The highly gas-dependent island state of Trinidad and Tobago off the coast of Venezuela is beginning to add renewable energies in its energy mix. Solar thermal technology has been profiting from several types of tax incentives since the beginning of 2011 and has also been part of the country’s energy strategy. Doodnath Singh from the Trinidad and Tobago Bureau of Standards (TTBS) spoke about the financial schemes and about the challenges with quality and product certification at the Mexican workshop Quality Assurance for Solar Water Heaters in September 2012 (see the attached presentation).
Trinidad and Tobago’s economy is largely based on the country’s oil and natural gas resources. Almost 100 % of the nation’s electricity comes from gas-fuelled power stations. Electricity prices are regulated: Residential customers pay between Trinidad Tobago Dollar (TTD) 0.25 and 0.36 per kWh, which is 0.03 to 0.04 EUR/kWh. This makes electricity the most common method to heat water on the islands. But while the energy demand is rising, resources are being depleted – and the government is looking for alternatives. One of the most promising options is solar: the country´s radiation is close to 2,000 kWh/year*m².
The first and very visible step towards more solar water heaters (SWHs) had been the implementation of several fiscal incentives specified in Act No. 13 of 2010. These regulations became effective in January 2011 (see the yellow parts in the attached document). Some of them do not only apply to solar thermal, but also to photovoltaics and wind energy. The second step was of a more strategic nature: The Framework For Development Of A Renewable Energy Policy, which was approved by the cabinet in November 2011. It is currently being incorporated as a chapter in the country´s national energy policy green paper, which is about to be finalised, too. In the policy framework, the Ministry of Energy and Energy Affairs (MEEA) in Trinidad and Tobago states, among others, the importance of incentives, awareness-raising and capacity-building in the field of solar water heating.
The fiscal incentives are:
- Manufacturers profit from two fiscal incentive provisions:
- There is no import duty on machinery, equipment, materials and parts for the manufacture or assembly of solar water heaters
- There is a wear & tear allowance on 150 % of the expenditure incurred on the acquisition of plant, machinery, parts and materials used in the manufacturing of solar water heaters. This allowance is distributed evenly throughout the equipment’s lifetime
- Companies which invest in solar water heaters for themselves also profit from the wear & tear tax allowance as described above.
- Energy Service Companies (ESCOs) are granted accelerated depreciation: When a certified ESCO has acquired plant and machinery to conduct energy audits, this ESCO can depreciate 75 % of the costs in the year of acquisition.
- Companies which engage certified ESCOs profit from a 150 % tax allowance on the costs for carrying out an audit in order to design energy-saving systems and install these energy-saving systems in a company.
- Individual customers are entitled to a tax credit of 25 % of what they spent on solar water heating equipment. The tax credit is limited to TTD 2,500 (EUR 300).
- In addition, there is no VAT on solar water heaters.
The fiscal incentives soon showed their effect on the market. “Imports of SWHs started almost immediately,” Singh says. Still, there have not been any official figures on the number of installed solar water heaters in the country.
A lack of conformity assessments, however, created some health and safety concerns with the import and installation of those heaters. As a response, the TTBS has developed two standards for SWHs in cooperation with the MEEA.
- Standard TTS 106:2012, Solar water heater systems – Design and installation requirements is a voluntary regulation. It specifies requirements for designing and installing solar water heater systems in Trinidad and Tobago, including requirements for system performance, operation and servicing, safety, reliability and durability. The standard also specifies certain obligations as to the characteristics of the individual solar water heater components.
- Standard TTS/EN 12975-1:2012, Thermal solar systems and components – Solar collectors – Part 1: General requirements, is mandatory. It is similar to European standard “EN 12975-1 Solar thermal systems and components – Solar collectors – Part 1: General requirements”. Like its European model, the regulation stipulates requirements on durability, reliability and safety for solar collectors with liquid heating.
There are also deliberations about a testing lab for solar water heaters within the next three to five years, to ensure compliance with the relevant safety and performance requirements.