For electricity generation incl. fuel some 27 EC-cents/kWh (10 US$-cents) had to be spent in operation costs alone. The generation costs excluding fuel were in the range of 6 EC-cents/kWh, so that about 21 EC-cents/kWh (7.8 US-cents/kWh) were spent on fuel alone. Transmission and distribution costs amounted to 7.9 EC-cents/kWh. Revenues were 59.3 EC-cents/kWh (22 US-cents/kWh) on average and thus significantly less than on the neighbouring islands.

The number of customers grew by 3.3% to 50,250. Annual average consump-tion of domestic customers remained stable with 2,064 kWh, while especially the commercial sector (incl. hotels) faced a significant increase, probably mainly due to the come-back of the tourism sector. The number of industrial customers dropped again to a new all-time low of just 102.

In October 2003 the maximum demand reached 44.9 MW. The reserve margin stands at about 25% of the peak load. Despite this high margin, the Electricity Supply Act of 1994 requires Lucelec to have a reserve capacity equal to the two largest units (9.3 MW). Therefore the reserve capacity is currently not adequate in a strict legal sense. New capacity is being provided, but will not be available till late 2004.37

The expected load growth for the next 5 years is about 3.5 %/a. The maximum demand is seen to reach 51 MW within the same period. A contract has been awarded in 2004 to install a further 10.2 MW unit at Cul du Sac (to compensate for the shut-down of the Union Power Station), which was supposed to be commissioned by the end of the same year. With the new plant, the currently installed capacity will allow

37 This new capacity will mainly substitute older engines.

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Detlef Loy
Siehe Tabelle.
Detlef Loy
Note
67 MW at the middle of 2005
Detlef Loy
Note
49.2 MW First half-year 2005
Detlef Loy
Note
266.4 GWh in 2004
Detlef Loy
Note
EC-$ 0.64/kWh in 2004 (US-$ 0.24/kWh)
Detlef Loy
Note
Almost the same in 2004: EC-$ 0.42/kWh
Detlef Loy
Note
51,766 at the end of 2005
Detlef Loy
Note
10.2% in 2004
Detlef Loy
Note
308.5 GWh produced in 2004
Detlef Loy
Note
19.3 kWh in first half-year 2004
Detlef Loy
Note
2,073 kWh in 2004
Detlef Loy
Note
96 in 2004
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LUCELEC to meet the projected demand and provide for a sufficient security margin at least until 2006.

Due to network expansion, by 2003 the transmission and distribution systems served more than 99% of all households, so that the island can be regarded as almost completely electrified. Only a few remote houses and facilities are not supplied by the national grid and may in specific cases receive funding for grid extension to isolated communities through the Poverty Reduction Programme of the Government. New cus-tomers are connected to the grid free of charge, as long as they are within a stipulated distance from the distribution mains.

As already mentioned, Lucelec is very interested in obtaining natural gas from Trinidad which is expected to become available in the medium-term. A quote from B. Theobalds (CEO until the end of 2003) states: “Gas remains the single possible oppor-tunity to make a significant reduction in investment costs for new plants while also cutting expenses and improving plant reliability.” In 2002, fuel costs represented ap-proximately 30% of total costs.

Even though electricity prices are on the lower level if compared to other Wind-ward islands they are high on international standards and offer good opportunities for competitive RES power generation. The highest prices are paid by non-residential customers with a basic energy tariff of EC-$ 0.446/kWh for low voltage electricity (not including fuel surcharge of around EC-$ 0.20/kWh and minimum monthly charges). With the background of those high tariffs, the Government of St. Lucia appointed in 2002 a Review Commission to assess Lucelec’s efficiency, examine the existing ar-rangements for determining the tariffs, explore alternative cost effective regulatory mechanisms and suggest energy conservation measures.38

In addition to Lucelec’s monopoly position, the Electricity Supply Act No 10 of 1994 also guarantees Lucelec a fixed return on its investment and also provides a formula for the establishment of a fuel surcharge.39 This surcharge keeps Lucelec’s cost of fuel (diesel) at a base price and allows it (by the formula) to pass on automati-cally any increase or decrease from the base price to the consumers. The tariff scheme itself is part of the Electricity Supply Act. Additionally, the company was con-sidering the introduction of a new off-peak tariff for industrial consumers by 2004.

Lucelec’s attitude in the past towards the possible entry of IPP’s has been ex-pressed by its former CEO B. Theobalds in this way: “It is hardly possible for a third party to generate power better or cheaper than the company can, under the same constraints.”(October 2003).

38 A summary of the findings can be found in the paper “Energy Sector Policy and Strategy” (draft, May 2003, p. 71) as well as on LUCELEC’s Internet site, including the full chapters 16 (“Comments on Electricity Supply Act”) and 17 (“Conclusions and Recommendations”). The full report was not accessible for the consultants. 39 Return on equity averaged about 15.6% over the period 1997 to 2002.

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Detlef Loy
Note
In 2004 EC-$ 0.23/kWh In first half-year on 2005 EC-$ 0.29/kWh.
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2.4.3 Status and Perspectives of Renewable Energy Use

22..44..33..11 WWiinndd EEnneerrggyy4400

Studies in St. Lucia suggest that areas of moderately high wind speed exists on the island especially on the exposed locations on the windward coast of the island, and in particular at the northern and southern extremities, where the prevailing wind flow has been diverted around the central mountain range.

In 1995, Lucelec was approached by the Canadian joint venture company Saint Lucia Windpower JV, formed by Probyn Company of Toronto and York Windpower of Montreal to set up a commercial-scale wind farm near the Eastern coast of the island. Lucelec agreed to the proposal for a feasibility study to determine the viability of a wind power plant. In January 1998 the company presented to Lucelec the "St. Lucia Preliminary Wind-Diesel Integration and Wind Power Plant Project Development Plan" and in April 1999 the "Term Sheet for Power Purchase Agreement". Lucelec was also provided with a copy of the “Wind Resource Assessment and Energy Estimate” pre-pared by the joint venture in October 1998 after a one-year continuous wind speed measurement. On request of Lucelec the proposal to construct a 13.5 MW wind farm was evaluated by international consultants. They judged the proposal as being inade-quate, lacking sound engineering principles and impossible to be implemented at this specific location.

Even though the local utility Lucelec has expressed interest in purchasing power from external wind operators, provided that the cost of power is below existing avoided costs (i.e. the fuel cost of generation) and that no investment by the utility is required, no project has been implemented so far. The company has now targeted an integration of renewable energy into its grid to account for 10% (10 MW) of its capac-ity by 2007.41 This target was reinstated in Lucelec’s annual report of 2003. In order to achieve this objective mainly by exploiting the island's wind potential, LUCELEC is determined to commission a pilot wind project of two larger turbines. This first small wind farm was thought to start operation by the end of 2004.

With medium annual wind speeds estimated to be in the range of 7 m/s at hub height, the generation costs from wind energy would be approx. 8 US-cents/kWh, i.e. below current fuel costs alone. Therefore, even taking into ac-count that additional costs will occur from improving the infrastructure (roads and grid extension and/or reinforcement, extra costs for transport of turbine components), the generation costs will stay below the limit set by the avoided operational costs of LU-CELEC’s diesel power stations under current price conditions.

As a first step Lucelec decided to undertake a wind power study in 2003. Within this desk study 34 sites have been examined, allowing Lucelec to analyse interconnec-tion and operating cost issues, as well as to consider the optimal integration of the energy generated into the national grid and environmental concerns as it relates to noise and visual impact. The comparative analysis showed that the South-East of the island offers the best opportunities for wind energy.

40 Most information in this chapter is based on a press announcement by Carilec of February 27, 2003 and on interviews with LUCELEC’s Chief Engineer Trevor Louisy and Bishnu Tulsie (Chief Sustainable and Environmental Officer) in the Ministry of Physical Planning, both on October 16, 2003. 41 10% of peak demand or an equivalent of 5 MW according to Mr. Trevor Louisy. With a capacity factor of 40% this would result in 7% of the current electricity generation.

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Six sites were chosen as being the most attractive in terms of location, road and grid access, ownership etc. Those sites were named to the Government in April 2004 (Ministry of Public Works, with summary sent directly to Ministry of Physical Development) to provide for state acquisition after purchasing or leasing ne-gotiations with the property owners had failed. An anemometer and tower has al-ready been purchased for on-site wind-speed measurements. By the end of 2004, Lucelec was still awaiting Government approval to set up its measurement equipment at one of the selected sites.

The pilot project would use two wind turbines of between 600 and 1000 kW rated capacity and probably be put in place and run jointly with an experienced wind farm operator (Delta Caribbean from Curacao, see chapter 4).

Lucelec expects, that once the pilot project is in place, this will facilitate the monitoring of the installation as well as attaining the necessary learning curve on the operation of wind power turbines in combination with diesel-based generating units. It should also bring Lucelec in a position to determine the true costs associated with wind energy in St. Lucia.

Land ownership should not be an obstacle/impediment to wind power, as long as the owners are properly reimbursed and the removal of the machinery after its life-time has been negotiated.42 But competing tourism developments along the east coast of the island could reduce the available sites for wind energy exploitation.

The compliance with international construction and electrical standards could be secured through the involvement of well known technical institutions, like Ger-manischer Lloyd, TÜV Nord or consulting companies Decon and Lahmeyer from Ger-many, which are experienced with certification and advisory services in the wind busi-ness.

22..44..33..22 SSoollaarr EEnneerrggyy

St. Lucia’s abundant solar energy resources offer tremendous potentials for vari-ous applications, particularly solar water-heating. The country already enjoys a rela-tively high usage of solar water heaters spurred by technological improvements, the commercial availability of the systems and the waiving of import duties and consump-tion taxes on renewable energy equipment and materials since May 1999. An addi-tional impetus to utilisation has been the decision by the Government of St Lucia in April 2001 to allow the cost of solar water heaters to be charged as an expense against taxable income (income tax allowance). This measure is expected to further promote their use.

Given the relatively high cost of electricity in Saint Lucia there are clear opportu-nities for enhancing the use of solar water heaters in the tourism, residential and commercial sectors: a development that would facilitate reductions in foreign currency leakage and slow the growth of electrical energy demand. A new solar hot water heating financing programme is about to start in Spring 2005.43

42 The affects on continued agricultural use are minimal. 43 Global Sustainable Energy Islands Initiative (GSEII), Newsletter, January 2005

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Detlef Loy
Weiß GSEII mehr ? Im Newsletter Januar 2005 steht etwas von Point de Caille mit 4.25 MW.
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Due to the high electrification rate of close to 100% and relatively high prices, photovoltaic systems are currently only regarded as a viable solution for specific purposes at isolated locations or under certain circumstances. For example, PV offers an immediate benefit as a reliable back-up power source for such instances as the 70 existing hurricane shelters.

In 1999 in the remote and non-electrified village of Bouton on the West coast of St. Lucia a school hall, that is also used as community centre, adult teaching facility and hurricane shelter, has been equipped with PV modules of 400 Wp by the Sustain-able Development Science and Technology Office and with financial support of the UN Trust Fund on New and Renewable Sources of Energy. Another three storm shelters at different sites have received PV installations in the past with Italian assistance.

Under the current Act, grid-connected PV electricity generation without prior sub-licence by Lucelec is only allowed for self-supply and as long as no excess electricity is fed into the public grid. Also, there is no obligation for the utility to pay for any power fed into the grid, unless a specific purchase agreements have been negotiated.

22..44..33..33 GGeeootthheerrmmaall EEnneerrggyy

Geothermal energy may be St. Lucia's principal renewable energy resource. Several exploration programs have been carried out during the last two decades, funded by U.S. and European companies and the United Nations.

The drilling explorations have confirmed the presence of a geothermal resource capable of supplying electricity to the national grid. However, no adequate determina-tion or feasibility study is currently available.

