Trinidad and Tobago’s electricity generation is completely fired by fuel, but only 8% of its natural gas output is channelled to electricity generation. Directing the gas to its power stations deprives the country of potential revenues that could be gained from selling liquefied natural gas (LNG) as feedstock, especially given that only one of two Latin American countries exports LNG, most of which goes to the US, or as feedstock for the production of petrochemicals such as ammonia and urea. To this end, Thackwray Driver, president and CEO of the Energy Chamber of T&T, argues that the amount of gas directed towards power generation could be reduced. “There is a lot of additional revenue that we could be making,” he told OBG, suggesting that the 8% of the country’s gas used for power generation could be halved. In order to optimise energy efficiency he proposed that renewables could be brought into the mix, leaving more gas for export.
Meanwhile, T&T’s relatively high CO emissions from gas-fired electricity generation highlight the country’s need to adopt renewable energy, such as photovoltaic solar and wind power, which would also address the issue of gas shortages.
Government Focus
Despite the government having set a 10% target for the country’s energy matrix to be made up of renewables by 2021, the development of such power projects remains on the drawing board. In the meantime energy efficiency in electricity generation has been identified by Vincent Pereira, former chairman of the Energy Chamber, as a priority issue. “Investment in energy efficiency in electricity generation could result in very significant savings for the country, as gas diverted from electricity generation can be channelled to high-value petrochemicals or LNG production,” Pereira stated in the chamber’s 2017 annual review. “T&T needs to quickly build capacity in renewable energy technologies and develop our expertise in this rapidly growing sector. If we do not, we face the risk of being left behind,” Pereira added.
However, when announcing the government’s intention to increase the proportion of renewables in the country’s energy matrix in October 2015, Courtenay Mark, assistant general manager of the T&T Electricity Commission (T&TEC) said that, while the commission does not foresee any technical or interconnectivity challenges of introducing renewables to the mix, he did predict that “any challenges would be related to changes in legislation to allow interconnectivity and, more importantly, to the regulatory mechanism that would allow T&TEC to cover revenue displaced from renewables.”
In 2016 the government announced it was working on establishing a legislative framework for renewable energy, which would involve the review and amendment of the T&TEC Act, and introducing a feed-in-tariff policy, the implementation of which would involve both the statutory body Regulated Industries Commission and T&TEC. According to Driver, “There are still legislative changes that need to be made to allow people to operate small-scale solar farms and establish independent power producer agreements with T&TEC.”
Power Producers
T&TEC is the state-owned power utility that is responsible for the country’s energy generation, transmission and distribution. Power is also generated by independent power producers that feed electricity to the island nation’s grid via power-purchase agreements with T&TEC. In 1994 T&TEC divested its generation assets to PowerGen, a domestic company in which it holds a 51% stake. PowerGen operates a 838-MW power station at Point Lisas, a 270-MW plant at Port of Spain and 236-MW facility at Penal.
T&T’s other power stations include a 11-MW diesel-fired plant in Scarborough and a 65.6-MW facility in Cove, which converted to natural gas in 2013. Trinity Power, owned by US-based Carib Power Management, operates a gas-fired 225-MW plant at Point Lisas, while Trinidad Generation Unlimited operates the 720-MW station in Union Estate, of which the government became the sole owner in 2013 after buying out the original joint venture partner, US energy provider AES Corporation.
Rising Emissions
According to a 2015 report by the Inter-American Development Bank, rapidly increasing demand for electricity across all sectors, which is in line with GDP growth and reduced exports of crude oil, would result in a larger share of gas being directed to power generation, raising CO emissions as a consequence. “It is therefore essential that concerted efforts are made to introduce a higher percentage of renewable energy into the power generation equation, along with the implementation of energy-efficient practices at both the generation and end-use level,” the report stated.
According to the Energy Chamber, T&T’s population is growing an annual rate of 4%, which means that the country will need another power plant by the early 2020s to meet rising electricity demands. While Driver notes that CO emissions have been dropping, he ascribes that to falling gas production levels and not to policy enactment. This means that ammonium and methanol plants are not operating at full capacity, reiterating the country’s need to produce low-sulphur diesel as incoming international standards will prohibit T&T’s exports of diesel.
Electricity Subsidy
Despite rising demand for power, electricity costs in T&T are subsidised. The Adams Report on Natural Gas Pricing in 1978 recommended that if natural gas is to be used to generate power, then it should be sold at a rate that is affordable for the entire population, forming the basis of T&T’s current electricity subsidy policy. The subsidy protects natural gas demand in the petrochemicals and LNG segments, allowing the population to benefit from low-cost electricity. However, this means that the country is foregoing the opportunity to generate additional streams of revenue, namely from increased gas sales of higher-valued derivatives of natural gas.
