Caribbean Utilities Company said on Monday it would begin planning for 5 megawatts of solar energy and up to 15 megawatts of power generation from sun, wind and ocean sources.
In the wake of Friday’s announcement that CUC would spend $85 million to install almost 37MW of new diesel-fuel generation, augmented by another 2.7MW in heat-recovery technology, making it the largest project in the company‘s history, the utility said it would approach industry overseer the Electricity Regulatory Authority to plan use of alternate-energy sources.
Company President and CEO Richard Hew cautioned, however, that, while renewable technology was nearing commercial viability, it did not yet offer cost reductions to consumers.
Liquid natural gas, while cheaper “in the pipeline,” he said, incurred considerable costs to freeze, ship in special vessels, store in large containers, unfreeze, then convert to electricity. Compressed natural gas suffered from similar disadvantages, except the freezing process, “cryogenics,” was not involved.
Solar power, he said, contingent upon weather conditions, still had to be augmented by traditional power generation, while long-term storage depended on still-evolving battery technology.
Wind, the most efficient renewable, faced hurdles posed by the size of the turbines and the noise of operations.
Finally, he said, CUC had been “in discussions since the early ‘90s” about ocean thermal energy conversion, and while Mr. Hew was “comfortable the technology will work,” it had functioned only in small-scale situations, remaining unproved in larger applications.
The company, he said, “was trying to scale it up for commercial use.”
“Renewable energy is no silver bullet for provision of electricity on a small island,” he told a press conference on Monday morning, meaning economies of scale were unavailable.
At the moment, he said, consumer costs for power generated by CUC’s planned diesel units “were approximately the same” as alternative energies, “so either has roughly the same impact on prices.
“Even if we brought on solar energy tomorrow,” Mr. Hew said, “you would not see electricity rates drop.” Diesel generation also remained the most reliable of any source.
He cited a CUC survey in which 80 percent of respondents approved adding renewable energy to the CUC grid, but a similar percentage “said they were not willing to pay more” for power.
While CUC prices compared favorably with those across the Caribbean – “we are somewhere on the middle of the pack, and we compete very well in size” – high electricity bills were the result of high consumption.
He compared annual household use in Bermuda of 600 kilowatts to Cayman’s 900 kilowatts, attributing the difference to air-conditioning, as local residents in larger houses battled greater heat and humidity.
As oil prices rise, however, he acknowledged alternative energies would quickly prove cost effective, although he declined to offer a time frame either for discussions with the ERA or the introduction of renewable projects.
“We pay just under $4 for a gallon of diesel now,” Mr. Hew said. However, as fuel costs moved toward $6 “definitely, others will be a viable option.”
He anticipated, however, that consumers would benefit from CUC’s new, more efficient, diesel-generation project, saying the company’s bid had pegged costs at 4.8 cents per kilowatt less than competing proposals, and that the company would spend $6.5 million [*] less in fuel costs every year during the 25-year life of the project than it paid in the past.
“All these savings will be passed on to consumers,” he said.
[*] Editor’s note: Figure changed from the original story to reflect the correct number.