MAJORITY SHARES IN GRENADA'S ELECTRICITY COMPANY SOLD OVER CHISTMAS

On November 27th, a Successor Agreement between the Government of Grenada and the Barbados based Light and Power Holdings Ltd. (LPH) was signed. This means that the majority shareholder in GRENLEC, which had been WRB Enterprises/Grenada Private Power Ltd has now sold their shares to a subsidiary of Canadian based EMERA. The subsidiary, Light and Power Holdings has purchased 61.4% of GRENLEC shares. The Government has one year to purchase the 11.4% shares to ensure EMERA/LPH are compliant with the 50% ownership policy. The Framework does not clearly stipulate the consequences if this did not happen.

The initial response by Grenadians following developments in the nation’s energy sector has been positive; as several local news and social media reported with a measure of jubilation that Grenada’s energy monopoly had been finally broken paving the way forward for renewable energy liberalization.

Has It?

It is commendable on the Government’s part to have released the most comprehensive map of Grenada’s energy framework that has ever been available to the public, although it was shared after the deal was signed. Analysts will certainly appreciate the detailed ownership profile and contextual background provided, that was intended to enable the public to understand the details of the transaction as they have occurred. But there is little question the intricacies of the Framework are still not simplified enough for general public consumption.

In the (apparent) attempt to be transparent, generalized statements and contradicting information has been presented, leaving a scrutinizing reader with as many questions as there are answers provided.

Our Renewable Future

The Successor Agreement between the Government and EMERA include a new interconnection policy that will provide an opportunity for citizens to invest in renewable energy, such as solar panels for systems up to 15 kilowatts. That’s great, since most households don’t need more than that, and the new policy allows householders to take the first draw of power on their systems and sell a portion of their surplus energy (if there is any) at a fixed rate. Hopefully, that will do a lot to stimulate business for solar energy retailers targeting the domestic market. There’s a ceiling to the growth however, capped at 5% of the peak demand (which is 30MW), until grid impact studies are done.

The questions raised in the new interconnection policy however include:

- Since the 5% cap will ‘be revised after consultation with GRENLEC on studies on grid stability thresholds’ we have to wonder who will conduct these studies? Will there be an independent review? Or will the lucky 5% be the only 5% that benefit from this policy?

- If we assume that a reasonable portion of the 5% would be reserved for household use, based on the cap established approximately 10 businesses could take advantage of the 100kW offer.

- Renewable Energy Special Purpose Vehicles (RESPV’s) are traditional renewable energy financing instruments, but they are also commonly used to financial liabilities that can skew corporations financial profile such as ENRON did. Does Grenada have sufficient financial legislation to protect the public from any inappropriate use of SPV’s?

- Who has the final say on who the RESPV partners are going to be?

Does Civil Society Get a Second Chance at Investing in Solar Farms?

One of the positive highlights could be the introduction of the RESVP Framework since it provides a policy opening for civil society stakeholders to invest in a renewable energy facility perhaps in a shared partnership with another private company and GRENLEC. The RESVP framework was likely agreed upon to facilitate Geothermal energy development and private equity investments in renewable energy. But - this might actually represent the lifting of the barrier my Hotel and Tourism clients faced when I tried to get a community solar farm set up for them. In 2012, independent energy generation was a NO-GO! Will we be able to re-open this door to reap the benefits of climate financing, collect undesignated revenues for social programming and economic growth while advancing a carbon neutral goal?

With respect to how the sale of the majority shares will affect Grenadian consumers on a more personal level, there isn’t much good news [yet]. EMERA has a controversial reputation in the other markets where they operate subsidiary utilities. One market even has their own consumer site operating, which can be found at this link: Grenadians might find themselves singing the words of Joni Mitchell “Don’t it always seem to go that you don’t know what you’ve got till it’s gone” but hopefully the strong and committed technical and management team at GRENLEC will help keep potential consumer concerns at bay as they begin operating with new owners.

There is no question ‘The New Developmental Framework for the Grenada’s Electricity Sector’ has several areas that require clarification. Recognizing that the Government’s announcement was trying to capture an enormous amount of information in a very short document, ambiguities are to be expected. The Government has organized a stakeholder consultation early next week, so further analysis on this aspect of the transaction will be reserved until then.