The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Utility-scale renewable energy is “not economically viable” on New Providence, BPL’s former manager ruling out a $140 million solar farm investment in its business plan.

PowerSecure, in its analysis of options to achieve the Government’s renewable energy goals, analysed the feasibility of both a 40 Mega Watt (MW) solar farm for New Providence and the renewable energy self-generation (RESG) programme that Bahamas Power & Light (BPL) has ultimately moved ahead with.

Besides the difficulties associated with finding 155 acres of land for the solar farm, BPL’s business plan said it would be unable to produce energy “when it is needed most” - during the evening hours between 7pm and 11pm, when the darkness coincided with peak loads.

“Because of the cost of the initial investment and other operational factors, the 40 MW solar farm is not an economically viable investment for BPL in the near-term,” PowerSecure argued.

“The total cost of the 155-acre field is $139 million, not accounting for land. The annual operations and maintenance costs are estimated at $0.56 million, not including the cost of spinning reserves. The unit cost is approximately $0.10 per kilowatt hour (KWh), but one developer in Nassau recently quoted $0.19 per KWh factoring in land - furthering the financial challenges.”

BPL’s business plan, though, said the main problem was the inability to align solar energy production with its peak night-time demands.

“Because of the poor coincidence of customer demand versus solar availability, a 40 MW solar installation can provide about 5.6 per cent of BPL’s annual demand requirements, based on the hourly forecast for 2016 - about one-sixth of peak demand,” PowerSecure estimated.

“At BPL’s latitude, solar output has a 24 per cent load capacity and is not firm capacity that can be counted toward peak demand..... Solar power is not available during the hours when it is needed most, between 7pm and 11pm. Moreover, the 40 MW of solar capacity would operate only at a 24 per cent load factor, and therefore would not contribute to BPL’s system peak.”

Some observers are likely to be surprised that PowerSecure ruled out utility-scale solar for New Providence so readily, but the US utility has built up significant expertise and experience in the field.

However, Desmond Bannister, minister of works, acknowledged in a recent Tribune Business interview that the scarcity of suitable land in New Providence was a major impediment to the development of utility-scale solar.

“One of the issues with solar in New Providence is that it simply takes up large areas of land, so we’re going to have to look at green buildings, roof-top installations,” he conceded.

PowerSecure had promised to keep “reevaluating” this and other renewable energy options during the course of its five-year management contract, which was brought to an end after just 18 months.

Apart from problems in securing the necessary land at reasonable price, PowerSecure said the 40 MW solar farm would not allow it to retire its own generation units due to the loss of production whenever there was significant cloud cover.

This meant all its units would have to be kept on stand-by to take over from the solar farm, which it forecast as being able to produce a peak monthly output of 39,401 kilowatts, and 85,497 mega watt hours annually.

The “unstable nature” of BPL’s existing infrastructure presented a further obstacle, and PowerSecure concluded that the 40 MW farm’s value failed to offset the costs of using the existing generation capacity.

“The solar project’s total annualised cost of $8.6 million is less than the savings by a ratio of 1.71,” BPL’s business plan concluded. “Should the cost of ADO fuel (used at Blue Hills) climb to historical highs, as a year ago, then the savings would far exceed costs.

“However, there is consideration of converting generators to use propane or LNG fuel. In a comparison of the avoided cost savings using propane fuel for generation, the annualised cost of the solar project exceeds the avoided cost benefit by a ratio of 1.52.”

The plan recommended: “A solar generating project should not be considered unless there is a determination that the combustion turbines will not be converted to LNG or LPG. Customer solar systems should be encouraged, and should be paid the avoided cost of the fuel they replace.”

Renewables, though, represented a key component of PowerSecure’s plans to slash BPL’s annual Family Island costs of $105.33 million, broken down into $70.73 million associated with fuel and $34.6 million for operations.

“The financial goal is to reduce fuel costs by 15 per cent and operations costs by 32 per cent,” PowerSecure said. “Historically, managing the Family Islands has been a challenge for BEC in terms of cost, service and reliability... Of the 155 MW of generation equipment and plant infrastructure located on the Family Islands, approximately 55 MW are in poor-to-moderate condition, or at beyond-end-of-useful life.

“There is virtually no renewable energy in the Family Islands. Obviously, this represents an excellent opportunity for fuel savings and environmental responsibility.”