The World Bank
One of the key challenges facing the Caribbean countries’ electricity infrastructure sector is service delivery in terms of affordability and financial sustainability. On the demand side, since energy efficiency (EE) is low, there is significant savings potential.
To strengthen the power sector in general, the OECS member states have decided to reinforce the sector’s regulatory framework. Doing so individually would not be a financially viable choice. The LAC Energy Unit (LCSEG) of the WB is supporting a collective strategy by launching the operation of a regional electricity entity, the Eastern Caribbean Energy Regulatory Authority (ECERA). ECERA is expected to provide independent regulation and oversight of the electricity utilities to achieve cost-effectiveness in electricity supply. The creation of ECERA is expected to increase and improve regional cooperation, maximize economies of scale in the regulation of the electricity sector and utilize scarce skilled human resources more efficiently.
Econoler was mandated by the WB to prepare a paper on the potential regulatory changes and commercial structures that would incentivize the different OECS countries (with particular focus on Grenada and St Lucia) to develop and implement EE initiatives using the national electricity utilities as the main drivers for implementation.
As part of this project, Econoler carried out two main activities. The first activity involved developing two commercial models by completing the following steps:
- Reviewing energy efficiency market and its associated barriers in the region.
- Identifying the targeted most electricity-intensive market sectors, including public buildings, hotels, commercial buildings, street lighting and industries.
- Proposing two business-model implementation schemes to tackle the different market sectors: through Energy Services Companies (ESCO) based in utilities and a direct-install approach.
- Identifying the risks associated with the business models and the corresponding mitigation actions.
- Defining the stakeholders’ roles and responsibilities in developing the business models.
The second main activity was related to the regulation framework and included the following steps:
- Reviewing the background and the current regulation framework regarding the electricity market, EE and RE.
Proposing regulatory changes for :
- Obligations of public and private electric utilities.
- public buildings and services (procurement rules)
- introduction of fiscal incentives
- Identifying the role and responsibilities of the organizations involved, including the ECERA.
The paper will serve as a source of input for consultations held by the WB with the OECS countries in developing a strategy for more efficient use of energy and may be used by the ECERA as the regional energy regulator to develop regulations, which will help foster a sustainable approach suitable for different countries of the region.