‘Sun tax? It doesn’t have to be a problem.’

‘Sun tax? It doesn’t have to be a problem.’

Eco Energy on going solar

Supplier and installer of solar panels Eco Energy lost almost all of its business in Curaçao, after the introduction of Sun Tax in 2014. Nonetheless the company acknowledges the need for this monthly fee for the use of solar installations. ‘The fee itself is not the issue,’ says general manager Eelco Baak, ‘but we do think it is too high.’

Baak starts drawing on a piece of paper and adds numbers indicating the average solar energy production and the impact on the grid. Suddenly he changes subject: ‘Let me clear up one misunderstanding which is relevant to the debate on solar in Curaçao. Our country is not the only one that introduced Sun Tax. Several other countries and some states in the US charge a fee in order to maintain the grid and grid stability.’

If a household has an output of 10 kVA from solar, Aqualectra needs to make sure it can deliver the same amount of power in case the solar panels are damaged. ‘This will not easily happen,’ says Baak, ‘but Aqualectra is obliged by law to have backup at all times and deliver when needed. That costs money; the utility company needs to invest in acquisition and maintenance of generators.’

How Aqualectra generates electricity is irrelevant, he says. ‘It could also come from solar energy, from wind or from ocean waves and tides, but as you can imagine it takes huge investments to redesign and reorganize the production of electricity on the island.’  

The electricity production on the island is based on an average household electricity consumption. This raises the question why a person or family that saves on electricity by going solar is charged a fee while others who save on energy don’t have to pay compensation. The next door neighbor might have a very low electricity bill due to LED-lighting, using little equipment, or simply because he is hardly ever home.

Baak: ‘In their Report of Advice to the Minister the Bureau Telecommunications & Posts states that due to the use of solar installations the utility company has seen a loss in revenues and therefore users of solar panels should pay compensation.’  The manager of Eco Energy holds the opinion that everyone should be treated fair and equal, based on Principles on Equality. ‘Those are upheld in many countries around the world, where households pay a fixed fee to contribute to the cost of transport and the maintenance of the distribution network.’ As an example he mentions ‘vastrecht’ in the Netherlands and the Aruban ‘electricity access charge’ of Afl 12.50 per month for each household. ‘In Belgium this monthly fee depends on the size of the household and monthly energy consumption in order to avoid putting disproportionate financial pressure on those with the lowest incomes.’

Curaçaoans most affected by the collection of Sun Tax, since January 1st, 2015, are those who already invested in solar installations prior to the new set of regulations. Based on the expected monthly savings in energy costs, many families had applied for a loan with a local bank. Baak recalls Eco Energy had clients who saw their electricity bill drop to zero, saving up to 650 guilders a month. ‘They paid a similar amount to the bank every month to pay off their loans, but suddenly were confronted with much higher monthly expenses due to the Sun Tax. Baak: ‘As a company we regret that there wasn’t some kind of transition period for these families, some of whom are still struggling to pay off their loans today. We consider the current fee to be too high and find that a reduction of at least forty percent would be reasonable and justifiable.’

Is solar still worth it? ‘Yes’, says Baak. ‘Going solar is definitely a good deal for those who have a new house built and have the investment incorporated in the mortgage. That way clients can calculate their financial risks, based on their solvability, and won’t feel the financial burden our older clients have.’

Due to the Sun Tax it now takes a lot longer for the investment to pay off, from five to six years before the taxation to now nine to eleven years. Baak comments: ‘Of course, if you have the money to invest and don’t have to apply for an additional loan, then it is for sure worthwhile to go solar. Ultimately it’s better for you, for the planet, for all of us.’ 

Eco Energy as a company barely survived. ‘We used to sell four solar systems a week in Curaçao, now we are lucky if we even sell four systems in a year,’ says Baak, who had the difficult task of laying off fourteen of the twenty-two employees of the company. The remaining team of eight started to look elsewhere for business, which they found on the Windward Islands, especially Statia. ‘In March this year we finished installing 7.000 solar panels on the island of Statia, and we won the tender bid for another 8.000. This means nine months of work for us on the island.’ He adds, proudly: ‘When this project is completed, Statia will generate fifty percent of its electrical power from solar energy.’

Eco Energy is hopeful about the future of solar in the Caribbean. ‘Saba recently issued a Request for Proposal, Aruba will do the same soon,’ says Baak. ‘Also Anguila, Antigua, Sint Maarten, Jamaica, Barbados, Saint Kitts, Puerto Rico, the Dominican Republic, all of these islands are going solar. We just hope that Curaçao will follow, either by introducing an electricity access charge, like Aruba has, or by lowering the Sun Tax fee. All in all, renewable energy is the only solution in the long run.’

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