devon gardner, strategies for accelerating the solar water heating market in caricom states, 9-2012

7/30/2019 Devon Gardner, Strategies for Accelerating the Solar Water Heating Market in Caricom States, 9-2012

1/32

Devon O. Niel Gardner, Ph.D.

CSEF III

Marriott Resort, St. Kitts & Nevis

Thursday 13 September 2012


2/32

Background to Project

About Solar Water Heating

Solar Water Heating Penetration

The Barbados Model Some Major Challenges

Key Opportunities

Acknowledgements


3/32





Key Opportunities

Acknowledgements


4/32

Every year, the Caribbean region spends a significantportion of scarce foreign exchange to import liquid

petroleum fuels to provide energy services.

The price of oil on both sides of the Atlantic has this yearreached its highest level since the 2008 Financial Crisis and

continues to hover at around USD 100 per barrel.

It is estimated that some 85 per cent of all electric power inthe Caribbean is still generated with liquid fuel.

Climate change is an energy-related issue as an estimated80 per cent of GHG are generated by the energy sector,primarily form combustion of fossil fuels.


5/32

A key challenge for Caribbean countries is to meet itsenergy needs in a sustainable manner, which woulddecrease dependence on petroleum fuels.

The EU-funded CRECS was designed to build on thefoundation of CREDP, in strengthening capacity for REdevelopment in the areas of policy, awareness and

investments support.

Water heating end-use has significant potential to benefitfrom the increased use of RE in the form of solar waterheating technology.

Project was developed to look at a regional model forpromoting SWH that uses the best practices of theBarbados as well as other experiences, while considering the

specificities of individual member states.


6/32

To design strategies and mechanisms for acceleratingcommercialization and sustainable markettransformation of solar water heating in CARICOMstates, thereby reducing the current use of electricityand fossil fuels for hot water preparation in residential,private service sector and public buildings and, whenapplicable, industrial use.


7/32





Key Opportunities

Acknowledgements


8/32


9/32


10/32


11/32


12/32





Key Opportunities

Acknowledgements


13/32

1.64%

8.24%

52.58%

1.18%

1.97%

5.41%

0.66%

10.25%

0.85%

10.52%

1.71%

0.39%

1.58%0.26%

0.45%

0.16%

1.31%

0.81% ANTIGUA & BARBUDA

THE BAHAMAS

BARBADOS

BELIZE

DOMINICA

GRENADA

GUYANA

JAMAICA

ST. KITTS & NEVIS

ST. LUCIA

ST. VINCENT & THE GRENADINES

SURINAME

TRINIDAD & TOBAGO

ANGUILLA

BERMUDA

BRITISH VIRGIN ISLANDS

CAYMAN ISLANDS

TURKS & CAICOS ISLANDS


14/32

0 50 100 150 200 250 300 350

ANTIGUA & BARBUDA

THE BAHAMAS

BARBADOS

BELIZE

DOMINICA

GRENADA

GUYANA

JAMAICA

ST. KITTS & NEVIS

ST. LUCIA

ST. VINCENT & THE GRENADINES

SURINAME

TRINIDAD & TOBAGO

ANGUILLA

BERMUDA

BRITISH VIRGIN ISLANDS

CAYMAN ISLANDS

TURKS & CAICOS ISLANDS

SWH Installed Capacity/ KWth per 1,000 inhabitants


15/32





Key Opportunities

Acknowledgements


16/32

The great majority of SWHs in Barbados operate on thebasis of a thermosiphon system.

Currently, there are an estimated 35,000 to 40,000 SWHunits installed on the island.

The current Barbados market is estimated at about 2,000systems per year split unevenly among three local

companies Solar Dynamics, SunPower, and Solaris.

It is worth noting also that there are a number of smallbackyard manufacturers operating in Barbados.

Barbados accounts for around 55 per cent of the solar waterheating capacity within CARICOM states.

SWH penetration is around 313.9 KWth per 1,000inhabitants (CARICOM average is ca. 33.4 KWth).


17/32

Perlack, Bob and Hinds, William. Evaluation of the Barbados SolarWater Heating Experience. September 2003

TIMEFRAME EVENT

1970 - 1975 Stagnant economic growth that lasted until 1975.

1973 - 1974 First OPEC oil embargo leading to a quadrupling of world oil prices.

1974 CADEC loan to help establish Solar Dynamics Limited as a means to develop and market SWH units.

1974 Active involvement of an informed government in seeking ways to reduce oil dependency.

1974 Promulgation of the Fiscal Incentives Act:

- Exemption of SWH raw materials (e.g., tanks and collectors) from the 20% import duty; this lowered the installed cost

of a SWH by 5 to 10%.

- A 30% consumption tax placed on conventional electric water heaters.

1975 - 1977 Government purchase of 84 units for a housing development project (Oxnards project).

1978 Launch of SunPower Limited by Peter Hoyos;provided the firstdirect competition to Solar Dynamics.

1978 1980 Second world oil price shock brought about by the Iranian Revolution and the Iran-Iraq War leading to a doubling of

prices.

