Towards a National Energy Policy for the Bahamas

by Larry Smith

For the past couple of years - as fuel prices have soared - government has talked about formulating a national energy policy to help minimise economic and social disruption in the event of a global energy crisis.

The need for such a policy was recently underlined by a major new report from the US National Petroleum Council, which listed some "hard truths" about the global energy future over the next 25 years. The Financial Times of London described the report as "a defining moment in the history of the global energy industry."

That's because the NPC is not some idealistic green lobby. It's a privately funded government advisory body that represents the views of the oil and gas industry. And the current chairman is Lee Raymond, a former chief of ExxonMobil.

"Accumulating risks to the supply of reliable, affordable energy require an integrated national strategy," the NPC report said, adding that any policy to address those risks had to balance economic, security and environmental goals.

World energy demand has increased about 60 per cent over the last quarter-century, and is projected to grow by a similar amount over the next couple of decades—due to rising incomes in developing countries as well as population increases. And this growth in demand will be accompanied by significant supply challenges.

"Over the coming decades, the world will need better energy efficiency and all economic, environmentally responsible energy sources available to support and sustain future growth," the NPC warned. "Energy security can be enhanced by moderating demand, expanding and diversifying domestic energy supplies, and strengthening global energy trade and investment.

Think about it - most of the world's transportation energy comes from oil, so if we have a scarcity of transportation all the things we use that come from a distance (including tourists) will become scarce too.

Although more concerned with the political challenge of rising pump prices, the Christie administration did set up an energy and environment ministry in February 2006 headed by Dr Marcus Bethel. One of its key tasks was to draft a policy based on a recent study of the Bahamian energy sector financed by the Inter-American Development Bank.

Dr Bethel also appointed a committee to review energy policies developed by CARICOM, Jamaica, Belize and St Lucia. That panel included representatives from BEC, the BEST Commission, and the Ministries of Financial Services, Transport and Tourism, and was separate from the Petroleum Usage Committee set up in 2005 to review the pricing of imported fuels.

To get the ball rolling, the BEST Commission surveyed major stakeholders in the energy sector early last year - including hotels, oil companies, BEC and other government agencies. All of the respondents stressed the "importance, necessity and urgency" of a national policy that would provide guidance for future energy supply and usage.

So you would expect that by now we would be well on the way to addressing our energy concerns by providing incentives for alternative energy sources, by promoting fuel efficiency and energy conservation, and through long-range planning to meet future power demand - which is projected to grow at 8 per cent a year.

But you would be wrong.

A consultant from the IADB (one Herbert Phillips) did produce a 60-page "roadmap" for the development of a national energy policy, but no-one has followed his directions yet. Energy now comes under the portfolio of Works Minister Earl Deveaux, who told Tough Call that while he is interested in seeing the project completed, he is now focused on other priorities.

Tough Call was able to obtain a copy of the IADB study, which details our soaring energy demand. Total energy use in 2005 was 34.4 million gigajoules - a 32 per cent increase over 2004. (A gigajoule is equivalent to about 278 kilowatt-hours of electricity.) And the Bahamas paid $256 million to import 5.1 million barrels of fuel in 2004, which jumped to $460 million for 6.3 million barrels in 2005 - about 8 per cent of our GDP.

And energy demand is expected to grow at an even faster pace in the years ahead, due to population growth and new investments. In case you didn't know, hotels use enormous amounts of energy, and its cost is critical to the competitiveness of tourism, our chief foreign exchange earner and employer; the business that underpins our standard of living.

In fact, we are expected to import as much as 7.5 million barrels of oil a year over the next five years. Crude prices now stand at over $75 per barrel, but even at a projected average price of $55 a barrel these imports will cost us over $400 million a year. Added to that will be the cost of financing the necessary expansions to our power grid. That's an awful lot of money we have to earn from tourists.

The IADB roadmap argues that since oil price stability is an "unattainable goal", rather than focusing on price controls or subsidies, the government should ensure that energy prices are as realistic as possible in order to send the right signals to consumers. In other words, energy prices should reflect their actual economic, social and environmental cost.

"The effects of higher oil prices could be beneficial in restricting wasteful consumption," the report says. "spurring the search for alternative sources of energy, and increasing awareness of the benefits of conservation, among which are the reduction in demand for energy and environmental protection."

There has been a lot of talk about solar, wind and marine power lately, but for a variety of reasons renewable energy is not produced on a scale which allows for its inclusion in the planning of our power grid. However, even at their current low levels, renewables do help to moderate somewhat the growth in electricity demand.

"The Bahamas now has limited ability to shift quickly to alternative fuels as primary energy sources," the roadmap said. "This means there are fewer options on the supply side and more options on the demand side." In other words, simply increasing the energy efficiency of what we do now can be pretty effective in the short term.

The roadmap outlined a series of goals for a Bahamian energy policy. In summary, they are to promote energy efficiency and energy conservation, to increase the use of environmentally clean energy, to diversify and improve the stability of supply, to enhance storage and delivery capacity, and to meet the basic energy needs of the poor.

