A Unique Approach For Sustainable Energy In Trinidad And Tobago

Abbreviations and AcronymsixAbbreviations and AcronymsADOAutomotive Diesel OilAEAlternative EnergyAEPAnnual Energy ProductionAOEAnnual Operating ExpensesBOETrinidad and Tobago Board of erate-TransferCADCentro de Alianzas para el DesarrolloCaOCalcium OxideCCGTCombined Cycle Gas TurbineCENEuropean Committee for StandardizationCFLCompact fluorescent lampCHENACTCaribbean Hotels Energy Efficiency Action ProgrammeCHPCombined Heat and PowerCO2Carbon DioxideCRECCaribbean Renewable Energy CentreCRFCapital Recovery FactorCSPConcentrated Solar PowerDNIDirect Normal IrradianceECCESCO Certification CommitteeECPAEnergy and Climate Partnership of the AmericasEEEnergy EfficiencyEECEnergy Efficiency CommitteeEPCEnergy Performance ContractingESCOEnergy Service CompanyEUEuropean UnionEVOEfficiency Valuation OrganizationFCRFixed Charge RateGDPGross Domestic ProductGEFGlobal Environment Facility

A Unique Approach for Sustainable Energy in Trinidad and TobagoxGHGGreenhouse GasesGoRTTThe Government of the Republic of Trinidad and TobagoHDCTrinidad and Tobago Housing Development CorporationICCInstalled Capital CostIDBInter-American Development BankIEAInternational Energy AgencyIMFInternational Monetary FundIPPIndependent Power ProducerIRENAInternational Renewable Energy AgencyISOInternational Standards OrganisationLCOELevelized Cost of EnergyLEDLight emitting diodeLNGLiquefied Natural GasLPGLiquid Petroleum GasUNITSbcfbillion cubic feetGJGigajoule, 109 Joule (energy)GWhGigawatt-hourshaHectarekW, kWhkilowatt, kilowatt-hours (electrical power and work)MMBTUMillion British Thermal UnitsMMSCF/DMillions of Standard Cubic Feet per dayMW, MWhMegawatt, Megawatt-hours (electrical power and work)Nm , mNorm cubic meter, cubic metert, ktton, 103 tonst/atons per yeart/dtons per daytcftrillion cubic feetTWhTerawatt-hours33

1Executive SummaryThe Government of the Republic of Trinidad and Tobago (GORTT) has received a PolicyBased Loan (PBL) (TT-L1023) from the Inter-American Development Bank (IDB). This PBLfor the Sustainable Energy Program consists of three different operations, each with specificinstitutional and policy goals. The IDB hired the consortium of Centre of Partnerships forDevelopment (CAD), Projekt-Consult and LKS in 2012 to support the Ministry of Energy andEnergy Affairs (MEEA) with technical assistance in the development of policies and activities that will promote the deployment of Renewable Energy (RE) and the implementation ofEnergy Efficiency (EE) measures.The following is the Final Report of the consultancy services undertaken. It defines the baseline for electricity generation and carbon dioxide emissions, provides recommendations onpolicies for a Sustainable Energy future, assesses the potential for EE in T&T and analysesthe options for different RE technologies and their possible uptake in T&T.Baseline for Electricity Generation and Carbon Dioxide EmissionsIn 2010, Trinidad and Tobago generated 8.5 TWh of electricity with CO2 emissions of 700g for every kWh generated. When compared to international benchmarks for 2010, thesefigures demonstrate a high electricity consumption and CO2 emissions per capita from energy-related activities at nearly 2.5 times the world average.1 Plans are identified to improvethe efficiency of the existing electricity generating plants as well as an intention to incorporate a small percentage of RE-based generation over the coming years.The electricity generation is to almost 100% based on natural gas. The contribution of REgeneration is negligible with only a few residential and commercial micro-scale systems connected to the grid or operating as stand-alone systems.1International Energy Agency: CO2 Emissions from fuel combustion, 2012.

