Five months after the popular Consumer Owned Renewable Energy programme, or CORE, was shut down to new customers in December 2019 because it was fully subscribed, the Ministry of Commerce, Planning and Infrastructure has reallocated 700 kilowatts of the 1-megawatt capacity originally assigned to government to the residential market.
The 8MW CORE programme connects residential and commercial solar panels and wind turbines to the electricity network. It allows customers to generate their own electricity, lower their bills and remain connected to Caribbean Utilities Company’s grid.
In May, the ministry’s policy directive made 500kW of CORE capacity, previously allocated to the government, available for residential customers. It also re-allocated 100kW CORE capacity to affordable homes of 2,000 square feet or less and 100kW to homes built under the National Housing Development Trust.
To access the tranche of the CORE programme, the ministry advised solar companies that they must be prepared to provide solar to affordable homes and those built under the NHDT programme at “an affordable cost”, CUC said in a press release.
While residential applications exceeded the 500kW allocation within one week of it being made available in early May, space remains available for the 100kW allocation to affordable homes.
CPI Minister Joey Hew said the re-allocation of 700kW back to the CORE programme for residential use is part of government’s stimulus package.
“The Government is confident that this will have an immediate and direct effect across the industry, in particular to our residents, the small businesses in this sector and energy sustainability,” Hew said. “We anticipate that this will provide local jobs in around eight to ten companies while helping to reduce our carbon footprint.”
James Whittaker, the founder of Greentech Solar and president of the Cayman Renewable Energy Association, commended the government and Hew for taking action, but stated that by itself it was not enough to generate significant economic stimulus.
Only when done in conjunction with additional capacity that is pending approval, and other measures highlighted in the National Energy Policy, would that bring new energy options for consumers, he said, which would create a large number of new jobs.
CREA advised the government and the regulator last year that the local solar industry would require at least 1.4MW of new capacity in the residential renewables market to remain operational.
In addition to the 700kW now re-allocated by the government, the association said another 700kW could be taken from capacity assigned to CUC’s Distributed Energy Resource programme.
In 2018, CUC introduced the DER initiative to replace CORE. However, under that scheme, customers sell excess electricity exported to the grid to CUC under a different rate structure, which makes it economically less suitable for smaller residential consumers.
So far, only about 500kW of the 3MW capacity available under the DER programme have been taken up.
Following a stakeholder-consultation process, the Utility Regulation and Competition Office, known as OfReg, has yet to make a decision on reallocating unused capacity from the DER programme back to CORE as an interim measure.
CUC has pointed out that the CORE programme is subsidised by non-CORE customers because the utility provider pays more for electricity generated under that initiative than the cost of its own energy production.
The DER programme, on the other hand, avoids the potential cross-subsidisation between electricity-producing and non-producing customers. This is also the reason why future residential solar capacity will more likely come from the DER programme.
For Whittaker, the stop-and-start management of the residential renewable-energy market was “entirely avoidable”. He says the regulator was long aware of the capacity constraints for renewable energy in Cayman’s power network.
Currently, the intermittent nature of solar power means the stability of CUC’s grid could be compromised and suffer blackouts, if renewables exceeded more than 17MW of the total energy generated. This capacity is fully used by the 8MW CORE programme, the 1MW allocation to government, the 3MW Distributed Energy Programme and the 5MW solar farm in Bodden Town.
To expand the use of renewable energy, CUC first needs to increase its energy storage capacity and install industrial scale batteries.
Last year, the utility provider received OfReg’s approval for a 20MW utility-scale battery project. But according to CUC, the regulator is still reviewing the tendering documents for the project.
This makes it unlikely that the batteries, which would free up another 12MW for solar energy, will come online before 2021.
Until then, solar businesses and consumers will remain in limbo as to when new capacity will be available.
The starting and stopping of the CORE programme over the years, Whittaker said, creates a backlog of applications, artificial demand cycles, and consumer confusion, as well as chaos in the local industry, as solar businesses are abruptly shut for months at a time and collectively lose millions of dollars.
“The shutting down of the industry has now happened twice since 2017 and lasted months each time. This has led to some of the solar businesses going bankrupt,” the CREA president stated.
“This is unfortunate because it has nothing to do with the products or services these businesses provided to their clients or the way they run their businesses; these are purely external regulatory disruptions that are avoidable.”
He noted that CREA had stressed over the last five years, both to OfReg and the government, that massive disruptions in the way the industry is regulated must be avoided by proactively addressing issues like capacity availability and programme changes.
“This will avoid all the confusion and disruption from stopping and starting these programmes which consumers and the entire industry relies on.”
Typically, there are about 18 to 20 applications for the CORE programme each month. The pent-up demand for CORE programme capacity, which led to government’s reallocation being snapped up within a week, is simply the result of a five-month backlog of CORE applications, Whittaker said.
Government has put forth aggressive targets for the expansion of renewable energy. The National Energy Policy has set the goal that within 20 years, 70% of Cayman’s electricity needs should come from renewable sources.
Most of that would be achieved by utility scale solar farms but, according to CUC’s Integrated Resource Management Plan, rooftop solar would also have to increase fivefold.