Reform of the electricity sector in support of Grenada’s climate policy

Project description

Title: Reform of the electricity sector in support of Grenada’s climate policy (G-RESCP)
Commissioned by: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) as part of the International Climate Initiative (IKI)
Country: Grenada
Lead executing agency: Ministry of Finance and Energy
Term: 2015 to 2019

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Context

Electricity prices on the island state of Grenada are among the highest in the world for several reasons. One of which is the island’s dependence on fossil fuels and thus resulting in high import costs. In its energy policy and as a signatory to the Kyoto Protocol, the Grenadine government has committed itself to achieving a renewable energy target of 20 per cent for its electricity generation by 2020. However, electricity is currently produced almost entirely from fossil fuels, in particular diesel. The reasons for this include monopolistic structures in electricity generation, transmission and distribution. The market entry of independent energy producers has so far failed, due to the existing legal structure and the lack of regulatory framework. The government of Grenada would therefore like to renegotiate the monopoly contract-which is in force until 2073- with the electricity supplier GRENLEC and its main investor.

Objective

In Grenada, the market for electricity and energy efficiency technologies is more open, which means that the conditions for electricity production are increasingly based on renewable energies from independent electricity producers. Greenhouse gas emissions and the degree of dependence on oil imports have been reduced.

Approach

On behalf of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), GIZ is supporting the government of Grenada in restructuring the energy sector with the aim of achieving the country’s climate goals. New legal and regulatory framework conditions should open the market for electricity and energy efficiency technologies. The production of electricity from renewable energy sources through independent electricity producers will be promoted. Restructuring will further reduce greenhouse gas emissions and dependence on oil imports.

The sector reform is based on the new Electricity Supply Act of the advisors to the Eastern Caribbean Electricity Regulatory Authority (ECERA), which was founded in 2013. GIZ supports the Grenadine Government in evaluating the technical, economic and legal details of the draft law. The individual steps include:

  1. Supporting the government of Grenada with the revision and implementation of the Electricity Supply Act and the Regulatory Act.
  2. Establishing a dialogue between the stakeholders to promote the implementation of necessary changes and to facilitate the transition to new regulatory and institutional structures.
  3. Developing a roadmap to identify challenges and the necessity for action and support in the expansion of renewable energies and energy efficiency.
  4. Setting up a national forum for the exchange of information on renewable energy technologies and energy efficiency.

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