A Unique Approach for Sustainable Energy in Trinidad and TobagoxiiT&T has large natural gas reserves and gas extraction has increased significantly over the past22 years from 177 bcf in 1990 to 811 bcf in 2011. There has been no shortage of gas forlocal consumption and due to a substantial increase in the industrial natural gas use, powergeneration only accounts for 8% of the annual gas production, with 56% being exported asLNG (liquefied natural gas). This abundance accompanied by low prices has made gas the obvious choice of energy for electricity generation up to now and for the medium-term future.However, a rapidly increasing demand for electricity in all sectors in line with GDP growthand reduced exportation of Crude Oil will result in a larger proportion of gas being designated to power generation, with the consequent increase in local CO2 emissions. It is therefore essential that concerted efforts are made to introduce a higher percentage of RE intothe power generation equation along with parallel EE implementation at both the generation and end-use level.Based on the growth rates seen over the past 20 years (average 4.4% per annum) it is expected that by 2020, T&T’s gross power generation output will be 13.0 TWh, equivalent toaround 10,000 kWh per capita, far higher than in many industrialized countries, unless demand-curbing measures are being introduced.2 The projected increase in consumption needsto be tackled accordingly. When extrapolating this further to 2032, T&T’s gross power generation output could reach almost 16.8 TWh, equivalent to around 12,000 kWh per capita, under a business-as-usual scenario. However, industrialized nations experience a saturation of electricity consumption at some point.An elevated electricity demand will need to be more efficiently generated in order to avoidaugmenting carbon emissions from increased fuel consumption. The thermal efficiency of theexisting eight power plants is low. The proposed measures, which consist mainly in substituting simple-cycle gas turbines with combined-cycle plants could achieve a 45% efficiencyimprovement by 2020, a significant step forward against current efficiency rates of an average of about 27%. Moreover, looking as far as 2032, such energy saving measures will enable the natural gas production sector to increase its share of exports, generating increasedrevenue compared to the cost-inefficient and subsidized domestic market.EE measures implemented in buildings and industrial processes could significantly lower the demand for electricity and related gas consumption, which in turn would lead to reduced CO2 emissions.E.g. 7,081 kWh/cap. In Germany and 5,516 kWh/cap. in the United Kingdom in 2011. See: ttp://wdi.worldbank.org/table/5.112

Executive SummaryxiiiHowever, there are currently various barriers, which do not incentivize the implementation of EE measures and technologies; one of these are the existing low tariffs for electricity. Due to the reduced rates for local gas consumption, electricity customers in T&T enjoyvery low tariffs in comparison to other countries in the region, with prices seven times lower than the Caribbean average. Negative consequences include potential discouragement ofboth supply-side and demand-side efficiency improvements, the promotion of non-economic consumption of energy. Finally and importantly in the context of this assignment, fossilfuel energy subsidies hinder the development of RE technologies by making them economically uncompetitive (WB, 2010).Increasing the percentage of RE in T&T’s electricity generation mix will be vital in reducing overall CO2 emissions. There are a number of zero carbon technologies available, whichcould potentially be applied both at a national and local scale to generate emission-free electricity and reduce the country’s carbon footprint. GoRTT has expressed its plan to increasethe share of RE-based power generation and has envisaged a respective target of 60 MW REcapacity by 2020 as part of its Green Paper. Although small (around 2.5% of overall powergeneration capacity) it will be a step forward in reducing overall emissions and is a foundation, on which further RE projects can be built on.Legal and Regulatory Framework and Supporting PoliciesThe most important policy is the Green Paper on Sustainable Energy that is currently underdevelopment and will be fed into a national consultation process for further discussion. TheGreen Paper will provide the overall guidelines for implementation of EE and RE measures inthe future. While the draft Green Paper envisages to increase the share of RE to about 2.5%of overall power generation by 2020, the consultants recommend raising this target to at least4% to create sufficient market size that could then lead to lower specific costs and a strengthened business sector. As under this scenario sufficient market size to make RE more attractivewould have been reached, it is expected that a 0.5% increase per year in the first 8 years up to2020, followed by a 1% increase thereafter, yielding a 16% share of RE electricity by 2032.In order to create the legal and regulatory requirements for RE in T&T it will be necessaryto amend the Trinidad and Tobago Electricity Commission Act that currently does not allow for wheeling or the feeding of electricity from independent operators into the grid without consent of the state-owned utility. Once the legal framework is in place, it is suggested to concentrate on the development of feed-in tariffs for grid-connected smaller-scaleRE facilities, namely solar PV and small, as sources of RE with the largest potential. Theintroduction of a net-metering or net-billing schemes are not advisable under the currentconditions with highly subsidized consumer tariff rates, as PV investments would need sig-

