Calculation of Payments for Renewable Energy Systems Roland Clarke PhD Project Manager Caribbean Renewable Energy Development Programme, CREDP CARICOM Secretariat Combined Heat and Power Systems in the Caribbean Sugar Cane Industry, Savannah Hotel, Hastings, Barbados 18-20 April 2006

Payment for Net Energy Output Component Base Price (“/kWh) Adjustment Basis Adjustment Frequency Adjustment Month 5.5” Base O&M Charge $2,000 2% annual Fixed Energy Charge Capacity

Understanding Avoided Costs Assumptions Peak Load = 150 MW No over capacity Merit order dispatch, with unit commitment No energy from RE plant during peak load period i.e. 6:00 PM and 9:00 PM

Plant

Daily Load Profile (MW)

Dispatch

Impact on Dispatch by RE

Summary of this Example RE avoids energy from base loaded Steam and LS Diesel, and intermediate loaded MS Diesels – avoided energy and variable O&M payments due RE does not avoid energy from Combustion and Gas Turbines – no avoided capacity payments due RE may delay the next base load plant – capacity payments due ?? Avoided costs should be determined and published PPA payments should not exceed avoided costs Payments subject to negotiation in the absence of Government policy or regulatory ruling