Caribbean Utilities Company is soliciting interest from renewable energy producers to build and operate alternative power generating facilities in Grand Cayman, as the utility looks again to green its heavily diesel fuel-based portfolio after similar efforts three years ago went for naught.
CUC, the sole commercial provider of electricity on the largest of the Cayman Islands, is looking for an independent power producer to develop up to 13 megawatts of sustainable energy generating capacity. CUC then envisions the investor would enter into an agreement with the local utility to sell the electricity it produces back to CUC for resale on the commercial market.
Presently, nearly all electricity generated and used in Grand Cayman comes from diesel fuelled generating units, with CUC providing roughly 151 megawatts of capacity for more than 26,000 residential and business customers.
However, the prevailing trend of rising fuel costs and increasing concerns over dependency on foreign sources of oil, as well as lingering questions about reliable access to energy sources and their environmental footprint have led utilities and producers worldwide to reassess their energy portfolios.
“CUC is conducting this solicitation process for all renewable energy technologies in an effort to ensure that Grand Cayman is able to receive the benefits of all forms of viable electricity technologies,” said Sacha Tibbetts, CUC’s manager of engineering services. “These benefits include reduced environmental impact, energy price stability, reduction in dependency on foreign resources, possibly energy cost reductions and job opportunities during the construction as well as operation and maintenance periods of the project(s).”
Three years after CUC opened the door to bidders in July 2008 to produce 10 megawatts of large scale wind energy in Grand Cayman – an initiative that failed to materialise because of concerns over its proximity to the airport and potential interference with a proposed government weather service radar system – CUC is opening the bidding process again to all forms of sustainable energy.
CUC is requesting interested parties submit preliminary proposals by 31 October for the financing, construction, ownership and operation of up to 13 megawatts in aggregate of grid-connected renewable energy generators.
Proposals shall be for a minimum of 50 kilowatts of generating capacity. Proposals for systems larger than five megawatts should also include option pricing for less capacity. The location of the generation sites shall be determined by potential investors.
CUC plans for the investor to become an independent power producer and enter into a power purchase agreement with CUC for the supply of electricity from sustainable sources. The proposed agreement would be subject to approval by the Electricity Regulatory Authority. Upon approval, the independent power producer would also need to secure a generating license.
“CUC’s last procurement process for 10 megawatts of large scale wind energy was halted due to the limitations of land space created by the 150 feet structure height limitation within 10 miles of the airport and the required clearance from the proposed Doppler Radar site in East End,” Mr. Tibbetts said. “CUC believes that this new solicitation will be more successful as we are seeking all forms of renewable energy, including wind, solar, wave, etc. which will allow for more flexibility within the existing regulations in the Cayman Islands.”
CUC, which has provided electricity in Grand Cayman since 1966, has always contended diesel fuel is the most viable technology and energy source for power generation considering reliability, economic and environmental factors.
However, the company also has publicly recognised potential renewable energy alternatives via ocean thermal energy conversion technology, as well as natural gas, and commercial wind and solar operations.
Grand Cayman is too small for present nuclear power technology and commercial power generation based on hydrogen isn’t yet technologically viable. Obvious options for a Caribbean nation such as the Cayman Islands are wind, biomass, geothermal, ocean thermal, hydropower and solar. But while each offers certain benefits, they all present distinct drawbacks, too.
Renewable energy is typically higher in cost than diesel generated electricity; however they have other advantages such as fixed costs and benefits relating to the protection of the environment.
“CUC has been monitoring the status of several alternative technologies for over a decade,” said Neil Murray, a CUC corporate communications officer. “Historically, the cost of these technologies has prohibited adoption, however, with current high oil prices and advancement in renewable energy generation technologies, CUC believes that there are vendors in the market that can provide utility scale projects that may provide a life cycle cost savings to the consumer.”
The Caribbean has long been dependent on fossil fuels for its energy supply as more than 85 per cent of its electric power is generated by fuel oil, according to a 2008 report prepared for the Caribbean Association of Electric Utilities, of which CUC is a member.
The current economic situation in the region can be characterized as transitional toward diversification of energy supplies. With rising oil prices and higher electricity rates there is a need for cheaper power to enhance the Caribbean’s attractiveness for investors and the growth of economic activities, according to the position paper.
“Oil dependence has become a heavy burden for the Caribbean energy situation,” the CARILEC report read. “This is all pointing into the direction of exploring the best possible and economically most feasible options in the field of renewables.”
CUC’s average price per imperial gallon of fuel for the six months ending 30 June, 2011, increased 40 per cent to $4.54, compared with $3.24 for the six months ending 30 June, 2010, according to CUC’s second quarter 2011 earnings report.
The cost increase was due to world market prices rising and a $0.30 per gallon increase in government’s fuel import duty implemented in July 2010, the report read.
“Renewable energy could provide several benefits to Cayman, including lower emissions, price stability and perhaps lower cost,” Mr. Murray said. “CUC is hoping to identify viable renewable energy projects by the end of 2011.”