The first survey was carried out in 1951 with support of the United Nations. It was focused on the Sulphur Springs area which is the main zone of surface manifesta-tions with abundant hot springs, fumaroles, mud pools and steaming grounds. The survey indicated that there were steam dominated reservoirs at depth. In 1964, the first comprehensive geological map of the area was produced.

Seven exploratory holes were drilled in the Qualibou depression in Soufriere be-tween 1974 and 1976. The primary finding of the exploratory drillings was the recog-nition of a steam-dominated geothermal reservoir below the Sulphur Springs at 200 to 300 meters depth, producing superheated steam with low pH and a high amount of non-condensable gases. The initial estimated figure on the geothermal potential was lowered as it was determined that the steam had a high saline content and for safety reasons any effluent should be re-injected. A second phase of exploration survey was carried out in 1982 and 1983, the aim of which was to improve the knowledge of the background of the Qualibou depression and the Sulphur Springs geothermal system.

A feasibility study started in 1986 led to two deep exploratory bore holes being drilled in 1987-1988. In 1990-1991, in consultation with Lucelec, a New Zealand con-sultant (GENZEL), performed incomplete tests on the wells. The most recent evalua-tion of the Sulphur Springs project was carried out in 1992 by an Italian consultant, who considered the Terra Blanche area as having potential because of its high tem-perature and permeability.

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Lucelec has been involved in the Government's exploratory efforts over the years for geothermal energy in the Sulphur Springs area. Lucelec understands that the Government, in collaboration with French interests, plans to undertake further geo-physical and geo-chemical investigations, including the sinking of some shallow test wells. Lucelec was invited to become a partner in this initiative. However, Lucelec has been reluctant because of the level of risks. Lucelec is of the opinion that any further exploration will need to clearly determine the quality and capacity of reserves in order to assess the viability of any development. This will provide Lucelec the in-formation to determine a way forward to complement its existing sources with geo-thermal energy.

Excluding exploratory work that has not yet been started, an estimated EC-$ 40.0 million has been spent over the last 30-40 years for geothermal studies. In 2004, the Government signed a Memorandum of Understanding with United Network of the Eastern Caribbean on the exploitation of geothermal sources on St. Lucia.

St. Lucia participates in the GEF-funded project Eastern Caribbean Geother-mal Development Project (Geo-Caraïbes) that focuses on the elaboration of feasi-bility studies and the commercial development of geothermal sites and was started in 2004 (see chapter 2.1.3.3.). Within this project OAS support is asked for drafting a geothermal energy law.

22..44..33..44 BBiioommaassss EEnneerrggyy

St. Lucia has an extensive agriculture and some forests with an unknown poten-tial of biomass residues for electricity generation. Traditional forms of unsustainable biomass use for process heat are still common in some rural areas. Deforestation and soil degradation have created substantial problems.

Organic waste from food processing industries and households could be another energy resource, if proper collection and subsequent disposal or incineration is se-cured. Further assessments in this field could probably show viable options. A pre-feasibility study on the gas extraction and use from the Ciceron landfill site 44 has recently been concluded as well as a similar study on energy from poultry litter. Both projects have received support from the Global Sustainable Energy Is-lands Initiative (GSEII).

22..44..33..55 HHyyddrrooppoowweerr

St. Lucia has limited hydro resources due to a) the low gradient of rivers, b) de-forestation for agriculture purposes and cultivation in watershed areas, c) low flows during the dry season. However, until 1977 there was a small hydro plant of 50 kW in operation on the Soufrière River.

A desk study completed in 1982 45 recommended that the hydropower potential of the Millet, Vieux Fort und Troumasse Rivers should be examined.

44 The site was closed for waste dumping in March 2003. 45 World Bank Report No. 5111-SLU – St. Lucia: Issues and Options in the Energy Sector

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Detlef Loy
Könnte es sein, dass es sich hierbei um einen Irrtum handelt und uns dies im Oktober falsch dargestellt wurde ?
Detlef Loy
Liegen diese Studien vor ?
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The few options include the overflow from the John Compton Dam near Millet in the centre of the island that may offer the opportunity to generate electricity that could be used e.g. for the water pumping station at the foot of the dam. The dam provides most of the drinking water for the northern part of St. Lucia. The generating capacity is estimated to be in the range of more than 100 kW.

2.4.4 Renewable Energy and Energy Efficiency Policy and current legislative framework

Besides setting RES electricity targets for 2005 and 2010 and favourable tax conditions for solar thermal systems, no further initiatives have been undertaken by the Government of St. Lucia so far to enhance the use of RES sources. Lucelec has always required a high standard of proof for the viability of RES projects. This to the point where it is interpreted that the utility is reluctant or even has a negative attitude towards any plans of private companies to exploit renewable energy sources for elec-tricity generation, (e.g. wind and geothermal), including those projects which are based on contractual power purchase agreements. Because of the existing Electricity Supply Act (ESA), RES electricity faces severe barriers mainly by the status of the na-tional utility as single producer and supplier of grid-based power and the preferences linked to this monopoly.

The most relevant sections of the ESA are the following:

Chapter Content Explanation Long Title An Act to retain the grant of an exclusive licence to the St. Lucia Elec-

tricity Services Limited, for the exercise and performance of functions relating to the supply of electricity including the calculation of charges for the supply of electricity, the independent review of such charges and matters connected therewith, and for imposition of a fee on fuel purchased for the generation of electricity

Sect. 3 Lucelec has sole and exclusive licence to generate, transmit, distribute and sell electricity in Saint Lucia for a period of eighty years with ef-fect from 1st July, 1965.

Licence until 2045

Sect. 4 Lucelec may with the approval of the Cabinet authorise any person, local authority or Government department during the whole or any part of the period of the licence to generate, transmit, distribute and sell electricity upon the terms and conditions and within the area specified in such authority.

Lucelec is sole buyer; only self-generation allowed under certain terms

Sect. 9 All plant, machinery, equipment , meters, instruments, vehicles and materials imported by Lucelec for the purpose of the Lucelec’s busi-ness of generating, transmitting, distributing or supplying electricity are exempt from all customs and other import duties, landing tax and trade tax.

This will refer to any RE equipment as well

Sect. 10 During the continuance of the licence Lucelec is exempt from payment of all stamp duty including stamp duty on arbitration awards.

Exemption from stamp duty

Sect. 10 (A) A fee is hereby levied on all fuel purchased by Lucelec from Hess Oil (Saint Lucia) Limited at the rate of 20 cents per imperial gallon or part thereof.

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Chapter Content Explanation Sect. 11 The Government shall, whenever requested by Lucelec, acquire under

the Land Acquisition Ordinance or any other Ordinance amending or replacing the same, any land reasonably required by Lucelec for the purpose of its business of generating, transmitting, distributing or sup-plying electricity in Saint Lucia, and shall transfer the land to Lucelec at the actual cost of acquisition.

Exclusive right for Lucelec, could be important for wind sites. Does not apply to any other electricity genera-tor.

Sect. 15 Lucelec may erect, place or replace pipes and electric lines along or under or over any road in Saint Lucia without payment of any way-leave, rent, fee or other charge.

Sect. 19 Subject to Government approval Lucelec may without making payment therefor, harness water power throughout Saint Lucia at such sites (weather on Crown or private land) as the Government may from time to time reserve for public electricity supply purposes.

Water rights

Sect. 21 - (1) Subject to subsection (2), during the continuance of the licence no person except Lucelec shall generate, transmit (save for his own con-sumption and use), distribute or sell electricity within Saint Lucia pro-vided that a sub-licensee may, during the period stated in the written authority granted to him by Lucelec, generate, transmit, distribute and sell electricity upon the terms and conditions within the area specified in such authority.

Electricity genera-tion for own use is allowed. Other electricity produc-tion only with permission from Lucelec.

Sect. 21 - (2): The Government may grant to Lucelec or to another corporation a licence to generate electricity by utilising the fumaroles at Soufriere; but the Government may not grant any such licence to another corpora-tion without giving Lucelec not less than twelve months’ previous notice in writing of its intention to do so; and on the condition that any electricity so generated and not required for that other corporation’s own use will be sold to Lucelec.

Specific ruling for geothermal sources at Soufriere

Sect. 23 Lucelec shall use reasonable efforts to endure that sufficient firm gen-erating capacity is maintained at all its power stations in order that peak demand may be met, assuming that the two largest generating units are unavailable for generating electricity.

High reserve mar-gin.

Schedule 3, Part B:

Target Rate of Return - … is that level of annual rate of return to be attained on the equity of Lucelec which shall be not less than the aver-age twelve month deposit rate paid by commercial banks in Saint Lucia plus an additional ten per cent provided that such return on equity shall be at a rate not less than fifteen percent per annum.

Guaranteed rate of return, minimum 15% on equity.

Section 26 (4) Where the interim rate of return for any financial year is less than the allowable rate of return calculated in accordance with Part A of the THIRD SCHEDULE then with respect to that financial year, Lucelec shall in respect of the month in which the relevant interim return is submitted and in respect of subsequent months, increase the basic en-ergy rates chargeable for each kilowatt hour consumed.

Tariff adaptation

Section 37 The Governent may require Lucelec to implement rural electrification programmes from time to time and Lucelec shall accede to any such requirement, on terms and conditions agreeable to both Government and Lucelec which shall include the provision of funds by the Govern-ment for this purpose.

Rural Electrifica-tion

It is generally expected that the act will be amended taking into consideration the recommendations of the governmental Review Commission on Lucelec.

Higher energy efficiency in the past has been mainly tackled by the private sec-tor 46, but is now receiving more and more attention and forms part of the national 46 see e.g. Carl Hunter, Energy Use, Conservation and Efficiency at Wyndham Morgan Bay Resort, St. Lucia

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energy strategy. Prospects are seen in the building sector with the introduction of an adequate building code 47, labelling for major electrical appliances and in technical assistance for energy consumers. The use of compact fluorescent lamps has been encouraged with the removal of consumption taxes on such appliances.

Demand Side Management actions undertaken by Lucelec have been marginal so far, even though a new project with assistance of the Canadian International Devel-opment Agency (CIDA) has been shaped and was ready to start by the end of 2003. The Government’s major concern is the individual transport sector, which needs fur-ther regulation and improved taxation schemes in order to curb energy consumption.

2.4.5 Conclusion and specific recommendations

-St Lucia could cover significant parts of its energy needs from windpower, geo-thermal energy and by tapping the solar potential for hot water generation. The will-ingness to exploit renewable energy sources is apparent, in the Government as well as on the side of the utility.

The relatively small market size and the need for secure long-term investments and electricity supplies place some natural limits on the opening towards liberalised competition among different electricity generating companies. Despite those facts, certain fractions of the electricity supply market should be accessible by in-dependent producers either alone or in close co-operation with Lucelec.48 A favour-able pre-condition for any grid-access by third parties with transparent rules and tar-iffs would be the introduction of a separate accounting system for generation, trans-mission and distribution.

In order to increase the share of RES and reduce fossil energy consumption in general major political and legal changes will be necessary, including the amendment of the Electricity Supply Act, which is already proposed in the draft of the National En-ergy Strategy. Section 21 – (2) of the ESA should generally be extended to any form of renewable energy source.

The introduction of a quota system (Renewable Portfolio Standard– RPS) that sets certain legally binding targets for the contribution of RES to the electricity gen-eration, has already been envisaged in the Sustainable Energy Plan of 2001.49

For grid-connection of PV systems, there is no reason to wait for the maturing of the sector as provided under art. 10.44 of the Energy Sector Policy and Strategy (draft of May 2003).

As for the mandatory introduction of solar water heaters, the Government could link its support to the housing sector, namely through the various low and middle in-come initiatives, to such (and other) environmental and energy requirements.

47 The existing Caribbean Unified Building Code (CUBIC) does neither include energy efficiency nor renewable energy issues. 48 Bilateral supply of electricity by third parties using the national grid should generally be possible. 49 Energy Sector Policy and Strategy, May 2003, p. 84: “GOSL will commission a study to determine the likely impact of RPS on the development of the energy sector in St. Lucia.”

