Groundbreaking for Cayman’s first solar farm and non-Caribbean Utilities Company utility-scale power plant will take place next month, launching a long-awaited move to renewable energy.
The North Carolina-based builder, Entropy Investment Management – and local affiliate Entropy Cayman Solar – and industry overseer the Electricity Regulatory Authority expect the 20-acre, 21,690-panel farm in eastern Bodden Town will open in October, generating 5 megawatts of power, enough energy to supply 800 homes. The ERA approved the Entropy-CUC venture on Oct. 30, 2015.
The 5MW capacity of the Bodden Town facility represents a fraction of the nearly 100MW that CUC generates to meet demand from its 28,035 residential and commercial customers, meaning significant reductions in consumer bills are unlikely in the short term.
Entropy Investment Managing Partner David March said Cayman is only the latest solar project his company has undertaken.
“Entropy is a very active investor in – and builder of – utility-scale solar projects. We have built over 350MW of solar, mostly in the United States,” he said. “We believe Latin America and the Caribbean are attractive investment markets and have unique load, environmental and grid characteristics that multiply the value of solar and other renewable-energy technologies.”
Entropy has built at least 28 solar projects, almost identical to the Bodden Town project, in its native North Carolina alone. Cayman will be the company’s fourth overseas project. It has built three 10MW solar farms in Panama. The company has pointed not only to cheaper electricity, but also has advertised the projects’ environmental benefits, substantially reducing CO2 emissions.
“It is important to recognize that current diesel-electricity prices do not capture the external costs of climate change, local air pollution, groundwater thermal pollution and wear and tear on infrastructure resulting from transporting the fuel,” Mr. March said.
In 2011, CUC called for bids to generate power from renewable energy. In 2013, the ERA named U.S.-based International Electric Power to build its proposed 5MW solar installation.
Mr. March explained the two-year lapse between selection and construction.
“IEP is [the] electricity-project developer,” he said. “Developers typically require other investors to come in during construction because the capital requirements are substantially larger. Entropy elected to purchase IEP’s complete ownership, since they are a U.S. firm.” IEP’s Cayman partner, ReNew Solar Cayman, remains Entropy’s local partner.
“We were introduced to the project by ReNew Solar Cayman in January 2014,” Mr. March said. “It took considerable time purchasing the project from IEP, due to some of the complexities inherent in international transactions. Most of the time, however, was spent in finalizing the power purchase agreement with CUC and then getting the approval of the PPA by the ERA.”
The ERA proceeded cautiously, wanting to ensure Cayman’s first solar-generation license was done correctly.
“This is the first utility-scale solar project in Cayman,” Mr. March said, “whereas hundreds have been built in North Carolina, for example. New markets take time. The same was true in the United States. Early projects took considerably longer than what is experienced today. We expect the Caribbean will become easier and less expensive to do renewable energy projects as the market matures.”
A “substantial difference” in the U.S. and Cayman electric grids, for example, presented unique problems, he said.
“The Cayman grid is very small, so integrating solar requires much more diligence, engineering, safety concerns and forethought,” he said. “There isn’t as large a margin for error in a small grid. The ERA and CUC understand this and did a great job in ensuring safe, reliable solar integration.”
A successful 5 MW project, Mr. March said, could spur further investment and creation of a pan-Caribbean industry, founded on Cayman’s unique legal and financial expertise.
“Importantly, our focus is to be an investor rather than a builder of solar farms,” he said.
“We build solar farms to help jump start the industry.
“Our goal is to be a catalyst for a Cayman-based renewable-energy industry, and for Caymanians to be a leader in the Caribbean’s renewable-energy industry.
“Given our track record in the sector, we can provide the investment capital, education, experience and access to global purchasing power, but we recognize the project will be more successful if it is built and led by local Caymanians.
“We see our role as providing the resources, capital and expertise to locally owned-and-run businesses to make this a reality.”