Deconstructing the surge in renewable energy

The Faroe Islands, a Danish possession in the North Atlantic, display some rough similarities to the Cayman Islands, a British possession in the Caribbean.  

Both boast approximately 50,000 people, all highly literate. Both have few natural resources and little manufacturing and traditionally have relied on fishing and seafaring for a living. The labor forces are about the same, in the mid-30,000s, and both modern economies are dominated by service industries. 

The “Faroes,” halfway between Scotland and Iceland, are a collection of 17 islands, in aggregate 5.3 times bigger than Cayman’s 102 square miles across three islands. For years, the Faroes relied on fossil fuel for power, but as the price of oil escalated and their indigenous industries shrank, and, more recently, banks struggled to stay afloat as recession gnawed at the ragged economic remnants, the islands accepted that diesel fuel was threatening their well being. 

“Oil prices,” explains Finn Jakobsen, chief technical officer of local power company SEV, an acronym for the three largest islands in the group. Put simply, the changes were driven by high – and rising – prices. 

SEV was producing 1 kilowatt hour for 1 Danish Kroner (US$0.17), Jakobsen says. “Now, with wind output at [the capital] Torshavn, we produce 1 kwh for one-third the price, or 3 kwh for the same price as 1 kwh from oil.” 

The islands are among Europe’s leading renewable-energy power producers. While SEV still uses diesel to generate 60 percent of the Faroes’s 45-megawatt demand, it produces 40 percent from hydro and wind power. The company wants to reverse those numbers as quickly as possible, and local government has set 2020 as the year to boost renewable generation to 75 percent. 

Prospects are good: For a decade already, local political will has smoothed the path toward renewable energy: “In 2005, we started with a green agreement that in 2008 we would have 40 percent renewable and 60 percent diesel,” Jakobsen told The Journal.  

SEV, he said, “wants to reverse that now, with 40 percent oil and 60 percent renewable.” 

Both the immediate and 2020 goals, he says, will build on the wind installations and “we think we can extend the hydro most easily.” 

In September, the company contracted with Germany’s Enercon for 13 new turbines near Torshavn, bringing to 18 the number of windmills. When the new park comes online next autumn, wind contribution to the national grid will almost triple. 

Each of the turbines generates 0.9MW and costs US$1.17 million, Jakobsen says. The park will cost another US$1.65 million. Financing, however, will be borne by SEV, a collective among the 17 islands, “and this just gives more drive to get the oil bill as low as possible and use the money to invest in renewables.” 

Essentially, the scheme creates an enormous battery, storing potential energy in the form of a reservoir at the top of a 150-meter hill. 

While the community slumbers overnight, the local power company diverts electricity – generated in large part by hydro and wind power – into pumps, which move rainwater collected in the lowlands to the hilltop pond. 

Come the morning, SEV releases the water, which descends through a system of ducts and pipes, and, like power-generation plants everywhere in the world, turns a set of turbines, generating more electricity to feed the Faroe Islands. 

About the same time as the new turbines start to turn, new French-built 2.4MW batteries – enclosed in a 40-foot shipping container – will be installed at the site, not only storing power for later use, but also smoothing fluctuations in wind speed and frequency. 

But, Jakobsen says, with a goal of 100 percent renewables by 2030, “we need something more.” SEV is experimenting with tidal movements, tapping the expertise of leading Scottish wave-energy company Wavegen; hydrogen technology; and, in the three summer months, solar installations, already used in the lighthouses that dot the Faroese coast. The pump storage feeding the mountain reservoir will complete the picture. 

“It’s a sort of vast storage battery,” Jakobsen says, and with tidal movements “and a lot of rain, we can get to 100 percent.” 

 

The inevitable move to renewables  

The move to renewables now appears inexorable, and not just in the north Atlantic. 

In April, CleanTechnica, which claims to be “the #1 cleantech-focused website in the world,” announced California had achieved “grid parity,” meaning the cost of electricity from solar power finally equaled that from conventional sources such as natural gas and fossil fuels. 

However, the declaration was not without its complexities. 

While the “weighted average” of a renewable-generated kwh was US$0.89 cents for a 20-year power-purchase agreement, well below California’s 2011 US$0.15 average, the price did not reflect all the costs involved. 

Subsidies from both Washington and Beijing – for manufacturers and exporters of crystalline silicon solar photovoltaic cells and panels – boosted demand for solar systems. “Grid parity,” CleanTechnica conceded, would be difficult to maintain without those financial supports. 

Equally, the cost of production and transmission infrastructure is not included in the kwh price: While coal, oil, natural gas and even nuclear power have long had – and amortized – such facilities, renewables have no such facilities and will need to build them.

 

Effort in Cayman  

In October, Cayman’s Caribbean Utilities Company, after its successful $85 million bid to install 39.7MW of diesel-fired electricity by summer 2016, said the new contract at last enabled the start of planning – joining its Electricity Regulatory Authority overseer – for renewables in the next few years. 

