By FAY SIMMONS
TRIBUNE Business Reporter
jsimmons@tribunemedia.net
A GRAND Bahama Power Company executive yesterday argued that power purchase agreements (PPA) with independent power providers should mandate that the latter rebuild damaged generation assets after hurricanes.
Neilson Beneby, vice-president of operations, told a regional CARILEC energy conference panel discussion that utilities should not be left carrying the responsibility of restoring electricity when privately-owned generation assets are damaged by extreme weather.
His comments came after a representative of Barbados Light & Power raised concerns about how electricity restoration would work under a government policy targeting 100 per cent renewable energy, where independent power producers and roof-top solar owners could account for about 90 per cent of generation.
Mr Beneby said power purchase agreements should include an obligation to serve, similar to the responsibilities imposed on utilities through their operating licences.
“When you look at a lot of the PPAs, even some here in The Bahamas, you look at some in Barbados. I think there's a very important clause that's missing that does show up in the operator licences that the utilities have, and that's your obligation to serve,” he said.
Mr Beneby argued that ‘force majeure’ provisions in some agreements could leave independent power producers (IPPs) without a continuing obligation to restore generation after an exceptional event.
“If you think about it, for the IPPs, they claim and they get their insurance claim, and they go running off to the bank. There's no duty to build back,” Mr Beneby said. “And then the utility is left holding the bag.”
Mr Beneby said independent power producers should be required to rebuild damaged facilities over the investment period, rather than leaving the utilities they supply to shoulder the responsibility of restoring service to customers.
“The democratisation of generation allows more participants. Good, but you have this obligation to serve as well,” he said. “It's your duty, especially over that investment period, to build back. It's not fair for the utility to have to carry that obligation by themselves.”
The issue has implications for small island electricity markets such as The Bahamas, where hurricanes can damage generation and network infrastructure, and disrupt electricity supply to households and businesses.
Mr Beneby also argued that energy planning must account for the cost of maintaining reliable service, rather than focusing solely on finding the cheapest means of producing electricity.
He said the regional energy transition required a shift in thinking from delivering electricity at the lowest possible cost to providing the most affordable and reliable service.
“In this day and age, everything is increasing, right? The price of everything is increasing. Resilience comes with costs. Reliability comes at a cost,” he said.
Mr Beneby said island utilities face additional challenges because of their limited scale, the up-front capital required for infrastructure and pressure on the cost of financing.
Even renewable energy investments require capital that must ultimately be recovered, whether projects are funded through utilities or independent investors, he added.
Mr Beneby argued that utilities must plan realistically for the resources and financing available to them, rather than announcing targets they lack the capacity to deliver.
“We have to be much more engaging with our customers. We need to listen to understand and build plans around that,” said Mr Beneby.
He also called for greater collaboration among Caribbean utilities, including sharing lessons from previous investments and operational experience, so that individual countries do not have to solve the same problems independently.
The CARILEC discussion examined how Caribbean electricity providers can maintain reliability and build resilience as their energy systems incorporate renewable generation and new market participants.