The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE developer of Baha Mar's proposed renewable energy plant is seeking to part-finance the project through raising $13 million in capital from Bahamian investors via a preference share issue, Tribune Business can reveal.

A May 10, 2012, update issued by Ocean Thermal Energy Corporation (OTEC), the developer of Baha Mar's $102.3 million Seawater District Cooling (SDC) system, which will supply the $2.6 billion Cable Beach redevelopment and existing hotels' air conditioning needs, said a "mandate letter" to provide $70 million in debt financing for the project had been received from the Inter-American Development Bank (IDB).

The update said designs for the two ocean thermal plants that OTEC will construct and operate, supplying power to the Bahamas Electricity Corporation (BEC), were "nearing completion", while other opportunities included supplying Atlantis with energy from an SDC plant similar to Baha Mar's.

And OTEC added that discussions had begun with an unnamed Bahamian aquaculture/hydrponics company that wanted to use the "nutrient rich water" produced by its planned Clifton Pier ocean thermal plant for use in its operations.

Jeremy Feakins, OTEC's chairman and chief executive, did not return Tribune Business calls and e-mails seeking comment before press time last night.

But, in its update, OTEC said: "Baha Mar project proceeding well, and efforts to work with new PLP Government are underway. Mandate letter for $70 million of debt financing has been received from the Inter- American Development Bank.

"Commitment has been received from Nassau-based CFAL/Providence Advisors for $13 million of preference shares. Commitment for up to $5 million of equity financing received by OTE's partner, DCO Energy. Other opportunities for OTE are being discussed, such as bottled water for the entire [Baha Mar] resort and certain other markets (in discussions)."

Tribune Business understands that the $13 million preference share issue is designed to give Bahamian investors an opportunity to participate in, and earn returns, from the Baha Mar SDC project - a move likely to go down well with the new government.

It is likely to be a private placement, targeted at specific high net worth investors and Bahamian institutions, with CFAL and Providence Advisors likely acting as placement agents. Tribune Business understands that the preference share issue has not been finalised yet, but that talks are ongoing between OTEC on one side, and CFAL/Providence Advisors on the other.

OTEC previously pledged that Bahamian labour would perform 75 per cent of the construction work on the Baha Mar SDC plant, accounting for 80,000 man hours of work on a system that would supply renewable energy to the resort project under a 30-year contract.

OTEC previously said its SDC plant would reduce Baha Mar's air conditioning-related electricity demands by almost 90 per cent, from 42,837 Mega Watt hours (MWh) per year to 4,512 MWh - a drop of 38,325 MWh.

Referring to its Bahamian subsidiary, OTE BM, OTEC said: "OTE BM Ltd. 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.

"The use of the SDC system instead of the originally planned centrifugal compressor systems and their associated cooling towers would allow the Baha Mar resort to reduce its electricity for chiller-related cooling requirements by almost 90 per cent........

"The savings of electricity realized by operating the SDC system instead of a conventional chilling system is referred to herein as avoided electricity use. Calculations of the SDC system's avoided ton-hours of electricity, less the pumping load required to operate the system, result in a reduction of 38,325 MWh of electricity annually (from approximately 42,837 MWh to 4,512 MWh)."

As for its other Bahamas-based projects, OTEC said: "Designs for the Bahamas Electricity Corporation (BEC) OTEC plants are nearing completion, and a request has been made to BEC to present those plans and the cost of OTEC electricity for the Bahamas market."

And it added: "Discussions have commenced with a Bahamian aquaculture/hydroponics company who wishes to commence sustainable food production in the Bahamas, utilising the nutrient-rich water from the OTE OTEC plant that is slated to be built at Clifton Pier.

"Opportunities for additional SDC and OTEC plants are ongoing in the Bahamas, including the Atlantis, Family Islands (OTEC) and Grand Bahama/Abaco (OTEC, SDC, Sustainable Food/Bottle Water production)."

Mr Feakins previously told Tribune Business that OTEC planned to develop an eco-industrial park in the Bahamas, leveraging its project technology and export spin-offs that would make this nation "a world leader in green technology and green energy".

He explained that the company's "vision" was to emulate the National Energy Laboratory of Hawaii (NELHA), and its Ocean Science and Technology Park, in the Bahamas, having already assessed potential sites at Clifton Pier and in Grand Bahama.

Mr Feakins added that the deep sea water employed by OTEC's ocean thermal energy plants could be employed by a host of spin-off industries, such as bottled water producers, agriculture, mariculture and aquaculture, potentially creating a more diversified Bahamian economy and new job opportunities.

Mr Feakins told Tribune Business: "Our vision is to open an eco-industrial park similar to NELHA, the National Energy Laboratory of Hawaii, which is on the big island of Hawaii.

"There is space available in the Bahamas to put up such an industrial park, both at Clifton Pier and we've been looking at some places in Grand Bahama, too."

Noting that the Ocean Science and Technology Park hosted tenants involved in aquaculture, mariculture, agriculture, pharmaceuticals, nutrients, bottled water production and renewable energy, he added: "There's a whole slate of products that are being developed using the deep sea water brought up through the pipes" of OTEC's original ocean thermal plant in Hawaii.

Research by Tribune Business shows that NELHA's Park includes Black Pearls Inc, a company that has developed hatchery technology for oysters; Cyanotech Corporation, an entity that produces natural nutrients using microalgae technology; Kona Cold Lobsters; Ocean Rider, a commercial seahorse farm; and Kona Coast Shellfish, a shellfish nursery/hatchery. There are at least another 20-30 tenants in the Park.

"That's the vision I've got for the Bahamas," Mr Feakins told Tribune Business. "It's not only about getting you guys weaned off fossil fuels. It's about the spin-offs which that provides; the technology opportunities, the export opportunities from all the industries I've probably just mentioned.

"On the big island of Hawaii, bottled water is Hawaii's biggest export. There's no reason why we can't do something like that for the Bahamas. There's a whole bunch of things we can do to make a difference in the Bahamas, and I'm seriously excited about this."