Erik Lavoie

Some 80 per cent of Trin­bag­o­ni­ans are in­ter­est­ed in in­stalling so­lar pan­els, ac­cord­ing to a Unit­ed Na­tions De­vel­op­ment Pro­gramme (UNDP) study. How­ev­er, a lack of nec­es­sary leg­is­la­tion and high up­front costs are sig­nif­i­cant bar­ri­ers to rooftop so­lar adop­tion, ac­cord­ing to the Reg­u­lat­ed In­dus­tries Com­mis­sion (RIC).

The Min­istry of En­er­gy and En­er­gy In­dus­tries (MEEI) plans to im­ple­ment a feed-in tar­iff regime to en­cour­age small-scale re­new­able en­er­gy. Typ­i­cal­ly, feed-in tar­iffs work by pro­vid­ing re­new­able en­er­gy pro­duc­ers with a guar­an­teed pay­ment rate for the elec­tric­i­ty they pro­duce and/or ex­port to the grid. This mech­a­nism aims to make so­lar in­vest­ments more at­trac­tive by en­sur­ing a sta­ble and favourable re­turn on in­vest­ment for house­holds.

How­ev­er, un­der the T&T Elec­tric­i­ty Com­mis­sion’s (T&TEC) cur­rent busi­ness mod­el, house­holds with so­lar pan­els can­not ex­port elec­tric­i­ty to the grid, mak­ing the im­ple­men­ta­tion of a feed-in tar­iff regime im­pos­si­ble at this time. This is due to the ab­sence of nec­es­sary pro­vi­sions in both the RIC and T&TEC Acts.

Fur­ther­more, an eco­nom­ic analy­sis of rooftop so­lar shows that off­set­ting elec­tric­i­ty con­sump­tion from T&TEC with elec­tric­i­ty pro­duced from rooftop so­lar is not cost-ef­fec­tive, even af­ter a po­ten­tial tran­si­tion to RIC-rec­om­mend­ed, high­er elec­tric­i­ty rates for res­i­den­tial con­sumers by 2028 (see graph).

As a re­sult, rooftop so­lar adop­tion in T&T is like­ly to strug­gle with­out a feed-in tar­iff that ex­ceeds T&TEC’s re­tail tar­iff.

The high­er costs as­so­ci­at­ed with rooftop so­lar rel­a­tive to re­tail rates may be in­curred by T&TEC and dis­trib­uted among all elec­tric­i­ty ratepay­ers in the form of a “green sur­charge”.

This would like­ly be a per kWh pay­ment al­lo­cat­ed to­wards off­set­ting the dif­fer­ence be­tween the cost of elec­tric­i­ty pro­duc­tion from re­new­able en­er­gy and the cost of elec­tric­i­ty from nat­ur­al gas, en­sur­ing T&TEC does not in­cur fur­ther fi­nan­cial loss­es.

Un­like elec­tric­i­ty pro­duced from nat­ur­al gas, which con­sti­tutes near­ly 100 per cent of the en­er­gy mix in T&T, rooftop so­lar pro­vides a clean and re­new­able en­er­gy source.

So­lar en­er­gy re­duces green­house gas emis­sions, low­ers de­pen­den­cy on fos­sil fu­els, and of­fers en­er­gy se­cu­ri­ty. Adopt­ing re­new­able en­er­gy sources like so­lar will help T&T reach its com­mit­ment to­wards 30 per cent re­new­able elec­tric­i­ty pro­duc­tion by 2030 and pro­vide var­i­ous so­ci­etal ben­e­fits.

The ori­gin of dis­cus­sions re­gard­ing a feed-in tar­iff in T&T date back to 2011, when the Min­istry of En­er­gy pub­lished a “Frame­work for the De­vel­op­ment of a Re­new­able En­er­gy Pol­i­cy for Trinidad and To­ba­go.” The frame­work was the first to for­mal­ly in­tro­duce the con­cept of a feed-in tar­iff in T&T.

An in­ter-agency com­mit­tee was cre­at­ed in Sep­tem­ber of 2014, re­sult­ing in a “Feed In Tar­iff Pol­i­cy” pub­lished by the Min­istry of En­er­gy in June of 2015. The pol­i­cy in­clud­ed im­por­tant guid­ance to var­i­ous or­gan­i­sa­tions in­volved, in­clud­ing the RIC, T&TEC, and the Min­istry of Pub­lic Util­i­ties. A Guardian Me­dia ar­ti­cle in 2021 stat­ed that the pol­i­cy was “sent to the Leg­isla­tive Re­view Com­mit­tee in 2017 and was sub­se­quent­ly sent to the Min­istries of En­er­gy and Pub­lic Util­i­ties for a man­dat­ed re­view.”

