By NEIL HARTNELL
Tribune Business Editor
An $80 million renewable energy project believes it could slash electricity costs for consumers on 15 Family Islands by at least 25 per cent, having met or exceeded the Government’s own pricing targets.
Guilden Gilbert said the proposal, a joint venture between Bahamian investors and a foreign group, would “cost the country nothing” through their consortium providing 100 per cent of the financing.
Explaining that the group had submitted their proposal to the Government’s recently-cancelled Family Island alternative energy project tender, Mr Gilbert said they were proposing to establish solar photovoltaic (PV) plants on 15 different islands, each generating an average of 2 Mega Watts (MW).
The group would develop the solar PV sites under a 20-year build/own/operate arrangement, and sell the energy generated to the Bahamas Electricity Corporation (BEC).
While the buyer might end up being BEC’s transmission/distribution business, if the company is split into two, Mr Gilbert said the group would turn all 15 plants over to the Government after those 20 years.
And Mr Gilbert, who is also president of the Bahamas Renewable Energy Association, told Tribune Business that the Government’s ‘grid stability’ concerns would be a “non-issue” if all utility-scale renewable projects were required to be “dispatchable”.
The Christie administration has deferred any approvals for large-scale alternative energy projects until 2014, but Mr Gilbert argued that they could “mitigate” grid stability fears by requiring all proposals to have a back-up generator or battery bank.
While declining to name his group’s foreign partner, Mr Gilbert told Tribune Business: “The total investment would be between $60-$80 million, and our partners would finance 100 per cent of that.
“We would manage and maintain the plant for a 20-year period, and then the plant would be handed over to the Government.
“I know we’re not the only proposal on the table, but the guys we are working with have funded and installed over 225 MW of solar PV worldwide, so this is not a ‘fly by night’ company. This would be financed by them 100 per cent, so there is no cost to the Bahamas.”
The annulled Family Island tender had mandated that bidders offer per kilowatt hour (KWh) rates that are at least 30 per cent less than BEC’s current per unit fuel cost.
Successful bidders would have entered into power production agreements with BEC, offering per kilowatt hour rates ranging from a low of 20.1 cents in Exuma to a high of 46.9 cents on Long Cay.
“The challenge for us in that Request for Proposal was to meet or come in at a rate at or below the fuel charge,” Mr Gilbert told Tribune Business.
“We accepted that in our proposal. In every situation, our deliverable cost of power met or was well below the fuel charge or rate they wanted us to meet.”
The Government’s tender had stipulated that renewable power plants initially be limited to a maximum 30 per cent of each Family Island’s power demand.
It left open the possibility, though, that they could supply 100 per cent of an island’s energy needs where the peak load was 2 MW or less.
The proposal by Mr Gilbert and his colleagues is along similar lines, and with between 15-20 persons required to construct each solar PV plant, he added that their project had the potential to generate 225-300 construction jobs.
Acknowledging that the group’s plants could potentially supply 100 per cent of the energy needs on more sparsely populated Family Islands, Mr Gilbert also conceded that they would only provide an “offset” in locations such as Abaco and Eleuthera.
“But the philosophy of the group we work with is that size doesn’t matter,” he told Tribune Business.
“The proposal was that we would sell the power to BEC, and by the time it’s delivered to the consumer, the cost would be around 31 cents per kilowatt hour, so you’re talking about a 25 per cent reduction - and we could go lower than that.
“The costing was based on the pricing of materials at that point, but renewable prices are coming down very quickly. The cost to us could change in a very positive way, and that could impact our costs and the cost of deliverable power. If that happens, it would be a positive development for consumers.”
Meanwhile, the Government has focused its first phase energy reform efforts on BEC, aiming to split the Corporation into two and find joint venture and management partners for its generation and transmission/distribution businesses, respectively.
Decisions on utility-scale projects were pushed back into next year, due to concerns over BEC’s ‘grid stability’ and whether it could cope with the integration of renewable technologies and their potentially inconsistent supplies.
But, arguing that there were ways to alleviate the Government’s fears, Mr Gilbert told Tribune Business: “I’m still not in agreement with Minister [Kenred] Dorsett, because when you have a PV system that is fully dispatchable, you have 24 hours of guaranteed power.
“In the event of cloud cover, there is a mechanism in place to compensate for it.”
This ‘mechanism’, Mr Gilbert said, required all utility-scale renewable power plants to put in place on-site generator or battery bank power back-up. These would kick-in, and pick up the slack, whenever renewable energy levels dipped.
“I understand their concerns about the stability of the grid, that’s a definite, but the way around that is requiring any large scale solar PV plant to be disptachable - having a generator or battery bank of equal size,” he explained.
“Their concerns are only valid if they have a solar PV plant that is non-dispatchable, and what we proposed for the Family Islands are 100 per cent dispatchable, so there’s no impact on the grid.
“I understand and respect the Minister’s concerns, but if those plants are dispatchable, it’s a non-issue.”
Mr Gilbert added that giving the go-ahead to utility-scale Family Island renewable energy projects would also reduce the burden on BEC, whose New Providence operations effectively have to subsidise all other islands.
Letting renewable providers move, he said, would reduce the level of these subsidies.