Business

Power wheeling may be the one bright spark this year

Business Year In Review

CAMILO THAME BUSINESS CO-ORDINATOR thamec@jamaicaobserver.com

Wednesday, January 09, 2013    

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THE 360-megawatt (MW) electricity generation plant to be located in Old Harbour, St Catherine, is now expected to come on stream in early 2016.

What's more, commercial scale renewable energy projects won't get the go-ahead until preferred bidders are selected from an ongoing request for proposal, which is scheduled to end in April.

Bringing it closer to the home or business also doesn't appear to make solar-powered generating systems, or photovoltaic systems, any more feasible, given the sluggish process involved in getting them into net billing contracts.

And while electricity rates are at historical highs in Jamaica and it appears that Jamaica Public Service Company's (JPS's) customers won't see a dramatic reduction in rates for years to come, some businesses still stand to benefit from power wheeling as early as this year.

Wheeling would give private entities access to JPS's distribution lines to provide its own electricity at several sites across the island.

The OUR is now conducting a public consultation on a wheeling framework that would determine how self-generators would be charged for use of the national grid and aims to publish a determination notice on February 15.

Even then, wheeling has been a long time coming for some companies.

"The Jamaica Broilers (JB) Group has, over the years, invested considerable sums in its co-generation power plant with the hope that 2012 would have been the year that "power wheeling" became a reality in Jamaica," said the company's assistant vice-president of energy, John Carberry. "After a firm commitment by the nation's leaders that this would be in place for 2012, the group was disappointed by several postponements and revisions of previously communicated launch dates."

The uncertainty constrained the group's further planned investments, but now JB hopes the framework and logistics will be unveiled early in 2013.

The commissioning of Jamaica Energy Partners's (JEP's) 66-MW West Kingston Power Plant last year meant more efficient generation, allowing for a reduction in the overall fuel bill of Jamaica, according to JEP's managing director, Wayne McKenzie.

"This would have resulted in a lower heat rate system-wide," he said.

The OUR also raised efficiency requirements, through the lowering of the heat rate target, that should have resulted in a 2.6 per cent reduction in fuel charges, which coupled with a 1.1 per cent increase in non-fuel tariff allowed to JPS, should have led to an overall reduction in electricity rates.

Nevertheless, JPS fuel rates ended last year 13 per cent higher than at the start, albeit slightly lower than the peak of $24 per kilowatt-hour (kWh) in May, and was on average six per cent higher than the average in 2011.

JB said it took a leadership position in the use of renewable energy in its poultry operations last year. It embarked on a solar photovoltaic (PV) energy programme "that sees its contract farmer network making the single largest investment in renewable solar energy in the Jamaican manufacturing sector", according to Carberry.

"This programme continues to roll out through 2013 and is expected to be completed by the second quarter of 2013," he said.

But participating farmers have expressed grave concerns as their efforts to expedite the standard offer contract (SOC) with JPS has been challenged by "the slow pace of the required administrative support to facilitate the necessary Grid -tied connections and metering", according to the JB

vice-president.

"It is hoped that 2013 will see this process being streamlined as it threatens to derail the progress made thus far," he told the Jamaica Observer.

The OUR said that in order

to facilitate a smooth implementation process, a sub-committee including members from the Bureau of Standards, MSTEM and JPS has been established by the National Energy Council to deliberate and resolve issues related to its implementation.

Twenty-six licences have been issued since the project was implemented at the end of May.

On a larger scale, investors wanting to build out renewable energy capacity in the latest round of investments in Jamaica will have to do so by early 2015.

Up to 115 megawatts (MW) are up for grabs.

The regulator is pushing for renewable generation plants to be up and running by May 2015.

Currently, approximately 64 MW of the 930 MW installed generating capacity in Jamaica is made up of wind and hydroelectric generators.

Another 6.4 MW hydro plant in Magotty, St Elizabeth, is set to come on line next year. Adding another 115 MW to that amount would substantially increase the proportion of electricity generated by renewables.

However, JPS's owners are bringing 360 MW of capacity to be fired by natural gas on stream by 2015, to replace older and less efficient plants, which are rated at 292 MW, and add 68 MW to the grid.

The new liquefied natural gas (LNG) plants are now expected to come on line by the first quarter of 2016, instead of mid 2014 as originally required, or 2015 as was projected up to late last year.

The delay in implementing the largest single power generation project in Jamaica was due to uncertainties in the delivery date and price for procurement of natural gas through the GOJ Steering Committee led LNG Project.

However, last year the Government dropped the LNG Project, opting instead to leave the procurement to the private sector, or more specifically the owners of the new power plant.

"2013 may be a watershed year for generation in Jamaica," said McKenzie. "The status of the natural gas project decides how pricing of energy and development will be done going forward. One must be mindful that a true fuel mix is required for generation and not just a majority switch from heavy fuel oil to natural gas."

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