Authorities in Cayman on Friday gave the nod for the first time to an overseas company for the generation of electricity and creation of a solar-energy installation.
The new company, Entropy Cayman Solar Limited, will build a 20-acre, $1.4 million “utility-scale” solar farm in eastern Bodden Town, completing it by October 2016. The installation is expected to generate 5 megawatts of electricity, initially costing 14.28 cents per kilowatt hour, averaging 16 cents per kWh during the 25-year life of the project.
The Caribbean Utilities Company charges between 26 cents and 32 cents per kWh for diesel-generated product.
The approval comes nearly 11 months after CUC and Pittsburgh-based International Electric Power signed a “power purchase agreement” for the project, subsequently submitted for review to the industry overseer, the Electricity Regulatory Authority just after Christmas 2014.
The review took until last week to approve because of the time that had elapsed since CUC’s 2011 call for bids in solar generation, and the ERA’s 2013 selection of IEP.
In the two years since IEP approval, better technology and, chiefly, widespread adoption of solar energy has significantly lowered costs, which IEP had originally pegged somewhere near 20 cents per kWh.
After Christmas, the Pittsburgh company devolved responsibility for the Cayman project onto its Entropy Cayman Solar affiliate.
“The 5MW solar project will provide energy to power approximately 800 homes with clean renewable solar energy and will significantly reduce emissions into the atmosphere through the avoidance of diesel-fuel consumption,” according to a joint ERA-CUC statement late Friday, calling the 14.28 cents a “competitive initial price.”
Charles Farrington, ERA managing director, said “the price keeps coming down because the dependability is going up. We are now at the ‘tipping point,’” where costs begin to move against the traditional diesel-driven models in favor of alternative energies.
Efficiency had improved, he said, reducing the need for subsidies to the industry, “we are fitting more [solar] cells onto panels and there is more demand, driving economies of scale.”
CUC President and CEO Richard Hew welcomed the development, but stopped short of a full embrace: “We are very pleased that we have reached this stage of the project” which, he said, had been “a prolonged, but necessary process to ensure that we secured the right partner who could meet our goal to bring large-scale renewable energy to Grand Cayman’s electricity consumers.
“Clean energy at a competitive and stable price,” he said, “represents a large step in the ongoing development of a diversified and environmentally sustainable energy sector.” He cautioned, however, that “firm” sources, such as diesel fuel, are required to provide stable power to the grid.
James Whittaker, founder and chairman of the Cayman Renewable Energy Association, also welcomed Friday’s approval, but disputed Mr. Hew’s claim that diesel fuel remained crucial.
“CREA welcomes the news that the 5MW solar project has finally been approved. We believe it to be an important first step to ensuring renewable energy provides a sustainable future and vital energy security for the Cayman Islands.”
He warned, however, that Cayman “desperately needs to … show more progress than its current status of 1 percent energy coming from renewable sources.”
CUC supplies 100MW of electricity to its 28,000 Grand Cayman customers.
“Given the low adoption levels of solar energy in Cayman … it is false to claim that renewable energy cannot provide stable power to the grid,” he said. Available technology enabled a much greater renewable-energy contribution.
Even with Friday’s approval, he said, “Cayman still has many years and a long way to go before we need to be concerned about [the] potential for power instability from renewables.”
Pointing to broad-based solar use in a dozen countries, Mr. Whittaker said, “the rapid pace of battery and storage technologies today are clearly going to make those issues irrelevant even at 100 percent renewable energy penetration.”
Mr. Farrington said CUC was “re-evaluating” a June statement by Manager of Engineering Services Sacha Tibbetts that the grid was unable to handle more than 5MW of renewable energy.
“That was just a guess and now we are really looking to see what we can do,” he said.
David March, managing partner of financier Entropy Investment Management, said the company was “excited to be a contributing partner in the country’s quest for sustainable and renewable energy independence.”
“Strong foundations make enduring partnerships and Entropy looks forward to working with the ERA and CUC to develop additional energy cost-saving projects,” he said.
Mr. Farrington echoed Mr. March, and said the ERA would seek more renewable projects for Cayman.
“The ERA is also pleased to welcome Entropy Cayman Solar as a new generation licensee and we look forward to a long and mutually beneficial relationship on behalf of Grand Cayman electricity consumers.
“The ERA is now turning its attention to developing a new [request for proposals] for additional utility-scale solar resources for Grand Cayman’s electricity grid.”