CUC: Solar power only way to reduce fuel factor costs

The Caribbean Utilities Company says large-scale solar projects are the only way to reduce expensive fuel factor costs facing Cayman’s growing population, and it hopes to reduce those costs by 50% in the next six years.

It said it was “committed to the pursuit of achieving a 60% reduction in emissions by 2030 and to lowering fuel factor costs by up to 50% by 2030”, but that it could not reach that target alone and would require collaboration with OfReg, industry partners, and policymakers.

In a statement issued on Friday, 12 April, in response to media articles which it said had “sparked discussions surrounding the future of renewable energy in the Cayman Islands”, CUC insisted it was fully supportive of solar projects – both large scale and residential rooftop.

CUC says utility-scale solar energy will significantly lower the fuel charge for customers in Cayman, delivering power at a cost of 10 cents per kilowatt hour or less, compared to 19 cents per kWh with diesel generation.

100% target for renewables

“Therefore, CUC has been eagerly awaiting the release of the competitive bid for utility scale solar since the Utility Regulation and Competition Office (OfReg) began planning for a Renewable Energy bidding process in 2019,” the statement noted.

Cayman currently generates around 3% of its power from renewable energy and has set a target of hitting 100% by 2050. OfReg is organising a bid process for new large-scale power generation to increase that proportion, and an initial solicitation for a 23 megawatt solar farm is in progress.

The Ombudsman – Cayman’s public sector complaints watchdog – earlier this year flagged conflict-of-interest concerns with that bidding process, pointing out that CUC, the monopoly holder of electricity sales in Grand Cayman and an interested party, is co-designing the specifications of the requests for proposal.

CUC has rejected this assertion, stating that under its licence agreement, it is required to help OfReg with the facilitation of competitive bids to ensure an adequate supply of generation capacity and energy for a reliable service.

In its statement on Friday, the electricity company said it cannot reduce fuel-factor costs for customers until utility-scale solar is implemented, “whether by us or another provider”.

It added, “Should CUC win a bidding opportunity, our primary goal is to reduce the fuel factor cost for customers, and subsequently, their monthly bill payments.”

The fuel factor cost makes up a significant portion of customer’s electricity bills every month.

Rooftop solar

CUC insisted that, despite claims that it does not support rooftop solar, “nothing could be further from the truth,” adding that it has been “instrumental in facilitating the growth of the rooftop solar industry in Grand Cayman” and had approved 20.5 MW of rooftop solar by the end of last year.

“This allows Grand Cayman’s rooftop solar owners to contribute to clean energy and allows them to benefit from reduced energy bills. To put the amount of rooftop solar already installed into perspective, CUC’s entire plant has a capacity of 166 megawatts,” the company noted.

CUC buys energy from rooftop solar owners in the same way it purchases fuel from fuel companies, it says, with the cost being passed through to all customers connected to the power grid, without markup.

“We would like to clarify that CUC does not profit or lose money from rooftop solar. It is important to CUC that all customers, producers and non-producers, benefit from rooftop solar,” it said.

It argued that it advocates for “fair solar rates”, but not for “customer subsidisation, which is one customer segment paying more for electricity, to reduce the rate to others”.

CUC said private installers who advocate for higher solar rates are advocating for customer subsidisation and increased costs.

“We believe that every person on Grand Cayman should have the option of reduced energy bills, regardless if a customer has rooftop solar or not. Utility scale solar, therefore, will allow for all customers to benefit from reduced rates and reduced energy bills.

“By CUC’s estimation, covering every roof of every building will only contribute a maximum of 25% of Grand Cayman’s energy needs.”

The company said it needed large-scale solar if it is to achieve the National Energy Policy goal of 70% renewable energy by 2037.

‘Missed opportunities’

In its statement on Friday, CUC said several rooftop solar installers on Grand Cayman “have yet to advocate for or promote, in a meaningful way, the use of utility scale solar”.

It added that the Cayman Renewable Energy Association (CREA) “has, and continues to, advocate for higher rates to be paid by CUC customers for electricity obtained from rooftop solar customers. While our belief is that rooftop rates have to be high enough that it benefits the homeowner with solar on their roof and it supports their investment; it must also be low enough that other residential customers don’t pay the difference.

“CUC supports all options that will reduce carbon emissions and reduced costs for all persons, not just individuals with rooftop solar.”

The company says opportunities for low-cost, large-scale solar energy in Cayman have been missed in the years it has taken to work out a competitive bidding process for such projects.

“It is in this vein that CUC made its proposal [to OfReg in 2021] to give its customers the opportunity for some progress while the competitive framework was developed. It is noteworthy that other unsolicited proposals for similar large scale solar projects, have also been presented to OfReg over the years,” CUC stated.

It added that its proposed solar project “had the potential to significantly increase renewable energy usage on Grand Cayman, from less than 3% to approximately 15%, addressing a longstanding concern”.

It said that due to the opposition to this project, and the increase in Grand Cayman’s population, CUC has had to lease “rental generation with lower fuel efficiency in order to meet the electricity demands of Grand Cayman that could have been served by the proposed solar + storage project”.

The company added that it is determined to minimise the purchase of more fossil fuel generators “except where needed to support renewable energy and firm capacity”.

It says the decision not to proceed with the solar project, pending the development of a competitive process, “translates to a missed opportunity for consumers, resulting in foregone energy cost savings of approximately $10 million per annum”.

It added that CREA’s “ongoing opposition to projects like these continue to impede the progress of renewable energy adoption”, and said it would like to publicly ask the association “to engage in a constructive dialogue on how we can work together to make low-cost clean energy accessible to all residents”.