The core of renewable power

On 1 February, the Caribbean Utilities Company launched a new version of its Consumer Owned Renewable Energy Programme, known as CORE, offering consumers more money to buy their self-generated power.

By late March, two new customers had signed up for the revamped programme, bringing to five the total number of consumers who have agreed to sell energy produced from solar panels or other renewable energy sources in their homes.

For some home and business owners who have been producing and using their own energy, the new CORE deal is not an attractive one and they insist that it fails to provide an incentive for people to turn to greener energy and to cut back on the amount of diesel burned each year by CUC to produce the vast majority of the Island’s electricity.

CUC, however, says it sees the latest version of CORE as a means by which the use of fossil fuels will be reduced, cleaner energy produced and supplied to consumers, and as one that will provide “significant incentives to consumers who generate energy from renewable sources”.

The premise is straightforward – CUC buys 100 per cent of the energy produced by a consumer, for example, from solar panels or a small windmill for 37 cents per kilowatt hour and sells it back to them for the current retail price, which as of February, when the new CORE arrangement was announced, was 30 cents per kilowatt hour.

Under the previous CORE arrangement, which was introduced in 2009 to much fanfare but garnered a less-than-enthusiastic response from consumers (just three signed up), CUC was buying renewable power from those three customers for 20 cents per kilowatt hour. That price was based on the price of fuel that CUC had avoided using by buying the renewable energy, plus half a cent per kilowatt hour.

The new arrangement has also drawn detractors. In a letter to the Caymanian Compass in March, Sam Small, who initially signed up for the first CORE programme, but then withdrew his application after inspecting the terms more closely, wrote: “Sadly, CORE mark 2 has the same faults as mark 1 because CUC does not want to purchase your extra electricity produced by the renewable generation system; they want to buy all of it and sell it back to you at full rate whether you use it in your house or not.”

Jim Knapp and Jay Esterbrook, both of whom have been producing their own energy, have also denounced CUC’s latest CORE offering, saying it simply does not provide any incentive for an individual to invest tens of thousands of dollars in solar panels or other renewable energy products.

Esterbrook, who along with his wife Nancy, owns Lighthouse Point condos and dive resort which runs mostly on renewable energy – its air conditioning unit run on electricity provided by CUC. He describes the latest CORE deal as “worthless”, arguing that the 7 cents he makes on selling his power to CUC is likely to disappear as soon as fuel prices go up and CUC starts charging a retail price of more per kilowatt hour than the 37 cents offered to CORE customers.

Under the new CORE agreement, customers sign up for a 20-year-contract. However, customers can opt out of the arrangement by giving five days’ written notice to the utility company.

“It is fixed at 37 cents for 20 years. In 20 years, it might be $1.50 per kilowatt hour. It is a bad deal,” Easterbrook said.

Knapp, who owns a solar-hydrogen-powered home, commented shortly after CUC announced the new CORE arrangement: “A fixed price for energy at 37 cents may sound good now, but when energy costs skyrocket in the years to come, CUC would be guaranteed energy at an extremely low fixed price for years, where the people that invested in renewable energy systems would, in effect, be providing the energy by which CUC is deriving their profits at no increased cost to CUC. In my opinion, the price paid to the renewable energy customers should be tied to a schedule related to the cost of CUC’s generation costs.”

Louis Boucher, deputy managing director of the Electricity Regulatory Authority, says the rate of 37 cents will be re-evaluated at the end of the one-year pilot programme.

Generating one’s own electricity was not even possible in Cayman until 2008. Up until a licence agreement was signed in April 2008, CUC was the only entity that could produce, generate or distribute electricity. Under the 2008 licence, CUC no longer held the monopoly to generate power, but it retained the exclusive right to transmit and distribute power.

Detractors of the new CORE deal argue that it is unfair that CUC will only agree to buy 100 per cent of the power generated by a consumer and vie instead for an arrangement whereby excess power produced by a person or company is purchased by CUC and added to the grid.

In several jurisdictions, including the US where it is widely used and in Bermuda which introduced it last year, electricity companies buy back power from consumer generators in form of net metering.

With net metering, homeowners who generate their own electricity from renewable sources only pay for the extra electricity they take from the grid, paying the same rate they get paid by the electricity company for the power they generate and give back to the grid. A meter installed in the home spins backwards or forwards, depending on whether energy is being added to or taken from the grid, with excess energy being banked on the utility grid.

Net metering is an option favoured by several of those who produce their own electricity in Cayman, and is also supported by the Cayman Islands Tourism Association. CITA states on its website that it is “determined to push for net metering from the Caribbean Utilities Company, and must have the support from [the Cayman Islands Government] to work more proactively to drive down the cost of doing business”.

It adds: “Net metering is just one of these critical issues: it is the only way to encourage member businesses to invest in alternative energy. Without a broad investment in alternative energy throughout the three Cayman Islands, our future costs of energy will make us wholly uncompetitive in the future. It is only a matter of time before we are once again faced with increased oil prices. The Cayman Islands needs more competition or better policy and regulation in the areas of insurance, banking, shipping, gasoline, propane and other products and services whose costs are increasing at rates faster than the market can absorb.”

Trina Christian, executive director of CITA, said the association was disappointed that CUC had not opted for net metering when it revised its CORE arrangement. “The current set up does not incentivise people to generate their own power,” she said.

She added: “CUC considers oil a firm source of power and that wind and solar are not firm. However, in the long term, how firm will oil be in years to come?“

However, the new CORE arrangement does have its supporters. One of the two new customers who have signed up for CORE since it was relaunched last month is developer Lindsay Scott, who has built his own “green” home in South Sound.

He admitted he was sceptical at first, but when he looked further into the arrangement, he became sold on it and now believes that, regardless of if or when the price of oil goes up, generators of renewable energy sold to CUC’s grid are essentially getting paid money for their power that they otherwise would not get.

“I cannot see any reason not to go forward with it,” he said.

The original CORE programme was a pilot scheme that ran for two years. The latest programme will initially run for one year, ending in January 2012, or until a quota of one megawatt of capacity has been filled on a first-come, first-served basis.

Generation of renewable energy appears to currently lie entirely in the hands of small operators – those who generating electricity for their own homes or businesses. Hopes for larger, commercial wind-generated operations were scuppered last year when the government announced that the erection of an early-warning weather radar system meant that no wind farms could be put up in Cayman because they would interfere with the radar.

In mid-2008, CUC launched a request for expressions of interest on wind-farm projects and had been in talks with a company to erect a wind farm in East End, but the new radar system meant the work was suspended. Since large windmill blades would interfere with the radar system no matter where on Grand Cayman the windmill were situated, no wind farm can be built on the island with the technology currently available.

At a recent press briefing, president and CEO of CUC, Richard Hew said: “Perhaps there are other locations on the Island or perhaps there is some way [a wind farm] can co-exist with the radar system… I personally have not given up home on having a wind project here.”

He said that wind had a “real potential” to generate power more cheaply than by diesel, unlike solar power which is still an expensive means of producing energy. However, neither method could produce a guaranteed supply of power, he said, meaning diesel was still needed as a back-up on days or hours with no wind or sunlight.

“There has to be reliable source to augment wind or solar and, currently, it is diesel and diesel engines. Currently, there is no other technology we know of that can do a better job than a diesel engine,” he said, but he added that CUC continued to keep abreast of all technologies and fuels becoming available.

“If someone has something out there [with which] they can produce electricity at a lower cost, we are interested,” he said.

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Mr. Hew

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