A Unique Approach for Sustainable Energy in Trinidad and Tobagoxivnificant additional financial and fiscal incentives to be competitive. For utility-scale windand solar plants, competitive bidding is recommended, which will allow site and capacityplanning that fits generation expansion plans and uses existing resources adequately. Tostimulate the initial uptake of household PV systems, it is recommended that a 100 roofsprogram be developed.Low electricity tariffs are one major reason for low energy efficiency in T&T. In order to exploit the potential of EE and RE in the country, electricity tariffs need to be further increased.Other policy recommendations that could have a visible impact on energy efficiency includethe enactment of an Energy Efficiency Law, as well as demand-side-management programs,a market ban of inefficient consumer products, such as incandescent light bulbs, the development of minimum efficiency standards and labelling programs, as well as the introductionof energy-related building standards, including the mandatory use of solar water heaters atleast in specific cases. It is also recommended to expand the infrastructure in a way that SMEscan benefit from direct supply of natural gas and to install smart meters.Energy Efficiency (EE)It is widely accepted that EE is one of the least-cost ways of satisfying growing demand forenergy services. No comprehensive study has previously been made of the EE potential inTrinidad and Tobago, but our review indicates a unique case in the Caribbean: very low retailenergy prices; a per-capita energy consumption exceeding North American and most Europeanlevels; and a low appetite for EE technologies and practices across the board.The most important barriers to EE uptake are the country’s low retail energy prices (whichare largely a consequence of price subsidies employed by the Government) and low levels ofpublic energy awareness and literacy. Unlike elsewhere in the Caribbean, limited access tofinancing is not a factor of significance.In relation to policy-setting, the uptake of EE technologies will be influenced by the specific mixof and interaction between: information provided, incentives set and regulations imposed by theauthorities. Policy in turn must translate into specific programs in each sector as proposed below.The residential sector is almost fully electrified and consumes 29% of total electricity.Average household consumption is the highest in the CARICOM region, and it is consideredthat there is a large potential for energy savings through efficiency in the sector. Four mainresidential energy efficiency interventions are recommended, aimed at:xx Reducing the use of electricity for water heating;xx Encouraging the use of energy-efficient appliances and lighting;

Executive Summaryxvxx Reducing energy consumption in the social housing sector;xx Engaging and motivating consumers to adopt no-cost, durable energy savings behaviours.Over the first five years, estimated savings from the recommended residential EE measures,would amount to 930 GWh of electricity worth US 46.5 million at current electricity rates;and avoided emissions of some 651 kt of carbon dioxide (CO2).Trinidad and Tobago has over 6,300 hotel rooms, with a total annual electricity consumptionestimated at 76 GWh. It is recommended that the hotel sector invests in EE interventions aspart of a holistic sustainability strategy, aimed at increasing overall sector performance. Inthis context, we propose four general program interventions, to:xx Improve air-conditioning efficiency;xx Use more efficient lighting and controls;xx Use more efficient equipment and appliances;xx Encourage green hotel certification.Based on an assessment, implementation of these measures can allow the hotel sector toachieve aggregate savings of 10.3 GWh of electricity over a five-year period.Overall, the commercial and industrial sector consumed some 5,600 GWh of electricity in2011, which was two-thirds of the country’s total electricity consumption. In the absenceof specific industrial sector end-use consumption data, it can reasonably be assumed, thatelectric motors, process heating, cooling, ventilation and lighting are significant end-users.The relevant EE investments that processing and manufacturing firms should make include:xx Retrofit of motors with Variable-Frequency Drive (VFD) systems;3xx Process heating retrofits;xx Installation of high-efficiency, chilled beam air-conditioning systems;xx Lighting replacements/retrofits and implementation of lighting control systems.It is estimated that over the first five years, a modest total of 224 commercial and industrial customers will take advantage of the proposed Energy Service Company (ESCO) 150%Tax Allowance Program, resulting in a cumulative savings over the period of approximately 33 GWh of electricity.A Variable-Frequency Drive (VFD) or Variable-Speed Drive (VSD), is an electronic control device usedin electro-mechanical drive systems to control the speed and turning force of alternating current motors, by varying the motor input frequency and voltage. VFDs are used in applications ranging fromsmall appliances to the largest motors and compressors, and allow significant energy savings comparedto operation in fixed-speed mode.3

