People who generate their own electricity and who work in the renewable power industry have given mixed reactions to Caribbean Utilities Company’s new arrangement to buy green power.
The power company and the industry’s regulator, the Electricity Regulatory Authority, last week announced changes to the
Consumer Owned Renewable Energy, or CORE, programme.
Under the revised conditions, CUC would buy renewable energy for 37 cents per kilowatt hour and sell it back to the producers of that energy for the current retail price, which is now 30 cents per kilowatt hour.
As of 1 February, it had offered 20 cents per kilowatt hour.
Jay Easterbrook, who owns Lighthouse Point dive resort and condos in West Bay that are powered mostly by solar energy, said he considered the new arrangement a “bad deal”.
He and his wife Nancy did not sign up for the previous CORE programme and say they do not intend to sign up for the latest deal, either.
He said that while he would make 7 cents on every kilowatt hour of energy he produces, if the price of fuel goes up to beyond 37 cents per kilowatt hour, he would end up buying his own generated electricity back from CUC for more than he sold it for.
“They want 100 per cent of my renewable energy. I cannot consume any of my own. I have to send it directly to the grid first… Right now, we’re talking about a 7 cent differential.
It’s not going to be a consistent 7 cent differential. What if the retail price goes up to 50 cents per kilowatt hour?” he said.
Mr. Easterbrook said his solar panels are generating four times more power than his property can use and he is dumping the excess energy because under the previous arrangement, CUC was paying less for the kilowatt hours of renewable energy than the retail price, which includes import duty and fuel surcharge.
Their solar panels generate so much power, that a wind turbine the Easterbrooks erected on heir property is rarely used.
He is disappointed that CUC did not adopt a system for buying renewable energy called “net metering”. “I thought it was going to be net metering, by which I generate power and consume it and sell the excess to them,” he said.
He added that there were some positive elements to the new arrangements, but these were “just baby steps” and did not offer much incentive for people to pay tens of thousands of dollars to buy their own equipment to generate alternative energy and reduce reliance on fossil fuels.
Currently, CUC’s electricity supply comes from diesel generators.
“The price of crude oil will go up. The 7 cents is not going to be fixed. It is fixed at 37 cents for 20 years. In 20 years, it might be $1.50 per kilowatt hour. It is a bad deal,” Mr. Easterbrook said.
His view was echoed by Chris Anco, a renewable energy systems designer at Electratech, which installs alternative energy systems in properties in Cayman.
He said the new arrangement might save some money for people who supplement their electricity with a few solar panels on their roof, but it is not an economically viable option for people who power their homes exclusively on renewable energy.
“It’s better than what we had before, but for the people investing in these renewable energy systems, it’s a raw deal,” he said.
He said that since the price of oil can fluctuate so much, hence affecting the retail price of electricity, it would be more acceptable for the price paid for renewable energy generators to be pegged to the retail price and go up and down depending on the retail price.
The new deal was welcomed by builder Lindsay Scott who has worked on a number of properties in Cayman that have renewable energy systems, including the first home entirely powered by green energy – the late Frank Bank’s house in South Sound.
“I’m pleased with how CUC is going to bill it. I’m encouraged by it,” he said.
He said that after speaking with CUC officials, he was confident that if the price of oil went up significantly, the electricity company would step in “and make adjustments [to the arrangement]”.
“But if they don’t, and they stick to 37 cents per kilowatt hour, then I’m still getting 37 cents that I wouldn’t be getting otherwise,” he said.
Mr. Scott, who recently built a new home for himself, said he planned to sell renewable energy produced by solar panels at the house to CUC under the new deal.
“I think we need to embrace this and move on,” he said, acknowledging that at first he was sceptical but on closer examination of the new arrangement, he is now convinced that it is the best way forward.
CUC officials said customers can sign up during a one-year pilot period, beginning 1 February, and secure the fixed rate of 37 cents per kilowatt hour for 20 years.
“After the initial sign-up period, or after the one megawatt quota has been reached, CUC and the ERA will decide if the programme should be extended and if any changes are necessary,” says a statement from the company.
“Fixing the rate for a period of 20 years assures that the customer receives a defined revenue stream. The initial capital investment, the defined (guaranteed) revenue stream, and the projected operations and maintenance costs are all the parameters needed to perform a sound economic evaluation.
“The retail cost of the electricity sold by CUC should not affect the business case (economic evaluation) of the investment,” the statement from the company says.
It continued: “CUC will learn from the experience of the pilot programme and evaluate with the ERA before deciding on any subsequent offer next year.
The initial CORE rate was tied to fuel costs and proved unpopular, hence the move to paying the estimated cost of the renewable.
To tie the purchase cost of the renewable to the purchase cost of diesel would remove one of the benefits of the programme, which is to include a more stable component of energy costs not related to diesel fuel for the benefit of all consumers.”
CUC says its customers can expect to see a slight increase in their bills due to its new arrangement to buy electricity generated by solar or wind power from home and business owners.
If people who generate their own electricity meet the one megawatt quota, regular customers using 1,000 kilowatts per month who get a bill of $300 would expect to see an increase of 50 cents per month, based on the current fuel prices, CUC officials said.
The deputy managing director of the power regulator, the Electricity Regulatory Authority, Louis Boucher, said: “All consumers will be subsidising the programme (commercial and residential) and the amount a consumer subsidises will be in direct proportion to the quantity of energy they consume.”
He added that the cost of the subsidy would be offset by the savings in fuel costs by approximately three to one.
“For example, if one home installs a 20-kilowatt system and assuming this system were operated at full capacity, then this would have an effect of potentially reducing CUC’s fuel consumption by approximately 160 imperial gallons per month, which is equivalent to approximately a $600 per month fuel savings island-wide at today’s fuel prices.”The cost for achieving these savings (the subsidy) would be approximately $200 per month. The net effect is that the island could potentially save approximately $400 per month in fuel costs if just one home installs a 20 kilowatt solar system,” he said.
Responding to criticisms about the fixed price of 37 cents per kilowatt hour, Mr. Boucher said that price was fixed for one year and would be looked at again once the pilot scheme was completed next year.