Caribbean Utilities Company has raised the cap on its program that allows individuals to produce their own renewable energy, but has lowered the price it pays for the power.
CORE, the Consumer Owned Renewable Energy program started in 2009, seeks to encourage individuals and businesses to develop their own rooftop or backyard renewable-energy systems – usually in the form of solar panels and wind turbines. The utility pays the system owners for their kilowatt hours, places the power on the national grid, and then bills them at a lower rate as they consume electricity for their own needs.
CUC and its Electricity Regulatory Authority overseer have lifted CORE’s 4 megawatt cap to 6 MW, but has changed the rates it will pay to individuals and businesses. It has announced a sliding scale according to the size of the system.
In February 2015, CUC paid residential customers 38.5 cents per kilowatt hour and businesses 37.5 cents per kWh for their electricity.
On April 1, 2015, CUC and the ERA revised CORE, allowing more renewable power onto the grid, but lengthening subscriber contracts from 20 years to 25 years and reducing prices – to 32 cents for residential and 28 cents for businesses.
The new scale, announced late last week, mandates payments of 30 cents per kWh for systems up to 5 kW; 28 cents per kWh for systems between 5 kW and 10 kW; 26 cents for systems between 10 kW and 20 kW; and 21 cents for systems generating between 20 kW and 100 kW.
Residential systems are limited to 20 kW; commercial systems to 100 kW.
CUC’s retail charge for 1 kWh is currently 20 cents, although it changes as market costs vary for diesel fuel.
“The higher payments for smaller systems reflect their higher installation costs,” CUC and the ERA said in a joint press release. “The promotion of smaller systems will also ensure that the benefits of the CORE programme reach a wider cross-section of the consumer base and will provide opportunities for the greatest geographical distribution.”
Cayman Renewable Energy Association chairman James Whittaker welcomed the expanded 6 MW cap, but is concerned that the reduced rates will discourage interest in renewable energy, possibly hurting the nascent installation industry.
“We are … disappointed by the degree of reduction in tariffs – some 25 percent for systems above 20 kW and 6.25 percent to 18.25 percent for residential systems,” he said.
“While the ERA describes their new rates and structure as promoting smaller solar energy systems, let’s be clear: The result of this announcement is that every system, regardless of size, is now being paid less for that solar energy than before.
“These new prices will have a negative impact on the rate of adoption, and the local industry will no doubt feel the negative impact of these lower tariffs. CREA warns that this may result in either a loss of business, jobs or a reduction in the quality of installation and materials or both.”
ERA Managing Director Charles Farrington said he had consulted Cayman Renewable Energy Association about the 6 MW cap and the new tariffs.
“The ERA engaged with CREA extensively before coming to its final conclusions – in consultation also with CUC – as to both the amount of the capacity increase and the pricing structure of the FIT [feed-in-tariff]. This engagement took time and impacted the final decision,” he said.
He said the lower tariffs are part of a larger effort to limit electricity prices as CUC passes along to its 28,000 customers the costs of CORE purchases.
Reduced payments were designed “in order to lower the subsidy paid by non-CORE consumers and to diminish the increase in the cost of electricity overall due to CORE and to reflect reductions in the cost of solar PV in particular,” Mr. Farrington said, referring to photovoltaic solar systems, which form the bulk of local solar arrays.
“The ERA is … cognizant of its duty to keep costs as low as reasonably possible for all consumers and hence the lowered rates,” Mr. Farrington said. “Whilst the amount of energy produced by CORE consumers is relatively minor, consistent downward pressure on the … rates must be maintained if Grand Cayman is to realize the maximum benefit from the expansion of this form of renewable energy.”
Mr. Whittaker said alternatives could be found to reduce electricity costs other than discouraging solar installations: “If CUC and the ERA are looking to drive down the installed price of solar by reducing the tariffs, CREA continues the appeal that the ERA target the government and CUC policies and processes for renewable energy,” by removing “complex and lengthy importation and approval processes,” which he said drive up the cost of doing business and in turn impacts the installed cost.
He said CREA would encourage alternatives to CORE, and hopes to develop renewable-energy options that do not depend on the program. Already, a few installations have taken homes and office blocks “off grid” with systems that generate sufficient power to enable severing links to CUC.
“CREA recognizes there are other ways in which we could provide renewable energy to consumers outside of CORE or any subsidized FIT program,” Mr. Whittaker said, “and will continue discussions on grid-connected renewable-energy options outside the CORE program that allow Cayman’s consumers to utilize more renewable energy in the future and provide Cayman’s consumers with the choices that the ERA Law entitles them to.”