One key recommendation was the formation of a national council to promote energy efficiency and monitor a proposed three-year action plan. Another was to make national investments in renewables, require BEC to set targets for producing energy from waste for the national grid, and require public buildings to use renewable energy where possible.

To help the poor adjust to rising energy prices, the roadmap said the government should subsidise special groups through reduced transport fares, low-cost loans for retrofitting houses, and rebates on energy surcharges.

Experts agree that there is no easy solution that can solve the world's energy challenges. We will need a multiplicity of approaches. As well as a good dash of common sense.

Evidence of the growing unease over global energy supplies is the fact that the US Congress is debating new legislation right now to promote energy security, increase production of renewable fuels, and improve the energy efficiency of products, buildings, and vehicles. The Senate version of the Bill calls for the elimination of tax breaks for oil companies, raising vehicle fuel efficiency standards, and extra funding to develop and promote alternative energy technology.

So in the absence of an official Bahamian policy, what can WE do to promote energy security?

Well, the prime minister could easily make a general policy speech at an appropriate time, and officials could be required to discuss and promote energy efficiency and conservation on every possible occasion to sensitise consumers to the issues.

The ban on co-generation of electricity should be lifted immediately. Even for those willing to pay a premium to run their homes or offices on solar power, it is currently illegal. Why should this be the case when BEC cannot meet consumer demand as it is?

Import duties should be lifted on all associated equipment needed to install solar powered devices.

A renewable energy council - consisting of energy auditing firms, water heater installers, researchers, etc. - should be formed to educate consumers and promote this fledgling industry.

We should ban the importation of older gas-guzzling autos without emission controls.

The importation of incandescent light bulbs should either be banned or highly taxed.

We should publicly examine BEC's forward planning, conservation measures and load capabilities, and conduct an independent energy audit of all BEC operations.

The building code should be updated to promote energy and water efficiency in new homes and offices.

The College of the Bahamas should initiate research on renewable energy applications.

These are minimal and inexpensive responses to a major potential problem.

According to the US National Petroleum Council, "It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50-60 percent growth in demand over the next 25 years (The world currently uses about 86 million barrels per day of oil).

"Geopolitical changes coincide with increasingly large and complex technical challenges. Environmental concerns compete with security concerns. Carbon constraints would require huge capital investments to maintain energy. These uncertainties, and the risks they generate, describe the background for understanding supply prospects during the next few decades."

It is simply not prudent to sit on our hands and do nothing in such circumstances. A little common sense will go a long way.

Comments

[ryan carroll]

Great article! I would love to be able to produce my own
electricity and put the excess back into the power grid. I didn't know
it was illegal. It should be encouraged.

As you mentioned, equipment
brought in should be duty free andIknow many of us would jump at the
chance to substantially reduce our power bills.

Many people don't
realize the savings that could be had by changing the way we do things right now. For instance:

1. Replace all bulbs with flouescents.
2.Turn AC thermostat up for a big saving if you have it lower than 75.
3. turn water heater to lowest setting; about 110 degrees.
4. Drive at speed limit or slower to save on gas.
5. Insulate attic in home.
6. Replace single plane windows with double glazed ones.

These are just a few ideas to affect our overall consumption. Many others are out there and can be found with a little research. I think the government should take a more active role in educating consumers by providing an office or department with one or two qualified people trained in the area of energy efficiency, conservation and especially
alternative energy concepts with a view to help us move more over to
solar, wind, etc.

Thank you again for writing your great article. I will be contacting Neko Grant, my parliamentary rep. to lobby him and others for action in this worthy cause.

[larry smith]

Thanks.

I investigated solar for my little 9-person office in Nassau - 30k wouldn't cover it 100%, but even so I might have been tempted with a little incentive and if it wasn't illegal.

Solar panels are duty free and solar water heaters are cost-effective (you can recover the cost in a couple of years), but the associated equipment, such as tanks and fittings, is not. And there are only one or two companies offering this service. There are also other factors like roof installations causing leaks and affecting insurance policies.

Insulating roofs is a no-brainer. I dropped my hurricane insurance two years ago and invested in an acry-tech coating (http://www.acrytech.com), which protects shingles, stops leaks and also insulates. My house is several degrees cooler now.

I also changed all my lightbulbs months ago.

And yes, we all need to lobby harder.

[thinsoldier]

1. Replace all bulbs with flouescents.

Did that. Made no difference...or BEC is a bunch of lying bastards who overcharge the hell out of me.

Going to switch to LED this year and see if it makes a difference.

http://kwc.org/mythbusters/2006/12/episode_69_22000_foot_fall_lig.html
Scroll down to "lights on or off"

http://www.ccrane.com/lights/led-light-bulbs/index.aspx

[thinsoldier]

you may also enjoy this video about bio-diesel

http://video.google.com/videoplay?docid=5254821858533807129

[Jason Hayman]

I simply cannot understand why the Government of The Bahamas is missing the plot so badly. If they don't start getting their act together they are going to miss some huge opportunities and in the not-so-distant future they may not have anything to govern, and will have been implicit in a great tragedy.

