0

$102m Plant's Timetable Missforces Baha Mar To 'Plan B'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Plans to reduce Baha Mar’s air conditioning-related energy demand by 90 per cent have been thrown into severe jeopardy, the $2.6 billion resort developer yesterday confirming it had moved “on to Plan B” after a renewable energy firm failed to meet agreed timelines.

photo

Robert Sands

Robert Sands, Baha Mar’s senior vice-president of external and governmental affairs, said Ocean Thermal Energy Corporation’s (OTEC) failure to meet a pre-determined timetable for its $102.3 million Seawater District Cooling (SDC) system meant the developer had been forced back to looking at “traditional forms” of air conditioning (AC) cooling.

Mr Sands was responding to Tribune Business’s inquiries, after sources close to developments revealed that OTEC’s contract/agreement with Baha Mar for the SDC system had expired at end-June 2012.

This newspaper was also told that Baha Mar executives were concerned that delays in obtaining all the necessary government approvals for the OTEC project could prevent the SDC plant from fitting in with the $2.6 billion project’s construction schedule, throwing this off and delaying the planned December 2014 resort campus opening.

Mr Sands effectively confirmed this to Tribune Business yesterday, saying: “I can confirm that OTEC has not met their timeline commitment to Baha Mar, and therefore we have gone on to Plan B.”

When asked what ‘Plan B’ was, Mr Sands responded: “Traditional forms of AC cooling.”

Pressed further by Tribune Business, the Baha Mar executive added: “I don’t know where they [OTEC] stand at this point in time.

“The only thing I am prepared to say is they have not met their agreed timetable with Baha Mar to allow us to make appropriate business decisions and meet timelines for opening in December 2014.”

Mr Sands indicated Baha Mar had not ‘closed the door’ completely on the OTEC proposal, but reiterated that the resort developer felt it had no choice - given its construction and opening deadlines - to assess the alternatives.

“What may happen down the line, I can’t speak to that, and the door is always open, but Baha Mar has had to go to Plan B in moving forward. That’s where we are at the moment,” he added.

Tribune Business has made repeated attempts to contact OTEC’s chairman and chief executive, Jeremy Feakins, and James Greenberg, the company’s chief strategy and marketing officer, over a period of several days. However, neither of them have replied to repeated cell phone and landline calls and messages.

An OTEC employee, though, did confirm that Susan Larson, who was appointed to head the company’s Lyford Cay-based Bahamas office, had “left the company”.

If the Baha Mar SDC plant does not go ahead, there are potentially numerous ramifications. For starters, the resort developer may have to adjust its financial model, given that without the renewable energy facility it faces a massive increase in its electricity bill.

OTEC’s capital raising in the Bahamas, and investment opportunities for Bahamian investors, may also be impacted.

The OTEC entity that was created to hold the Baha Mar SDC plant, was earlier this year attempting to raise $3 million from Bahamian investors by issuing promissory notes - with an option to convert to equity - to them.

And, as part of the $102.3 million financing required for the SDC plant, OTEC and its Bahamian subsidiary were also planning to issue $13 million in preference shares to local investors via a private placement.

Kenwood Kerr, chief executive of Providence Advisors, which together with CFAL was lined up to place the preference share issue, told Tribune Business that this could not be launched without confirmation that the SDC deal with Baha Mar was sealed.

“I have no idea. I really don’t,” Mr Kerr said, when asked yesterday whether he knew about the status of OTEC’s Baha Mar project.

“Everything is contingent on whether they have a deal or not. We haven’t heard any updates on the project; we’re still waiting.”

Some $76.8 million in Inter-American Development Bank (IDB) debt financing was being lined up as the lion’s share of the SDC money, with some $10.6 million being raised as equity - $5.6 million from OTEC itself, and the $5 million balance from its construction partner, DCO Energy.

If the OTEC plant does not go ahead, it could also represent another setback to the development - and use - of renewable energy technologies in the Bahamas, and have associated negative effects on the environment.

It is also unclear whether the situation would impact the Memorandum of Understanding (MoU) that OTEC has signed with the Bahamas Electricity Corporation (BEC) for two 10 MegaWatt (MW) ocean thermal energy plants, although the two deals are not directly related.

Khaalis Rolle, minister of state for investments in the Prime Minister’s Office, told Tribune Business the Government was “very close” to concluding the approvals process for OTEC’s $102.3 million SDC plant.

“We’re still trying to finish some things with that,” he added. “We’re working through the issues.

“There are a number of issues we’re working through, and are trying to get this to a logical conclusion very quickly. We’re working very diligently on it. It is new, and we want to make sure all areas are properly covered. We’re very close to bringing it to a logical conclusion.”

OTEC had previously pledged that the construction workforce for the SDC plant would employ ‘75 per cent Bahamian labour’, accounting for 80,000 man hours.

The OTEC project would involve construction of a 12,000 tonne system to provide Baha Mar’s $2.6 billion development with its air conditioning needs, via chilling capacity from deep sea water.

A recent analysis of alternatives to the SDC facility concluded that none were viable.

OTEC said that if it decided not to go ahead with the project, Baha Mar would lose the potential economic benefits resulting from a 90 per cent reduction in its air conditioning-related energy costs.

