THE RENEWABLE ENERGY ACT 2015 by Hon. Asot Michael
The enactment of the Renewable Energy Act 2015 marks a bold and definitive phase in our nation’s development as we pave the way for the citizenry of Antigua and Barbuda to benefit in a meaningful way from the extensive renewable energy resources with which Mother Nature has blessed our beautiful island nation.
Specifically, Mr. Speaker, this modern and innovative legislation will for the first time provide the regulatory framework to allow the people of Antigua and Barbuda to harness our renewable energy resources while remaining connected to the national electricity grid and in fact to feed the energy which is generated by renewable energy – be it wind, biomass or solar – into the national grid within a clear and transparent regulatory framework.
Mr. Speaker, in embarking on this road the Gaston Browne administration is seeking to take advantage of the tremendous strides which have been made in renewable energy technologies in recent years and to bring Antigua and Barbuda on par with the technical and regulatory developments taking place globally and regionally in this sector.
Mr. Speaker, it is important that we gain an understanding of the transformation that is taking place in international energy markets for while we are all aware of the dynamics occurring in global petroleum markets, we are generally less aware of other equally significant developments taking place in global energy markets.
This is particularly true of the transition which is underway in the shift to “green energy” and specifically the transition which is occurring around the world moving from fossil fuels to renewable energy. The United Nations International Renewable Agency (IRENA) in its 2014 report notes, for example, that “renewables have accounted for more than half of net capacity installations additions in the global power sector since 2011 – meaning more new renewables capacity is being installed than new capacity in fossil and nuclear power combined”.
Mr. Speaker, the IRENA report points out that “New renewable energy capacity installations outside the OECD exceeded deployment within the OECD for the first time in 2013 with China dominating new capacity additions of both solar PV and wind. In fact 2013 marked the first time that new renewable power surpassed new fossil fuel and nuclear additions in China”.
IRENA further points out that “the rapid expansion in deployment is spurred by declining costs of renewable energy technologies…… Moreover renewables are sheltered from volatile global fossil fuel costs and have a proven technological viability that ensures long term cash-flow for investors”. In fact between 2009 and 2013 prices for solar PV modules declined by 65% – 70%” while IRENA estimates that the cost of onshore wind has fallen 18% since 2009 on the strength of cheaper construction costs and improved efficiency, and that wind turbine costs have fallen nearly 30% since 2008.
Mr. Speaker, the benefits of renewable energy are well known and hardly need repeating but it is perhaps important to do so for this landmark legislation. These benefits include:
- Lowering the price of energy to consumers with all of the downstream benefits flowing from that;
- Reducing the amount of foreign exchange spent on petroleum fuel imports;
- Enabling our young engineers and entrepreneurs to become involved in this new and growing field of commerce;
- Reducing the likelihood of petroleum pollution on our fragile natural environment; and
- Reducing Antigua and Barbuda’s contribution to global greenhouse gas emissions.
Mr. Speaker, within the Caribbean, important strides in developing renewable energy resources have already been made in jurisdictions as diverse as St Kitts, Jamaica and Aruba. Unfortunately Antigua and Barbuda under the previous administration seemed unable to grasp the significance of this revolution in energy that was taking place all around us, leaving my administration with the difficult task of transforming an outdated and inefficient energy sector into a modern and dynamic sector capable of powering Antigua and Barbuda into its position as an economic powerhouse in the Caribbean.
Mr. Speaker, this administration will not repeat the mistakes of the former government by failing to put in place the institutional and policy imperatives for transforming our energy sector.
This is not a task which we are going to shy away from.
In fact Mr. Speaker, this piece of legislation represents an essential first step to provide the platform which will allow Antigua and Barbuda to effectively manage its power sector in a manner which allows for a balance between those wanting to adopt renewable energy as a part of their energy mix, while also ensuring that the interests of other consumers and the utility are not compromised in this effort.
Mr. Speaker, the Renewable Energy Act before you are one of the principal outputs of a regional energy project, financed by the CDB and implemented through what was then the OECS Secretariat (now OECS Commission). The legislation was developed as a harmonized instrument intending to provide OECS countries with a virtually identical legal framework for renewable energy.
The actual drafting of the legislation was done by a team of international and regional legal and energy consultants, and was followed by a consultative process involving officials from ministries of energy and ministries of legal affairs throughout the OECS. Working with stakeholders at APUA and following consultations with the Environment Division, the Ministry of Energy and Ministry of Legal Affairs have in turn tweaked the OECS draft to adapt it to the national circumstances of Antigua and Barbuda.
The RE Act introduces a number of new legal concepts and some of these are especially critical in enabling renewable energy consumers to effectively and profitably transition to green energy. In that regard, Mr. Speaker, Article 2 provides various definitions including for a “Feed in Tariff” as the tariff system for electricity produced from eligible renewable resources, while the concept of ‘net billing’ is also introduced as a methodology under which electric energy generated by that person and delivered to the grid may be used to offset the cost of electric energy supplied from the grid. Net billing is the methodology endorsed by CARICOM as the preferred approach to encouraging the development of renewables while ensuring that other interests are not jeopardized in this process.
Article 3 establishes the overall guiding objective for the Act, this being “the accelerated development and advancement of renewable energy resources”. Article 3 also requires the Minister of Energy, within 180 days, to prescribe targets for the use of renewable energy in Antigua and Barbuda. This is an important obligation Mr. Speaker and will be done by the Ministry in consultation with other key energy stakeholders such as APUA, Environment and others in public and private sectors, to ensure that ambitious yet achievable targets are set.
