Annual review 2022
Taking out carbon in the Caribbean
An island nation reliant on imported fossil fuels and yet with the natural resources to generate its own clean power, Barbados set an ambitious goal to reach carbon neutrality and 100% renewable energy within a decade. We helped it work out how, by gathering and curating quality data to build a digital twin of the country’s entire energy system and then modelling different options for policy strategies.
Project
Integrated Resource and Resiliency Plan (IRRP) for the Barbados Renewables Masterplan
Client
Ministry of Energy, Small Business and Entrepreneurship (MESBE)
Location
Barbados
Expertise:
Masterplanning; energy and infrastructure analysis; resource planning; scenario modelling
How does carbon pricing work?
Carbon is not at present taxed in Barbados, unlike in Europe, and therefore is a classic externality, that is a cost that is not directly borne by market participants and therefore external to their decision making. The policy for dealing with such an externality is to internalise the cost through a price mechanism, such as a tax, or capping the volume of emissions, such as through a cap-and-trade scheme for emissions allowances, to encourage decarbonisation.
The carbon price assumptions in our two higher-intervention scenarios are based on the recommendations by Nicholas Stern and Joseph Stiglitz in their 2021 report for the National Bureau of Economic Research. They recommend that carbon prices be set in line with the Paris Agreement temperature target of a maximum of 2°C warming of the Earth’s atmosphere and quantified the implied price.
Given the urgency of implementing decarbonisation in Barbados, stakeholders agreed to such a carbon price of US$80/t in 2020 with an exponential increase to US$100/t by 2030. The impact of the carbon price in the higher-intervention scenarios was decreased investment in fuel combustion technologies, with increased and faster investment in renewable energy sources commensurately rising and therefore lowering the cumulative carbon emissions.
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When the ships come in
Predicting energy demand and carbon emissions in any market requires a high level of skill and knowledge, things that we were able to provide in a business-as-usual approach. In Barbados, it entailed us making accurate assumptions around tourism, an industry responsible for around 30% of the country’s GDP. A major factor is the influx of cruise liners into its ports every year.
These ships tend to run their own diesel generators for power even when in harbour, with a load of around 4.5MW for each vessel. This is a large carbon footprint, over which the government has little control.
However, with some liner companies already moving towards electrification, and the possibility that ships could plug into Barbados’ grid when moored, it was important to establish how much extra load this would add to the system.
Using a base case that 50% of the cruise liners that dock in Barbados are electrified by 2030, that would create 30GWh of extra demand each year, or just under 10% of the total commercial demand for electricity.
30%
of Barbados’s BDP comes from tourism
10%
of commercial electricity demand could come from cruise liners
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That was the question facing the island nation of Barbados in 2019, when its Ministry of Energy, Small Business and Entrepreneurship (MESBE) set an ambitious target for 100% renewable energy and carbon neutrality by 2030. With a clear ambition but no firm plan, the ministry drafted in Mott MacDonald to help come up with one.
An economic opportunity
Moving to net zero within a decade could transform the economy of Barbados.
Globally, government attitudes around decarbonisation have changed. No longer a ‘nice to have’ distant goal, it’s something every government must actively work towards. But if you are a small country with limited resources and an outdated energy system, how do you start moving towards net zero?
100%
targeted renewable energy in Barbados by 2030
3%
renewable energy use starting point
“It’s transformational to go from what they currently have to where they want to be,” says Christian Kaufmann, a senior energy strategy and innovation consultant and our modelling team leader on the project. “And it involves a lot of stakeholders – across the transportation, tourism and agriculture industries, the end customers and so on.”
It was a daunting task, but the prize for our client made it worthwhile, as Christian explains: “They’re currently generating carbon intensive electricity at a very high price. They have to import fuel, which is expensive, while at the same time having the vast indigenous renewable resources of a sunny, windy Caribbean island that they could easily tap into.
“There’s an opportunity for the country to move forward in a way that has economic potential, and this masterplan could set out the direction of travel for the next 10 years.”
That potential includes expansion of manufacturing through lower cost renewable power, agricultural diversification into biofuel crops, and the development of new, high-tech industries in renewables and energy storage. All this could create thousands of jobs and revolutionise the economy.
The scale of that transformation is apparent when looking at the country’s present energy mix. Barbados expects to consume 1277GWh of electrical energy by 2030, but most of its supply now is derived from imported fossil fuels. In 2019, oil accounted for 92% of primary energy use, with natural gas making up another 5% and renewables just 3%.
Given the volatility of the global oil market, the insecurity of supply, and the availability of new low-cost renewable energy technologies, the Barbados government understandably wants to change this mix. The question posed to us was “how?”
We began by talking to a variety of stakeholders in the Barbados energy and economic ecosystem, before collecting and processing data from a wide variety of sources. We then devised three proposals for how the country could transition to net zero within a decade.
It’s transformational to go from what they currently have to where they want to be.”
Christian Kaufmann, energy strategist and team leader, Mott MacDonald
There’s an opportunity for the country to move forward in a way that has economic potential, and this masterplan could set out the direction of travel for the next 10 years.”
Christian Kaufmann, energy strategist and team leader, Mott MacDonald
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“This needed to be a data intensive exercise, but much of what we required was uncertain or unknown,” explains Christian, “so a part of this stakeholder engagement process was not only to get people’s views, but also to gather the best information we could possibly have to make the most informed decisions.
Starting with the facts
Our first step was to gather the data we’d need for our scenario modelling – and that meant talking to a huge range of stakeholders.
With funding from the Inter-American Development Bank, we worked for two years from May 2020 alongside the MESBE to develop what became known as the Integrated Resource and Resiliency Plan (IRRP). Our work included a diagnostic study of the resources and challenges facing the Barbados electricity market, facilitation of knowledge exchange between the ministry and key energy stakeholders, and the development of the plan itself.
One of the biggest initial challenges facing our team was to collect and analyse data of varying quality and depth, and from numerous sources. This included collating data from Barbados’ existing energy assets and making informed assumptions about future energy demand.
The work involved a diagnostic study of the resources and challenges facing the Barbados electricity market
