Cayman’s first commercial-scale solar plant made a positive impact on the community during its first year of operation, producing clean electricity, reducing greenhouse gas and creating jobs, according to a post-project review conducted by the Utility Regulation and Competition Office, OfReg.
However, the company that conducted the project, Entropy Cayman Solar Ltd., has advised OfReg that the plant was not a successful financial investment, the report states.
OfReg stated in its report that the project – which includes 21,690 solar panels on a 22-acre Bodden Town site – was built at a cost of US$9.7 million, with a budget overrun of US$2 million.
Once it was fully commissioned in June 2017, the solar plant generated 9.4 GW-hours of electricity in its first year, which is less than the 11.1 GWh it was expected to produce – enough electricity to power about 800 average Grand Cayman homes, according to the report. Entropy, a subsidiary of the North Carolina-based Entropy Investment Management, sold the power to the Caribbean Utilities Company for 17 cents per kilowatt hour.
OfReg attributed the plant’s underproduction to several problems, including “unfavorable weather conditions, inverter faults and software fine tuning during the first few months of operation.” There was also an issue with dust accumulating on the panels – the site is near a quarry.
The report also stated that the project was fully commissioned about six months behind schedule.
“The time objectives were not met due to defaults by both parties – [Caribbean Utilities Company] underestimated the construction and logistics costs of the interconnection facility which resulted in budget overruns and Entropy did not meet the commercial delivery date due to financing and equipment delivery delays,” OfReg stated. “The parties have subsequently agreed on a solution for liquidated damages and costs offsets.”
OfReg also noted difficulty it has had in monitoring the project due to the Electricity Regulatory Authority not following up on ensuring that all the required documents were acquired and stored.
“Consequently, there is no signed/executed copy of the Interconnection Agreement on file,” OfReg stated. “This has subsequently been requested from Entropy.”
Moving forward, Entropy hired local company ReNew Solar Development Ltd. to maintain the facilities. Entropy forecast annual operating costs of US$470,000 per year for the first 12 months of the plant, the report states.
Overall, “from a financial viewpoint, Entropy has advised that it was not a successful investment,” OfReg stated.
Nevertheless, OfReg stated that the territory received multiple benefits from the project.
The clean electricity helps Cayman avoid more than 4.2 tons of greenhouse gas emissions per year, and lowers costs for consumers.
“Although the solar plant does not substantially decrease fuel costs, it still contributes to the overall goal of ensuring that consumers pay the least cost for their energy needs,” OfReg stated. “The plant also contributes to the National Energy Policy’s goals of increasing the amount of electricity produced by renewable energy facilities.”
Additionally, the development employed more than 40 people to build the plant, with four permanent local jobs being created to support ongoing operations at the site.
There were spillover effects in the economy, as well, with more than $3 million of local goods and services being purchased during the construction phase, according to the report.
“Importantly, the Entropy project promoted industry development by transferring skills and experience to the local labour markets, as well as helping to identify supply chains that benefit the local solar industry,” OfReg concluded. “These developments should help drive down the cost of the next generation of large-scale local solar PV projects.”