OfReg, Cayman’s utility regulator, is commissioning a study on the value of solar energy to the Cayman Islands.
The office said in a request for proposal that its regulatory objectives are to foster grid modernisation, conserve natural resources, preserve the environment, and advance the national energy policy goals, while ensuring that financially healthy utility companies provide safe, reliable and quality services at reasonable rates for consumers.
The Electricity Sector Regulation Act, among others, requires the office to monitor and regulate the rate, the price, and the terms and conditions of electricity generation.
OfReg said that to establish fair and equitable rates that are proportionate to the cost of renewable energy generation, it now requires a comprehensive study on the value of solar.
This study should independently assess and determine “solar’s full value to society at large based on a holistic set of costs and benefits, in addition to the impacts to utilities and ratepayers”.
The consultants selected for the study will have to evaluate the net present value of long-term avoided costs as well as the benefits of distributed solar generation, such as residential rooftop solar panels, based on a standard energy efficiency benefit-cost analysis in the Cayman context.
The study should further recommend the net value of the costs and benefits to Cayman’s consumers and society as a whole to inform rates and tariffs.
As of May 2021, Grand Cayman had a 9.5 megawatt renewable energy capacity from consumer-owned rooftop solar panels under the CORE (Consumer Owned Renewable Energy) programme, a 5 MW solar farm, and 3 MW renewable capacity allowing residential and commercial consumers that are part of the Distributed Energy Resources programme to provide surplus energy to the grid.
According to OfReg, customer-owned renewable energy accounts for an estimated 10% of the total island-wide electricity demand.
However, the available residential renewable-energy-generation programmes have been oversubscribed and hampered by the stop and start nature of when and how much capacity was assigned to them by the regulator.
Earlier this year, OfReg also slashed the rate paid for solar energy to homeowners.
According to companies that install rooftop solar panels, the latest reduction of the subsidised rate was so steep that it would lead to further job losses in the industry and put into doubt the ability of homeowners to opt for renewable energy technology.
The regulator defended its decision to set a lower rate than the one recommended by an independent committee, saying that the rate paid under the CORE programme continues to provide subsidies to the owners of solar energy systems.
Going forward, the value-of-solar study OfReg is now commissioning will inform the rate-establishing process.