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2.5 St. Vincent and the Grenadines (SVG)

2.5.1 Background

SVG imports most of its energy needs, mainly in the form of oil derivatives.50 A de-creasing dependence on the use of hydropower for electricity generation is taking place on the main island. Despite sufficient potentials for other renewable energy sources (mainly solar, wind, biomass and geothermal) such indigenous energy sources have not been tapped so far, with the exception of solar energy for hot water. Imported diesel oil is largely used for electricity production.

SVG has so far no formal energy policy, but the Government is considering producing a policy document for medium and long-term strategies and the es-tablishment of RES targets in 2005. In this general context, a joint strategy for OECS member states would be preferred.

SVG has accessed the United Nations Framework Convention on Climate Change in December 1996. The Kyoto-Protocol was signed in March 1998, but has not been ratified yet. An Initial National Communication on Climate Change has been prepared by the National Environmental Advisory Board and the Ministry of Health and the Environment in November 2000.

Due to the geographic situation of this group of islands, conditions are slightly dif-ferent from the other countries within the region. The state’s smaller islands of Bequia (5000 inhabitants), Union Island and Canouan have their own isolated electricity sys-tems, while some other islands (partially private property) are operating their individual electricity generation, typically based on diesel machines. SVG has a total population of 117,000 inhabitants.

2.5.2 Electricity Sector

The company St. Vincent Electricity Services Ltd. (Vinlec) has the exclusive right for generation, transmission and distribution of electricity since its formation in 1961. Vinlec was registered as a private company, owned and operated by CDC. Today the Govern-ment of SVG owns all the shares.

The monopoly of Vinlec has been legally established with the enforcement of the Electricity Supply Act of 1973 (see chapter 4.5.4). The company works under an exclu-sive statutory license that will expire in 2033 at the latest.

The utility operates diesel-based power stations and hydropower with a total plant capacity of 37.4 MW, included a rated capacity of 31.2 MW on St. Vincent and diesel generators on Bequia (2.2 MW), Union Island (0.9 MW) and Canouan (3.1 MW). The hydropower plants on St. Vincent are distributed among the South Rivers (3 turbines with a total of 0.9 MW), Richmond (2 with 1.2 MW) and Cumberland (5 with 3.7 MW). The available plant capacity is 5.2 MW during the rainy season, while the output drops to around 2 MW during the dry period. 50 There is no processing of primary oil in the country.

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Taking into account the low availability of hydropower plants at specific periods of the year and the low effective availability and the high age of some of the diesel plants, new generation stations have to be brought on line in the near future. A new diesel plant with 9 MW capacity will be installed in the near future at Lowmans Bay on St. Vincent, while 6 MW of outdated engines will be retired instead. The Electricity Supply Act does not impose a specific reserve margin on Vinlec.

Losses (technical and non-technical) in the transmission and distribution system are low in comparison to other countries in the region, probably due to a closer distance be-tween generation site and consumers.

Vinlec is not opposed to Power Purchase Agreements with independent power producers or to new RES electricity in general, if the price for RES electricity is based on avoided costs and would be lower than its own generation costs. The utility itself is not interested in investing its resources in RES with the exception of hydro.

Some operational figures of VINLEC

Installed capacity End of 2002 37.4 MW (St. Vincent: 31.2)

Peak demand 2002 18.3 MW (St. Vincent: 16.0 MW)

Units sold 2002 89.8 GWh (+3.7% against 2001)

Average sales price, incl. fuel surcharge 2002 EC-$ 0.68/kWh

(US-$ 0.25/kWh)

Average sales price, without fuel surcharge 2002 EC-$ 0.53/kWh

(US-$ 0.20/kWh)

Number of customers End of 2002 32,230

Line losses 2002 10.4%

Source: Vinlec, Financial Statements for 2002

Electricity tariffs are very high due to high capital, operation and fuel costs, even though there is no tax on fuel, materials and equipment with the exception of a “customs service charge” (see sections 12 and 32 of the ESA). The fuel surcharge was above EC-$ 0.20/kWh in April 2003. Residential consumers are charged EC-$ 0.50/kWh (US-$ 0.19/kWh) for the use of more than 50 kWh/month plus the fuel surcharge which is re-calculated every month.

The island of St. Vincent is almost completely electrified. Private generation facili-ties are being operated on Mustique, Petit St. Vincent and Palm Island (hotel resort, one mile distance to Union Island).

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2.5.3 Status and Perspectives of Renewable Energy Use

22..55..33..11 WWiinndd EEnneerrggyy

St. Vincent has a tradition of using wind power for grinding sugar cane. The major-ity of windmills were located in the parish of St. George.

Today wind power is mainly seen as an alternative option for electricity supply on some of the Grenadine islands. A wind study has already been completed for Mayreau (250 inhabitants), which shows encouraging results and a revised proposal for wind turbine use is available. In those cases where wind power would be tapped, small turbines will act as part (fuel saver) of a hybrid system in conjunction with diesel-powered generators.51

The potential for wind power on St. Vincent needs further examination. With assis-tance of the CDREP/GTZ project a wind assessment study was carried out in April 2004. Several suitable sites for wind energy have been identified, of which the most favourable site on plains in the South-east of the island could be in conflict with plans for a new air-port.

22..55..33..22 SSoollaarr EEnneerrggyy

The application of solar water heaters is still marginal and not widespread, despite favourable conditions with regard to the high electricity tariffs. According to Vinlec, the penetration rate of electric heaters is thought to be marginal, so that the re-placement by solar water heaters would not have a considerable impact. There have not been any promotional activities by the Government in the past. Vinlec for its part is will-ing to encourage the use of solar collectors in the future.

PV systems have only been applied in a few very specific cases, despite the possi-bility of getting duty free concessions on a case-by-case basis. Further short-term po-tentials most certainly exist on some of the smaller inhabited islands for tourist resorts with strong ecological criteria.

22..55..33..33 GGeeootthheerrmmaall EEnneerrggyy

Existing geothermal studies 52 do not show an encouraging picture, even though St. Vincent is the home of one of the few active volcanoes in the region. A proposal from an American investor for exploiting geothermal resources was not pursued by the Govern-ment.

22..55..33..44 BBiioommaassss EEnneerrggyy

The use of non-conventional biomass resources for energy purposes is not common (unlike the traditional way of using wood for cooking). The potential of applying for ex-

51 Similar systems for smaller islands are operating for example in the South of Chile. 52 One study was done by the consultant Mc Donald from Antigua.

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Detlef Loy
Habe diese Studie nicht. Gibt es mehr zu sagen ?
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ample agricultural residues as heat source or for cogeneration facilities is unknown. Fur-ther studies will be needed to get a fair assessment.

22..55..33..55 HHyyddrrooppoowweerr

The island of St. Vincent has a rugged terrain with numerous small rivers and creeks. Using water power has a long tradition, but its use for electricity generation has not been expanded in the last decade. The first hydropower stations were installed in the early 1950’s with the takeover of Vinlec by CDC. The installed capacity is today mainly concentrated in the Cumberland Hydro System, which is connected to the main grid by a 33 kV transmission line

Contribution of the ten hydro turbines to the total electricity generation of Vinlec varied in recent years between about 19 and 27%, depending on annual precipitation. There is a competing need of river water for irrigation and fresh-water supply. Due to the run of the river systems (without water storage) firm capacity from hydropower is rather low.

Vinlec is currently concentrating its efforts on the rehabilitation of existing hydro sites. Further hydro energy potentials could be exploited at Wallibou and through the expansion of the South Rivers and Cumberland. Water rights are vested by the Water Authority.

CREDP/GTZ assisted VINLEC in reviewing the status of the existing hydropower sta-tions, to identify options for upgrading them and to identify new hydropower sites.53 The study came to the conclusion that the output of the South Rivers plant could be up-graded by some 30% and of the Richmond plant by some 20%. This however, would need the careful examination of water availability and economic viability of these measures. A rough estimation shows that some 5 MW of hydropower generation capacity could be added. The hydropower study was continued in April/May 2004.

2.5.4 Renewable Energy and Energy Efficiency Policy and current legislative frame-work

With the exception of case-by-case exemption from import taxes no major ini-tiatives have been undertaken by the Government of SVG so far as to enhance the use of RES. Vinlec is not in principle opposed to other renewable sources besides hydropower.

On the grounds of the existing Electricity Supply Act (ESA), RES electricity faces severe barriers mainly by the status of Vinlec as single producer and supplier of grid-based power and the preferences linked to this monopoly. There is no legal door opened yet for any third-party generation of electricity, except for self-supply and as sub-licensee of Vinlec, even though Vinlec has no fundamental objections against any IPP engagement.

Unlike neighbouring countries, the Electricity Supply Act allows self-generation of electricity for own use without any preconditions (based on the need to supply 53 CREDP/GTZ: Report on Hydro Power Assessment St. Vincent, St. Vincent/ Switzerland, December 2003.

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Detlef Loy
Ich weiß nicht, ob das so stattgefunden hat. Habe leider weder die eine noch die andere Studie.
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some of the remote smaller islands with isolated systems). No reserve capacity charge is raised in the case of parallel operation with the main grid.

Specific policies or actions have neither been set up by the Government of SVG nor by Vinlec.

The most relevant sections of the ESA are the following:

Chapter Content Explanation Long Title An Act granting an exclusive licence to the St. Vincent Electricity

Services Limited for the supply of electricity, providing for the exer-cise and performance of functions relating to the supply of electricity and for purposes connected therewith and making provision with re-gard to revocation of the licence.

Sect. 3 Vinlec has sole and exclusive licence to generate, transmit, distribute and sell electricity in Saint Vincent for a period of 60 years with effect from May 1973.

Licence until 2033

Sect. 28 The Governor shall be entitled to revoke the licence on the last day of the first fifteen years of the licence or on the last day of the first forty years of the licence.

Revocation of the licence.

Sect. 4 Vinlec may with the consent of the Minister responsible for electricity authorise any person during the whole or any part of the period of the licence to generate, transmit, distribute and sell electricity upon the terms and conditions and within the area specified in such authority.

Sub-licence for all electricity market activities possible.

Sect. 5 During the continuance of the licence no person except Vinlec shall generate (save for his own consumption and use), distribute or sell electricity within Saint Vincent provided that a sub-licensee shall be at liberty, during the period stated in the written authority granted to him by Vinlec, to generate, distribute and sell electricity upon the terms and conditions and within the area specified in such authority.

Electricity genera-tion for own use is allowed. Other activities only with permission from Vinlec.

Sect. 7 Vinlec’s revenues must be sufficient … to meet all expenses, …. to repay its indebtedness, …. to provide a reasonable proportion of the capital cost of expanding its undertaking … and to pay regular divi-dends.

Tariffs adapted with respect to sufficient revenues

Sect. 12 All plant, machinery, equipment , meters, instruments, vehicles, mate-rials and consumable stocks imported by Vinlec for the purpose of the Vinlec’s business of generating, transmitting, distributing or supplying electricity are exempt from all customs and other import duties, landing tax.

This will refer to any RES equip-ment as well

Sect. 23 Vinlec may erect, install or replace along or under or over any road in Saint Vincent without payment of any way-leave, rent, fee or other charge, any poles, electric lines, conductors, sub-stations, pipelines, cables or other works or apparatus.

Sect. 25 Vinlec has the right to harness water power throughout Saint Vincent at such sites as Government reserves whether on Crown or private land without payment for water rights.

Water rights with-out costs.

Sect. 26 The Government shall at request of Vinlec assist the country in acquir-ing any land reasonably necessary in connection with its business.

Could be important for wind sites.

Sect. 32 Vinlec shall be granted such exemption from payment of stamp duties as may have been or may be provided for by an agreement of Vinlec and Government

Possibility for partial or total exemption from stamp duty.

