Taking out carbon in the Caribbean

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 But if you are a small country with limited resources and an outdated energy system, how do you start moving towards net zero?

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.

“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.”

100% targeted renewable energy in Barbados by 2030

3% renewable energy use starting point

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 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.

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.

“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.

The work involved a diagnostic study of the resources and challenges facing the Barbados electricity market

“We needed to gather a lot of data, which is a challenge wherever you are. For example, in Western European countries it’s challenging because of the sheer volume of it, as well as the elements that are unknown. Even though Barbados is well developed, a lot of the data infrastructure isn’t yet there. It didn’t exist often enough in many places, or it wasn’t organised centrally, so it had to be collected from across a great many different parties.”

The data collection work did not just involve the relatively simple – though nonetheless resource intensive – job of analysing Barbados’ current assets in terms of power generation, distribution and transmission; it also involved us making medium- and long-term predictions about electricity demand.

A specific challenge was around predicting tourist demand, given the importance of the sector to Barbados’ economy. Our team analysed the carbon emissions of cruise liners, making predictions about how the frequency and length of their visits would change over the next decade and assessing whether there was scope to plug the ships into the electricity grid when they docked so they could be powered by locally generated renewable energy (see panel, ‘When the ships come in’).

Three decarbonisation scenarios

We mapped three alternative pathways to decarbonisation. Each involved different levels of intervention and cost and – as our modelling showed – would produce different outcomes.

“The three scenarios offered different levels of integrating a number of renewable energy technologies into the system,” elaborates Tola Adeoye, who worked as project manager, and for whom the development of the IRRP was a key milestone in her career with Mott MacDonald. “We could quantify the effects these would have on, among other things, cumulative emissions, supply reliability, and electricity cost.”

The first pathway, called the ‘least cost plan’ (Sc1 LCP), is a baseline scenario with no major policy interventions, relying only on the competitive positioning of onshore solar PV and wind. The second, the ‘carbon cost internalised’ (Sc2 CO2), builds carbon pricing into the market cost mechanism to deter fossil fuel (see panel, ‘How does carbon pricing work’).

The third pathway, the ‘forced firm renewable scenario’ (Sc3 FRES), implements not only carbon pricing but also policies enforcing the use of renewables considered firm and dispatchable (as opposed to variable wind and solar), such as biomass, captured landfill gas and energy from waste, to improve resiliency.

88% minimum reduction in carbon emissions by 2030

To assess the impact of each scenario on Barbados’ ability to decarbonise its power supply, we undertook generation and transmission planning studies spanning 10 years, from 2021 to 2031. This established that while the baseline least cost plan could achieve an 88% reduction in annual carbon emissions by 2030, the carbon cost internalised scenario would reach 93.3% and the forced firm renewable scenario a 95% reduction.

Key results for three decarbonisation pathways for Barbados

None of the pathways achieve 100% decarbonisation by 2030. This is because back-up generation, which is still going to be needed, was found to be most economically provided by maintaining some level of existing flexible fossil fuel generators. To achieve further decarbonisation than the developed pathways would require increasingly higher cost premiums within the current IRRP.

“As expected, there is an optimal sweet spot for the level of renewable energy penetration, which to our surprise was much higher than expected as indicated already by the high outturn decarbonisation of the baseline least cost plan,” says Tola. “Then going beyond that with the other scenarios based on policy intervention ends up being slightly more expensive in terms of whole life system cost. That’s due to the decreasing marginal returns from relatively more expensive technologies that need to be deployed to achieve further reductions."

She explains that the impact of policy on cost and benefits at the margin needed to be carefully assessed. For example, weighing up the increased cost against the benefit of the intervention, which might significantly lower cumulative carbon emissions while offering increased resilience and wider economic sector participation that were major attractions for the stakeholders of our client.

To illustrate the delicate balance that must be struck by governments looking to decarbonise, the option offering the lowest cumulative emissions and the highest share of renewable integration – the forced firm renewable scenario – also has the highest levelised cost of energy of the three.

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.

Modelling the options

We built a simulation of the entire energy system of Barbados, to explore different ways in which the government could approach its energy transition.

To build the digital twin, we used the PLEXOS energy market simulation software platform (licensed by Energy Exemplar), and included inputs for generation, transmission, demand and many other variables. This allowed us to model the behaviour of the system under a range of different scenarios to produce an optimised plan according to whether the desired outcome is for the lowest cost, the most economic value, or the biggest reduction in carbon emissions.

By definition, the optimised least cost plan (Sc1 LCP), resulted in the lowest cost energy mix, albeit not accounting for the cost arising from the emissions being created. The plan maximised the deployment of the low cost renewable resources available in Barbados, solar PV and wind generation, supplemented by energy storage and maintaining a level of fossil fuel backup generation. The forced firm renewables scenario (Sc3 FRES),on the other hand resulted in the lowest emissions exactly because the firm renewables allowed for retiring much more of the fossil fuel based backup generation, and sooner, while otherwise being very similar in deploying the same resources.

We pushed the scope and depth of the analysis carried out using this and other software to the very edge of the possible, to increase confidence in the scenarios we mapped out on our digital twin being technically feasible. For example, we needed to ensure that demand and supply of energy would be always in balance – something considerably harder to achieve if using weather-dependant renewable sources rather than fossil fuel legacy generation systems.

