Caribbean Utilities Company will pay producers of alternative energy more for electricity they generate under a revised energy buy-back scheme approved by the power company and the electricity regulator.
People who produce their own electricity with solar panels, small wind turbines or other means will be paid 37 cents per kilo
watt hour for the power they generate and sell back to the CUC grid under the Consumer Owned Renewable Energy, known as CORE, programme, compared to 20 cents per kilowatt hour as of 1 February under a previous arrangement.
The new programme, which has been approved by Cabinet and made public on Wednesday, consists of a Feed-in Tariffs structure.
CUC and the regulator say the new structure, which came into effect on 1 February, will provide “significant incentives to consumers who generate energy from renewable sources”.
Feed-In Tariffs systems are widely used in Europe and North America.
Managing Director of the Electricity Regulatory Authority, Philip Thomas, said: “The development of renewable energy systems in the Cayman Islands for electrical generation is critical to reducing our dependence on diesel fuel products, and the [Feed-In Tariffs] programme is consistent with ERA policies and that of the recently formed Government National Energy Policy Committee.”
The programme will initially run as a pilot scheme for one year, ending in January 2012, or until a quota of one megawatt of capacity has been filled on a first-come, first-served basis, a joint press release from CUC and the Electricity Regulatory Authority stated.
Under the new arrangement, the introductory rate will be 37 cents per kilowatt hour for customers generating renewable energy that is fed to the CUC grid.
Once an application is made to CUC, applicants should expect to be able to start exporting energy to the grid within 30 days, subject to approval by the Central Planning Authority.
The Feed-In Tariffs agreement contracts would last for 20 years to enable enough time for renewable energy system owners to make a return on their capital investment, according to the joint statement.
CORE customers will be billed monthly at the normal retail rate, which is currently 30 cents per kilowatt hour, for their total energy consumption and will be credited monthly at the FIT rate of 37 cents per kilowatt hour for the renewable generated energy sent to CUC’s grid.
Every three months, CUC will pay those customers for any accumulated FIT credit balance on their account.
The rate for commercial and residential customers will be the same – 37 cents per kilowatt hour – but initially commercial customers will be limited to 70 per cent of the one megawatt capacity installed.
The size of units for residential systems is a maximum of 20 kilowatts while the maximum size for commercial systems is 50 kilowatts, under the new arrangement.
The previous arrangement, introduced in March 2009, was not embraced by some generators of their own electricity, who said it offered no incentive to people to produce their own power.
Under that system, consumers who sold their excess alternative energy were paid the equivalent of the fuel costs at the time, plus half a cent per kilowatt hour.
Since that programme was introduced nearly two years ago, three people have signed up for it, according to CUC.
Jim Knapp, who owns a home powered by alternative energy was an opponent of the previous system. He said the new arrangement was a step in the right direction, but he continued to have some concerns about the Feed-In Tariffs programme.
“I don’t like the idea that it’s limited to the first one megawatt on the pilot programme when the customers are expected to sign a 20-year agreement. The pilot agreement should be just that – a pilot, or conversely it should be a longer term agreement,” he said.
He added: “A fixed price for energy at 37 cents may sound good now, but when energy costs skyrocket in the years to come, CUC would be guaranteed energy at an extremely low fixed price for years, where the people that invested in renewable energy systems would, in effect, be providing the energy by which CUC is deriving their profits at no increased cost to CUC. In my opinion, the price paid to the renewable energy customers should be tied to a schedule related to the cost of CUC’s generation costs.”
He also questioned why CUC would pay CORE customers on a quarterly basis.
“I believe that settlements should be made monthly. CUC has no problem billing and shutting off electricity on a monthly basis. Why should they hold their client’s money for three months where they make the interest on it rather than the customer’s”, he asked.
President and chief executive officer of CUC, Richard Hew, said the power company was pleased to introduce the Feed-In Tariffs to existing and new CORE customers.
“We look forward to an increase in the amount of renewable energy available to our system as we introduce some diversification of energy sources and displace fossil fuel used and its associated emissions,” he said.
The CORE programme enables customers to connect renewable energy systems to CUC’s distribution network, so they can produce and use their own generated electricity while remaining connected to the grid, which they can access when wind power or solar power is not available.
Juliana O’Connor-Connolly, under whose Ministry of District Administration, Works, Lands and Agriculture, electricity generation matters fall, said: “The government wholeheartedly supported the FIT programme as it dovetailed into the National Energy Policy, as a means of encouraging consumers to reduce their utility bills while doing a small but important part in becoming more environmentally conscious.”
CUC has invited customers who want to find out more about the programme to contact its Customer Service Department on 949-4300.