Energy efficiency has so far not been a priority issue, neither for the Government nor for Vinlec, despite similar problems as in other island states of the Caribbean, with

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high specific electricity needs for climatization of buildings and huge saving potentials in the residential as well as commercial sector. Recently a number of TV-spots have been posted by Vinlec to promote energy efficiency measures.

2.5.5 Conclusion and specific recommendations

St. Vincent and the Grenadines has potential to expand its hydropower on the main island and use wind energy on all of the major islands. For some of the smaller islands, hybrid wind/diesel systems could be a viable option, beneficial in costs as well as for the environment.

The relatively small market size and the need for secure long-term investments and electricity supplies limit the perspectives for opening competition among different elec-tricity generating companies. Despite those facts, certain fractions of the electricity supply market should be accessible by independent power providers producing on the basis of indigenous and/or cost-competitive energy sources, either alone or in close co-operation (joint ventures) with Vinlec.

In order to increase the share of RES and reduce fossil energy consumption in gen-eral, major political and legal changes will be necessary, including the amendment of the Electricity Supply Act.

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3 Recommendations for policy and regulation changes

Electricity Sector

Amendment of the Electricity Supply Acts mainly with regard to the following aspects:

- Parallel operation with the public grid and feed-in of excess electricity should be allowed at least in such cases, where this leads to a considerable reduction in energy inputs and environmental benefits (compared to the status-quo situation or regular alternative solutions), e.g. for cogeneration with waste heat use at or near the site of electricity production. Preferential conditions (e.g. priority dispatch) could apply to co-generation plants using biofuels, for instance biodiesel or solid agricultural or other organic residues. No prior tendering should be required for (small-scale) self-generators of electricity and in such cases, where this leads to a considerable reduction in energy inputs and benefits the environment (compared to the status-quo situation or regular alternative solutions).

- For additional electricity supply from the grid and emergency situations in case of production outages fair tariffs should be established. This is also valid for excess electricity fed into the grid, taking into account the capac-ity factor of the cogeneration facility.

- Grid-connection of PV systems, coupled with so-called “net-metering”, should be allowed in any cases, if certain technical standards and rules are met (can be copied from German experience, where more than 50,000 home systems with normally between 1 and 5 kWp are already in operation). Due to the high generation costs and lack of funding, such systems will only be installed in few exceptional cases over the next years (for example by home-owners with environmental consciousness and sufficient financial resources).

- Free choice of electricity supplier should be allowed at least for all major consumers (large hotels, industries) above a certain consumption limit. This does not imply that anybody can enter the market as electricity producer. Strict rules will be necessary to avoid stranded investments and maintain a safe and reliable electricity supply.

- Grid access and electricity transport should be allowed in any cases of self-generation or supply by third parties (power providers) serving directly the complete or partial demand of industries or the tertiary sector, based on renewable energies. Example: Wind turbine operator A supplies electricity on a bilateral contract basis from location B to factory C at location D. This will require the establishment of transparent grid access and transport fees. Licensing of such independent power producers with contracted customers should be non-bureaucratic and supervised by an independent regulator.

- Tax-free import of machinery for generation and transport of electricity (as well as other fiscal incentives) should generally apply to all stakeholders, not only to the monopoly utility, and give preference to RES application. All other clauses of ESA favouring solely the monopoly utility (like exemption from stamp duty and land acquisition by the Government) should be ex-tended.

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- In the case of non-firm (intermittent) RES electricity, operators could be obliged to run their own back-up systems.

- The tariff scheme should offer preferential conditions for customers agree-ing to a load management curbing the peak demand of the electricity system.

- Share of costs between grid-operator and RES plant operator for reinforcement or expansion of the grid to connect generating facility.

Quota system: Introduction of a quota system (Renewable Portfolio Standard –

RPS) that sets certain legally binding targets for the contribution of RES to the electricity generation or – alternatively – for the maximum input of fossil fuels per (sold) kilowatt-hour, thus integrating energy efficiency measures. It should be left up to the grid operator, how this RPS target is being met, either by self-generation of the major utility or by acquiring RES electricity from independ-ent generators. Compliance with the RES target should be supervised and moni-tored by an independent regulator. Least-cost options should be made available by using bidding processes, determining capacity size, possible RES sources and power purchase and operational conditions as well as environmental frameworks. The Government could assist in the pre-selection and acquisition of suitable sites (as for the location of wind farms).

Solar Thermal Energy

• Obligation for solar water systems: Larger tourism facilities such as hotels and recreation centres should be required to provide most of their hot water by using solar energy. Such requirement should be mandatory for all new construc-tions, but also applied to existing facilities after allowing a certain grace period. This obligation can also be extended to large new settlements with individual homes or certain other buildings with high hot water needs (examples for manda-tory solar hot water exist in various Spanish communities54). In this context, more thought should be given on how existing building codes could be made mandatory and their enforcement be supervised at least for certain types of con-structions.

Fiscal incentives for solar water systems: A tax allowance for solar thermal collectors (and maybe other fiscal incentives like exemption from VAT) should be introduced (as in Jamaica and St. Lucia) and focused on locally produced systems and exclude or less benefit imported models.

Promotion by utility: The installation and use of solar collectors for hot wa-ter production should be stimulated and promoted by the utility in its own inter-est to reduce peak loads and save generation capacity. The Government could negotiate with the utility for a voluntary commitment for such and other demand-side-management measures, which lead to the targeted load reduction.

54 See Renewable Energy Journal, December 2004 (http://www.systemes-solaires.com).

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General Provisions

The establishment of a Renewable Energy and Energy Efficiency Fund based on fees for imported fossil energy should be examined. The fund could finance such purposes and tasks as

- pre-feasibility studies for large-scale RES electricity generation;

- enforcement and expansion of the electricity grid to connect RES power plants;

- compensation of additional costs for RES electricity generation with large up-front investment;

- the set-up and strengthening of a local production of solar collectors and the improvement of the installation business;

- campaigns for solar hot water production and energy efficiency awareness;

- small-scale demonstration projects for innovative RES technologies;

RES potentials need to be assessed in further detail.

In the case of hydropower, different competing long-term water applications (ir-rigation/fresh water/power production) should be analyzed and possible sites and plant sizes for power generation determined and allocated.

In the case of wind power, land leasing or acquisition rights should be regu-lated; preferential sites for wind farms should be determined and discussed with local population.

All major RES projects should be subject of international tenders.

RES applications should generally be closely linked with efficiency improvement measures.

Building permits and supervision of construction in the case of wind turbines should be done with assistance of international experts.

Public Utilities Commissions should be established or revived and take over the role of assessor of tenders at least for RES electricity projects and supervise the tariff setting.

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4 Comparative Analysis for the region

The comparison between the countries examined within this study, shows some dif-ferences with respect to the status of their energy policy. Only the OAS-supported coun-tries within the Global Sustainable Energy Islands Initiative (GSEII) have either published a draft for a Sustainable Energy Plan (Dominica, Grenada) or already approved such plan (St. Lucia). Three countries (Dominica, Jamaica and St. Lucia) have established short-term RES electricity targets. St. Lucia is most advanced with the draft of a comprehen-sive National Energy Strategy.

All countries have substantial potentials for electricity and heat production from RES, but their legal framework is either prohibitive or sets at least certain limitations to the immediate exploitation of such indigenous resources. Jamaica has also a large po-tential for biofuels in the transport sector.

The most stringent barrier in the electricity sector is the monopolistic structure of this market in most countries, based on laws or licences which restrict the entry of other potential market participants. The attitude towards independent power producers ranges from general acceptance to more or less reluctance. Some utilities see a benefit in at-tracting additional capital and eventually purchasing power under more favourable condi-tions than it could be produced with own means.

Energy Policy Indicators Dominica Grenada Jamaica St. Lucia St. Vincent

Sustainable Energy Plan

Draft (OAS-assisted),

approval pending

Draft (OAS-assisted),

approval pending

Energy Policy in place

(under revision)

Approved by Government

(OAS-assisted) In preparation

RES electricity targets

2008: + 5 MW or 48% of installed

capacity; 2015: 65-70% RES electricity

No 8% of installed

capacity by 2010, 12% by 2020

2007: 10% of peak demand No

IPPs allowed

No (Legal amend-

ment under con-sideration)

Under sub-license;in practice no IPP

working

Yes (Currently 4 IPPs

have license)

Under sub-license; in practice no IPP

working

Under sub-license; in practice no IPP

working

Self-generation allowed

With utility consent

Yes, under certain conditions Yes Yes Yes

Feed-in of excess electricity No No With PPA yes No No

RES willingness of utility

Own generation preferred ? Purchase yes Own generation

preferred Purchase yes

Incentives for solar collectors

Duty tax exemption

Duty-free conces-sion for hotels

Duty tax reduc-tion and excise tax exemption

Exemption from import duties and

consumption taxes; income tax allow-

ance

Case-by-case

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It is remarkable however, that even feed-in of excess electricity from auto-generation plants (e.g. cogeneration plants in hotel resorts) is not possible in most cases, since no specific regulations exist for the technical connection of such plants and for the remuneration of the power supplied to the grid. This includes also the operation of grid-connected PV-systems, which is normally not possible without the threat of being cut off from the regular electricity supply.

Solar thermal systems which could grab a large market share for water heating in the domestic and services sector, have apparently not received sufficient attention and respective incentives in the past. In none of the examined countries market penetration of solar collectors exceeds 10%, despite the fact that those systems show a payback within a very brief period of time, save large amounts of imported fossil fuels and con-tribute substantially to reducing the peak load of electricity supply. The low penetration of solar collectors in Jamaica of around 3% can be correlated to the relatively low elec-tricity tariffs (and the high rate of illegal power consumption), while prices in the other countries are generally well above US-$ 0.20/kWh for domestic and commercial custom-ers.

RES contribute currently with between zero and about 45% to electricity generation in their respective countries. That two countries have no RES share at all is surprising given the fact that RES are generally abundant. With the exception of Jamaica no major potentials for RES exist for rural electrification using decentralised systems (like PV So-lar-Home-Systems). All the other islands are completely electrified by extension of the grid even to remote areas.

Most of the electricity markets are rather small (with the exception of Jamaica) so that a fully competitive market is not realistic and viable. It is generally reasonable that transmission and distribution remain in the hand of one company, while the generation sector could be opened within regulated boundaries.

Electricity Markets Dominica Grenada Jamaica St. Lucia St. Vincent

Utility Domlec Grenlec JPSCo + IPPs Lucelec Vinlec

Exclusive License until ... 2025 2073 2021 (JPSCo,

except generation) 2045 2033

Total capacity (MW) 21.2 42.0 780 56.5 37.4

RES capacity (MW) 7.6 hydro none 21.4 hydro 20.9 wind none 5.6 hydro

Peak capacity (MW) 13.0 22.5 593 44.9 18.3

RES generation share (installed cap.) 36% 0% ~ 5.5% 0% 15%

Electrification rate 100 % 99.5 % ~ 95% 100 % 99 %

Electricity sold (GWh) 63 129 2,996 252 90

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Electricity generation costs of more than US-$ 0.12/kWh in most of the smaller is-land states - with fuel costs accounting alone for around US-$ 0.09/kWh55 - provide a favourable basis for RES alternatives, especially in the form of wind energy, small-scale hydropower and biomass residues. It should be noted that in many cases assessments of RES potentials are not yet sufficient to determine the exact size and location for any future investment. Governments should in all cases provide the conditions for further in-depth assessments, alone or in close cooperation with the private sector, and decide on possible sites for the construction of plants, be it hydro, biomass or wind.

RES Potentials Dominica Grenada Jamaica St. Lucia St. Vincent

Hydro 10 MW < 1 MW 60 MW < 0.5 MW 5+ MW

Wind 20-30 MW 20+ MW 90 MW 20-30 MW 20+ MW

Geothermal ~100 MW ? none existing existing

Biomass ? marginal (nutmeg shells) >50MW ? ?

Solar thermal existing existing existing existing existing

Landfill gas ? ? 20 MW (?) 2+ MW ?

