Caribbean Utilities Company has announced an increase from 3 megawatts to 4 megawatts in the amount of renewable energy it will accept on the national grid from Consumer-Owned Renewable Energy installations, causing some concern that the move may damage the solar energy industry.
In a complex arrangement, both CUC and its Electricity Regulatory Authority overseer said Tuesday that the utility would reduce the price it pays to individuals to supply renewable-generated power to the grid, but will extend the duration of each agreement from 20 years to 25 years.
The arrangement takes effect April 1.
CUC will pay new residential customers 32 cents per kilowatt hour, 20 percent less than previously. New commercial customers will receive 28 cents per kWh, 30 percent less than before.
“That is substantial,” said James Whittaker, chairman of the Cayman Renewable Energy Association. He called it a step backwards for renewable energy and Cayman’s efforts to decrease dependence on diesel-generated power.
The 1MW increase in renewable power the utility and the Electricity Regulatory Authority will accept is meaningless, he said.
“Don’t let that fool you. It means that where you once faced paying back your solar system in seven years, you will now have to wait 10 years. The ERA did not take into account the broad social and economic environment. It’s short-sighted,” he said.
Charles Farrington, the regulatory body’s managing director, said the agreement comes as the cost of generating equipment and diesel fuel diminishes, and the authority tries to balance public interest, pricing and efficiency.
“It’s time and value,” he said, speaking broadly of the complex calculations. “It depends on how much you want to incentivize. Do you feel you need a 25 percent return or might 10 percent or 15 percent be OK?” For that greater return, he said, you pay a premium, and for consumers to pay, for example 32 cents for 1kWh of solar-generated power as opposed to 28 cents for 1kWh of diesel-generated power … “well, you would need a pretty good reason.”
Mr. Whittaker disputed the math, but even using Electricity Regulatory Authority numbers, he calculates the consumer subsidy for solar power at less than $1 per person per month.
“And last year we created nearly $10 million in economic activity in Cayman,” he said.
In recent meetings with the regulator, Mr. Whittaker said, the Cayman Renewable Energy Association sought a 10-year program for renewable energy, culminating in 10MW of renewable power, setting a benchmark for development. The Electricity Regulatory Authority declined, he said.
“The authority is discouraging rooftop arrays,” he said. “They want to have fields of panels out in, for example, East End, or like the International Electric Power bid for Bodden Town,” a reference to the Pittsburgh-based solar company that signed a 5MW power purchase agreement with CUC at Christmas.
Mr. Farrington pointed out that the grid’s limit for renewables had been set at 15MW. International Electric Power’s bid was already for 5MW, with another 4MW now mandated. The initial request for proposals that drew the Pittsburg company’s bid had also sought another 8MW, some relying on wind power.
Meanwhile, CUC said the intention had always been to expand the renewable energy program from its original 2MW to 4MW. Just two months ago, the utility and the Electricity Regulatory Authority approved an interim expansion to 3MW.
“The initial intention was to expand the program to 4MW to allow additional participation in the program,” a CUC spokeswoman said.
The upper limits on the renewable energy program, however, were still being studied, she said, accounting for both safety and costs: “The level of intermittent power such as rooftop solar power, utility-scale intermittent power, variations in the type of intermittent power (wind versus solar), location of the power on the grid [and] existing power-generation sources must all be taken into consideration in establishing the capacity limits to ensure that the grid remains reliable and safe.
“The economic cost of each intermittent and non-intermittent generation source, the cost to own and operate the grid and the cost of non-intermittent [diesel-generated] power-generation capacity must also be considered in establishing CORE capacity limits and rates to ensure the competitive and fair allocation of costs for all electrical customers,” CUC said.
Mr. Farrington said the CORE program had proven a success, observing that individual and commercial generators of renewable power had “blown through the 2MW limit – and use is accelerating greatly.”
CUC said the program’s success was “based on the rapid residential and commercial customer participation within the CORE program.
“Currently, there has been approximately 2.5MW of CORE applications within the 4MW limit in capacity,” the spokeswoman said.
Mr. Whittaker argued the CUC and the Electricity Regulatory Authority limits were artificial and likely to drive future consumers entirely off the grid, jeopardizing the utility’s foundations and financial future.
“With rapidly developing storage and battery technology,” he said, “CUC’s and the ERA’s fears are all going to come true, bringing all those long-term viability issues.”