FTC wants to review decision on battery storage tariffs
There are concerns that similarities between two national programmes for providers of energy market battery storage could cause confusion among potential investors.
This has prompted the Fair Trading Commission (FTC) to launch a January 13 to February 7 public consultation to review its June 2023 decision to use energy storage tariffs (EST) in a pilot programme to implement battery energy storage systems (BESS) projects.
The conflict has emerged because, as currently proposed, the FTC’s EST framework and Government’s new framework for energy storage are both expected to apply to BESS in the one megawatt (MW) to ten MW capacity range.
“That essentially presents two options to developers who wish to provide BESS services in the Barbados energy market. This is a situation that both the Commission and the Ministry of Energy and Business wish to avoid,” the FTC says in a Review And Variation Of The Decision On Energy Storage Framework And Tariffs consultation paper.
“The overlap in terms of size category in this instance could create confusion among potential investors and this does not align with regulatory principles of clarity and predictability.”
The regulator added that “owing to the importance of driving investment in the energy sector, it is important to send clear signals to the market”.
It noted that “since the issuance of the decision in 2023, the Commission is aware of some interest by potential investors [but] due to the lack of an established BESS licensing component within the Ministry of Energy and Business renewable energy licensing framework, no applications could be processed”.
The FTC reminded that BESS was needed because Barbados’ energy sector had predominantly seen the installation of variable renewable energy resources, mainly solar photovoltaics.
“This and other intermittent resources are known to introduce stability and sustainability issues into the grid, leading to the need for mitigation measures. Indeed, the Government identified energy storage, particularly
BESS, as a means of combatting the deleterious effects of these intermittent resources,” it said.
The FTC’s 2023 EST framework for storage had proposed a four-year pilot project. The first two years of the pilot programme was expected to see the design, procurement, installation and connection of the BESS equipment.
The remaining two years were to cover the operation of the projects and collection of the relevant data to assess the performance and viability of the projects.
It was to focus on the use of BESS of four, three and two-hour durations, with a total allocated capacity of 50 MW.
The FTC said the EST and associated framework “shall be reviewed every two years”, adding it “reserves the right to conduct reviews on a more frequent basis should market conditions deem it prudent”.
The consultation paper observed that subsequent to the Commission’s determination on its pilot programme, “there have been significant developments which impacted the energy sector”.
Among them was the fact that Government “has initiated the process of implementing a competitive procurement (or auction) framework for energy storage”.
“With assistance from the Inter-American Development Bank, the Government undertook a consultancy to develop a competitive procurement process that facilitates the procurement of utility scale energy storage and is now close to launching its first round of procurement of 60 MW of BESS,” said the FTC.
It explained that the auction process, being led by non-profit entity RELP, “is one of the main reasons for the Commission’s review of the decision at this stage, owing to the need to have the EST pilot and the auction clearly delineated such that investors can easily understand the regulatory environment and make decisions as warranted”. (SC)
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