Potential RES share for public electricity until 2015

100% ? 15% ? ?

All countries need to enhance their activities in the field of energy efficiency, be it in generation, transmission or final use. Technical and non-technical electricity losses in transmission and distribution are far too high. The consumption of electricity as well as other forms of energy is constantly increasing, while the energy-intensity is generally high and the waste of energy for example in the building sector (mainly for lighting and climatisation) apparent. The final use equipment is often inefficient or not used and maintained to save energy effectively.

Principle 16 of the St. George’s Declaration of Principles for Environmental Sustainability requires each OECS Member State to:

(a) co-operate in evaluating, promoting and expanding the use of renewable energy sources and energy efficient technologies and systems through the application of economic instruments and the rationalisation and simplification of regulatory re-gimes;

55 Based on an efficiency of 16 kWh electricity per imp. gallon of fuel and US-$ 50 per barrel (no taxes included).

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(b) promote and adopt the sustainable use, management and conservation of energy at the national level.

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5 International and regional experiences with RES policies

European Union

Besides using direct investment subsidies and fiscal incentives, the member states of the European Union have introduced mainly three different policies for the promotion of electricity from renewable energies:

• Feed-in tariffs

• Quota systems (Renewable Portfolio Standards) with Green Certificates

• Tender systems.

In the feed-in model a fixed long-term minimum price or additional bonus is guar-anteed for electricity produced by renewable energy. Prices normally vary depending on the RES technology, the plant size, local conditions, amount of produced electricity and other parameters. This pricing scheme reduces the risk for investors and makes it rela-tively easy to obtain bank credits. Incremental costs are in general shared by all electric-ity consumers, thus not affecting the involvement of state budgets. Incentives for cost reduction can be introduced by a step-wise reduction of tariffs for new installations and further price adjustments within certain time frames.

Quota systems in combination with Green Certificates set certain annual targets for the share of RES electricity to be produced or consumed. This quota is equivalent to a determined number of certificates, which can be traded on a special market. Producers of RES electricity will get the normal electricity price plus the (fluctuating) price for the green certificate from the retailers or other large electricity consumers. In case of non-compliance of the set quota, retailers or producers may either buy (additional) certifi-cates or pay a penalty charge. The system is rather complex and requires substantial administrative work with subsequent high transaction costs.

The competitive tender system is based on calls for tenders in certain intervals to fulfil a determined quota for an individual RES technology or a bundle of different RES. The goal is to get least-cost solutions based on long-term contracts with fixed prices.

All systems applied in the countries of the European Union have their specific de-signs and vary significantly in details. In practice feed-in tariffs have proven to achieve the best results in terms of installed capacity and are now the policy most widely used in the EU (Germany, France, Spain, Portugal, Austria and others). The green certificate system has been successfully introduced recently in the UK, while other countries (Den-mark, Netherlands, Sweden, Italy) have approved the respective legal framework, but are still in the preparation phase or use a mixed scheme of certificates and fixed tariffs.

The tender system has been the main basis of RES promotion policy in the UK in the nineties (Non-Fossil Fuel Obligation) and is still being applied in Ireland. It has re-sulted in reduced RES electricity prices, but many of the selected projects have never been realized.

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Further information on the different systems introduced in the EU contains Annex V or can be obtained from the references listed in Annex I.56

Dominican Republic

The Dominican Republic enforced the establishment of a special fund (Fondo de In-terés Nacional) within the regulation of its new Hydrocarbon Fiscalisation Law (Ley Tribu-taria de Hidrocarburos No. 112-00). The fund, which became effective in January 2002, is focussed on the promotion of renewable energy as well as energy saving programmes.

Main income source is a share of the new established hydrocarbon taxes on fossil fuels, starting with 2% in 2002 and a subsequent annual increase by one percentage point up to a maximum of 5%. In 2002 this fund income amounted to some. US-$ 8m, while in 2003 it was estimated to be about. US-$ 12m.

Discussions on the utilization of the fund capital started in 2001 and have not come to a final conclusion yet. The current draft for an incentives law 57 provides for fiscal and financial support for wind farms of up to 50 MW, hydropower of up to 5 MW, biomass plants with an organic fuel content of at least 80% and a maximum capacity of 40 MW and solar electric modules as well as solar thermal collectors.

The list of incentives ranges from grants of up to 50% of the investment costs and for a maximum electrical capacity of 5 MW, to be decided on a case-by-case basis, to tax exemptions for the import of certain RES components, reduced transport fees and fixed remuneration tariffs for RES electricity, income tax exemptions and fiscal incentives for self-suppliers.

The National Energy Commission would be entitled to determine RES shares (quota) for electricity to be traded and remunerated off the spot-market. Already prefer-ential dispatch for RES electricity is possible in accordance with the General Electricity Act.

It needs to be seen how this initiative will work out in the future and how the ad-ministrative process will be put into practice. For the time being there is no clear indica-tion, when the law and subsequent regulations will be enforced.

Barbados

Barbados can serve as a good example in the region on how the use of solar ther-mal collectors can be made popular and economically competitive.

The basic situation is similar to other countries of the Caribbean islands: High de-pendence on fossil fuel imports, a relatively cost-intensive power system and subsequent

56 A detailed review of the renewable energy policies in the EU-15 and the new member states can also be found on www.erec-renewables.org. 57 Proyecto de Ley de Incentivo al Desarrollo de Fuentes Renovables de Energías, Octubre 2003

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high consumer tariffs for electricity, as well as an increasing demand for hot water in the residential and tourist sector.

In these circumstances and as a reaction to the oil crisis of 1973, the Government of Barbados started as early as in 1974 with the Fiscal Incentive Act, allowing the solar water heating business to benefit from import preferences and tax holidays on imported components for the manufacturing of solar collectors.

In addition, a 30% consumption tax was placed on electric water heaters, making this common and energy-consuming device for water heating more expensive and solar heating on the other hand more competitive.

As a further incentive to private customers, a tax allowance was introduced which allowed the partial or complete deduction of installed costs from personal income tax.

As a consequence, Barbados has become by far the largest market for solar water heaters in the Caribbean with around 4,000 units sold every year. About 60% of all resi-dential households (i.e. more than 47,000 dwellings) as well as tourist resorts and other major hot water consumers are nowadays equipped with solar water heaters, either small and simple thermosiphon systems or larger facilities with separate water storages. Those systems substitute directly the consumption of fossil fuels and help curbing the electrical peak load at evening hours. A further benefit is the establishment of a national solar industry with manufacturers based in the country and increasingly acting in the ex-port market to neighbouring countries or setting up manufacturing facilities as subsidiar-ies on foreign territories.

Curaçao

Two wind farms have been erected in Curaçao in the past decade, both at the northern coast of this island. The first of 3 MW was placed on the San Pedro plain near Tera Kora in 1993 consisting of 12 turbines of 250 kW each. Extensive measurements at the site had shown average wind speeds of 8.5 m/s. The output was calculated to be in the range of 9 GWh per year, assuming a capacity factor of 40%. Those expectations were fulfilled and even exceeded and the plant supplied close to 2% of the countries electricity needs in its first year of operation. The plant is owned by the state-controlled utility Aqualectra 58 and was installed by the company Delta Caribbean N.V., subsidiary of the private Dutch utility Delta Nutsbedrijven, an experienced operator of wind farms in the Netherlands. Delta Caribbean is also managing the operation and maintenance of the wind farm. The investment costs of 1.667 US-$/kW were partially funded by the Euro-pean Commission.

The second wind farm of 9 MW was commissioned in November 2000 and is located near the village of Playa Kanoa. It comprises 18 turbines with 500 kW each. In this case the wind farm is in the hands of N.V. Delta Windparken Curaçao, daughter company of Delta Nutsbedrijven, while the project planning and installation was also done by Delta Caribbean, who is also responsible for operation and maintenance. Delta Caribbean guarantees the contracted availability and output for a period of 15 years. The produced

58 In December 2001 Aqualectra concluded a strategic alliance with the US company Mirant (parent com-pany of the Jamaican utility JPSCo).

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electricity is sold to Aqualectra under a long-term power purchase agreement. Total in-vestment for this project was down to 1.481 US-$/kW.

Both projects are seen as good example for a public-private partnership in the re-newable energy sector, using first-hand experience in engineering and operating a new RES technology. Aqualectra has gained confidence that wind power is a viable option and would even be willing to purchase more windpower in the future. Delta Caribbean has also been initiator of the first wind farm in Jamaica. Both wind farms together supply about 5 % of the current electricity requirements of Curaçao.

In December 2003 a subsidiary of Aqualectra (Aqualectra Multi Utility - AMU) and the Dutch consultant company Ecofys started a feasibility study for energy and water saving in hotels and tourist resorts of Curaçao. The project, which analyses the technical and financial options, is carried out in close cooperation with the Curaçao Hotel and Tour-ism Association (CHATA) and will be extended after completion to other regions of the Netherlands Antilles and the Caribbean.

Guatemala

In October 2003, the Congress of Guatemala has approved a new law on incentives for the development of renewable energy projects 59 , substituting a former regulation aiming at the promotion of RES.60

The law establishes the basis for the provision of fiscal, economic and administra-tive incentives to achieve this target. Besides directly supporting the investment into renewable energy projects it is envisaged to promote pre-investment studies on invento-ries of RES as well as on available technical potentials.

Municipalities, the National Institute for Electrification (INDE), public-private com-panies and individual and juridical persons can benefit from the following fiscal incen-tives:

- Exemption from import tax and VAT on imported machinery and equipment for the use of RES and all activities in the pre-investment and construction phase.

- Exemption from income tax for individual and juridical persons for up to 10 years after the commercial start of the project.

- Exemption from a specific tax for enterprises in commerce and agriculture (Im-puesto a las Empresas Mercantiles y Agropecuarias – IEMA) for up to 10 years af-ter the commercial start of the project.

Every request for such tax exemptions has to be directed to the Ministry of Energy and Mines for evaluation. With the project and the fiscal incentives having been certified the applicant can then get the exemption granted by the treasury office (Superintenden-cia de Administración Tributaria).

59 Decreto Numero 52-2003 “Ley de Incentivos para el Desarrollo de Proyectos de Energia Renovable” 60 Decreto Ley 20-86 “Ley de Fomento al Desarrollo de Fuentes Nuevas y Renovables de Energía”

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Further regulations on the execution of this law will be published within six months after its enforcement.

