US$1.2b price tag for sun, wind, water energy grid
Investors would need to pump the equivalent of about $185 billion into clean energy over seven years to achieve the revised target of 50 per cent renewables by the year 2030.
The previous target was 30 per cent within the same timeline. But the Jamaican Government has not tendered for new renewable energy investments for nearly eight years despite upping the target.
“Based on the cost estimate, this investment by 2030 would require US$1.2 billion to achieve the implementation goals,” said Valentine Fagan, power-generation systems consultant for the Office of Utilities Regulation, OUR, in a webinar presentation on Thursday.
Currently, Jamaica generates 87.5 per cent of its energy from fossil fuels and 12.5 per cent from renewables.
“By 2030, renewables will become the dominant source of energy, contributing 51 per cent, and that would achieve the target,” said Fagan.
Renewables provide a cost-free solution to fluctuating fuel sources while also cutting down on exhaust pollution – perfect for a tourist-centred economy offering beachside relaxation and nature tours.
The cost to build renewable plants versus fossil power plants has entered into the realm of ‘price parity’, the panellist asserted.
In the past, it cost about double to build a renewable plant. But advances in storage technology along with spikes in oil prices since the Russia-Ukraine war resulted in nullifying long-term differences. Additionally, advances in storage technology, which can easily store power overnight and during low production periods, make the target of 50 per cent attainable, Fagan said.
Jamaica can readily generate 3,500 GWh or gigawatt-hours of renewable energy annually from elements like wind, solar, and hydro. That is more than enough to meet the expected renewable demand of 2,300 GWh by 2030, according to government studies that Fagan referenced. He added that the current 12.5 per cent of installed renewable energy supplies some 530 GWh of energy. Jamaica, therefore, needs another 1,800 GWh to hit the target.
Fagan revealed a road map to achieving the target, which includes investments in additional renewable plants as well as energy-storage facilities. He explained that storage will offset periods of low production to avoid the dumping of renewable energy. That becomes handy during nightfall for solar power consumers, or variations in pressure for windmills, or reduced water flows during droughts.
“It serves a dual purpose as a supplier and also as storage,” Fagan said of the proposed battery storage plants.
Operator of the national electricity grid, the Jamaica Public Service Company , JPS, itself has installed a 24.5MW storage facility under a plan first announced in 2017.
The Government’s renewable target was revised five years ago but was recently updated to include a road map to hit that target, said Elizabeth Bennett Marsh, acting director for consumer and public affairs at the OUR, and mediator of the webinar.
“In 2018, Prime Minister Andrew Holness announced that Jamaica would increase its target for renewables to 50 per cent,” she said then reminded participants that the governor general in his throne speech this year, also indicated the need to update the National Energy Policy to include guidance to achieve the target.
Attorney Elizabeth Butler from International Clean Energy Projects and Butler Law Firm based in the United States said private-sector investors and donor agencies are keen to participate in renewable projects right now.
“The US$1.2 billion is a competitive price tag,” said Butler. “Jamaica must look for public and private financing to meet that target,” she said at the webinar.
Interest in and backers of ‘green’ financing are on the rise worldwide as governments strive for ‘net zero’ emission targets by 2050 as a check on global warming.
But on Thursday, prospective investors also wanted to know whether they could recover their investments in a reasonable payback period with interest.
There were also appeals for swift project approval timeline by the authorities.
The addition of substantial amounts of new power generation must go through tender. The last time Jamaica issued requests for proposals, or RFPs, from renewable energy investors was in 2015 – for 37 MW of capacity.
In 2020, then energy minister Fayval Williams indicated plans to develop over 500 MW of new energy projects generated mostly but not exclusively from nature, she pledged to get investors bidding by 2021, but that hasn’t happened on schedule.
Still, the need for new generating capacity since that time has waned. That is due to the pandemic reducing overall economic activity.
Blaine Jarrett, JPS vice -president in charge of energy delivery, welcomed more renewables to augment the stable and reliable fossil fuel plants but said the transition should be done, if possible, in a cost-neutral manner for customers.
“Consideration must be given to ensure that customers do not pay more for renewables, in addition to storage, in addition to paying for stranded gas contracts that may have been established prior to us bringing on these new renewables,” said Jarrett.
The JPS owns and operates three fossil fuel power stations, eight hydroelectric plants, and one wind farm, according to the company in its filings to contractors for tenders this year. The total system installed generating capacity stands at 1,026 MW.
The company owns 33.5 per cent or 344 MW of this capacity, while the other 714.5 MW is supplied to the grid by independent power producers contracted by the JPS.