On Feed-in-Tariffs for Renewable Energy Technologies Above 1MW and up to 10MW

• Jurisdiction: Barbados
• Court: Fair Trading Commission (Barbados)
• Judgment Date: 31 December 2022
• Docket Number: Document No.: FTCUR/DECFIT1-10MW/2022-14

On Feed-in-Tariffs for Renewable Energy Technologies Above 1MW and up to 10MW

Document No.: FTCUR/DECFIT1-10MW/2022-14

FAIR TRADING COMMISSION

DECISION

Table of Contents

List of Abbreviations	4
Section 1 Decision Summary	5
Section 2 Transitioning to Renewable Energy	8
2.1 Introduction	8
2.1 Economic Regulator's Role In The Energy Transition	9
2.2 Submission of RE Project Information to the Commission	10
Section 3 Legislative Framework	11
3.1 Legislative Framework	11
Section 4 Feed-In-Tariff Design and Assumptions	14
4.1 Development of Tariffs	14
4.2 FIT Policy Design Features	15
4.3 Counterparty and Obligation to Purchase	16
4.4 Addressing Counterproductive Issues	17
4.5 Billing and Compensation Scheme for RE Projects	17
4.6 FIT Agreement	17
4.7 Interconnection Agreement	17
4.8 Interconnection Cost Treatment	17
4.9 Cost Recovery	18
4.10 FIT Impact on Customer Rates	18
4.11 FIT Model Assumptions	18
Section 5 The Determination	24
Appendix 1	27

List of Abbreviations

AC	Alternating Current
BLPC	Barbados Light & Power Company Limited
BNEP	Barbados National Energy Policy
COD	Commercial Operation Date
ELPA	Electric Light and Power Act, 2013–21
FCA	Fuel Clause Adjustment
FIT	Feed-in-Tariff
FTC	Fair Trading Commission
FTCA	Fair Trading Commission Act CAP. 326C of the Laws of Barbados (as amended)
GoB	Government of Barbados
IPP	Independent Power Producer
KV	Kilovolt
KWh	Kilowatt Hour
KWp	Kilowatt Peak
LCOE	Levelised Cost of Energy
MW	Megawatt
NDC	National Determined Contributions
PV	Photovoltaic
RE	Renewable Energy
REC	Renewable Energy Credit
The Commission	The Fair Trading Commission
URA	Utilities Regulation Act CAP. 282 (as amended)

Section 1 Decision Summary

1 The GoB expects an economy driven by 100% RE by 2030. This thrust towards the exploitation of RE indigenous resources is set out in the BNEP. FIT programmes were adopted as a vehicle to accelerate the deployment of RE projects and expand the RE sector. The targeting of utility scale RE projects sized above 1 MW and up to 10 MW under a FIT regime was accepted by stakeholders as an approach to achieve cost effective electricity prices and provide investment opportunities. In light of the current volatility in prices and market conditions observed during the review process and based on the FITs determined for new participants in the RE market and the impact of these rates on customer electricity prices, the FITs herein shall remain in place for one year with respect to this 2023 FIT programme:

• I The dates of the commencement and termination of the FIT programme shall be January 1, 2023 and December 31, 2023, respectively. All applicable technology project categories, rates, and assigned capacity for systems sized above 1 MW and up to 5 MW as set out in paragraph IV, shall remain in place for a full 12 months of the programme. A review of this segment of the programme shall be undertaken at least 3 months before the expected termination date or when the allocated capacity of 40 MW is exhausted. For RE technologies over 5 MW and up to 10 MW in size, the rates, terms and conditions for this segment of the programme shall remain in place for seven (7) months from the January 1, 2023 and conclude on July 31, 2023 or until a competitive procurement framework is established.

• II All terms for FITs procured under this decision shall remain constant for the duration of the 20-year contract.

• III The FIT determined for the technology classes were derived via the LCOE methodology and utilised the multi-criteria approach expressed in the BNEP document. Rates are differentiated by technology and size and shall be based on a fixed 20-year term with no front-loading. These details are captured in the Table following.

