CUC makes plans for renewable energy

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.

5 COMMENTS

  1. Ok folks sit in your rocking chair, grab a magazine and a cup of tea. Rock away, and wait and see if your tea colds before the planning is done.

  2. Mr.Hews obviously does not understand solar power. There are no batteries needed!!! That statement is laughable!!! I have built solar plants in Canada with a fraction of sunlight that Cayman receives. An island as small as us can be totally reliant on renewable sources within 3-5 years and our electric bills could be drastically reduced. There are more than enough studies and actual plants that have been built to support my claims. WAKE UP CAYMAN!

  3. Here is an interesting article from the Rocky Mountain Institute, one the the preeminent energy research organizations in the United States.

    The Economics of Grid Defection
    Distributed electricity generation, especially solar PV, is rapidly spreading and getting much cheaper. Distributed electricity storage is doing the same, thanks largely to mass production of batteries for electric vehicles. Solar power is already starting to erode some utilities’ sales and revenues.

    But what happens when solar and batteries join forces? Together they can make the electric grid optional for many customerswithout compromising reliability and increasingly at prices cheaper than utility retail electricity. Equipped with a solar-plus-battery system, customers can take or leave traditional utility service with what amounts to a utility in a box.

    This utility in a box represents a fundamentally different challenge for utilities. Whereas other technologies, including solar PV and other distributed resources without storage, net metering, and energy efficiency still require some degree of grid dependence, solar-plus-batteries enable customers to cut the cord to their utility entirely.

    http://www.rmi.org/electricity_grid_defection

    Caribbean Utilities Ltd. like many electrical utilities will find themselves in the near-term in a position where, as the article points out, their customers start deserting and going off grid.

    It would be in the corporate best interests for CUC to activly persue alternative energy rather than just making a feeble attempt to so do.

    The Cayman Islands desperatly needs an Energy Policy as I have been advocating for the last seven years.

    Nicholas Robson
    Director-General
    Cayman Institute

  4. Response to yesterday’s article by Tad Stoner by a Noah Rotman who states that

    "Mr. Hew obviously does not understand solar power. There are no batteries needed!!! That statement is laughable!!! I have built solar plants in Canada with a fraction of sunlight that Cayman receives. An island as small as us can be totally reliant on renewable sources within 3-5 years and our electric bills could be drastically reduced. There are more than enough studies and actual plants that have been built to support my claims. WAKE UP CAYMAN!"

    Perhaps Mr. Hew does understand solar and the associated benefits and challenges for a small Island grid. Your experience in Canada was likely with the Ontario Feed-In Tariff system, in which the Government subsidized renewables to a great extent and initially offered to purchase solar energy at 0.90 per kWh. It did not take a lot of sunshine to make money on that deal! In fact the sophisticated developers were all over this and arranged deals with farmers to install arrays with sun tracking systems that squeeze more energy out of the solar arrays than the Government anticipated and fairly the soon the subsidy was spent. Since then, more subsidies have been extended but the feed in tariff has dropped to around 0.45 per kWh. The impact of these subsidies has driven the average price of electricity up significantly as reported in the attached article:
    http://business.financialpost.com/2014/06/02/ontarios-power-trip-irrational-energy-planning-tripling-power-rates-under-the-liberals-direction/
    Turning to Mr. Rotman’s theory that this island can be totally reliant on renewable sources with 3-5 years, he should explain exactly what will produce the electricity when for moments or hours the sun isn’t shining and the wind isn’t blowing. In this scenario there will have to be some sort of back up, whether diesel engine or energy storage. Perhaps not batteries, but I do not think it is a laughable suggestion, as large grid connected batteries are currently being used on Islands such as Hawaii and Puerto Rico. The jury is still out on the success of those installations.
    Mr. Rotman should also know that apart from hydroelectricity which is considered a renewable source, Ontario’s renewable output (wind and solar mainly) is 1% of the total capacity in the province. The capacity of customer owned renewable generation in Grand Cayman is anticipated to exceed this level within a year and the addition of a 5 MW solar project which is currently before the planning authorities would increase the penetration to over 5%. The point is that CUC’s system which is much smaller would encounter reliability challenges earlier than large interconnected systems in Canada will, and the progress down the road of renewables must be carefully planned.
    The bottom line is that small distributed renewable installations still cannot compete on a cost or reliability basis with conventional power. Larger scale installations are becoming cost competitive but still rely on firm generation to back it up. I am sure that Mr. Hew understands the potential of renewables and will migrate in this direction with economics and reliability in mind.

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