Sat | May 15, 2021

Editorial | Give concessions to lithium batteries

Published:Monday | May 3, 2021 | 12:07 AM

Maybe it is being saved up for a grand announcement by Daryl Vaz, the energy and technology minister, when he reports on his sector to Parliament shortly. It is, nonetheless, surprising that the Government has not yet provided tax relief on lithium-ion and lithium ferro phosphate batteries for use in solar energy systems.

The technicalities on which the administration has, up to now, rested its refusal of concessions on these products flies in the face of its commitment to advancing technology, and protection of the environment, which includes its stated policy of significantly increasing the share of renewables in Jamaica’s energy mix.

Phillip Paulwell, the shadow energy minister, recently drew public attention to the matter of the treatment of lithium-ion and lithium ferro phosphate batteries as part of a broader discussion in Parliament of how Jamaica might use small-scale solar systems to address energy poverty and eliminate theft from the national grid, mostly evident in poor communities. Mr Paulwell also argued that the falling price for solar technology, and the improved storage capacity of batteries, enhanced the possibility of Jamaica reaching its target of 50 per cent renewable energy by 2030. Until recently, the target was 30 per cent by 2020. Renewables now account for around 17 per cent of the island’s energy output.

“A good start would be to extend tax concessions now to lithium-ion and lithium ferro phosphate batteries as critical components to a photovoltaic set up,” Mr Paulwell said. Currently, the multi-cell lead batteries typically used in small-scale solar power systems (mostly for homes) to store electricity do not attract the 15 per cent general consumption tax (GCT).

NEITHER NOVEL NOR UNIQUE

Mr Paulwell’s intervention in favour of the new technology batteries, however, was neither novel nor unique.

The island’s solar energy sector has for months quietly attempted to have concessions applied to lithium-ion and lithium ferro phosphate batteries. They, however, have been told that while these batteries may be “complementary” to the development of the renewable energy systems, they were not, in the strictest sense, photovoltaic, and were not covered by existing policy on renewable energy. But when the policy was written a dozen years ago, the target for renewables was not what is today, and neither was the energy-storing capacity of batteries as good as it is now.

In any event, removing the GCT from lithium-ion and lithium ferro phosphate batteries requires only the flick of a pen by the finance minister, Nigel Clarke, once he has the approval of the Cabinet. It is for Mr Vaz to make the case. It would make sense to do it.

Compact and lightweight, lithium-ion batteries are used in a range of applications, from computers and smartphones to uninterrupted power supply systems, electric vehicles and, increasingly, in solar energy systems where their size, quick-charge and ability to store high amounts of energy make them attractive.

Though lithium iron phosphate batteries (LiFePO4) tend to be larger than other types of batteries, and usually have a higher upfront cost, their longer life cycles increase their competitiveness in solar systems. This characteristic is enhanced by their deeper discharge capacity, which makes them robust, and the fact that they do not generally run as hot as other batteries, which is good for safety. Additionally, they are not built with toxic materials, making them environmentally more friendly than most other batteries.

The logic of technology, as well as basic common sense, suggests that lithium-ion and lithium ferro phosphate batteries used in solar power should enjoy the same tax relief as other inputs. Which we expect to happen in short order.

Further, as the Government is at it, it should also craft a policy relating to taxes on batteries used in electric vehicles (and on electric vehicles generally) if Jamaica is to be in step with the global shift away from vehicles powered by fossil fuels. Electric vehicles, coupled with an increased use of renewable energy, are of value to the environment – and, ultimately, the economy.