The subsidy also impacts the profits of the National Gas Company (NGC). “If NGC raises its gas sale price, the economics for T&TEC and other power generation companies change completely, and electricity rates would have to be subsidised from elsewhere, but the government does not have the finances to do so,” Driver told OBG. Removing the subsidy and raising gas and thus electricity prices could serve as an incentive for the industrial, commercial and residential sectors to transition to renewable energy sources.
However, according to Driver, “The incentives for the country to transition to wind and solar already exist, but people are not seeing it because of the structure of the industry, as the drive for people to invest in renewables is not there.” Therefore, the economy and business environment would benefit from a reduction in the volume of gas destined to power generation, but while the legal structure exists for large-scale renewables plants, small-scale, rooftop solar installations with distributed generation still require legislative changes.
Wind
In a move to assess the potential of renewable energy, the government approved the National Wind Resource Assessment Programme in 2013, which is aimed at harnessing wind power to reduce greenhouse gas emissions and diversify T&T’s energy portfolio. According to the Ministry of Energy and Energy Industries (MEEI), wind farms would be a step towards a lower-carbon society, but first an evaluation of the country’s wind potential is required to facilitate farm development and implementation, to accurately gauge its energy yield and financial projections. The MEEI said the assessment could take about 20 months, after which the government would seek to attract investors and project developers.
While the wind resource assessment programme has been approved, it has yet to be carried out. No announcements for renewable energy projects have been made; however, there has been a great show of interest that suggests that could change in the near future, particularly in the solar segment. “In January 2018 the MEEI issued a call for expressions of interest in grid-scale renewables projects,” Driver told OBG. “There were around 50 responses, a majority of which were for photovoltaic solar activities.”
Though Driver expressed that the country has a lot of potential for wind and solar generation capacity, he noted that more needed to be done. “A lot more detailed work needs to be done to assess that potential. The advantage of wind is that it is less reliant on the time of day. The country has peak demand in the evening, when residents arrive home and turn on the air conditioning,” he told OBG.
Once the expressions of interest have been evaluated by the MEEI, proposals are expected to follow in September 2018. There were also expressions of interest in response to government calls for waste-to-energy projects, Driver told OBG.
Alternative Projects
The chamber set up the Energy Efficiency and Alternative Energy Committee in 2010, which is studying the viability of waste-to-energy projects in collaboration with the University of T&T. The committee is tasked with the responsibility of drawing up a roadmap to help incentivise and increase the share of renewable energy to the country’s generation capacity.
There have also been efforts aimed at consumers to promote energy efficiency on an individual level. In 2012 the Ministry of Energy and Energy Affairs, a local policy and enforcement body, launched a programme that focused on educating the public about the benefits of renewable energy, which included a campaign targeted at households to replace less efficient light bulbs with more efficient ones. Further highlighting the importance of diversifying the country’s energy mix, the Energy Chamber published a report in June 2018, in which it stated that renewables and energy efficiency “must be at the core of energy policy”. While the Energy Chamber acknowledges that the success of the country’s gas industry is based on creating demand for natural gas, especially in petrochemicals, heavy industry and LNG, the downside to this insistence for increased gas production is that “we often forget to plan carefully to make sure that the resources were being used efficiently, and this has especially been the case in electricity generation.”
Next Steps
The discussion surrounding T&T’s transition towards renewable energy and the acknowledgement that it is a necessary step has gained traction in recent years. In June 2017 the island nation hosted a two-day conference on energy efficiency and renewable energy that set out to determine the next moves to be taken by policymakers.
Following the conference, the Sustainable Energy Roadmap and Implementation Plan 2021-30 was drawn up and financed by the EU, and presented to the MEEI in September 2017. The plan concluded that, from all the evidence gathered, the timing was ideal for T&T to transition towards clean energy. Adopting renewable energy would place the country among a cohort of other oil and gas-producing nations that are gradually shifting towards clean energy in hopes of utilising and maintaining their natural resources in high-value processes for the benefit of future generations.
The country is now looking at implementing the necessary legislation and regulatory framework to facilitate that transition. In August 2018 Driver told OBG that there is much to be done in that regard. “T&T has the lowest electricity rate in the Caribbean, and there is a rate review process under way that has yet to be finalised,” he said. “The Regulated Industries Commission [a statutory body] will give its verdict on what the rates should be, and the Cabinet will have the final say.” Driver also added that there is ongoing discussion about more efficient energy usage. “T&T ended up with excess electricity due to a major combined-cycle power station that was built to serve an aluminium smelter, which never came to fruition,” he explained. “The T&TEC has been investing in upgrades to the grid so that more electricity from that power station can be utilised.”
The acknowledgement of T&T’s need to diversify its sources of power generation and adopt renewable energy, backed up by government initiatives and its collaboration with foreign bodies to meet international standards, shows that the country is on track in terms of carrying out its first renewables project. According to local media in July 2018, if the country installs 200 MW of wind and solar power capacity, it could attract up to $500m worth of foreign direct investment for the development of such infrastructure. On top of that, T&T has the potential to benefit from an estimated $200m to $300m of taxes accumulated over the lifetime of the projects.
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