Trinidad and tobago Solar News

Draft Renewable Energy Framework

In 2011 the Ministry of Energy Trinidad and Tobago published a draft renewable energy (R.E.) framework after the report from the Renewable Energy Committee established in 2008.

The committee recognized the country’s hydrocarbon resources as ‘finite and depleting’, and we are signatories to the Kyoto Protocol and wider Paris Agreement.

They recognized creating an enabling environment for Renewable energy (RE) technologies and industry as a necessary strategy for implementation. They also recognized subsidized Petroleum Product Prices as a market barrier to the RE implementation.

I referenced the framework as ten(10) years later it has yet to be ratified. However the draft policy is still being used to implement measures to satisfy the country’s Sustainable Development Goals or SDG’s. Here are six(6) fiscal incentives Trinidad and Tobago has initiated and how they affect consumers and suppliers.

Do - Reduce the cost of panels to customer

When purchasing a solar water heater, to generate hot water, or a solar photovoltaic(PV) panel, to generate electricity, you should pay zero vat on your purchases from the VAT Act! The price would be the sales price of the various panels which would depend on the design, brand and retailer.

Don’t do- Reduce the overall price paid by customer

Solar water heaters and Solar PV panels are a part of a system, that require other components to operate. The plumbing and electrical components connected ARE subject to vat, which can cause the price of the system to be significantly higher than a panel alone.

Do - Give consumers tax credits on solar water heaters

After purchasing a solar water heater, when filing your years taxes, keep your receipt so that you can claim for a tax credit, and get money back from the government! The amount you get back is 25% or a quarter of the price you paid for the solar water heater panel. Example, if the water heater costs $1000, you can get back $250. The maximum you can claim is $2500. Therefore if your solar water heater costs more than $10,000, you would still only get back $2500.

Don't Do - Offset the cost of installing solar water heaters

Following the previous incentive, remember the solar panel is not subject to vat, and only part of the cost of the entire system. Plumbing, pumps and tanks are not included. Therefore this rebate will NOT be 25% of the price you paid for the entire system! Example, if your entire solar water heating system cost $20,000 but the solar panel cost $5000, you will get back 25% of $5000, which is $1250. As a result some retailers have increased the price of solar water heaters, which in turn isn’t good for consumers.

Do - Reduce the import duty on whole solar panels

Retailers that import systems pay no customs duty on imported solar water heater panels from the Financial Act. Solar Dynamics and Eco-Sun are the only retailers I know(send me an email for correction) that are ‘local’ brand manufacturers of solar water heating panels, though these panels are assembled before entry into the country. Therefore equipment to make water heaters can take many forms, as there are many types and components differ, based on manufacturing goals. 

Retailers that import Solar PV systems pay no customs duty on imported solar panels, inverters and controllers as part of carbon reduction and energy efficiency incentives in the Tourism Act.

Don’t Do - Reduce the customer price/Duty on ANY other R.E. product.

The specificity of the law, causes customs officers tend to separate parts of a whole system, and charge duty on anything attached that isn’t a solar panel. This cost is transferred to the customer by suppliers.

Do - Incentivize Solar Retail Companies to buy solar panels

Companies that purchase new solar water heater panels and PV panels in Trinidad and Tobago, can claim 150% of the capital price in the year purchased from the Income Tax Act. Example if a PV panel was bought at $1000, the company can claim for $1500 back in their tax returns. Also this is aggregated to all the PV panels bought for the year. However, this is the ONLY deductible allowed in the year. 

Don’t Do - Encourage Retail Companies to file for this claim

Depending on the business model, claiming other deductibles may provide more returns than this single incentive. There are very few companies in Trinidad that operate purely in the Solar market in Trinidad and Tobago.

Do - Provide ESCo’s with incentive to purchase equipment

An ESCo is an Energy Service Company. Any company that is registered as such by the Minister of Energy Trinidad and Tobago can claim 75% on equipment expenditure for that year. Once that equipment is used to conduct energy audits.

Don’t Do - Anything, because there is no official way to certify an ESCo.

Do - Incentivize companies in Renewable Energy and Energy Efficiency.

Any registered company that engages the services of an ESCo. to reduce their energy use( increase their Energy Efficiency (E.E.) or install a renewable energy system can claim 150% tax allowance on their expenditure for that system, in that year. Example if your company pays an ESCo. to do an energy audit(s) costing $10,000, you can claim $15,000.

Don’t Do - Anything…because…there’s NO official way for the Minister of Energy to certify an ESCo. in Trinidad and Tobago.

Those are the fiscal incentives currently targeted toward the Solar Industry in Trinidad and Tobago via the Income tax, VAT, Finance and Tourism Acts. It’s easy to see the hurdles to the development of the Solar Energy Industry aren’t imaginary.