The program will help Barbados to introduce renewable energies in its energy mix, improve its energy efficiency, cut down on greenhouse gas emissions, promote climate change adaptation measures and energy conservation initiatives, and also reduce its exposure to oil price volatility.
Additionally, the loan will support institutional strengthening as well as public education and awareness building campaigns to promote sustainable energy and energy conservation initiatives among the population.
“The energy sector is one of the priorities of the IDB strategy with Barbados and this new project is part of a series of sustainable energy initiatives that the Bank is financing to help lower oil imports, increase use of renewable energy in energy mix and promote more efficient energy use,” said Christiaan Gischler, the project team leader. “The IDB has provided over US$3.5 million in grant financing for energy projects in Barbados over the last two years.”
The new IDB-financed program is expected to generate a net benefit of US$284 million in fuel and electricity cost savings over the next 20 years and reduce oil imports’ cumulative cost from US$2.65 billion to US$1.98 billion over the same period. It is also anticipated that the program will reduce more than 4.5 million tons of carbon dioxide equivalent emissions.
Barbados’s electricity installed capacity of 239 Megawatts is produced by mostly imported fossil fuel. But the government and the IDB estimate that at least 29 percent could come from economically and commercially viable renewable sources, including biomass cogeneration (20 MW), waste-to-energy systems (13.5 MW), and wind farm (10 MW or more).
“Solar photovoltaic (PV) panels that do not use batteries and which are connected to the distribution grid will play a major role,” said Gischler. “We will see at least 1MW of installed PV panels in the next two years. The Government of Barbados and the project team believe that PVs can follow the trend of solar water heaters, so popular in Barbados that one in every three residences on the island have a unit installed.”
As regards energy efficiency, the government estimates that the wide use of compact fluorescents lamps (CFLs), power monitors, premium efficiency motors, efficient air conditioning systems, variable frequency drives and efficient chillers could help save 19.4 percent of the island’s total electricity consumption.
As part of the program, the government also plans to promote the efficient use of fossil fuels, including greater use of natural gas and improved efficiency and sustainability of hydrocarbons consumption. In addition, credits from the resulting greenhouse gas emissions cuts will be traded in the global carbon markets in order to generate extra funds for energy efficiency and energy reduction projects.
The loan is for a 20-year term, with a five-year grace period, and carries a variable interest rate based on Libor. It is expected to be followed by a second loan of similar characteristics.