Pandemic May Delay New Caribbean Power Plant Construction

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There will likely be delays in construction starts on new power plants due to the COVID-19 pandemic, the Caribbean Community (CARICOM) advised in its just-released policy paper on the regional energy sector.

While it advised member countries to take advantage of hedging opportunities with record low oil prices over the short term, the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) states in its report, entitled “COVID-19 and the Energy Sector: Perspectives for Policymakers”, that over the medium to long term, the procurement, construction and commissioning of new power plants will be slowed.

“The unavailability of work crews and restrictions on international travel will curtail the ability of entities to bid on and execute projects, particularly international bidders. The reduction in overall business activity may affect the cash flow of potential bidders and thus restrict their ability to participate in procurements,” the report notes.

“The slowdown of procurement and construction may impact the availability and applicability of time-bound regulatory measures such as feed-in tariffs. Regulators and procuring entities may need to exercise some flexibility given these realities.”

Bahamas Power and Light (BPL) has been working toward raising $70 million by way of a rate reduction bond to build a 90-megawatt plant at Station D at the Clifton Pier Power Station, which is expected to be on stream by 2021.

CCREEE also advised that over the short term, governments must prioritize energy support to the most vulnerable groups, given that the shift in demand to domestic customers and the increase in domestic consumption hits at an especially hard time when many customers are no longer earning regular salaries.

“The treatment of vulnerable groups’ ability to pay for energy services is a pressing social concern. Some utilities across the Caribbean have placed moratoriums on payment for up to 2 or 3 months; other utilities have extended discounts. Nevertheless, in most cases, payments are only deferred to a later date, so the impact on vulnerable consumers is not yet fully resolved. The impact on the cash flow of utilities also depends on the overall duration of the pandemic and the response measures. The looming hurricane season, which is projected to be active, is also of great concern in this context,” the paper notes.

“Moratoriums on power disconnection, concessional payment schedules and the introduction or expansion of social tariffs, should be considered to ensure that citizens do not lose power at this time. The supply of power to essential services should also be prioritized and operational steps should be taken to ensure continuity of supply to hospitals and first responders.”

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