“Planning for the increase in renewables has to include a technical study which will determine how many and what type and size of renewable projects [small distributed vs. large central] would bring the greatest benefits in terms of least cost, without compromising the power quality and reliability of the grid,” CUC’s chief executive officer Richard Hew told The Journal. 

“The cost of large central solar has more recently become competitive when compared to the diesel-fuel cost it displaces,” he said, “so it now makes economic sense to pursue these projects. Other countries have pursued this option earlier on a grand scale at higher costs.” 

He spoke explicitly to the sense that renewables are not yet self-supporting, although the day is approaching: “Renewables are heavily subsidized in most developed countries and are still increasing the cost of electricity to consumers. 

“Germany,” he said, countering a frequent argument for quick commissioning of renewable-energy generation, “has one of the highest penetrations of renewables for developed nations, [but] this is paid for by a surcharge on consumers’ bills. This currently makes up about 6 euro cents of the roughly 30 euro cents that consumers pay per kwh.” 

Cayman consumers pay approximately 33 cents per kwh, a price Jim Knapp, managing director of solar contractor Endless Energy, says is too high. 

Late last year, Knapp wired the Caledonian Global Financial Services Building in George Town with a 528-panel solar system, slashing kwh costs to as little as US$0.07, and, along with a handful of other Knapp-recommended improvements, saving Caledonian as much as $80,000 per year. 

He says Germany, Europe’s largest economy, generates 25 percent of its electricity from renewables, and is aiming for 80 percent by 2050. 

Meanwhile, he said, renewables supplied 42 percent of mainland Spain’s electricity in 2013, [while] “the Philippines produces 29 percent of its electricity with renewables, targeting 40 percent by 2020.” 

 

Grid parity  

Knapp said “grid parity” is not new: “Depending on where you are in the world, we are well beyond parity with fossil fuels, which are the primary fuels used globally to produce energy. Clearly this is the case in Cayman, but nothing can happen until others decide they’ve had enough,” he said, offering to take everyone “off grid for good.” 

Underlining Knapp’s claim, February’s Forbes Magazine quotes no less an authority than the U.S. government on grid parity: The U.S. Energy Information Administration’s figures for “all-in costs” of other generation methods, it says, indicates that gas turbines come in “at about 7 cents per kwh, offshore wind 22 cents, and solar photovoltaic 14 cents.” 

Describing a Richard Branson-hosted February summit in the British Virgin Islands that explored renewables in the Caribbean, the magazine concluded: “The increased costs of building in isolated locations might add a couple cents per kwh, but overall, it’s hard to argue that the islands should stick with diesel.” 

Hew, while conceding the increasing attraction of solar energy, was less sanguine: “The cost of solar [photovoltaics] has been falling steadily. However, the challenge with solar is the intermittent output, which requires either storage technology or firm generation such as diesel to complement it.” 

The phrase “firm generation” indicates power supplies that, like diesel-generated electricity, are consistent and reliable – and commercially acceptable. Hew’s fear is that sunlight and wind are subject to variable hours and speeds, making collection almost haphazard. In short, CUC says, neither is “firm.” (Nuclear power is legally proscribed in Cayman.)  

However, like Torshavn’s Jakobsen discussing wind power, Cayman solar guru Knapp says CUC is simply wrong: Batteries will smooth fluctuations and enable storage for inclement conditions, creating “firm” renewables. 

“New technology provides electricity stored from renewables during daylight hours for use at night or low-light periods,” he said. “Coupled with an emergency generator, which virtually everyone has in the Caribbean these days, you have no need for a utility company with a regulated and guaranteed profit,” – a reference to CUC’s Scheme of Control mandating prescribed levels of return on their investment, indexed to the cost of living. 

“There are many new storage technologies available for solar off-grid and for grid smoothing of renewable-energy sources,” Knapp said. “We’re using flow batteries, nickel iron and lithium iron phosphate for solar systems today. The flow and nickel iron are … used in utility-scale systems for smoothing renewables, and we’re using the ZBB [zinc-bromine] flow,” he said, in a local project that will enable the client to leave the CUC grid permanently. 

Hew was unmoved: “Power generation utilizing diesel engines with waste-heat recovery is presently the most economically viable firm generation source as confirmed by recent bid results.  

“However, in the future it may be a combination of diesel engines or combustion turbines running on liquid or gas fuels, complemented by storage technologies [batteries, flywheels, etc.], which will provide the reliability to support the intermittent renewable-energy sources.” 

 

Renewable energy advocates  

In March, James Whittaker, CEO of local company Greentech, founded the two-dozen member Cayman Renewable Energy Association. 