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6 Annexes

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5.1 Annex I: References

St. Lucia

St. Lucia Electricity Services Ltd., Annual Report 2001 / 2002 / 2003

Saint Lucia, Electricity Supply Act 10 of 1994, Amendment (Act. 3 of 1996), Electricity Regulations (Amendment No. 28 of 1986; Amendment No. 2 of 1988; Amendment No. 3 of 1995)

Saint Lucia, Sustainable Energy Plan (Final Draft), May 2001

Saint Lucia, Ministry of Physical Development, Environment and Housing, Energy Sector Policy and Strategy (draft), May 2003

CARILEC, Internet-notice February 27th, 2003, Lucelec explains its Renewable Energy efforts

Report of the Lucelec Review Commission, 2003

Bank of Saint Lucia Ltd. Lucelec – Research Report, April 2003

Bernard Theobalds (Managing Director of Lucelec), Final Report on Operations and Performance, Oct. 2003

Christopher Corbin (Sustainable Development Officer, Ministry of Finance and Planning, St. Lucia), Energy Production and use in St. Lucia with particular focus on Renewable Energy, w/d

Saint Lucia’s Initial National Communication on Climate Change

OECS, Legal and Institutional Review of Environmental Management in Saint Lucia, March 2002

Dominica

Dominica Electricity Services Ltd., Annual Report 2003

Commonwealth of Dominica, Electricity Supply Act 21 of 1996 and Amendment (Act 19 of 1997)

Frontier Economics, Domlec Tariff Study, Final Report, Prepared for CDC and Domlec, December 2001

National Mortgage Finance Company of Dominica Ltd., Dominica Electricity Services Ltd. (DOM-LEC) - Research Report, July 2003

Dominica Electricity Services Ltd., Policy for Working with Independent Power Producers, 27th June 2002

Dominica, Sustainable Energy Plan, Draft 6, April 14, 2003

Ministry of Communications, Works and Housing, Sustainable Energy Plan Stakeholder Consultation, Report, July 26, 2002

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Ministry of Communications, Works and Housing, Sustainable Energy Plan Stakeholders Consulta-tion, Report, January 22, 2003

St. Vincent

St. Vincent Electricity Services Ltd., Annual Report 2001

Pannell-Kerr-Forster, St. Vincent Electricity Services Limited, Financial Statements for the year ended December 31, 2002

National Environment Advisory Board / Ministry of Health and the Environment, Initial National Communication on Climate Change, November 2000

Lennox I. Morris (Vinlec), Hydroelectric Development in St. Vincent, presentation for Renewable Energy Conference of Carilec, November 2002

Grenada

Grenada Electricity Services Ltd., Annual Report 2002 and 2003

Grenada, Electricity Supply Act 28 of 1994; Amendment, Commencement and Validation, Act. No. 26 of 1998; Statutory Rules and Orders, No. 17 of 1966

Draft for the Electricity Supply Act 2001, incorporating proposals by Projekt-Consult

Jamaica

Ministry of Commerce, Science and Technology, Performance of the Rural Electrification Programme for the 2002/2003 Financial Year and Focus for the 2003/2004 Financial Year, July 2003

Ministry of Mining and Energy, All-Island Electricity Licence 2001 for Jamaica Public Service Com-pany Limited, 2001

OUR – Office of Utilities Regulation, Annual Report and Financial Statements 2002-2003

Wright, Raymond M., Jamaica’s Energy, Old prospects, new resources, 1996

Wright, Raymond M., Jamaica – alternative energy and the energy balance, University of Technology Journal 2004

JPS Rate Submission 2004, Volume 1, March 1st, 2004

Jamaica Public Service Company Limited, Annual Report 2003

Jamaica Public Service Company Limited, Rate Schedules 2004

OUR - Office of Utilities Regulation, Jamaica Public Service Company Limited – Least Cost Expan-sion Plan, Approval Document, 19 November 2004

OUR - Office of Utilities Regulation, Least Cost Expansion Plan (draft 6), October 2004

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United Nations Commission for Latin America and the Caribbean – ECLAC (Author: Detlef Loy) , Study of the Potential of Renewable Energies in Jamaica, draft, February 2005

OECS-Papers

OECS ( Organisation of Eastern Caribbean States) – Natural Resources Management Unit, Identifica-tion of Policy Framework Options for Enhanced Efficiency of Energy Use in the OECS States, Tech-nical Paper No. 1, January 2001, prepared by Lewis Engineering Inc. (Canada) in association with Marbek Resource Consultants Ltd.

OECS (Organisation of Eastern Caribbean States) – Natural Resources Management Unit, Economic Opportunities Associated with the Environment in the Member States of the Organisation of Eastern Caribbean States (OECS), Technical Paper No. 2, December 2000

OECS (Organisation of Eastern Caribbean States) – Natural Resources Management Unit, Energy Management and Energy Efficiency: Proceedings of a Regional Symposium, Technical Paper No. 4, February 2001

Organisation of Eastern Caribbean States (OECS), Communiqué of the Special Meeting of the OECS Authority on the Economy, 10th October 2002

OESC Secretariat – Natural Resource Management Unit, Concept: Regional Approaches to Energy Sector Development in Small Island Economies, March 2003 (2 pages)

Organisation of Eastern Caribbean States, ESMAP Proposal (final): Regional Approaches to Energy Sector Development in Small Island Economies, July 2003 (?)

International and Regional Experiences with RES policies

Mischa Bechberger, Danyel Reiche, Renewable Energy Policy in Germany: Pioneering and exemplary regulations, in: Energy for Sustainable Development, March 2004 (www.ieiglobal.org/esd.html)

Center for Resource Solutions, Renewable Energy Policy Options for China, A Comparison of Re-newable Portfolio Standards, Feed-in Tariffs and Tendering Policies, June 2002 (www.resource-solutions.org)

A.L. van Dijk et.al. (ECN), Renewable Energy Policies and Market Developments, March 2003 (www.ecn.nl)

Imperial College London, Centre for Energy Policy and Technology, Review of renewable energy development in Europe and the US, October 2003 (www.dti.gov.uk/energy/renewables/policy/iceptreview.pdf

J.C. Jansen (ECN), Policy Support for Renewable Energy in the European Union, October 2003 (www.ecn.nl)

Thomas B. Johansson and Wim Turkenburg, Policies for renewable energy in the European Union and its member states; an overview, in: Energy for Sustainable Development, March 2004 (www.ieiglobal.org/esd.html)

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Niels I. Meyer, Legal Conditions for Renewable Energies: A comparison of National Legislation, Pa-per for Berlin Conference, May 2003 (www.eurosolar.org/new/de/downloads/EURATOM-Meyer.pdf.

Detlef Loy, Development of the German Wind Industry, March 2004 (revised version)

Danyel Reiche (ed.), Handbook of Renewable Energies in the European Union, Frankfurt/M. 2002

H.J. de Vries et.al. (ECN), Renewable Electricity Policies in Europe, Country Fact Sheets 2003, Octo-ber 2003 (www.ecn.nl)

WWF, Progress Report on the implementation of the European renewables directive, Brussels 2003 (www.panda.org/downloads/europe/renewablesdirectiveoctober2003.pdf)

European member state reports of 2002 and 2003 on the implementation of the EU Directive on RES electricity can be found at: http://europa.eu.int/comm/energy/res/legislation/electricity_member_states_en.htm

European Renewable Energy Council (EREC), Renewable Energy in Europe, May 2004

GTZ-Papers

CREDP/GTZ – Project Profile, Königstein/ Georgetown, Sept. 15, 2003

CREDP/GTZ: Report on Hydro Power Assessment Dominica, Dominica/Switzerland, December 2003 and May 2004

CREDP/GTZ: Report on Wind Power Assessment Dominica, Barbados, December 2003

CREDP/GTZ: Report on Hydro Power Assessment St. Vincent, St. Vincent/Switzerland, December 2003

CREDP/GTZ: Renewable Energy Activities in Eastern Caribbean, Barbados, April 2003

CREDP/GTZ, Review of the St. Lucia Energy Sector Policy and Strategy (chapter IV, draft of October 2003), A Green Paper for Discussion, October 2004

CREDP/GTZ, Brief Review of the Draft on Power / Electricity Policy for Jamaica (Draft version pre-pared in June 2004 and updated for Cabinet Retreat 13-15 September 2004), October 2004

Others

Caribbean Energy Information System (CEIS), Private Power and Renewable Energy Policy and In-centive Scenario in the Caribbean, September 2001

CARICOM Secretariat, Caribbean Renewable Energy Development Programme (CREDP), Solar Wa-ter Heating Market, 2003

UNDP/GEF/OLADE PDF B RLA/94/G41 Project, Development of Energy Efficiency in the Car-ribean, Barriers Identification – Draft, Energy Policy and Regulation

Forum for Energy and Development (FED), Renewable Energy on Small Islands, August 2000

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David Ince (Energy and Natural Resources Division, Ministry of Environment, Energy and Natural Resources of Barbados), Development of Solar Water Heating and other Renewable Energy Tech-nologies in Barbados

United Nations General Assembly, Report of the Global Conference on the Sustainable Development of Small Island Developing States, Bridgetown, Barbados, 25 April to 6 May, 1994

Global Sustainable Energy Islands Initiative (GSEII), Newsletters, July 2004 and January 2005

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5.2 Annex II: Stakeholders

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Institution Name + Function Address Tel. / Fax E-mail Web Remark

Dominica

Hon. Reginald V. Aus-trie / Minister

Tel. (767) 448-2401 ext. 3204 Fax (767) 448-0059

[email protected] Ministry of Commu-nications, Works and Housing

Ms. Marcella Powell / Senior Administrative Officer

Government Head-quarters Roseau

Tel. (767) 448-2401 Fax (767) 448-4807

[email protected] and marcellapowell70 @hotmail.com

Government of Do-minica

Mr. Swinburn Les-trade / Director of Finance and Planning

Mr. Joel F. Huggins / General Manager

18 Castle Street, P.O. Box 1593 Roseau

Tel. (767) 449 99 17 Fax (767) 448 26 84

[email protected] Dominicana Electric-ity Services Ltd. (Domlec)

Mr. Rawlins Bruney / Manager Power Pro-duction

18 Castle Street P.O. Box 1593 Roseau, Dominica

Tel. (767) 448 26 81 Fax (767) 448-60 82

rawlins.bruney @domleconline.com

Dominica Sustainable Energy Corporation (DSEC)

Mr. Bevin Etienne

Grenada

Grenada Electricity Services Ltd. (Grenlec)

Mr. Vernon L. Law-rence / General Man-ager

P.O. Box 381 Halifax Street St. George’s

Tel. (473) 440-9425 Fax (473) 440-4106

[email protected] www.grenlec.com

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Institution Name + Function Address Tel. / Fax E-mail Web Remark

Ministry of Works, Communication Public Utilities

John A. Auguste / Senior Energy Officer

Ministerial Com-plex, Botanical Gardens, Tanteen St. George’s

Tel. (473) 440-2271/2410 Fax (473) 440-4122

[email protected] [email protected]

Since late 2003 Min-istry of Agriculture, Lands, Forestry, Fisheries, Public Utilities, Energy and the Marketing and National Importing Board (MNIB)

Jamaica

Office of the Prime Minister

Ambassador / Special Envoy: G. Anthony Hylton

1 Devon Road, King-ston 10

Tel. (876) 927-9625 / -9941-3 Fax (876) 968-1678

[email protected]

Ms. Dr. Jean Dixon / Permanent Secretary

Tel. (876) 929-8990-9 Fax (876) 754-5501-4

[email protected]

Conroy Watson / Senior Director - Energy Division

Tel. (876) 926-2073 Fax (876) 968-2082

[email protected]

Ministry of Commer-ce, Science and Te-chnology (MCST)

Jerico Hanson / Chief Director - Energy Economics

PCJ Building 36 Trafalgar Road Kingston 10

Tel. (876) 929-8990-9 Fax (876) 968-2082

[email protected]

www.mct.gov.jm

Robert Patrick / Chief Operating Officer

Tel. (876) 926-3190 Fax (876) 926-6710

[email protected]

Samuel Davis / Govern-ment & Regulatory Affair

6 Knutsford Boule-vard, P.O. Box 54 Kingston

Tel. (876) 935-3547 Fax (876) 511-2027

[email protected]

Jamaica Public Servi-ce Co. (JPSCo)

Dwight Dacosta / Direc-tor System Planning and

Washington Blvd. Tel. (876) 933-2980 [email protected]

www.jpsco.com

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Institution Name + Function Address Tel. / Fax E-mail Web Remark

Control Kingston

Paul Morgan / Director General

Tel. (876) 929-3635 Fax (876) 926-6672

[email protected] Office of Utility Re-gulation (OUR)

Raymond Silvera / Deputy Director Ge-neral

PCJ Building Third Floor 36 Trafalgar Road Kingston 10 Tel. (876) 968-6053

Fax (876) 929-3635 [email protected]

www.our.org.jm

Raymond Wright / Group Managing Director

Tel. (876) 929-5380/9Fax (876) 929-2409

[email protected] Petroleum Corpora-tion of Jamaica (PCJ)

Cezley Sampson / Director – National Energy Efficiency

PCJ Building Box 579 36 Trafalgar Road Kingston 10

Tel. (876) 929-8990-9Fax (876) 754-5501-4

[email protected]

www.pcj.com

Rural Electrification Programme Ltd.

