The Office of Utilities Regulations (OUR) contends that Jamaica will not only miss out on savings on fuel imports by switching to natural gas, but would have to spend over US$2.4 billion more to build new plants over the next 20 years if it wants to continue as “business-as-usual”.

In its Generation Expansion Plan drafted in August, the OUR examined three main expansion strategies — natural gas only, a mix of coal and natural gas and the “business-as-usual”casse — over a 20-year planning horizon.

The regulator determined that “the total capacity that will be required by 2029 to both meet the increasing demand for electricity and displace aged existing plants” was 1,360 megawatts (MW) and estimated the cost of building natural gas-fired plants to generate that amount of electricity at approximately US$5.77 billion.

However, the OUR estimates that using a hybrid — natural gas and coal — strategy the total cost would be approximately US$5.85 billion while business as usual would cost US$8.18 billion.

What’s more the natural gas plant build out would require 14 plants commissioned in 12 installations versus the 21 diesel and oil-fired plants that would have to be built in 15 instalments should expansion be undertaken in much the manner it has been done for decades gone.

“The business-as-usual strategy demonstrates that the continued proliferation of petroleum based fuels is not sustainable and unresponsive to the national energy policy objectives,” said the report.

“New baseload capacity is urgently required in the system, but given the expected constraints regarding construction time and/or fuel availability, it is unlikely that any such plant can be in place before 2014,” it continued. “This study recommends the commissioning 360 MW (3x120MW) of natural gas-fired combined cycle capacity in 2014. Of this amount, 292 MW will be for displacement of aged, inefficient capacity and the remainder for demand growth requirements.”

The OUR has already invited bids from 28 local and international companies, including the Jamaica Public Service Company Limited (JPS), to supply 480 megawatts of new generating capacity.

The installation of the new generating capacity is scheduled to be carried out in two phases. The first 360 megawatts is scheduled to be installed by 2014 while the remaining 120 megawatts is to be installed by 2016.

Those bids are to be submitted no later than January 7, 2011 in keeping with the schedule outlined in the bid document.

Even then, the report admitted that “the fuel diversification objective was not sufficiently achieved under the Natural Gas (only) expansion strategy”.

Added the report: “It should be noted that these conclusions do not in any way prejudice the country’s commitment to the utilisation of any one fuel type for the expansion of the electricity generation system and by extension the energy sector. Strictly, from a planning perspective, the conclusions rather reflect the results of the various expansion alternatives that were investigated subject to the assumptions made.

Finally, the penetration of alternative energy sources has not been significant on the basis that these resources currently cannot significantly substitute for the use of fossil fuels for power generation at the level of energy required. Nonetheless the energy contribution from the existing and proposed plants has been incorporated in the expansion and is reflected in the overall future annual generation of the system.”