THE Office of Utilities Regulation (OUR) said several large companies that exited the electricity grid in recent times, mostly installing either solar panels and/or constructing and commissioning liquefied natural gas (LNG) plants at their operations, are having deep regrets over the move. The OUR, however, said the capital outlay made to set up plants means those entities may not readily return to the grid.

“Without telling any tales out of school, I know entities [that left the grid] and are now in serious discussion with the Jamaica Public Service (JPS) because the savings expected have not been realised,” Ansord Hewitt, director general of the OUR told the Jamaica Observer in a recent interview.

Hewitt said the grid remorse being felt by some of those who left is also causing those who are contemplating leaving to rethink.

“Even some of the people who have thought [about] leaving the grid, one or two have not found that to be as wonderful a proposition,” Hewitt added.

“Ideally, you don’t want to operate an electricity system. You want to do beer if your business is producing beer, right, not running a power plant. So if you have to run a power plant, you don’t have the competence, and all of those things brings the headache,” he continued.

Despite mentioning beer production, Hewitt said it was just an example and does not indicate that Red Stripe, one of the companies which exited the grid in recent years and set up an LNG-fired plant at its Spanish Town Road, St Andrew, brewery, is one of the entities having grid remorse.

The brewery, in 2017, announced that it had converted to using LNG to run its plant, with estimates that it would cut fuel consumption and save over US$336,000 annually. Other large users of electricity, such as The University of the West Indies, Mona, (UWI) announced in 2017 as well that it would build a 7 megawatt LNG plant on the campus, which it said, at the time, would save it $350 million annually. Wisynco Group invested $500 million in a solar plant and LNG plant, producing a combined 3 megawatt of electricity at its Lakes Pen, Portmore, headquarters. Others have also set up either solar plants or LNG plants. The LNG plants all buy fuel from US-based New Fortress Energy.

Still, for those who left and are having regrets about the decision, the OUR said it is not easy for them to return because of the amount of money that was spent to set up independent power plants for their operations.

“In terms of the initial capital investment, if I am running a business and my demand is 2MW, I cannot invest in 2MW. I would have to invest in a 5MW or 6MW plant to build in redundancy for the periods when I have to perform maintenance. Then I have to have a core staff outside of my core business to deal with power plants. So you set up an entire non-core operation within your operation,” Valentine Fagan, power system consultant at the OUR noted.

He said he believes one day the companies might return to the grid “because businesses won’t continue to throw good money after bad”.

His colleague, Cedric Wilson, deputy director general with responsibility for electricity, water and the sewage sector at the OUR, chipped in, saying, “The reason why large companies find it economical to get off the grid is not because they can generate power less than JPS [Jamaica Public Service].”

Wilson said the system losses JPS faces due to theft have caused electricity prices for paying customers to be higher than it would have been, and that extra cost, he suggests, has been the driving factor behind companies leaving.

About a fifth of electricity produced in the country is stolen by households and businesses, some using sophisticated means to bypass the JPS meters.

Wilson said bringing that down would take a national effort akin to what took place across political administrations to rescue Jamaica’s economy.

“You see just like how we dealt with our debt, we realised that there was a problem and there was a crisis, and we had to deal with it. Unless something parallel to that happens, in terms of electricity losses, we’re going to have this large level of losses to encounter, which is a disincentive to the economy.”

It was pointed out that entities such as Caribbean Cement Company left the grid before but returned after realising that it was more reliable and have done much better even though the company still burns tyres and coal to run its kiln.

Caribbean Cement, the OUR pointed out, has since inked a deal with JPS to supply it with electricity at a special rate and said others could approach the light and power company for similar deals if their “demand is of a certain size”.

“If you have a fairly big enough demand, you are in a position to negotiate your price rather than… depend on the standard rate schedules. So I think what we need to see more of in Jamaica is larger companies making similar deals that can negotiate a direct price with JPS. That would be good for the economy,” Wilson added.

“They recognise that running their own plant is not a good economic decision given the reliability issues that they were having, and that JPS, they have special arrangement with JPS. So they have backup feeders. So those could be something other than the people,” Fagan said.

Still, though the JPS has pointed out in the past that when large corporations leave the grid the burden of paying for the infrastructure falls on those who remain, who are typically entities and households who cannot afford the upfront capital outlay to leave the grid.

But though companies have been leaving the grid, contributing to a decline in electricity demand for most years during the last decade and a half, growth in electricity sales returned last year.

Electricity sales went up by 6.1 per cent in 2023, the first it has grown that strongly since the turn of the century.

“It shows some sort of hope. No doubt there is a certain amount of pent-up demand from COVID time, but to add that level of growth still is significant. So while people are leaving the grid, while some people are depending more on solar, there are other things that seem to be happening in the economy that seem to be pushing growth. So to the extent we can keep prices down. And when we say keep prices down, it’s a balance, because introducing more solar on the grid can cause the price of electricity to go up.”