Without the SDC system, the analysis said Baha Mar would be forced back to its original plan of installing seven electricity-driven centrifugal refrigeration compressors, each weighing 1,300 tones, on its resort campus. A cooling tower would also have to be installed on the roof of its Central Utility Plant (CUP).

OTEC added that in the absence of its SDC plant and pipeline, the resort developer would need to dig six extraction and injection wells to deal with the volume of cooling water required.

And it would be forced to consume an extra 37,489 Megawatt house (MWh) of electricity, and 2.645 million gallons of oil, annually in generating the required power, something that would eat significantly into its bottom line through the extra cost burden.

The environment, OTEC said, would also suffer from the extra 71.64 million tones of carbon dioxide created annually by Baha Mar’s electricity reliance, plus the use of 25,000 pounds of refrigerants in the chillers.

“Use of the cold seawater system proposed as part of the SDC system would allow for the elimination of the seven electric compressor-driven refrigeration systems and the cooling towers from the CUP,” the OTEC assessment said.

“In addition, the SDC system would also provide cooling to the Sheraton and Wyndham resorts, allowing for the elimination of the existing compressors and cooling towers at these locations as well. OTE BM has estimated that the conventional cooling system would require 42,837 MWh of electricity per year to generate the 12,000 tons of air conditioning that the Baha Mar Resort, and the existing Sheraton and Wyndham resorts, would require.”

Further extolling the virtues of its project, OTEC added: “The use of the SDC system instead of the originally planned centrifugal compressor systems, and their associated cooling towers, would allow Baha Mar to reduce its cooling-related electrical use by almost 90 per cent. “Operation of the SDC system would avoid the purchase and consumption of 59,312 barrels (2.5 million gallons or 9.4 million litres) of oil per year, and the subsequent release of 36,408 tons of CO2 emissions each year.

“Using the SDC system would also allow Baha Mar to significantly reduce its use of the refrigerants (HFC-134a) in the conventional cooling system, reducing the impacts of associated releases of greenhouse gases during routine maintenance activities.”

Comments

CarrieBaker 5 years, 2 months ago

Nowadays, the air conditioner is vital especially when we are confronting with high temperatures. But for now, giving the time of the year, solutions like http://passionhvac.com/blog/">Charleston heating would be suitable. Therefore, cooling and heating systems should bring a continuous investment because there's a high demand for these kinds of devices.

0

CarrieBaker 5 years, 2 months ago

Producing renewable energy should be the main concern for evey one of us. It’s a matter of principle and a matter of health, just as important as making sure you don’t have a house full of mold. In the way companies like http://www.greentreeenvironmentalllc....">http://www.greentreeenvironmentalllc.... can help with issues like mold removal, those in charge of making long term decisions for the well-being of a big number of people should consider renewable energy sources. So it’s a shame one of the companies that could’ve helped with this, is no longer an option.

0

serenelle 5 years, 2 months ago

Hopefully there will not be too much delay in this project, because saving energy is an important issue. We could all start right now paying attention to the amount of carbon dioxide we're creating and use just as much energy as we actually need. If we're having any extra refrigerant we don't really need, we might consider checking a http://usarefrigerants.com/">refrigerant buyback program, for example. Keeping it minimal in terms of energy consumption is not going to have a negative impact on our living standards, on the contrary: it will prove we understand civilization.

0

holymoly 5 years, 1 month ago

This article provides quality and well written information. There are a lot of resorts in Bahamas and the majority of them look amazing. They are having energy efficient systems like those solar panels from http://hometownremodeling.com/solar-p...">http://hometownremodeling.com/solar-p... that provide quality energy and an eco friendly environment.

0

holymoly 5 years, 1 month ago

The majority of the resorts from Bahamas have air conditioning systems and they use a lot of energy. The idea of reducing Baha Mar’s air conditioning-related energy is good but it would be recommended to use some eco-friendly energy systems as an alternative. There are some great specialists on http://precisionplushvac.com">http://precisionplushvac.com that provide quality services and they are experienced in installing eco friendly energy systems.

0

holymoly 5 years, 1 month ago

This article provides interesting information! Nowadays people are struggling to find solutions in order to save energy and reduce costs. The majority of the people installed air conditioning systems in their houses and there are companies that provide http://www.samedaymoldtesting.com/ind...">indoor air quality in Pasadena services that recommend to use heating and cooling systems in order to avoid musty odors.

0

KateThinnery 5 years, 1 month ago

With all these technical problems, plan B seems like the key to success. In matters of heating and air conditioners, they should turn to specialists; http://abovenbeyondservices.com">http://abovenbeyondservices.com , it might be helpful. Until then, they can still try reducing the air conditioning-related energy, it might be a good idea.

0

holymoly 5 years, 1 month ago

Nowadays many people are interested in building or buying houses that have green energy systems installed as they are very efficient. If you are planning to build a house then you should hire a professional construction team like those from http://www.aduinitconstruction.com/">http://www.aduinitconstruction.com/. Moreover it is recommended to install some green energy systems like solar panels as they will help you to reduce energy costs.

0

holymoly 4 years, 11 months ago

The majority of the Bahamians have air conditioning systems in their houses. Many people renovated their houses in the last years and created some great designs like those from http://www.ecedesigns.com/">http://www.ecedesigns.com/. Moreover they've installed air conditioning systems in order to feel comfortable on summer when the temperatures are increased there.

0

Sign in to comment