A Unique Approach for Sustainable Energy in Trinidad and TobagoxviThe uptake of viable EE technologies will be influenced by the specific mix of information,incentives and regulations, delivered under the umbrella of Government policy. GoRTT hasalready commenced education and awareness programs, as well as incentives for promotingEE. Continued government action in four areas is recommended:xx Delivery of information;xx Design and implementation of incentives;xx Enacting and enforcement of regulations;xx Design and implementation of specific projects (such as energy audits and interventionson high-profile government buildings).In relation to institutional arrangements, the establishment of a Trinidad and Tobago EnergyAgency (TTEA) is recommended; with responsibility for ensuring the promotion of RE andEE, supporting the MEEA by outsourcing activities that are not part of the core functions ofthe Ministry.Given GoRTT’s maintenance of a system of significant price subsidies, the market situationdoes not encourage private investment in EE and it is recommended that GoRTT must leadby example with specific initiatives.As part of this intervention, GoRTT, with support from external energy experts, has undertaken energy audits in public buildings. Results indicate that energy saving potentials are high in all the selected buildings. Energy savings of over 22% can be achievedthrough the implementation of energy conservation and/or renewable energy measureswith a payback time of less than five years. Beside these promising saving potentials,the audits also resulted in a number of interesting lessons for the MEEA and the ESCOCertification Committee (ECC). These included the need for capacity building of auditors, and the need for an increased focus on passive solutions with regard to building envelope improvements.The proposed five-year budget plan for the implementation of all EE measures estimates anexpenditure of US 23.3 million, resulting in cumulative energy savings of 972.9 GWh, costsavings of US 48.6 million and avoided emissions of 681kt of CO2 over the period.To promote EE in the housing sector, a full Global Environment Facility (GEF) proposal hasbeen developed. The Project Information Form (PIF) was approved as of early 2014. The GEFproject intents to focus on promoting EE in the social housing sector, assisting their low-income users to save as much energy and expenditures as possible. It is expected that the experiences gained in this project will also have considerable effect on the housing market anddomestic sector in general.

Executive SummaryxviiThe potential of different RE technologies in T&TAll possible technologies for RE in T&T that could theoretically be applied, have been assessed. PV, SWH and onshore wind energy are the most promising technologies. To supporta generous uptake of these technologies, detailed technical studies are necessary, suchas a detailed wind measurement to assess the potential electricity yield at concrete sites.Wind PowerWhile wind power is not used in T&T at present, the GoRTT plans to install a wind capacityequivalent of 5% of the total generation capacity by 2020. T&T lies in an area with strongwinds all year round and the GoRTT is currently undertaking a wind assessment to define theexact potential locations for wind farms. Based on experiences in other Caribbean islands itseems likely that a capacity factor of at least 35% can be achieved.It is relevant to note that when it comes to the cost of installing wind turbines in T&T, it ismore expensive than in most other countries, due to the lack of road infras

6.3 Offshore Wind Energy 137 Status of offshore wind energy 137 Costs of offshore wind power 138 Offshore wind power and risks of hurricanes 139 . Current Obstacles for the Implementation of WtE projects 181 Suggested Implementation Strategy 182 WtE in other Island Countries 184 Suggested Follow-Ups 187 Conclusions 188