Be­tween 2017 and 2020, there were not any sig­nif­i­cant up­dates or an­nounce­ments from the Gov­ern­ment re­gard­ing the feed-in tar­iff pol­i­cy. In 2019, the RIC pub­lished a pa­per called “To­wards Re­new­able En­er­gy De­ploy­ment in the Elec­tric­i­ty Sec­tor of T&T”, where it re­it­er­at­ed the need to up­date the RIC and T&TEC Acts and made com­pre­hen­sive rec­om­men­da­tions to the Gov­ern­ment aimed at fa­cil­i­tat­ing a de­fin­i­tive and time­ly im­ple­men­ta­tion of a feed-in tar­iff regime.

In Feb­ru­ary of 2021, a Loop News ar­ti­cle in­di­cat­ed that a feed-in tar­iff pol­i­cy de­vel­oped by an in­ter-agency team was await­ing fi­nal­i­sa­tion. It is un­clear whether the feed-in tar­iff pol­i­cy ref­er­enced is re­lat­ed to the pol­i­cy pub­lished in 2015, or is a com­plete­ly new pol­i­cy.

A sim­i­lar ar­ti­cle by Loop News sur­faced in May of 2022, stat­ing that “a con­sul­tant via the Glob­al Cli­mate Change Al­liance Plus is pro­vid­ing tech­ni­cal as­sis­tance in cre­at­ing a na­tion­al re­new­able de­vel­op­ment pol­i­cy.”

Dur­ing the Jan­u­ary 2023 T&T En­er­gy Con­fer­ence, Prime Min­is­ter Dr Kei­th Row­ley stat­ed that “(the feed-in tar­iff) is cur­rent­ly be­ing re­viewed by the Min­istry of En­er­gy and En­er­gy In­dus­tries and will be brought to Cab­i­net this quar­ter.”

Since then, no up­date has been an­nounced to the pub­lic re­gard­ing the feed-in tar­iff.

Guardian Me­dia con­tact­ed the MPU, a col­lab­o­rat­ing min­istry, to ex­plain the fac­tors re­spon­si­ble for the de­lays in im­ple­ment­ing a feed-in tar­iff. A re­sponse has not yet been re­ceived.

There are sev­er­al com­pa­nies in T&T that of­fer rooftop so­lar in­stal­la­tion ser­vices. These in­clude Re­new­able Pow­er Caribbean (RPC), RESS­COTT, So­lar­world, Tri­fac­tor So­lar, and oth­er small­er com­pa­nies.

With the as­sis­tance of RPC and the So­lar Pow­er In­stallers As­so­ci­a­tion of T&T in pro­vid­ing da­ta, Guardian Me­dia was able to de­vel­op a fi­nan­cial mod­el which cal­cu­lates the op­ti­mal feed-in tar­iff paid to rooftop so­lar in­vestors that would re­cov­er a rea­son­able re­turn on in­vest­ment over a 20-year pe­ri­od. A 50/50 ra­tio of debt to eq­ui­ty is as­sumed, both at a 6 per cent in­ter­est/re­turn rate. These fi­nan­cial as­sump­tions were utilised by the Bar­ba­di­an Fair Trad­ing Com­mis­sion.

The mod­el is based on a 5 kW rooftop so­lar in­stal­la­tion, with an $11,000 per kW in­stal­la­tion cost, $350 per kW of year­ly main­te­nance costs, and an in­vert­er re­place­ment every 10 years for $2,000 per kW. Bat­tery stor­age is not in­clud­ed in these cal­cu­la­tions.

The cal­cu­lat­ed feed-in tar­iff in 2024 and 2028 is $1.05/kWh and $0.94/kWh, re­spec­tive­ly. In com­par­i­son, the cur­rent av­er­age re­tail tar­iff pro­vid­ed by T&TEC for the av­er­age house­hold con­sum­ing 940 kWh of elec­tric­i­ty bi-month­ly is $0.29/kWh. That is pro­ject­ed to be around $0.59/kWh in 2028 if the RIC’s rec­om­men­da­tion to move to­wards cost re­flec­tive rates is ac­cept­ed by Cab­i­net.

In both 2024 and 2028, the feed-in tar­iff is high­er than the tar­iff pro­vid­ed by T&TEC, by a mag­ni­tude of $0.76/kWh and $0.35/kWh, re­spec­tive­ly. Thus, a feed-in tar­iff will like­ly re­quire T&TEC to pur­chase elec­tric­i­ty from rooftop so­lar at a pre­mi­um.