Keith D. Garvey / Gen-eral Manager

113 Washington Blvd, Kingston 20

Tel. (876) 933-5504 and -0631 Fax (876) 765-0746

[email protected]

Carribean Energy Information Service (CEIS)

Mona Whyte c/o Scientific Rese-arch Council P.O. Box 350 Kingston 6

Tel. (876) 927-1779 Fax (876) 977-1840

[email protected] www.comnet.mt/ceis

St. Lucia

CARILEC – Carib-bean Electric Utility Services Corporation

Victor Poyotte / Ex-ecutive Director

P.O. Box 2056 Orange Park Center, Gros Islet

Tel. (758) 452-0140 / 458-0371 Fax (758) 458-0702

[email protected] www.carilec.org

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Institution Name + Function Address Tel. / Fax E-mail Web Remark

Trevor Louisy / Man-aging Director

P.O. Box 230 Castries

Tel. (758) 457-4601 Fax (758) 457-4609

[email protected]

Francis Daniel / Plan-ning Manager

P.O. Box 230 Castries

Tel. (758) 457-4605 Fax (758) 457-4611

[email protected]

Jevon Nathaniel / Generation Engineer

Tel. (758) 457-4641Fax (758) 457-4609

[email protected]

St. Lucia Electricity Services Ltd. (Lu-celec)

Cornelius Edmund / System Planning En-gineer

Tel. (758) 457-4618Fax (758) 457-4609

[email protected]

www.lucelec.com

Hon. Theophilus Fer-guson John / Minister

Tel. (758) 468-4402 or 468-4409 Fax (758) 452-2506

[email protected]

Mrs. Marcia Philbert-Jules / Permanent Secretary

Ministry of Physical Development, Envi-ronment and Housing

…… / Chief Sustain-able Development & Environment Officer Cornelius Fevrier

Graeham Louisy Administrative Building P.O. Box 709 Castries

Tel. (758) 468-4459/-4458 Fax (758) 451-6958 / 452-2056

Hon. Felix Finisterre / Minister

Tel. (758) 452-4444 Fax : (758) 4532769

[email protected] Ministry of Commu-nications, Works, Transport & Public Utilities Mr. Truscott Augustin

/ Chief Public Utilities Officer

Union Castries

Tel. (758) 468-4320 Fax (758) 468-4365

[email protected]

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Detlef Loy
Evtl. ergänzen, soweit bekannt.
Detlef Loy
Bitte ergänzen.
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Institution Name + Function Address Tel. / Fax E-mail Web Remark

National Develop-ment Corporation

Mr. O’Donovan K. Yarde / Manager (A.G.) Project Man-agement Unit

P.O. Box 495 Iver Heraldine RockAdministration Bldg. Waterfront Castries

Tel. (758) 452-3614/5Fax (758) 452-1841

[email protected] www.stluciandc.com

Dr. Vasantha Chase / Head of Unit, Envi-ronment & Sustain-able Development Unit (ESDU)

Tel. (758) 453-6208, Ext. 26 Fax (758) 452-2194

[email protected] [email protected]

Organisation of East-ern Caribbean States (OECS)

Keith E Nichols Programme Officer, Environment and Sustainable Develop-ment Unit (ESDU)

Morne Fortuné P.O. Box 1383 Castries

Tel. (758) 453-6208, Ext. 30 Fax (758) 452-2194

[email protected]

www.oecsesdu.org

St. Vincent

Ministry of Transport, Works and Housing

Hon. Julian A.E. Fran-cis / Minister

Halifax Street, Kingstown

Tel. (784) 457-2039 Fax (784) 457-2168

Raffique M. Browne / Science and Technol-ogy Extension Re-search Officer

Tel. (784) – 456-1223 Fax (784) 457-2880

[email protected] Ministry of Tele-communications, Science, Technology and Industry

Dr. Alston Stoddard / Science and Technol-ogy Coordinator

Egmont Street Kingstown

Tel. (784) 456-1223 Fax (784) 457-2880

[email protected]

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Institution Name + Function Address Tel. / Fax E-mail Web Remark

Thornley Orsino A.O. Myers / Chief Execu-tive Officer

Tel. (784) 456-1701 Fax (784) 456-2436

[email protected]

Dr. Vaughn Lewis / Senior Planning Engi-neer

Tel. (784) 456-1701 Fax (784) 456-4681

[email protected]

St. Vincent Electricity Services Ltd. (Vinlec)

Mitra Malcolm

P.O. Box 856 Kingstown

[email protected]

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6.3 Annex III: Questionnaire

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Questionnaire (15.10.03)

RE Policy

Has the government any specific RE policy approved and established ? (s. St. Lucia: Development of a Sustainable Energy Plan approved in March 2000; what is the current status ? Has plan been approved by the government ?)

Are there any targets for reaching RE shares in electricity, the thermal sector or on primary energy sup-ply ? Has a (mandatory) RE quota been fixed for any sub-sector ? (St. Lucia: 5 MW or 7 % of installed electrical capacity to be delivered from RE sources by 2005, 17 MW or 20 % by 2010; proposed as RPS)

Has any fund been established for the promotion of RE ? If yes, which sources are feeding this fund ?

Is the energetic exploitation of water resources restricted by non-technical barriers, like the limitation of water resource usage out of nature preservation reasons and competitive use, e.g. for irrigation ?

Do users of solar thermal systems receive any financial incentive from state budget or utilities or fiscal benefits ? (s. St. Lucia: Decision of April 2001 to for income tax allowance on the purchase of solar water heat-ers; experiences ?)

Do building codes favour the installation of solar thermal systems ?

Do fiscal laws or regulations favour or prohibit the import of RE technologies ? (s. St. Lucia: all import duties and consumption taxes on renewable energy equipment and materials eliminated since May 1999)

Do property rights, environmental laws, nature protection laws, building codes or other regulations re-strict the use of RE sources ?

Have measures been taken to select, prepare and support CDM projects ?

Grid-based Electricity

Specific electricity law existing ? Degree of liberalisation ?

Does the law allow private engagement (national/foreign) in the generation sector ? (St. Lucia: Limited to one concessionaire) Is self-supply of electricity possible (and common) ?

If yes: does it include feeding surplus electricity into the public grid ? At what tariff ? (St. Lucia: Own-suppliers loose right to be provided with electricity from the grid)

Which tariffs apply for reserve or peak-load electricity taken from the grid ?

Has an independent regulatory body been established ?

Who has to pay for grid-connection and grid enhancement ?

Tariff scheme for different customer sectors ?

What tariffs apply for electricity wheeling ?

What are the generation costs for different plants and fuel sources ? (St. Lucia: US-$ 0.13/kWh fixed costs and US-$ 0.068/kWh fuel costs for diesel generation according to Sustainable Energy Plan)

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Are tariffs regulated in every customer sector ? (St. Lucia: prices regulated in such a manner that a minimum profit of 15 % is guaranteed)

How much are generation costs influenced by fuel prices ?

Does the conventional electricity generation comply with international emission standards ?

Do larger electricity or electrification projects require a national or international tendering process ? Are national institutions capable of selecting among different offers ?

Rural Electrification

Policy with regard to rural electrification ?

Is there a specific support programme for rural electrification or is it part of general rural development ?

Are utilities obliged to connect all customers within certain concession areas ?

What is the main reason to have customers not connected to the main grid ?

Are the target groups individual households or settlements/communities ?

Are national or international NGO’s engaged in rural electrification ?

Does the state prescribe any specific implementation and financing scheme for rural electrification, like credit schemes or fee-for-service for Solar-Home-Systems ?

How many households/people are without regular electricity service ? (St. Lucia: 100 % electricity coverage was supposed to be achieved by 2002)

Does RE for rural electrification receive any preferential attention ?

Conventional Energy and Energy Conservation

Which taxes are levied on fossil fuels ?

What are the diesel/gasoline prices for transport and stationary purposes ?

Is electricity use for hot water production penalized ?

What regulations and measurements are in place to curb energy demand growth (such as Labelling of household appliances, progressive household electricity tariffs, energy awareness campaigns, increased taxes depending on fuel consumption of cars, enhancing public transport etc.) ?

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6.4 Annex IV: DOMLEC – Policy for Working with Independent Power Producers

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DOMLEC, Draft June 27, 2002

Policy for Working with Independent Power Producers

1 Introduction Domlec is committed to providing reliable, environmentally responsible electric ser-vice to our customers at the lowest possible price. DOMLEC is therefore supportive of working with independent power producers (IPPs) to the extent that such IPPs can facilitate DOMLEC’s customer service commitments. Other elements being equal, DOMLEC is especially supportive of IPPs that utilise renewable resources.

2 Factors to be Considered In evaluating sources of supply, DOMLEC will consider the following factors: • Variable Costs

Variable Costs are the costs DOMLEC would pay an IPP per MWh for the energy produced, exclusive of any fixed take or pay or capacity obligations.

• Fixed Obligations Fixed obligations include, among other items, capacity payments to IPPs and take or pay obligations. To the extent that DOMLEC has fixed payment obligations, these obligations are the equivalent of debt and evaluated as such by many lend-ers.

• Security Interests and Priority of Payment DOMLEC depends upon attracting competitive financing for its own operations (to minimise costs to our customers). As such, it will not commit to providing security interests in its assets or grant priorities in interest of paying IPP obligations versus DOMLEC’s other corporate obligations. Any IPP proposals that contain such pro-visions will be discounted relative to those that do not have these provisions.

• Reliability and Timing of Supply Certain generation sources (such as wind, hydro, or co-generation supplies where the steam customer only operates during certain hours) may produce electric en-ergy at times other than when it is most beneficial to DOMLEC’s customers. As a result, DOMLEC may need to acquire, finance and maintain generation equipment as a partial or total back-up for such IPP capacity. In these circumstances, the IPP capacity is not as valuable to DOMLEC as other types of generation which can be counted upon to reliably and more economically meet DOMLEC’s custom-ers’ requirements.

• Security of Supply To ensure reliable supply to our customers, DOMLEC has an objective to manage its supply such that if the largest unit of capacity is unavailable due to scheduled maintenance, the company can still meet peak demand if the second largest gen-erator fails for any reason. For the purposes of this calculation, as is common practice in many jurisdictions around the world, DOMLEC includes load manage-ment arrangements and IPP PPA’s as sources of supply. To the extent that an IPP provides capacity greater than DOMLEC’s existing individual generation units,

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DOMLEC must consider the need to continue to maintain its own capacity to back-up IPP capacity to the extent that the IPP capacity is larger than DOMLEC’s larg-est firm unit of capacity generation. As such, IPP proposals which provide capac-ity in increments that are similar to or smaller than DOMLEC’s largest generation units are valued more highly than those which have large increments of power.

• Transmission, Inter-Connection and Other Costs DOMLEC’s transmission and distribution system has certain limitations and de-pending upon the location of the IPP’s generation, the system may require up-grades or the construction of new interconnection and transmission facilities. DOMLEC will evaluate all IPP projects inclusive of these and any other additional costs. These costs must be included as part of the IPP proposal and will be for the account of the IPP unless otherwise agreed with DOMLEC. In this way, the principle of least cost planning is protected, for the benefit of all DOMLEC’s cus-tomers.

• Limitations on Contracting Volumes Given the size and capability of the DOMLEC system, there are technical and commercial limitations of how much of a given type of offering can be entertained as well as the tenor of the arrangement. Notwithstanding the forgoing, DOMLEC will be fair in dealing with different suppliers and will evaluate the proposals based on the quantity, quality and timing of their supplies combined with its ability to pro-vide economical and reliable service to its customers.

3 Evaluation Criteria Given the various factors, DOMLEC has adopted separate criteria for evaluating the following three types of relationships: • Energy Supplies

These are supplies where there is not certainty that DOMLEC can call upon the supply on a long-term basis. Therefore, DOMLEC pays for the kWhs provided as and when supplied upon an agreed-upon basis.

