Minister with responsibility for Energy, Senator Darcy Boyce, has stressed the importance of a sound policy framework to attract investors to provide the capital necessary for the renewable energy sector.
He was delivering the feature address at the opening of a regional workshop on Financing Tools and Approaches for Sustainable Energy Projects at the Accra Beach Hotel last Monday.
The Minister maintained: ???The policy framework that attracts investment is one which provides as much certainty as possible and so helps investors to manage their risks.???
He said that an important part of the framework must be the pricing of the energy produced from renewable energy systems.??For investments to proceed, he argued, the price paid for the energy supplied to the grid must be sufficient to provide investors with an adequate return on the capital they invested. Adequacy, he said, had to be defined in terms of what return the investors could make in another sector of equal risk and potential.
Senator Boyce stated that pricing for energy from renewable energy sources should not be dependent on the level of prices of fossil fuels. ???If that is not done, and renewable energy prices fluctuate with the price of fossil fuels, then investor returns will also become volatile and capital will not flow into the industry,??? he submitted.
Stating that the prices for renewable energy must therefore be set to yield adequate profit over the life of the investment, he noted that this was probably best done through having a constant price over the life of the renewable energy plant.
???To this end, the Division of Energy in Barbados will shortly commission work to develop feed-in tariffs for discussion with the Fair Trading Commission, and thereafter, for implementation as may be agreed and appropriate,??? he revealed.
The Energy Minister told the audience that the Caribbean was seeking to develop renewable energy and energy efficiency industries not only to reduce the price paid directly for energy by consumers but also to reduce the level of foreign exchange used each year to import fossil fuels to produce power.
He noted: ???In Barbados??? case, this is almost four per cent of GDP for electricity alone, and clearly acts as a brake on the economy.???
Senator Boyce said that Barbados and the rest of the region were seeking to reduce emissions of greenhouse gases to set the pace morally for other nations to reduce their emissions; and were trying to make their economies greener to create a competitive advantage for the tourism industry.
Renewable energy and energy efficiency, he said, were also seen as industries where a significant number of new jobs could be developed for young people.
The Energy Minister therefore urged the audience not to let the current falling oil prices deter them from restructuring their energy sectors. ???The payoff for us in staying the course with renewable energy and energy efficiency is much more than the short term price of electricity,??? he stressed.??