Article 4 of the RE Act outlines the responsibilities of the Minister of Energy to facilitate the sustainable development of renewable energy in Antigua and Barbuda. These include working with appropriate agencies and departments in licensing of renewable energy, encouraging development of technical standards for renewable energy, and promoting awareness of renewable energy. Reflecting the cross-sectoral nature of the initiative a number of measures involve working with other government agencies and departments.
The role of the Responsible Network Utility, i.e. APUA, within the framework of the overall objective of the Act, is outlined at Article 5. Article 6 seeks to ensure that government itself encourages the use of renewable energy in its future electricity generation plans.
Article 7 of the Act provides for the establishment of a Feed In Tariff which is a policy mechanism designed to accelerate investment in renewable energy by offering contracts, usually long term, to renewable energy producers.
Mr. Speaker, Article 8 establishes a Renewable Energy Fund which will be managed under the provisions of section 43 of the Finance Administration Act, 2006 No. 23 of 2006. This will enable the Cabinet to approve the funding of renewable energy projects through the Antigua and Barbuda Citizenship by Investment program. The intent here is for government, utilizing resources generated under the CIP, to finance activities supporting renewable energy whether this be through actual investment in viable projects, procuring goods and services related to renewable energy development, or funding research and development into renewable energy in Antigua and Barbuda. Mr. Speaker, we are already seeing examples of investment areas for utilizing this fund to support vital economic activity in Antigua and Barbuda.
Recognizing the need to provide fiscal incentives for what is still a comparatively heavy initial capital cost, the Act at Article 9 provides for a set of general incentives aimed at promoting the use of these indigenous resources: the intent also is to provide as far as possible, harmonized incentives across the OECS single economic space.
Article 11 “Licensing” empowers the Minister of Energy to issue licenses for renewable energy generation in Antigua and Barbuda including setting in place the administrative structures for enabling renewable energy development.
Mr. Speaker, the Act introduces the concept of “energy wheeling” which allows a generator of electric energy to transmit this across the grid to customers at a fee agreed between the utility and the renewable energy generator.
A large energy consumer, like a hotel, might not have the land needed for a renewable energy solar park so with a wheeling license the resort could acquire or lease land elsewhere and pay APUA a fee to ‘wheel’ the energy from the solar park to the hotel which would also need a license. APUA would be compensated for system energy losses related to this renewable energy experienced over the grid as well as a charge for the use of APUA transmission, transformers and distribution lines. The benefits would be the hotelier would get cheaper energy making the hotel more competitive in the global market, APUA would get the wheeling tariff so they would be compensated and the environment would have less carbon dioxide as fossil fuel is displaced by the wheeled renewable energy. This results in a win-win-win for the Antigua economy.
Also Government will expect to benefit by wheeling the energy from renewable energy generators funded through the Renewable Energy Fund to large consumers like VCB International Airport Terminal and Mount St. John’s Medical Center.
Wheeling will be subject to regulations and wheeling licenses will require Cabinet approval. Both the renewable generator and the consumer receiving the wheeled energy must have a license.
This is an innovative approach within our region and is intended to encourage private sector investment in renewable energy.
One notable feature of the harmonized legislation is its emphasis on reporting and this will achieve a number of objectives including providing a benchmark for the targets which are being established and providing the general public with information on renewable energy use in Antigua and Barbuda.
In concluding Mr. Speaker, we can see that the Renewable Energy legislation represents a significant step forward as the Gaston Browne administration seeks to leapfrog many of the obstacles that plague the energy sector in Antigua and Barbuda as a direct legacy of 10 years of neglect of this vital sector, and to put in place a modern and progressive regulatory framework for renewable energy. Mr. Speaker, this in fact represents the first substantial change to the legal framework for energy since the 1970s – over forty years ago.
This move by our administration to develop our indigenous energy resources is particularly exciting at this time in view of the tremendous interest which already exists on the part of our nationals to move into this field. Already there have been dozens of proposals from our nationals, both those based at home and those in the diaspora, for development of wind and solar energy. We therefore envisage a future where ordinary citizens of our country will be able to benefit directly from the technological advancements and regulatory changes taking place in renewable energy development: a part of the effort of the Gaston Browne administration to empower our people.
Mr. Speaker, Barbuda presents a unique opportunity for exploitation of renewable energy resources. In particular, the island’s small population and available wind and solar resources mean that the concept of the “greening” of energy in Barbuda is a real possibility. My ministry has begun discussions with several interests in private and public sectors who are keen to develop Barbuda’s potential for renewable energy and we expect that within the next few months these partnerships will crystallize into concrete plans for development of Barbuda as a global example of sustainable energy with the bulk of its energy use coming from renewable power, and with consequent benefits to the people of Barbuda and to APUA.
The process is now underway to ensure that the integration of renewables in Antigua and Barbuda takes place in a technically sound manner and we are working jointly with the UN International Renewable Energy Agency (IRENA) and APUA so that we have a full understanding of all the technical parameters involved in the widespread integration of these variable energy sources so as to protect the integrity of the national electricity grid while enabling that the fullest possible extent of renewable energy can be harnessed for our nations sustainable development. This technical work is important, because notwithstanding our excellent wind and solar regimes, there are many technical issues which need to be analyzed to ensure that issues of grid stability and power quality are given the priority which they need to ensure the continued integrity of the overall electricity generation and distribution system.
Mr. Speaker, this initiative represents the fulfillment of yet another pledge in The Peoples Rescue Plan as our administration continues the process of empowering our citizenry in our quest for the development of our beloved Antigua and Barbuda.