Dionne Rose, Business Reporter

Clive Mullings (right), minister of energy, in discussion with Derek Jones, partner of Myers Fletcher and Gordon, at a seminar on renewable energy hosted by the law firm at The Jamaica Pegasus hotel in New Kingston yesterday. - Rudolph Brown/Chief Photographer

A partner in one of Jamaica's top law firms has advised the government that it needs to be far more generous with tax incentives to encourage domestic investment in alternative energy use and cited Barbados as a regional example to emulate.

"The tax incentives (currently on offer), I think, can be narrow or non-existent," Peter Goldson, who follows taxation issues at the firm Myers Fletcher and Gordon told a renewable energy seminar at the Jamaica Pegasus hotel on Wednesday.

Added Goldson: "I would encourage the Government to look at tangible incentives, to look at tax holidays and to ensure that there is a comprehensive approach."

Imported oil

Imported oil accounts for around 90 per cent of Jamaica's energy needs, but carbon emissions associated with oil and, critically, the high price for the commodity - the oil bill last year was over US$2 billion - has reignited a debate here about the use of renewables.

In fact, government policy is to increase the use of renewables to around 10 per cent of energy consumption by 2010 and to double that over the next decade.

Currently, renewable energy consumption here is primarily from a little over 21 megawatts of hydro power and a wind farm with a capacity of 20.7 megawatts. Combined, this accounts for around eight per cent of the electricity to the national grid.

The Government is seeking partners to expand the windfarm and wants Jamaicans to investment in other renewables, such as solar and biomass for domestic and commercial use.

But Goldson told Wednesday's seminar that a lack of serious incentives was a constraint.

Energy savings devices

"What we have today in terms of the legal environment ... (are) some NHT (National Housing Trust) benefits; we have some GCT (general consumption tax) benefits for the implementation of certain energy-saving devices," he said.

The NHT, the Government shelter agency that is funded through a payroll tax, provides loans of up to $1.2 million to erect solar panels. These loans are repayable over 15 years, at between two and eight per cent, depending on the income category of the borrower. The NHT also offers loans of up to $100,000, repayable over five years at a rate of three per cent, for the purchase of solar water heaters.

"It struck me particularly when I look at the Income Tax Act of Barbados and I saw very clearly the sort of incentives that they have there to encourage renewable energy sources,"said Goldson.

In one offer, he said, home-owners who invest in energy or water-saving devices are entitled to a deduction from taxable income of US$5,000.

"It seems to me that these sort of incentives are pretty simple, pretty clear," Goldson said. "They are the sort of incentives that would encourage householders to go out and do something on the part of the fight for energy conservation and turning to renewable energy sources."

Goldson also called for urgency in drafting a new Electricity Act to replace that one that, for the most part, has been in operation since 1893 and gives the monopoly electricity transmission and distribution company, Jamaica Public Service (JPS) too much power.

"It is one thing to talk about encouraging renewable energy about the statuary basis to negotiate with JPS and all that, it is another thing to ensure that the legal environment in the platform is in place and its clear," he said.

JPS terms

Goldson noted, as it is now, anyone who wants to provide renewable energy to the gird is forced to rely on the terms of the JPS electricity licence to determine the conditions under which they may supply energy to the grid.

"And I don't think that is appropriate," said Goldson. "In terms of encouraging an industry to develop, utilise technology and go to JPS and sit down and hammer out a deal, I think it is quite scary and I think that if there were regulations which set out the parameters as to what the basis would be, it would be clearer and easier."

Earlier on Damian Lyn, president of the Jamaica Solar Energy Association complained about the lack of an established policy in place. Lyn said his members were ready to sell back energy to the grid, but want a contract to be put in place.

Contract

Lyn said the Association had written to the JPS about putting a contract in place, to which he said JPS had responded by saying they hope to do so by the first quarter of 2009.

"So, hopefully, come the first quarter of '09, there may be a contract in place. The association has been pushing things in this direction, as it is very important not just to the residential sector, but also to the commercial sector in Jamaica," he said.

Lyn said under such arrangement, some two to three kWh of energy could go back to the grid for residential customers. He, however, noted that this could increase as more renewable energy projects develop.

dionne.rose@gleanerjm.com

Seen here is a wind turbine and a solar panel on a house in the Sunshine City of Portmore. Government is urging more use of alternative energy to reduce the country's dependence on oil. - File