“We are an association founded … by advocates for the Cayman renewable-energy industry,” he said in a formal statement, “who wish to encourage the development of the industry and build greater public awareness of the benefits of renewable energy.” 

The hope, according to a CREA spokesman, is to join government, CUC and ERA policymakers to help shape renewable-use decisions. 

The association boasts a variety of subcommittees designed to “promot[e] renewable energy, energy efficiency and sustainable living … bringing together providers, educators, contractors, installers [and] consumers ….” 

Managers at Health City Cayman Islands appear to agree, and even CUC is dipping a conservative toe into the renewable waters, quite literally, as the company huddles with Eileen O’Rouke, chief operating officer of Baltimore-based Ocean Thermal International Corporation. 

At East End’s Health City, director Gene Thompson recognizes that air-conditioning is among the major expenses of running any hospital – not to mention hotels like the Ritz-Carlton, Grand Cayman. Thompson is looking at a seawater air-conditioning (SWAC) system, set to come online in about two years. 

“We are in the early stages of this,” he said. “In the long term, we will have up to 10,000 tons of air-conditioning throughout the whole development,” scheduled to comprise in the next 15 years, a 2,000-bed hospital, an assisted-care living community, a medical school and two hotels. 

Air-conditioning is calibrated in British Thermal Units; 1 ton of air-conditioning equals 10,000 BTUs, meaning Health City is looking at 100 million BTUs. While a wag might observe that 100 million BTUs equals the food energy in approximately 80,000 peanut butter-and-jelly sandwiches, others will note that 1kwh equals 3,412 BTUs, meaning Health City is contemplating approximately 2.9MW of air-conditioning. 

Jeremy Feakins will build the SWAC system. Feakins is CEO and chairman of the Lancaster, Pennsylvania-based OTE Corporation. Neither he nor Thompson would discuss the cost of Health City’s SWAC, although the CEO conceded it would “definitely be in the millions of dollars, but it is definitely feasible.” He said the company would finance the system. 

Thompson described SWAC, which works by bringing cold seawater to the surface, pumping it through a building’s air-conditioning plant, replacing standard – and polluting – refrigerants like chlorofluorocarbon Freon, and then returning it to the ocean. 

“We will use a buried pipeline that runs out to the deep water through an ocean channel that has a sandy bottom,” he said, describing the seabed at High Rock. “Then it will go off the edge of the drop-off, down to about 3,000 feet.” 

Construction costs, he said, would be “significant, but the savings will definitely be worth it. We expect 70 percent to 80 percent savings in electricity, which is about 40 percent to 50 percent of our total power.” 

Feakins said the technology, “which uses 90 percent less electricity than conventional systems,” had been developed during many years of testing, had been proved in Hawaii and installed in downtown Toronto – on Lake Ontario – and in Bora Bora, Stockholm and Finland. Similar OTE projects in the Bahamas and the U.S. Virgin Islands were “moving ahead,” he said. 

 

North Side offshore plan  

Meanwhile, OTI’s O’Rourke, in Grand Cayman in late October, is developing for CUC a 25MW system comprising a seaborne platform moored off the North Side coast. 

The company hopes to procure permits – planning, building and environmental – to start operations by early 2017, initially supplying 6.25MW. 

Designed as a closed loop, the mechanism uses warm surface water to boil liquid ammonia. The “steam” turns onboard turbines; pumps move the electricity to an onshore substation connected to the CUC grid. 

Meanwhile, the plant reliquifies the gas with cold seawater from several hundred feet deep, recycling the chemical back into the vaporization chamber. 

CUC’s concern is that the system has never been used on a commercial scale. O’Rourke said the company has proved the technology in decades of testing in Hawaii and Japan. 

In 2001, she says, OTI started expanding the technology from government-sponsored demonstrations to commercial use, and in 2009, Florida’s National Oceanic and Atmospheric Administration said OTEC was ready. 

A 10MW OTEC plant was “technically feasible using current design, manufacturing, deployment techniques and materials,” NOAA said, and if they employed more than a single cold-water pipe, a 20MW system was possible using “off the shelf” components. 

At the least, the project is likely to reduce CUC bills: “A 6.25MW floating power plant can offset the need for 2.9 million gallons of diesel fuel per year,” O’Rourke said, alluding to the 30 million gallons of diesel CUC burns each year.  

“The impact of the initial 6.25MW on consumer rates may be nominal, but at a minimum it would eliminate the need for a fuel service charge.” 

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Solar panels at the car park of Caledonian bank in George Town.

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Gene Thompson

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Richard Hew

German_Wind

Germany, Europe’s largest economy, generates 25 percent of its electricity from renewables, including wind turbines.
Getty Images/iStockphoto

Farao_Islands

The Faroe Islands, which have many similarities to the Cayman Islands, relied for years on fossil fuel for power but now produces 40 percent from hydro and wind.

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