1980 Income Tax Amendment provided a specific line item to deduct the full-cost of a SWH installation. SWH deduction was

in-place from 1980 through June 1992.

1980 - 1985 International economic recession brought on by the second oil crisis.

1981 Launch of AquaSol Limited by Vincent McLean in response to the opportunity provided by the Income Tax Amendment,

which became known as the Homeowners Tax Benefit Act (1981).

1988 1992 Government purchase of 300 units for a housing development project (Venezuela project).

1990 - 1994 Severe international economic recession created significant fiscal and balance of payments deficits. Significant decline

in GDP (real GDP fell from BBD 909 million in 1989 to BBD 784 in 1992).

Tax deduction programme suspended as part of IMF structural reforms.

1993-1995 Suspension of tax deduction for SWHs. Tax deduction suspended as part of Structural Reform Programme.

1996 - present Reinstatement of SWH deduction as part of a personal home improvement allowance deduction of up to BBD 3,500 peryear for mortgage interest, repairs, renovations, energy or water saving devices, solar water heaters, and water storage

tanks.


18/32

There have been a confluence offactors that has driventhe Barbados Model to its current state and there is nosinglemagic bullet that accounts for its success:

There was recognition of the potential benefits at thehighest level of government.

The sector was driven by innovative entrepreneurship.

There was a roll-out of the industry at a time of rapidlyrising electricity cost.

The provision of key fiscal incentives by government.

The implementation of appropriate regulationdiscouraged electric water use.

The institutionalization of government policies.

There were deliberate and timely government

procurement programmes.


19/32

CYPRUS ISRAEL AUSTRALIA GERMANY BARBADOS

Financial Incentives for

Project Developers

Tax Incentives for

Manufacturers

Consumer Financing

Programme

SWH Regulation in Building

Code

Detailed Demand

Assessment

Business Development

Grants

Broad-based Customer

Education

Government Support for

Marketing

Government R&D Support

Capacity Building

Programme

Renewable Energy Policy

Integration of SWH into

Energy Economy


20/32




The Barbados Model

Some Major Challenges

Key Opportunities

Acknowledgements


21/32

ATG BHS BRB BLZ DMA GRD GUY JAM KNA LCA VCT SUR TTO AIA BMU BVI CYM TCA

Financial Incentives

for Project Developers

Tax Incentives for

Manufacturers

Consumer Financing

Programme

Tax Incentives for

End-users

Detailed Demand

Assessment

Business Development

Grants

Broad-based Customer

Education

Government Support

for Marketing

Government R&D

Support

Capacity Building

Programme

Renewable Energy

Policy

Integration of SWH

into Energy Economy


22/32

High Capital Cost

Perception/Awareness

Split Incentive Technical

Design

Installation

Standards and MEPs Cross-integration

Institutional and Legislative Change agent

Political continuity Performance data


23/32


24/32





Key Opportunities

Acknowledgements


25/32

0

100

200

300

400

500

600

700

800

900

1,000

DHW Penetration/

'000 Households

Solar Conventional (Electric & LPG)


26/32

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Antigua & Barbuda

Bahamas

Barbados

Belize

Dominica

Grenada

Guyana

Haiti

Jamaica

St. Kitts & NevisSt. Lucia

St. Vincent & the Grenadines

Suriname

Trinidad & Tobago

Anguilla

Bermuda

British Virgin Islands

Cayman Islands

Turks & Caicos Islands

Payback Period/ Years

Scenario 3 (LPG, Tank) Scenario 2 (Electric, Tankless) Scenario 1 (Electric, Tank)


27/32

Air Conditioning44%

Lighting13%

Pool Pumps12%

Kitchen & Refrigeration9%

Hot Water9%

GuestroomEquipment

7%

General Equipment

4%

Laundry

1%

Other

1%

Source: CHENACT. 2011


28/32

National Energy Policies

Generation Offset Legislation Solar Ordinance

Energy Planning

Regional Training and Certification

Standards and Labelling

Pay-as-You Save (PAYS)/Third-party Financing

Government procurement

Awareness raising Industrial Policies

Fiscal policies

Blended Loan-Grant and Carbon Financing


29/32

Solar Water Heating

Projects

Investment Sources

(Financiers & Banks)

Government

(Policies & Regulations)

Capacity

building

Technical

Assistance

Coaching &

Mentoring


30/32

Solar Water Heating

Projects

Investment Sources

(Financiers & Banks)

Government

(Policies & Regulations)

Capacity

building

Technical

Assistance

Coaching &

Mentoring

ESCo


31/32





Key Opportunities

Acknowledgements


32/32

European Union CARICOM Secretariat CARICOM Energy Unit

CARICOM Climate Change Centre Member states Government of Barbados CROS-Q and the national standards bodies

CDB and the national development banks Government agencies Commercial banks Electric utility companies SWH manufacturers Project developers Hoteliers Other participating stakeholders

Thank you!

devon gardner, strategies for accelerating the solar water heating market in caricom states, 9-2012

Documents