Private sector must step up in Bermuda’s clean energy revolution
This is the first 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 Legal & General Group, a multinational financial services company.
To value risk in insurance, we start by identifying vulnerability. One area of vulnerability that could impede the future development of Bermuda is the heavy reliance on imported fossil fuels. This reliance exposes Bermuda to fluctuations in prices, shifting international regulations on carbon emissions and fossil fuels, and the volatility of trade wars. The cost of this risk is high as Bermuda currently spends over $80 million per year on imported fuels for electricity. The Integrated Resource Plan (IRP) released this past July has set out to transform Bermuda’s energy infrastructure, however, to achieve this we believe that the private sector must step up to provide the long term capital needed to make this a reality.
In 2017, weather and climate related hazards resulted in global losses of around US $320 billion. Some Caribbean countries are struggling to recover from devastating hurricane seasons and rising global temperatures have necessitated greater electricity usage. With a way of life that is vulnerable to the changing climate and a cost of living that is ranked as one of the highest in the world, stabilising energy costs for Bermuda has become a priority.
As an island dependent on imports, Bermuda can be a beacon to the world for clean energy generation. Leading by example will increase Bermuda’s resilience to natural hazards and ensure our long-term economic sustainability. Investing in renewable infrastructure de-risks our energy programme by bringing additional, locally produced energy contributors into the system. This will stimulate the local economy by supporting Bermuda businesses and creating jobs.
It is therefore promising that the Regulatory Authority (RA) set an ambitious target of 85% of the island’s electricity coming from renewable sources by 2035 in the IRP. The RA, the Government and the business and community stakeholders who contributed to the formation of the IRP should be commended for this vision.
The IRP’s goals are forward-thinking, potentially transformative and, most importantly, achievable. It is true that the initial up front cost for this is high with a significant investment of an estimated $400-500 million required, but this investment will offset the ongoing spend on imported fossil fuels and so more than justify itself. To accelerate Bermuda’s clean energy revolution, the private sector must step up to work alongside the Government in order to generate the needed investment in the energy infrastructure of the island.
Willing investors exist – Legal & General is one. Globally, L&G has already deployed over $1 billion in renewable energy investment, helping technologies to reach maturity and bringing down costs for consumers. We believe that business should be both socially as well as economically useful and, therefore, look to make long term investments that enable positive change while also generating stable returns over time. We are committed to engaging with governments and businesses to provide real solutions to address Climate Change.
We want to help Bermuda achieve its renewable energy goals. The starting point is to rapidly accelerate solar deployment within the next few years to reach 2 megawatts of annual installations per annum, more than double the current installation rates, and to maintain this rate through 2030. There is no time to lose. These goals are achievable, but only if the private sector steps up and collaborates effectively to supply the investment and expertise.
Solar build rate required to meet IRP target of 30 MW distributed renewable energy by 2040
I began this article by talking about risks. The risks to Bermuda meeting its renewable energy targets are not that the technologies fail us, or that investors lose interest; the risk is that we fail to combine our resources to make the changes required for success.
In my next article, I will address how collaboration is the key to increasing investment, creating jobs and bringing down energy costs. It is time to deliver a more reliable, affordable, and environmentally responsible source of energy to Bermuda, with businesses working in support of the IRP’s important targets.