Making photovoltaics work in Jamaica

Marvin Goodman, Contributor

Jamaica is the perfect candidate to be a world leader in the use of photovoltaic cells to provide an alternate source of energy for all types of buildings.

1. Jamaica is in a belt of latitude that has the highest levels of solar energy in the world.

2. The number of usable hours for solar energy use (5.3 per day) is among the highest in the world.

3. Our cost of electricity is very high (three to seven times higher than in most of the United States and Canada).

These factors make the use of photovoltaics to produce electricity a no-brainer.

As solar technology breakthroughs are announced seemingly monthly and equipment prices fall further and further, what is the hold-up? Simply, a lack of low-cost, long-term financing.

The Current Situation

The Government has secured financing for the alternate energy sector at special low-interest rates.

The policy of the Government is to offload these loans to the commercial banks for lending to the public (and collecting the payments).

The banks, following their standard practices, add on a substantial fee to the rates to cover their costs and provide a profit.

As a result, the low-cost money becomes much more expensive.

The banks do not have a very wide customer base, are unfamiliar with the technology and do not like long-term loans.

Procedures for these types of loans are often not well understood by the banks' personnel and make the securing of these loans difficult and not easily accessible to the large part of the population that would consider them.

A Possible Way Forward

Instead of the commercial banks being the vehicle to make these loans, the Government should turn to existing organisations and entities that have very wide customer bases, and the knowledge and experience to make relatively small loans and ensure their repayment.

These include the National Housing Trust (NHT), The Jamaica Public Service, National Water Commission and the National Insurance Fund. They should be tasked with providing low-cost, long-term financing (of at least 15 years) directly to consumers. There is ample precedent for this worldwide.

For housing especially, but other uses as well, photovoltaics should be included as part of the costs included in the mortgages, these usually have 20- to 40-year terms for repayment.

NHT mortgages

In the case of the NHT, costs and payments can be simply wrapped into the low-interest, long-term mortgages that are available to its customers.

In a study I prepared for a pending NHT project, such a system would put the homeowner ahead in year one and as the price of electricity continues to rise, the use of lighting and appliances would remain affordable.

There is already a growing list of companies and professionals in Jamaica versed in the supply and installation of photovoltaics, wind energy and solar hot-water systems.

If low-cost, long-term financing were available, this industry would flourish and provide a great number of non-outsourceable jobs in installation and maintenance.

Entrepreneurs might also consider innovative practices employed elsewhere in the world, including solar leases. In the US, companies such as Solar City lease their systems: you pay nothing upfront for equipment and installation, and just receive the benefits of a lower electricity bill. Leases account for a good deal of the growth of photovoltaic systems in America, from 440 megawatts (MW) installed in 2009 to 4,700mw installed in 2013.

With the regular cash flows involved, the industry is an attractive target for securitisation, which would provide even more capital.

A company called Mosaic crowdsources funding for solar projects via the web, offering individual investors an annual 4.5-7 per cent yield above its 1 per cent fee. So far, it's raised over US$5m and says it has 100 per cent on-time payments.

Marvin D. Goodman is an architect par excellence and the head of Marvin D. Goodman and Associates.