Debating Electricity Supply

Grenlec's delegation and other stakeholers at the electricity reform consultation

By Linda Straker

A representative from Grenada’s lone electricity provider believes that allowing multiple licensees to engage in electricity generation, and also potentially to engage in electricity transmission & distribution, will not work for the benefit of consumers.

“GRENLEC contends that the small size of Grenada and its electricity system would prevent an efficient and cost-effective competitive market from functioning properly,” said Murray Skeete, Director of GRENLEC and Vice President of Engineering and Regulation with WRB Enterprises, the majority shareholder and operator of GRENLEC.

Addressing a national consultation on electricity reform, Skeete said there is substantial reason to fear that introducing multiple generation and/or network licensees into Grenada’s relatively small and insular market could materially increase electricity costs for some, or even many customers, and destabilise the reliability of Grenada’s energy network.

Quoting from ICF Resources, a recognised leader in international energy consulting with significant experience in Caribbean utility operations, he said that following a comparative analysis of the power industry structure and potential for utility unbundling and competitive energy procurement in Grenada, ICF concluded that the incremental cost of duplicating operations to separate generation from transmission & distribution on Grenada will carry a much higher cost per customer compared to a larger utility.

The report states: “… it appears that unbundling Grenada’s generation and wires businesses would be an endeavor more likely to increase costs than provide significant benefits. The endeavor carries risk for the system and for Grenada.”

Skeete also said that utility-scale renewable energy generation will not necessarily drive down prices. “Once again, although wind and solar power costs have been steadily decreasing worldwide for many years, the size of Grenada 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. It’s simply a matter of scale,” he told a wide cross-section of stakeholders who turned out for the first consultation on the new draft electricity legislation.

Elaborating further, Skeete said that at today’s lower fuel prices, most renewable technologies are not competitive with traditional fossil fuel generation. “Nonetheless, deploying renewable technologies now can help lessen Grenada’s dependence on foreign fuel when higher fuel prices return. However, it is essential to recognise that renewable generation technologies will not necessarily drive down retail prices in the near term,” he said

“The reason for this is simple and unavoidable – intermittent renewable technologies only displace the need to burn fossil fuel, and not the capital infrastructure that must remain for the frequent times when wind and solar conditions cannot support the system’s overall power needs,” he added.

Gregory Bowen Minister for Public Utilities told the audience the electricity consultation that energy reform is not anti-GRENLEC or WRB but Pro-Grenada. He further said that Energy Reform is not only a concern to Government but all Grenadians. Explaining that energy is a developmental issue and unless it is addressed creatively, it will put the next generation at a disadvantage.

This electricity reform project is funded by a World Bank loan of two zero-interest credits for a total of US$5.6 million, to help Grenada and Saint Lucia establish the Eastern Caribbean Energy Regulatory Authority. As a regional entity, ECERA will improve electricity service delivery and diversify sources of energy generation, including renewables, benefiting electricity consumers across the Organization of Eastern Caribbean States (OECS) countries. The consultant to the project is Janis Brennan.

Following Wednesday’s consultation, Ms Brennan is expected to redraft the legislation and then recirculate for further review.

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