Typical 2030 weekly dispatch in the baseline scenario (Sc1 LCP) and the most decarbonised scenario (Sc3 FRES)

Traditional power plants have characteristics that act to stabilise the grid; renewable generation currently lacks that capability to the same level of effectiveness. To compensate for this we proposed the use of synchronous condensers. While this technology has been around for almost 50 years for other niche applications, it is more recently being adopted as a solution to safely increase penetration of renewable energy into power grids to high levels.

Moreover, because such an application of the technology had not had much consideration at the time, it was a challenge to integrate it into the digital twin. This meant we had to innovate by accessing customisable features for constraints and variables to capture everything required to model this accurately within the software being used as it was not yet supported by default at the time. It was not only effort well spent for this project, but it motivated the software’s developer to include this functionality as a standard feature in subsequent versions of the software.

But our innovation went further. We also had to come up with ways to incorporate electric vehicles into the digital twin modelling, as EVs were potentially an important part of the decarbonisation strategy but could add considerable electric load demand to the system. This meant technical feasibility and economic viability both had to be explored.

To achieve this, we defined additional loads on the system in terms of daily energy requirements. This allowed for flexibility around when the load would be applied, to mimic smart charging behaviour, so that EV owners or smart charging infrastructure could optimise the timing of charging. Because we also needed fixed load profiles for EVs for where they were assumed not to be ‘smart charged’, we could then look at sensible compositions of these different charge types and how these would impact system design.

Resilience of the infrastructure to natural disasters was a key factor in our analysis overall. In a country like Barbados, reliable power supply can mean the difference between life or death during catastrophic climate events like hurricanes. Energy infrastructure assets that can typically be deployed in a modular fashion, such as solar PV and wind energy, battery storage and synchronous condensers would be geographically distributed within a grid system designed to be able to operate as individual disconnected smaller system to ensure that if some parts of the island were damaged, other areas could continue to operate.

Outcomes beyond cost and carbon

Cost and emissions were not the only salient factors when examining the merits of the competing scenarios we presented. It was equally important to look at less easily quantifiable outcomes such as job creation, climate resilience, bio-physical impacts, and land and water use.

“We looked at different technical, economic and environmental factors and examined how these affect the different scenarios,” says Tola. “It’s easy to say just go for the option that offers 100% renewables, but then you consider all the other criteria, like job creation. For example, we know that the forced firm renewable scenario (FRES) would result in the use of currently unused land to produce bio-fuel crops, which might become controversial.” As Christian and Tola point out, on one hand farmers may prefer the more productive use of their land, but on the other, environmental groups and tourism boards may not be so keen to see the return of land cultivation and intense farming.

Multicriteria analysis results

Land and water use are particularly important considerations in Barbados, given the local scarcity of each resource. “If they were to go for the best scenario [in terms of decarbonisation (FRES)], they would be using more water,” says Tola, by way of illustration. “So one of the recommendations we made was that you can’t just take the technical proposition that would work best in the power sector; you need to look at the cross-sector dependencies and impacts also and see how that solution would work best for Barbados overall.”

A firm footing for the future

The government of Barbados can use our modelling work to ensure future energy policy is always evaluated scientifically.

Our work on the IRRP is only a starting point. Ultimately, it will be up to Barbados and its government to decide on the best course to decarbonisation; however, the plan is an important first step in the journey.

The IRRP is not prescriptive but will be used as a framework by the current and any future government to help assess the costs and benefits of decisions made in implementing national energy policy. Resilience against changes in political will are thus baked into the IRRP framework being used to develop the plan.

“That’s why the Inter-American Development Bank put so put so much emphasis on developing a process and skills and for us to hand over a masterplan that isn’t just a point in time evaluation – once done, then forgotten about. It had to offer an ongoing framework for informed decision making that provides the best future for the country,” says Christian.

“At the moment, the government is obviously needing to make a set of decisions in light of a given set of circumstances faced with, but the legacy of tools, methodologies and the framework we’ve provided will remain in place for any future administration to continue to make sound decisions, even under changing circumstances.”

Crucially, the plan we helped put together has also been designed to leave a legacy beyond the net zero agenda, with its potential to develop existing and new industries and to create whole new job markets.

For instance, although offshore wind generation was not included in any of the three scenarios – partly because the steep seabed around Barbados means there is a lack of obvious suitable sites nearby that can be developed at low cost – the government has acknowledged a need for investigation, and this has stimulated stakeholder interest. While the government has since undertaken further studies, several large companies have instigated their own to investigate the feasibility of offshore wind deployment around Barbados. And we now understand that the government is interested in launching an offshore wind energy proof of concept project to test such feasibility.

Christian says this is an example of how the energy transition could drive a whole new economy: “It’s a strategic opportunity to create a phenomenal new local industry that would allow Barbados to lead the pack in the wider region,” he says.

Whichever technologies Barbados chooses to help it transform its energy generation, this is an exciting and bold move from its government, and we are proud to have been invited along on the journey.

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.

30% of Barbados’s BDP comes from tourism

10% of commercial electricity demand could come from cruise liners 

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.