Incentives for investment in renewable energy

POSTED: 09/5/14 4:14 PM

Government publishes National Energy Policy

St. Maarten – To achieve that 35 percent of the energy St. Maarten uses stems by 2016 from renewable sources, the government had to take several steps immediately to promote renewable energy. The first step is to make renewable energy interesting for citizens through incentives and legislation. Furthermore, the government has to promote solar energy for water heaters and for residential and commercial use, and invite investors to submit proposals for the development of commercial solar and wind energy projects. The purchase and promotion of electrical cars and an awareness campaign about energy efficiency and renewable energy are also part of the action points listed in the National Energy Plan. The government published the document yesterday on its website.

The policy is a joint production of the Ministries of Public Housing, Urban Planning, Environment and Infrastructure, and Tourism, Economic Affairs, Transport and Telecommunication. Erika Radjouki and Claire Hooft Graafland authored the report. The Council of Ministers approved in on April 24, but it took close to four months before the document was finally released to the public.

The report concludes that solar, wind, waste-to-energy and geothermal sources of energy are the most promising for St. Maarten in a bid to get away from its dependency on energy-production with heavy fuel oil. “The payback times of all renewable energy sources are getting shorter and shorter, and the technologies are becoming more affordable,” the report states. The National Energy Plan demands swift action to derive 35 percent of the island’s energy from renewable sources by 2016 and 80 percent by 2020.

While quite some businesses and private citizens have already invested in solar energy, utilities company Gebe still has to develop a power purchase agreement that contains the rules for selling back energy to the grid. Currently, Gebe-meters spin backwards when solar panels produce more energy than a business or a home consumes. This way, consumers create discounts on their energy-bills on a 1:1 basis – they receive in fact the price Gebe charges for a kilowatt for each kilowatt they give back to the grid. That is likely to change in the future, when smart meters make spinning back impossible and consumers will need an agreement with the utilities company.

According to the Energy Policy, Gebe still has to determine the so-called feed-in tariffs it will pay consumers for feeding their excess energy into the grid. The plan mentions that these feed-in tariffs should be “a reasonable rate” – a term that seems to indicate that Gebe will pay less for a kilowatt than it charges to consumers.

The plan furthermore recommends establishing requirements for solar energy installations and training and certifying electricians to install solar panels safely.

Another suggestion in the plan is drafting a sustainable mobility plan. While this idea is not worked out in the document, it mentions fleetingly “electric cars, scooters and bikes, free hop-on-hop-off electric buses in Philipsburg and adequate sidewalks and bicycle lanes.”

The Energy Policy outlines in dry figures how dependent St. Maarten is on fossil fuels for its energy production. In 2012, the country spent almost 265 million guilders on imported oil products – 18 percent of gross domestic product. Energy consumption is high: the approximately 20,000 Gebe-clients consume on average 1,500 Kwh per month. “This is one of the highest consumption figures in the region,” the report notes.

There is a direct link between de island’s prosperity – the per capita GDP was 44,000 guilders in 2012 – and energy-consumption. The unrestricted use of air conditioning systems in government buildings but also in the private sector contributes to excessively high energy bills every month.

There are options to bring this situation under control. The policy mentions for instance the use of solar water heaters. Of domestic electricity consumption, 14 percent goes to the production of hot water. Solar water heaters could save annually 300 liters of fuel per household. Multiplied by 20,000 Gebe-clients, the savings could run up to 6 million liters of fuel.

A 20-panel solar systems with an output of 4kW would save households $3,600 per year and it would also save Gebe 3,000 liters of fuel per household. Without incentives, consumers earn their investment in solar water heaters and solar panels back in 4 to 5 years.

The report states that St. Maarten’s prospective for generating offshore wind energy are good. The new generation of hurricane-proof wind turbines produces 5 to 8 Megawatt and they are operational 63 percent of the time at 80 percent of their capacity.

The waste-to-energy plant that is to be constructed on Pond Island will contribute 8 to 9.3 Megawatt to the country’s energy needs. However, the power this plant will sell to Gebe will be more expensive than wind or solar power according to the report.

St. Maarten is involved in a project with Saba and Statia for the development of a geothermal energy project. On Saba a 100 Megawatt installation is possible; Saba’s annual energy needs are just 2 Megawatt, so the island will have plenty to export to surrounding islands. St. Maarten would have to build a connection through a 60-kilometer long submarine cable – an investment of $25 million.

The switch from heavy fuel oil to liquid natural gas will require an investment of $900,000 from Gebe to make its generators fit for running on LNG. The upside: LNG costs only 20 percent of the price of the heavy fuel oil Gebe is currently using.

The grid will also have to be prepared for renewable energy. According to the policy, feeding more than 25 to 30 percent of the total load in renewable energy into the grid could cause technical problems with maintaining voltage on distribution circuits within acceptable limits. A storage system could circumvent this problem.

An awareness campaign is part of the action points mentioned in the Energy Policy. Small adjustments and behavioral change could already bring down energy bills by 15 to 25 percent, the report states.

An overview of regional prices for consumers shows that electricity is relatively expensive in St. Maarten. On a list of fifteen countries, St. Maarten ranks in eighth position with a kWh-price of $0.35. Electricity is the cheapest in Suriname ($0.05 to $0.11 per kWh) and the most expensive in Curacao and the Bahamas ($0.42 per kWh). Suriname uses hydro-electric installations to produce electricity.

The price to generate one kWh of electricity is also interesting. Solar energy would cost $0.24, while Gebe’s production costs currently are $0.22. The geothermal project in Saba would produce the same energy for $0.12 and the production costs from waste-to-energy in the United States are currently between $0.08 and $0.12.

The National Energy Policy is available online at on the page of the Vromi-Ministry under ministry policies and reports.


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