GRENLEC shares the
Grenadian Government’s goals for stabilizing electricity costs and increasing
the use of renewable energy to lessen our dependence on foreign oil. GRENLEC
wants to continue efforts to make changes collaboratively with the Government
and build upon the efficient, reliable, well performing electric system that has
steadily improved the quality of electric service on Grenada since Privatization
The Government of
Grenada’s draft Electricity Supply Bill, 2015 proposes to repeal and replace the
1994 Electricity Supply Act, calling for a comprehensive restructuring of
Grenada’s electricity sector. It intends to open Grenada’s electricity market to
domestic and foreign investment for the generation, transmission and
distribution of electricity. In
addition to GRENLEC, the bill allows multiple licensees to compete for the
production, transmission, distribution and sale of energy. The Government
believes that this new bill will lower electricity costs, reduce dependence on
foreign fuel, and increase reliance on renewable energy through competition.
Analysis shows that it’s not that simple to create a cost-effective,
competitive energy market on island nations as small as Grenada. A recent
industry report analyzing the power industry structure and competitive
procurement in Grenada concluded that: “The
idea of separating GRENLEC into separate generation and transmission entities
would not result in material benefits, and would instead be likely to result in
cost increases that could be detrimental to Grenada’s electricity customers and
This fact sheet
addresses some of the myths and misconceptions about energy competition and
renewable energy to help you understand the negative impact that this draft bill
can have on the cost and reliability of electric service in Grenada.
Grenada has high electricity prices compared to
the rest of the world.
current average electricity price (US$0.38/kWh)) is comparable to other
small Caribbean island nations with similar characteristics. On a larger
scale, with a population more than ten times that of Grenada, the U.S.
Hawaiian Islands’ average residential rates are US$0.35-$0.46/kWh.
regulated by the 1994 Electricity Supply Act. Non-fuel charge
adjustments must be 2% below Grenada’s annual inflation rate. In fact,
the non-fuel base rate has
decreased 23% when adjusted for inflation over the last 20
years. GRENLEC does not have control over Value Added Tax (VAT) and the
environmental levy, which GRENLEC pays directly to Government and the
Solid Waste Management Authority respectively.
Allowing multiple licenses for electricity
generation, as well as network licenses for transmission and
distribution, will drive down consumer prices.
Due to the
relatively small size of our country and our energy demand, we are not
able to benefit from economies of scale that allows a competitive energy
market to function cost-effectively.
independent power producers and operators into our environment can
increase costs with the duplication of systems, administrative
overheads, legal and other operational and management expenses.
transmission and distribution systems will unlikely result in cost
reductions, and can destabilize the reliability of Grenada’s energy
developing a fair, competent, experienced regulatory body with defined
roles, responsibilities and accountability will be critical. Those costs
will be borne by customers.
The cost of
regulating multiple power generators and transmission & distribution
networks will inherently be greater than regulating one integrated
utility. These additional administration costs will be passed on to
RENLEC’s exclusive license for electricity
generation, transmission and distribution has impeded the development of
utility-scale renewable energy generation.
pursued renewable energy options since 1996, with efforts escalating
after the economic shocks of 2008 international oil price spikes that
caused record high electricity price levels. Until then, pricing for
most renewable technologies was not economical. The cost of generation
from renewable energy was greater than the avoided cost of fossil fuel.
invested in renewable energy projects over the last decade as a
cost-effective way to develop an economical, diverse, and sustainable
Voluntary Customer Renewable Energy Interconnection Programme—the first
of its kind in the Caribbean—includes more than 75 customer sites for
installed capacity approaching 800 kW as it moves into its third phase.
made multiple proposals to the Government for major renewable energy
projects, including geothermal, wind and solar, which have not resulted
in positive action.
Utility-scale renewable energy generation will
drive down prices.
and solar costs are decreasing, the size of Grenada, availability of
suitable land, and the relatively small scale of any renewable projects
that can be installed will result in significantly higher installed
costs than would pertain on larger systems due to economies of scale.
renewable energy (solar and wind) only offsets the cost of burning fuel.
Power needs to be available when weather conditions are not conducive to
renewable generation. The present capital infrastructure must remain to
support the system’s overall needs.
associated with base-load renewable energy generation, such as
geothermal, are extremely difficult to predict without expending
significant exploration and development dollars. Pricing from around the
world suggest that it might yield energy costs at or above Grenada’s
current cost of traditional fuel generation.
intermittent renewable generation resources often requires additional
investment in transmission system upgrades to ensure quality and
Significant increased reliance on renewable energy
generation cannot have any adverse operational impacts on the
High levels of
intermittent renewable energy generation penetration on isolated island
systems is technologically challenging for the reliability of the
electrical grid system. Utilities in Hawaii and California have been
struggling to maintain grid stability in environments with high levels
of customer connections for roof-top solar. To date, we have not found a
high penetration of intermittent renewable energy systems operating on
an unsubsidized, commercial basis.
Greater self-generation of electricity will
benefit all citizens and businesses.
are able to take advantage of self generation more readily than most
lower-income households. This could leave the burden of paying a larger,
disproportionate share of the fixed electrical system costs to customers
who cannot afford to invest in renewable energy.
Greater politicization and increased governmental
control over the electricity sector will lead to more efficient and
reliable electricity services.
Government control over the electricity sector can have an adverse
effect on low-risk investors and discourage investment in lower-return,
longer-yield technologies such as renewable generation, energy
efficiency and energy storage.
control of the electric power sector increases risk due to the potential
for political interference and disruptions, resulting in higher
administration and capital costs which ultimately leads to a higher cost
of electricity for customers and threatens reliability.
world-wide best practices demonstrate that private-public partnerships
with a fair, competent regulatory system is better than Government at
managing and delivering vital utility services.
GRENLEC supports our Government’s goals of lowering energy costs and
reducing dependence on foreign fuel by increasing renewable energy generation.
However, this draft bill will not achieve these goals. GRENLEC asks the
Government for collaboration to create solutions that will foster mutual goals
for cost control, increased use of renewable energy, reliability, and
environmental stewardship in the best interest of our economy and citizens.
more information, please contact GRENLEC at
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