Renewables in the form of large-scale solar plants should be at the centre of Cayman’s energy mix of the future, according to electricity provider Caribbean Utilities Company.
Richard Hew, president and CEO of CUC, told the Public Accounts Committee last Thursday that, for the first time, utility-scale solar plants are competitive in terms of cost and ready to replace much of the currently cheaper diesel-generated energy in Cayman.
Questions by the committee focussed largely on energy cost, including CUC’s fuel charge for diesel and the cost of renewables.
Committee member Chris Saunders probed why the electricity provider was pushing for more renewable energy if, according to CUC’s own annual report, the cost was significantly higher than that of diesel-generated electricity. “If it is something that is more expensive, then the question anyone would ask is why are we doing it?” Saunders said.
Hew said both the public and CUC would like to see renewables but in the past neither utility-scale nor rooftop solar could compete with the price of diesel.
“The issue with rooftop solar is it is very expensive,” Hew said, explaining that, under its CORE programme, CUC initially paid rooftop solar producers 40 cents per kilowatt hour. Although the price has come down to just over 20 cents per kWh, diesel-generated electricity has ranged from eight cents currently to 20-22 cents per kWh at peak fuel prices.
CUC purchases of rooftop solar have been limited so far, because buying more would increase the overall cost of energy on the grid, he said, arguing that while the producers would get paid, consumers would have to pay more.
“There is an industry now that’s started to put these solar panels on rooftops and you know they’re obviously lobbying for more capacity… but the cost is going to drive up the overall cost,” Hew said.
Currently, the combined energy-production cost of CUC’s 5-megawatt solar plant in Bodden Town and rooftop solar is about twice as high as the cost of diesel-generated electricity.
But the head of CUC said, considering the new utility-scale solar technology and prices, renewable energy can be created at current diesel fuel prices.
“This is the first time that we’ve been in the position where we can actually effectively move from all diesel generation to go to solar plus storage on a utility scale and be as effective, as reliable, more sustainable and economically competitive with diesel. But it’s in the utility scale not on the rooftop scale,” he said.
In addition, the price for solar, which relies largely on fixed costs, would be much more stable than the “diesel price roller coaster”.
Last week’s PAC meeting focussed on the efficiency of utility regulator OfReg. Pressed by committee members on the issue, Hew said CUC had a cordial relationship with the “hardworking” individuals at OfReg but the decision-making of the “fairly small but effective” Electricity Regulatory Authority, OfReg’s predecessor organisation, “was a lot quicker”.
Transitioning from individual utility regulators to a single one had also resulted in delays for the approval of CUC’s Integrated Resource Plan that outlined how the electricity provider is planning to meet future demand and climate goals.
“That decision, for instance, took quite some time and we’re very keen to get renewables in place. We’re now years behind,” Hew said.
Asked whether the National Energy Policy’s goal of achieving 62% of all energy generated from solar by 2037 was still realistic, he said, the economics are now there and “we can still do it”.
OfReg is working on a competitive tender scheme for solar energy. Once this is released, the electricity provider would have to move fairly quickly.
However, because of the economies of scale involved, it will take several larger 20 MW projects to still meet the demand of the National Energy Policy. “We are not going to do that five kilowatts at a time,” Hew said.
He estimated that such utility-scale solar plants would require four to five acres of land per megawatt.