Mixed reactions to CUC green power deal

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.”

Bill increases

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.

1 COMMENT

  1. errrrrr. To get this straight. There are people here commenting that a fixed 37 cents an hour isnt worth the money to generate electricity because the price of electricity will go up? LOL

    Okay, lets look at this in a way those people might be able to understand. If you generate this electricity, Its 37 cents you would have not normally gotten. So even if the price of electricity doubles to 74 cents a kilowatt hour. You are only paying 37 cents a kilowatt hour, where everyone else is paying 74 cents. Thats 50% off!

    PS. the real concern should have been under the paragraph title BILL INCREASES.
    so CUC has managed to get on top once again. By raising EVERYONES electricity bill once again, because they are now paying for electricity that they will be generating money with!!!

    okay, maybe im not a smart guy here. But by buying energy from people who are generating from solar panels. Doesnt that mean CUC uses LESS FUEL to generate the same amount of electricity. Yet…they are going to charge us extra because they are buying the electricity.

    wow…………whom ever is CUCs deal maker is. Hes a slippery as a seal and one smooth operator.

  2. I hear you Big Berd, Bu the way I see it is after the initial Investment into the system. Youre not paying anything for electric. So if you keep you system indepedant from CUC, when the price for everyone else goes up, you will still be paying nothing. Seems that when you purchase these systems you really benefit from the longer term savings not profit from energy Sales. If you invest say 20 Grand into a renewable energy system that can completely power your home. you can easily save 6,000 bucks a year in Electric bills based on an average 500 monthly bill. You will recoup your investment in just a few years and still be paying nothing. I think thats even better than paying 50% of what others are paying.

    I think CUC is just trying to make sure they stay in the game without losing a lot of big customers to renewable energy products.

  3. Actually. Right now, they are saving almost 90%. those who generate enough electricity.

    But not tied into the grid is not going to save you money. The solar to power an entire average home is going to be 30K. Then it gets expensive. The battery banks. Those run around 20 to 40K. And have to be replaced every 7 to 10 years. The solar panels need to be replaced every 15 to 20 years.

    So you spend say high end (cause you like to use energy without conservation), you spend 70K in total and in ten years, you may save 60K of electricity from CUC. (if your electricity bill is 500 per month now)
    That means after ten years, and we will say your batteries last that long. you must pay an additional 40K for your batteries. So really, you do not save anything. You stay even. At best. Or just a bit behind in keeping up with the costs of replacements. If your batteries fail sooner (hence they are rated from 7 to 10 years before replacement) You could find yourself owing thousands (yes, alot less than if you dont generate solar at all) but you better have 40K to spend at a moments notice.

    But you certainly arent generating that power for free.

  4. How can it be a good deal when you HAVE to sell the solar power you generate to CUC for 37 cents per kWh for the next 20 years, and then buy it back at the retail price, which even at only 5% inflation would be 76 cents in 20 years time. Its a very good deal for CUC!

    And dont you think CUC are being disingenous when they say on the one hand that this deal will mean they have to put the price up by 50 cents a month for everyone, and then on the other hand say that they will make a profit of 400 a month from just one home selling them solar power?

  5. As I covered in my last two posts go4green.

    One, better a 50% discount on electricity, than the alternative.

    You see, right now, these people generating thier own electricity are happy. i dont need no CUC.

    wait until those electricity generating devices start to fail. I guarentee you, the people that installed those devices for these home owners. Didnt stress the failover rate of the equipment to those home buyers. Im no CUC lover, far from it.

    But even if you go solar off the grid, you will NEVER generate free electricity. Because solar power and especially the batteries that house it. Are way too expensive still. And as said in below post. Thier failure rate is still too high. So you really never get a return on your investment. (the batteries are the most expensive in the solar setup, and they always fail first, with only a 7 to 10 year life span!) Where grin tie in with solar, your only paying for the solar panels and the ac to dc converter (20 to 40k ish) and they last 15ish years.

    But if you have 70K approx e, to spend on solar panels and batteries. Then after wards, at least 40K as a reserve when in 10 years time, things start to fail and need replacing. Go for it, stay off the grid.

    Or go grid tie in, and still save money. either way, its better than having no solar at all.

  6. Makes since Big Berd, I didnt realize that you wouldnt need the batteries if tied in to CUC. Sounds like it would be worth looking into. I myself think the money would be better spent building a more energy efficient house with good insulation and options like low level lighting and a better then the norm energy efficient AC System.

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