• Capacity Supplies These are supplies where there is both a contractual commitment with penalties that the IPP will make the capacity available as and when needed, but also a technical assessment that such supplies can be reasonably relied upon with mini-mal risk of transmission or other interruptions.

• Load Management Arrangements These are supplies where a customer agrees to reduce its demand for short peri-ods of time, or supply itself with power during such period, in return for payments from DOMLEC. The introduction of an interruptible tariff will also be considered subject to regulatory and any other approvals required.

4 Global Requirements As a general rule, DOMLEC will: • Promote Renewable Resources

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If two proposals are otherwise equivalent, DOMLEC will promote renewable re-sources over those that utilise fossil fuels.

• Discount any Proposal that Requires DOMLEC obligations to be Secured This includes a security in DOMLEC’s assets, a securitization of its customer re-ceivables or any priority in payment versus DOMLEC’s other payment obligations.

• Require Co-ordination of Dispatch DOMLEC will require that IPPs conform to DOMLEC’s dispatch policies and in-structions so that DOMLEC can optimise available generating resources.

• Require IPP’s to Comply with Applicable Law IPPs shall be responsible for complying with all applicable laws and regulations.

• Make Modifications to these Principles as Necessary to Respond to Chang-ing Conditions While DOMLEC believes these IPP Principles are appropriate, it reserves the right to modify these principles to respond to changes in circumstances. In addition, all arrangements are subject to mutually satisfactory documentation between DOM-LEC and the supplier.

5 Energy Supplies For those suppliers of energy, DOMLEC will: • Pay an Amount Equal to its Marginal Cost of Production, less 10%.

DOMLEC will pay suppliers of energy according the following formula: [DOMLEC’s Average Annual Heat Rate] multiplied by [Average LHV of Fuel Purchased by DOMLEC in past year] multi-plied by [Past Month’s Fuel Price] plus Variable O&M} multiplied by 0.9

where Heat Rate = DOMLEC’s average heat rate of its generation facili-ties which DOMLEC will publish annually; Variable O&M = DOMLEC’s average variable O&M costs which DOMLEC will publish annually. The Variable O&M will include vari-able maintenance costs as well as an allowance for top and major overhauls of its units. Past Month’s Fuel Price = Price of fuel on the last fuel bill received for payment by DOMLEC during the previous month.

• Not Pay any Fixed Payments or any Take or Pay Obligations Given that DOMLEC can not call upon the IPP capacity from Energy Supplies with certainty, DOMLEC will not pay any fixed payments for capacity or any take or pay obligations.

• Not Require Any Upgrades to System as Purchases are Subject to DOM-LEC’s ability to Take the Energy

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Energy purchases are intended for those situations where the supplier has no ob-ligations to supply and DOMLEC has no firm obligation to take the energy. As such, DOMLEC will not require the supplier to make any upgrades other than those to interconnect to the system and properly meter and coordinate dispatch. To the extent that the supplier wishes to ensure that DOMLEC can take the full amount of energy that the supplier can provide, the supplier can, at its election, request that DOMLEC perform a system impact study and indicate what upgrades are required. DOMLEC will either perform these services or subcontract for the provision of these services with the supplier bearing all the costs associated with the study and any necessary upgrades.

6 Capacity Supplies For those suppliers of capacity, DOMLEC will: • Agree to make Fixed Capacity and Take or Pay Obligations

DOMLEC will agree to make fixed payments to the extent that the IPP proposal is attractive and in the best interest of DOMLEC in terms of security and cost of sup-ply.

• Will Consider Energy Payments that, when Combined with the Fixed Capac-ity Payments, are Attractive

• Require that a System Impact Study be Performed with the Costs of any Sys-tem Upgrades for the Account of the Supplier Given that DOMLEC will have fixed payment obligations, the supplier needs to provide DOMLEC with reasonable assurance that DOMLEC can take full advan-tage of the capacity. As such, a system impact study must be undertaken, includ-ing any load flow and stability modelling deemed necessary by DOMLEC, which indicates what upgrades are required. DOMLEC will either perform these services or subcontract for the provision of these services with the supplier bearing all the costs associated with the study and, to the extent that the project moves forward, the cost of any necessary system upgrades.

• Require Penalties to the Extent Capacity is not Available Given that DOMLEC is paying for capacity to be available, any power purchase agreement will also include penalties to the extent that the capacity is not avail-able. This requirement is consistent with international utility practice and helps to ensure that DOMLEC and our customers obtain value for their energy payments.

7 Load Management For customers with more than 0.5MW of peak demand, DOMLEC is receptive to ne-gotiating an on-demand load management arrangement where DOMLEC pays the customer a fixed monthly fee for the right to temporarily discontinue service upon an agreed notice period (measured in minutes), it being understood that the customer may utilise back-up generation during this period. In addition, depending on the amount of the fixed fee, to the extent that DOMLEC calls upon such service, it may pay the customer an hourly fee equal to the estimated customer’s cost of fuel and variable operations and maintenance costs, as agreed between the supplier and DOMLEC.

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Customers who qualify for load management arrangements will need to prove their initial and ongoing ability to reliably respond to load curtailment requests following receipt of a call or other notice from DOMLEC’s system dispatch centre. DOMLEC will also consider the development and implementation of an interruptible tariff for customers willing to have supply withdrawn at no notice / short notice, sub-ject to requisite regulatory and any other approvals necessary.

8 Environment / Health & Safety All project proposals must include a section on environmental and health & safety impacts. Some projects may have a positive impact on the environment overall, and others will not. Consideration should be given to the various aspects of the project that potentially impact the environment, including: • Land use and Agriculture

• Landscape and Visual Impacts

• Ecology

• Water

• Air quality

• Noise

• Transport

• Socio-economic Impacts

• Waste

• Fisheries.

9 Legal Status For the avoidance of doubt, this Policy document is not a commitment by DOMLEC to enter any contract for capacity or energy, but is being provided to support DOM-LEC’s continued interest (in accordance with the provisions of DOMLEC’s Licence) in the development of IPP projects in Dominica which meet the needs of DOMLEC cus-tomers and other stakeholders. DOMLEC will keep this Policy under review to ensure that it continues to reflect the requirements of our customers and shareholders in the context of changing technical, operational, commercial, financial, legal and regulatory circumstances. DOMLEC reserves the right to amend or withdraw this Policy document without notice. Any commitment by DOMLEC for energy or capacity can only be made pursuant to definitive contract and related documentation and is subject to appropriate corporate and regulatory approval.

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6.5 Annex V: Policies for RES electricity in the European Union

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Policies for RES electricity in the European Union (2004)

Country Policy Papers and Legal Framework

Targets Major support instruments Selection of additional instru-ments

Austria Green Electricity Act, July 2002 No binding targets Purchase obligation for Transmis-sion System Operator with man-datory obligation to suppliers; fixed feed-in tariffs

Rebates

Belgium Walloon: Electricity Directive of Sept. 2001, Plan pour la maîtrise durable de l’energie, Dec. 2003; Flanders: Electricity Decree of July 2000 and amendment with Decree of December 2002

Walloon: 3% RES electricity in 2003 up to 7% in 2007; Flanders: 0,8% in 2003, 2,5% in 2006, 200 MW wind until 2010

Renewable obligation and trad-able green certificates in combi-nation with guaranteed prices and financial penalties

Rebates, investment-based tax exemptions, subsidies for PV

Denmark Energy Act of 1999 and amend-ments; Energy Action Plan „En-ergy 21“

29% RES electricity by 2010 Transitional Feed-in tariffs (mar-ket price plus premium with cap for total tariff) until consumer quota system in combination with green certificates will go into operation (not before 2005); obli-gation of utilities to construct off-shore wind farms

Tax relief for RES electricity e.g. from CO2 tax, income tax.

Finland Action Plan for RES; Electricity Market Act 1995

Separate targets per technology Tax relief, voluntary green pric-ing

Rebates

France National Plan for Improved En-ergy Efficiency (PNAEE) of February 2000; White Paper on Energy of November 2003

21% RES electricity by 2010 Feed-in tariffs and purchase obli-gation

Fiscal measures

Germany Renewable Energy Act (2000) and amendment of 2004

12.5% RES electricity by 2010 Feed-in tariffs and purchase obli-gation for Transmission System Operator

Soft loans, green tariffs

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Country Policy Papers and Legal Framework

Targets Major support instruments Selection of additional instru-ments

Greece Law 2244/1994 “Regulation of power generation issues from renewable energy sources and conventional fuel and other provi-sions”; Action Plan “Energy 2001”; Law 3175/2003 Exploita-tion of geothermal potential, district heating and other provi-sions”

3.75% RES contribution of Total Primary Energy Requirements by 2005; additional 500 MW RES electricity capacity between 2000 and 2005

Feed-in tariffs and purchase obli-gation for national electricity supplier PPC

Subsidies and tax deduction

Ireland Green Paper on Sustainable En-ergy 1999; Sustainable Energy Act 2002; “Strategy for intensify-ing wind energy development” (2000); “Options for Future Re-newable Energy Policy, Targets and Programmes” (2003, Consul-tation Document)

500 MW additional RES electric-ity capacity by 2005 with annual increase of 31 MW between 2000 and 2010; technology specific targets set in tendering rounds

Tendering (Alternative Energy Requirement Programme) with purchase obligation and feed-in tariffs (according to price bids and supported through a public service obligation charge levied on all customers)

CO2 tax, tax relief for corporate investors, tax allowance for small-scale projects

Italy White Paper for the valorisation of RES (Aug. 1999); Decrees of Nov. 1999 and March 2002 intro-ducing RES electricity obligation and certification system

RES target: 18-20m t/CO2 reduc-tion Target of decrees: 2% RES elec-tricity by 2002; new proposal foresees 0.3%/a increase from 2005

Renewable Obligation with quota system, green certificates and financial penalties

Tax relief

Luxembourg Grand-Ducal Regulation of July 2001 on financial promotion of RES

5% RES electricity by 2010 Feed-in Tariffs Compensation schemes

Netherlands Act of 5 June 2003 and Act of 20 November 2003 amending the Electricity Act of 1998

10% RES of primary energy supply by 2020

Feed-in Tariffs and purchase obligations, combined with tax reduction for RES electricity consumers and certificate system

Tax incentives; investment subsi-dies

Portugal Program E4 (Energy Efficiency and Endogenous Energies, Octo-ber 2001); Law 339-C/2001 on tariffs for RES; Resolution No. 63/2003 on guidelines for na-tional energy policy

RES goal 15% by 2010; 39% of gross electricity consumption from RES in 2010; specific goals on capacity for different RE tech-nologies by 2010

Feed-in Tariffs Rebate, compensation schemes

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Country Policy Papers and Legal Framework

Targets Major support instruments Selection of additional instru-ments

Spain National Renewable Energy Plan 1999; Royal Decree 436/2004 of March 2004; Royal Decree 1802/2003 of December 2003

Target of 13.000 MW by 2011 Feed-in Tariffs (market pool price plus bonus or fixed tariff)

Compensation schemes, third-party financing

Sweden Energy Supply Bill 2001/02:143; Electricity Certificates Act 2002/03:40

Plus 10 TWh RES electricity increase from 2002 to 2010; Quota for new RES electricity increasing from 7.4% in 2003 to 16.9% in 2010

Renewables Obligation and quota-based tradable certificate system as of May 2003 in combi-nation with declining guaranteed price and penalty charge; transi-tional arrangements in place with degressive environmental bonus until 2009

Tax exemptions

UK Utilities Act 2000; Climate Change Levy 2001; Energy White Paper 2003; Renewables Obliga-tion Orders 2002 and Amendment of 2004

10.4% of electricity demand from RES by 2010; doubling in the following decade

Renewables Obligation in combi-nation with tradable certificates or alternative buy-out prices since April 2002

CO2 tax relief, green tariffs, in-vestment subsidies

Source: Detlef Loy; Ecofys 2003; WWF 2003

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