  Fit Policy Design

  FIT Policy Element	RE Systems above 1 MW up to and including 10 MW
  Proposed Effective Date	January 1, 2023
  Rate: Fixed, Tiered or Variable Options	Fixed
  Rate: Differentiated by Technology & Size	Yes
  Tariff Duration	20 years
  Administratively-Determined or Competitively-Bid	Administratively-Determined
  Presumed Off-taker	BLPC
  Quantity Covered by FIT	100% of output

• IV The applicable categories, rates and capacity allocation shall be as outlined below:

  Technology, Size Category	January 1, 2023 – December 31, 2023 FIT (BDS cents/kWh)	January 1, 2023 – December 31, 2023 FIT (BDS cents/kWh) Allocation (MW)
  Solar PV, above 1 MW and up to 5 MW	26.75
  Land-based Wind, above 1 MW and up to 5 MW	26.25
  Solar PV, above 5 MW and up to 10 MW	25.25
  Land-based Wind, above 5 MW and up to 10 MW	24.25
  Total Allocation	40

• V References to capacity in this Decision means alternating current — AC. Where allocated capacity for any technology category remains unutilised, said capacity shall be transferred from one technology to the other, where applicable.

• VI The revenue metering configuration shall be applied in accordance with established prudent industry practice. The billing arrangement adopted shall be applied according to the specificity of the project. Where it is practical to utilise either “Buy all/Sell all” or “Sale of Excess” billing modalities, the appropriate option shall be adopted.

• VII RE procured under this programme shall be purchased at the rates determined herein and shall apply to the applicable FIT agreement.

• VIII All future and existing RE generators connecting to the 24.9 KV transmission system shall pay the full interconnection cost estimated in the FIT and the cost incurred pursuant to the interconnection agreement.

• IX Interconnection cost outside of the cost covered in the FIT shall be shared between the IPP and BLPC according to the ratio of 25% / 75% of this cost. This cost includes the cost of the substation, switchgear, cabling, and poles required to interconnect the project. Where a substation facilitates the interconnection of an additional RE generator, the IPP is required to contribute 25% of the cost associated with that interconnection.

• X All prudent costs of interconnection of transmission RE equipment incurred by the BLPC shall be recovered through an approved appropriate recovery mechanism.

• XI At the end of the 20-year FIT contract period, a new contract will need to be negotiated based on the existing value of the assets, the avoided cost of fuel or such other factors as may be determined by the Commission, in its sole discretion, at that time.

Section 2 Transitioning To Renewable Energy

2.1 Introduction

2 The evolving renewable energy sector has been recognised by the GoB as a crucial vehicle to facilitate the transition from a fossil fuel dominated economy to one driven mostly by indigenous RE sources. This thrust towards the target of 100% RE consumption by 2030 is set out in the BNEP. One of the tools which has been implemented to accelerate RE deployment towards the target envisioned is the FIT programmes.

3 On September 24, 2019, the Commission issued its first Decision on Feed-in-Tariffs for Renewable Energy Technologies up to and including 1MW. This was considered a key step towards expanding the RE sector locally. Given the policy objectives identified in the BNEP, a FIT programme which catered to utility scale 1 type projects was issued to the public on September 29, 2020. The implementation of this programme for solar PV and land-based wind technologies above 1 MW and up to 10 MW was pivotal to further promote RE deployment and obtain cost effective benefits from economies of scale. This FIT programme was scheduled to conclude on March 31, 2022 but was later extended until December 31, 2022 following negative price impacts due to the enduring COVID-19 pandemic.

4 From July 12 to August 5, 2022 the Commission conducted a public consultation on the above 1MW and up to 10 MW FIT programme. In total the following seven (7) organisations responded to the consultation:

• • Barbados Light and Power Company Limited (BLPC)

• • Barbados Renewable Energy Association (BREA)

• • Blackstone Megawatt Energy

• • Haymans Solar Inc

• • Pavana Energy Ltd

• • Williams Caribbean Capital

• • Williams Solar

5 A summary of responses from the aforementioned organisations is presented in Appendix 1. The Commission thanks all respondents for their contributions to the Consultation.

2.1 Economic Regulator's Role In The Energy Transition

6 One of the key functions of the economic regulator is to design balanced rates for the RE sector. This task is multifaceted in that the regulator must develop rates that will allow private RE investment to continue to evolve, while ensuring the utility remains financially viable and able to support the energy transition. At the same time, these rates must be such that their impact on the charge consumers are...