In coun­tries where the re­tail elec­tric­i­ty tar­iff is low­er than the cal­cu­lat­ed feed-in tar­iff, a “buy-all, sell-all” billing method is the op­tion which will en­sure an ap­pro­pri­ate re­turn on in­vest­ment for house­holds with so­lar, a view­point which the RIC shares. In a “buy-all, sell-all” billing frame­work, all elec­tric­i­ty pro­duced by a so­lar in­stal­la­tion is sold to T&TEC at the feed-in tar­iff rate, while all house­hold elec­tric­i­ty con­sump­tion is billed by T&TEC to the house­hold.

There is a con­cept which can be used to quan­ti­fy the eco­nom­ic val­ue of so­lar called avoid­ed cost, which cal­cu­lates the av­er­age un­sub­sidised cost of fu­el and con­ver­sion per kWh that T&T would avoid by us­ing a kWh of rooftop so­lar in­stead.

By 2028, the avoid­ed cost is es­ti­mat­ed to be around $0.56/kWh, which is $0.38/kWh less than the pro­ject­ed feed-in tar­iff of $0.94/kWh for in­stal­la­tions in 2028.

Ad­di­tion­al­ly, con­sid­er­ing the en­vi­ron­men­tal cost of nat­ur­al gas us­ing the Biden Ad­min­is­tra­tion’s US$51 cost per ton of car­bon es­ti­mate, which trans­lates to $0.17/kWh in T&T, the avoid­ed cost would in­crease to $0.73/kWh. Even with the en­vi­ron­men­tal cost fac­tored in, there still re­mains an ad­di­tion­al cost of $0.21/kWh for rooftop so­lar.

This in­di­cates that even with en­vi­ron­men­tal costs fac­tored in, elec­tric­i­ty from rooftop so­lar is ex­pect­ed to be more ex­pen­sive than elec­tric­i­ty from nat­ur­al gas, rais­ing ques­tions about the ex­is­tence of a net eco­nom­ic ben­e­fit as­so­ci­at­ed with rooftop so­lar.

De­spite ques­tions re­gard­ing the quan­tifi­able eco­nom­ic ben­e­fits of rooftop so­lar, there are nu­mer­ous so­ci­etal and eco­nom­ic ad­van­tages that are not as eas­i­ly quan­tifi­able.

By sup­port­ing the coun­try’s com­mit­ment to sourc­ing 30 per cent of its elec­tric­i­ty from re­new­able sources by 2030, rooftop so­lar not on­ly en­hances T&T’s glob­al en­vi­ron­men­tal rep­u­ta­tion but al­so con­tributes to sig­nif­i­cant so­ci­etal ben­e­fits. These in­clude re­duced air pol­lu­tion, which leads to a health­i­er pop­u­la­tion, and the po­ten­tial for sub­stan­tial job cre­ation as the so­lar in­dus­try de­vel­ops, which can help de­crease un­em­ploy­ment.

More­over, so­lar pow­er, es­pe­cial­ly when com­bined with bat­tery sys­tems, en­hances en­er­gy in­de­pen­dence and re­silience, pro­vid­ing re­li­able house­hold pow­er dur­ing out­ages.

RPC em­pha­sis­es these ad­van­tages, stat­ing, “home­own­ers and busi­ness­es can ex­pect a re­duc­tion in elec­tric­i­ty bills, gain en­er­gy in­de­pen­dence, and re­duce their car­bon foot­print. The com­pa­ny strong­ly sup­ports the im­ple­men­ta­tion of feed-in tar­iffs.”

The Gov­ern­ment can pro­vide in­cen­tives along­side a feed-in tar­iff to fur­ther at­tract more in­vest­ment in re­new­able en­er­gy. For in­stance, Bar­ba­dos al­lows 75 per cent of in­stal­la­tion costs to be de­duct­ed when de­ter­min­ing owed in­come tax­es. If im­ple­ment­ed in T&T, this could re­duce the nec­es­sary feed-in tar­iff from $0.94/kWh to $0.81/kWh, a 14 per cent de­crease.

Al­ter­na­tive­ly, the gov­ern­ment could par­tial­ly or ful­ly sub­sidise the up­front costs for low­er-in­come house­holds to help over­come the high ini­tial cap­i­tal costs.

For house­holds that are iso­lat­ed from the T&TEC elec­tric­i­ty grid and make less than $10,000 in an­nu­al in­come, the Util­i­ties As­sis­tance Pro­gramme sub­sidis­es the cost of so­lar pan­els. Such a pro­gram could be ex­tend­ed to house­holds that are low in­come and con­nect­ed to the T&TEC elec­tric grid, bring­ing ben­e­fits to many more house­holds.