Address by Governor, Dr. DeLisle Worrell at a Discussion on the Energy Sector in Barbados

Green Energy in Barbados' Future Address by Dr. DeLisle Worrell, Governor, Central Bank of Barbados Discussion on the Energy Sector in Barbados, Grande Salle – November 10, 2014

Last month I attended a conference on growth in the Caribbean, organised by the International Monetary Fund, Caribbean Development Bank and other international financial institutions, and hosted by the Government of Jamaica in Montego Bay. In a session of the conference focussed on energy, businessman Philip Nassief of Dominica showed a picture of a distributed power generation system that could be the future of energy in Barbados. Electricity would be generated by solar power for the most part, with only a small off-peak power station, and surplus power would be stored during hours of sunshine for use in the hours of darkness. The solar output would be distributed via a smart grid, and storage could be either at the individual producing sites or at a central storage site.

This is the ideal energy solution for Barbados. Every single day Barbadians generate vast amounts of energy on the roofs of our homes and businesses, almost all of it completely wasted, because it is in the form of heat. A little of that energy is used to heat water, through our long-established solar water heating industry. But that is trifling compared with the potential for near self-sufficiency which is in prospect, if we were to capture the energy from our roofs to generate electricity.

Generating most of our power from solar would benefit consumers, workers and the country. The benefit to consumers is already evident to those who have recently installed solar-powered generators, now on sale from a variety of retailers, including the Barbados Light and Power. Users immediately achieve a substantial reduction in their monthly payment to the power company, which can go towards the cost of loan service, if they choose to borrow to finance the purchase of the solar system. Once the loan is fully paid, they have the prospect of relatively modest electricity costs for the expected life of the system. Generating their own electricity through solar and some wind is, in the long run, the cheapest potential energy solution for homes and businesses.

An island-wide solar-powered grid would create a sufficient demand for energy products and services to be the foundation of an industry with potential for hundreds of jobs, for advisory services, installation, maintenance, trouble-shooting and repair, product development, quality control, and information technology, finance, marketing and other business services specific to the solar electricity business. As Barbados builds a sizeable solar energy sector with a wide range of domestic expertise, prospects for selling that expertise abroad would open up, and this sector could become a significant source of foreign exchange earnings, and a way of further diversifying the country's foreign earning potential.

Powering our country by using solar power, a natural resource that Barbados has in abundance, would produce a truly remarkable saving in foreign currency spending. Fuel imports are in the region of $1 billion every year, or about one-third of everything we import. Converting fully to solar generation would probably cut that bill in half, or even lower, if accompanied by widespread use of electricity for transportation and the use of natural and petroleum gas for supplementary power generation. An additional $500 million of foreign exchange annually would provide a substantial boost to Barbados' economic growth.

The fly in the ointment is cost. The solar generating systems have now become as affordable as motor cars, if not more so, and the expected life of the systems make their installation an attractive proposition. However, storage is not yet as affordable, or as long-lived. It may well be the case that centralised storage is the more efficient in the long run. I really don't know. Also, things may change for the better. The Tesla company, which makes electric cars, intends to build an enormous factory in the US to build batteries, with the express purpose of bringing down their costs, worldwide. And I recently read claims by another international company of technological breakthroughs to increase battery efficiency and lengthen the expected life of batteries.

The biggest obstacle in the way of a solar energy future for Barbados, however, is the grid for the distribution of electricity across the island. I am made to understand that the grid we have is designed around a centralised source of power, which is trunked along main arteries to strategically located nodes, for distribution to homes and businesses in the vicinity. In the journey from generator to home, power has to be stepped down several times, so households and businesses can use it. The current grid is dumb, but it doesn't matter, because there is never any significant change in the power transmitted at any point in the system. The load at each stage of the distribution system is carefully controlled (by transformers) to ensure that it always remains within close tolerances.

In contrast, the grid that would be required for solar generation across the country would need to be a low-power one across the entire system, and would have to have a smart computer brain to help it manage daily fluctuations in generation. The design, testing and implementation of such a grid would be a major undertaking, and it would have to be planned and implemented over several years. Finance would have to be secured, and the cost of servicing funds raised to upgrade the distribution grid might require an increase in electricity supply costs in the near term.

In order to realise our real potential for green energy, it seems to me that Barbados must make strategic decisions with respect to the cost of re-engineering the grid. The initiatives that we have taken to spur the use of alternative power have taken root, and we are witnessing an explosion of interest in solar installations. However, all parties to the debate must now focus on the grid, because we are already on notice that the existing grid cannot handle solar input beyond levels which are not too far ahead of us.

These are a layman's observations, and I offer them for the consideration of those who have the responsibility to secure the future of energy in Barbados. My contribution is in highlighting the potential economic benefits, to all of us and to our country.