GK invests US$3m in renewables, pivots to solar
The food division of conglomerate GraceKennedy Limited has invested US$3 million since last year, approximating nearly half-billion dollars in local currency, to reduce its reliance on power supplies from the national electricity grid.
The company last month broke ground on a new solar power system at one of its manufacturing facilities, Grace Food Processors Meats – or GFP Meats – in Savanna-la-Mar, Westmoreland. Additionally, two liquefied natural gas, or LNG, engines will also be installed as part of the project.
Once installation is complete, the new system will give GFP Meats the ability to generate over 80 per cent of its own electricity needs.
GFP Meats was the first GK facility to implement an on-site solar power system in 2016, with a generation capacity of 100 kilowatts, the company said in a release.
“Our pivot towards solar energy is embedded in our new GK energy policy, which was launched in 2022 and aims to diversify the group’s energy supply through sustainable energy solutions, including renewable energy technologies,” explained Frank James, CEO of GK Foods-Domestic.
James added that full implementation of the policy is projected to recover over US$1 million in net energy cost reductions annually for GraceKennedy by 2026. This move also aligns with the food and financial services conglomerate’s recently announced ESG sustainability agenda.
The latest development at GFP Meats is among a series of new solar power projects being implemented by the wider GraceKennedy Group.
“Heavy dependence on imported petroleum products makes us susceptible to the volatilities of the world’s oil market, including supply and price fluctuations. With the introduction of our new energy policy, we are demonstrating GK’s commitment to exploiting indigenous renewable energy sources, while reducing our group’s carbon footprint,” James said.
Renewable energy refers to power generated from natural forces, including solar, wind, water or hydro, and biomass.
Several other GK Foods subsidiaries, including Hi-Lo Negril, Grace Agro-Processors Denbigh, Dairy Industries Jamaica Limited, NALCAN, and GK’s Distribution Centre in Spanish Town, have on-site solar power-generation capacity. GK’s corporate headquarters in downtown Kingston, a new edifice completed in 2019, is also solar-powered, with a system that currently provides 30 per cent of the building’s daily energy needs. Hi-Lo stores at Manor Park and Cross Roads in Kingston, and at Spanish Town in St Catherine, are also scheduled to have solar power systems installed in 2023.
Renewable energy, while cheaper to operate due to the free fuel source, costs more to install than traditional carbon fuel plants. Renewable experts say that advances in battery storage are making solar energy plants more competitive when compared to LNG. That’s because the plant can use stored power throughout the night as opposed to previous limitations of solar generation during daytime.
Natural gas prices have returned to the US$2 range since January – prices settled at US$2.40 per 1,000 cubic feet on Wednesday – but went up to US$8 in August 2022 due to supply constraints and global oil shocks, amid a policy reset by Europe to be less dependent on Russian oil, natural gas, and diesel fuel and other refined oil products.
The price spike has thrown off the expected returns on investments, as William Mahfood, executive chairman of beverage maker and distribution company Wisynco Group Limited, noted in a forum in January. The beverage maker added LNG to its energy mix back in 2017. It and other businesses, including the operator of the national electricity grid, are supplied with LNG from a single source, American company New Fortress Energy, since 2016.
Wisynco, a $26 billion company by assets, does not disclose its energy bill, but its wider spend on utilities at year ending June 2022 rose to $514 million from $342 million in FY2021.
GraceKennedy, which is one of Jamaica’s largest companies with assets of $201 billion and net value of $73 billion, does not disclose its energy expenditures.