Collaboration the key to energy cost solution
This is the second of a series on Bermuda’s energy future. Thomas Olunloyo is the CEO of Bermuda-based Legal & General Reinsurance, the global reinsurance hub of the L&G Group, a multinational financial services company.
Harry S. Truman, the US President between 1945 and 1953, once said, “It is amazing what you can accomplish if you do not care who gets the credit”. Too often we are focused on “who” is solving a problem and who gets the credit. The global climate crisis is too big a challenge for any one organisation, government or agency to solve. Addressing it by accelerating investment in renewable energy sources is something that can only be achieved through large scale global collaboration. In Bermuda, this collaboration must stretch across the entire community, from property owners to legislators, from solar installers to BELCO and from the Regulatory Authority (RA) to, importantly, the private sector. We all have a role to play and success will depend on how effectively we collaborate.
To be most effective I believe this collaboration should be focused on three crucial areas: funding, deployment and education.
It will require an estimated $400 million to $500 million to achieve the renewable energy goals for Bermuda. While this may seem a daunting figure, global investments in renewable energy infrastructure projects in 2018 reached $289 billion[1], far exceeding investments in new fossil fuel power projects. The private sector has proven it can embrace the principles of inclusive capitalism to generate broad-based and sustainable prosperity. It is Bermuda’s turn to benefit. We need to create opportunities for businesses to provide the capital required to accelerate this change in a framework that allows them to achieve their target returns. This can be in the form of joint ventures or clean energy funds.
BELCO’s ongoing work to modernise its electricity network to accept clean renewable energy must continue and be supported. Private sector funding can be used in part to support the development of the necessary infrastructure. This has been done in several jurisdictions and Bermuda can leverage that success for its benefit.
The next steps in the IRP implementation include conducting pre-feasibility studies. Experienced companies can, and should, contribute both expertise and investment to bridge the gaps to ensure these are carried out quickly, effectively and, ultimately, successfully. This would be instrumental in deducting years and expenses from the IRP’s implementation process by providing solutions that have already been comprehensively investigated and tested elsewhere.
While offshore wind projects can be developed once the appropriate feasibility studies have been completed, Bermuda should leverage existing technology and expertise to scale up solar. This will have the effect of increasing employment and reducing energy costs right away. The acceleration of solar deployment will require the right framework so that tens of thousands of residential, commercial and institutional property owners view solar as a sensible low-risk investment that is as normal and as necessary in Bermuda as regular roof maintenance. We are in need of a people-powered solar revolution.
Private sector funders must unlock access to financing by collaborating more closely with solar installers. This could include funding solar financing products provided directly by solar installers or local financial institutions could offer financing with fast application processes and flexible approaches on collateral.
Both solar and wind have reached technological maturity and the track records from countries where they have been deployed at scale demonstrate that they are an efficient, reliable and cost-effective solution to meet long term energy needs. However, an element of uncertainty still exists concerning renewable energy in Bermuda. Therefore, it is important to demystify solar through education outreach initiatives to ensure that the island can benefit from the newest developments in renewable energy technology. Education will also open job opportunities and allow Bermudians to participate in one of the fastest growing sectors in the world.
Through collaboration, we can empower both businesses and consumers to become the change agents Bermuda needs to achieve greater energy security, lower energy costs, create jobs and build a stronger economy.
[1] Source: UN Environment Programme, June 2019. https://www.unenvironment.org/news-and-stories/press-release/renewable-energy-investment-2018-hit-usd-2889-billion-far-exceeding