1. 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 April 2006

2. 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

3. 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

4. Plant

5. Daily Load Profile (MW)

7. Dispatch

9. Impact on Dispatch by RE

10. 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