See James Hansen, the head of NASA's Goddard Institute for Space Studies's article in the New Scientist last week on sea level rise: http://environment.newscientist.com/channel/earth/climate-change/mg19526141.600-huge-sea-level-rises-are-coming--unless-we-act-now.html

Even if you don't subscribe to the idea of global warming or can't bring yourself to comprehend something that doesn't have an immediate impact on your life, you should consider the impact on your wallet that the latest findings of the IEA will have. Very simply put, even if we are not running out of oil, we can't bring enough production online over the next 10 years to keep up with growing demand. This will drive oil prices sky high and will affect tourism and its profitably in a big way.

Getting away from all the doom and gloom, The Bahamas is in a very enviable position that it is currently wasting. Because of its location and low population density, it is capable of easily supplying all of its energy demands through renewable energy. In fact it could even become an energy exporter, as Florida's energy demand is growing consistently and strongly. This could have a huge impact on the diversity of income for the country but apparently the politicians never bothered learning a bit of basic economics and don't understand the economic impact of importing all the country's energy.

They also clearly don't understand the concept of perverse incentives.

Having been living out of The Bahamas for the past few years and being involved in evaluating renewable energy technology policies in the UK and now being directly involved in developing marine renewable energy technologies, I have watched the situation in The Bahamas with interest and growing dismay.

Anyone who can suggest a way of getting the politician's attention and letting them know that they are sitting on a gold mine capable of transforming their country's economy, as well as placing them in a position from which they can effectively influence other nations' policies by being a leader for once, let me know. I would be more than happy to help in any way that I can.

[Caius St George]

Just a couple of thoughts:-

With regard to solar energy how do we get BEC to allow "net metering" ie surplus power from domestic solar panel production to feed back into the grid? I'm about to equip my home with solar panels and if I can net meter then I don't have to buy batteries as a storage medium. I use the grid to store for my excess power production and buy back the power I gave them during the day. Again short sightedness as this would be a benefit for BEC ie less plant reqd but of course they can't see it that way I am sure.

Water and reverse osmosis. At what cost will this be produced in the future? I think they've dug themselves a hole and shot themselves in the foot, cost of oil increase cost of water increase etc: As opposed to mandating with new construction water tanks under the floor! As was done in days gone by and is done on some out islands. I have just completed my new home in Coral Harbour and for just a few thousand dollars more have a 22,000 gallon tank under my living room and raised my home over 3 feet & I don't need city water any more and don't use it. In fact the valve is turned off but I am still compelled to pay the minimum charge every month!!!!

Enjoy most of your articles! Keep it up

[larry smith]

BEC is obviously not set up for net metering because co-generation is illegal. I would be interested in reviewing your communications with them on this subject.

I am told that the current water barging system will be discontinued within two years when all of NPs water will be produced by RO plants. We are almost at that stage now.

The cost/1000 gallons for barged water is higher than the price of RO water, but the main problem has been reliability because of weather conditions, and water quality is not as good as RO. especially after storm surges or long dry spells.

Requiring rainwater tanks would help to reduce demand but would not solve the problem.

[Caius St George]

There is a school or camp that net meters in south Eleuthera so if they can do it why can't the rest of us?

[larry smith]

The Island School at Cape Eleuthera (www.islandschool.org) is experimenting with wind and solar power, and they are affiliated with a Nassau outfit to install solar water heaters. They are a research operation and have approval to supply some electricity to the area. In any event, I don't think the government would be foolish enough to prosecute a homeowner.

[larry smith]

I might add that the previous minister of the previous government refused to give me a copy of the IADB roadmap - even though he told me it was supposed to form the basis of a public consultation. The present minister of the present government kindly obliged, so I have started the process of public consultation for them.

[dadon589]

Good article. The money govt./BEC have probably spentclose to a billion dollars over the past 20 years. Had we invested in alternative energy sources over the same period, we would have been 100% oil-free by now.

[Noel Rodman]

Your right Larry, too bad about the law and Net Metering in the Bahamas. Hopefully the laws will change and allow everyone to install wind/solar systems to offset the high cost of Bahamian power. Without this small change in the law, no one will receive the full benefit of these power systems, but with the cost of electricity going up at the speed it is, it still will be cost effective to install. Noel Rodman, Sandyport, Nassau, Bahamas

[Andrew Curry]

It seems that the question is, how do we get Government on board ? Here in Abaco duing the summer it is not uncommon for the power to be off every day. For the average home 60% of energy cost come from air conditioning and hot water . If we used a minimum 15 SEER A/C unit , replace traditional hot water units with on- demand or solar and the big one , build our homes with cool roofs , this would greatly effect energy demand. In Bermuda they do a good job with cool roofs . They are all white . They also mandate car sizes and quantities. The Bahamas Government is not proactive so,can we get enough people to make this happen and who wants to lead the way ?