By NEIL HARTNELL
Tribune Business Editor
Bahamas Power & Light (BPL) yesterday defended its hiring of an extra ten megawatts (MW) of expensive diesel-burning generators from fierce union criticism that it “makes no sense”.
Whitney Heastie, the utility’s chief executive, told Tribune Business it had “no option” but to install additional temporary generation capacity at its Clifton Pier power station to prevent New Providence being plagued by summer 2019 blackouts.
He acknowledged that the move could further increase already-high Bahamian electricity bills, given that the Aggreko units use the most expensive fuel available, but said this was the same for all rival proposals.
Arguing that criticism of BPL’s selection “falls by the wayside” as a result, Mr Heastie further highlighted the increasingly fragile nature of New Providence’s energy supply infrastructure by confirming that the extra ten MW could bring the amount of electricity generated by temporary units close to 50 percent.
Aggreko already provides 80 MW of temporary generation at BPL’s Blue Hills plant, and Mr Heastie said the additional capacity had been wrapped into the two sides’ existing deal. While Bahamian consumers will see no electricity tariff increase as a result, the BPL chief admitted it would further “strain” the utility’s finances since it would have to absorb this extra cost.
He also revealed that BPL is working with Shell, the preferred bidder on New Providence’s proposed 270 MW power plant, on a medium-term solution to the island’s power woes that was sparked by the recent fires at Clifton Pier.
The state-owned utility monopoly is seeking to acquire 40 MW of longer term generation capacity to replace the 60 MW lost in the blazes, with Mr Heastie pledging these units will positively impact the fuel charge portion of customer bills that have been hit by rising global prices through their ability to use multiple fuels.
The new Aggreko deal yesterday came under union fire, though, amid suggestions that it “makes no damn sense” and that there were better offers available to BPL.
Paul Maynard, the Bahamas Electrical Workers Union’s (BEWU) president, told Tribune Business the continued use of diesel fuel was “madness” given the high cost it imposed on Bahamian businesses and households.
Contacted after this newspaper was tipped off about the rental generation units’ arrival at Clifton Pier, Mr Maynard said they were supposed to start supplying power to BPL’s grid this weekend once cable and fuel lines were connected - a timeline confirmed by Mr Heastie.
The BEWU chief, though, said New Fortress Energy and General Electric/Providence Energy Partners - two bidders who had lost out to Shell on the long-term generation contract - had made proposals that were superior to the Aggreko arrangement.
He added that the latter, in particular, had “offered to put 100 MW there at no cost to the Government and the people, and sell it to BPL”.
“It doesn’t make no sense what they’re doing,” Mr Maynard told Tribune Business of the Aggreko deal. “We’re paying a fuel charge this month of 20.78 cents per kilowatt hour (KWh). For us to be continuing to use diesel ADO fuel is madness, but it’s their decision. Who am I, the little boy crying wolf.”
Mr Heastie, though, confirmed that BPL had contracted with Aggreko to provide an extra 10 MW of rental generation upon the advice of Shell. “There’s no intent to add above 10 MW,” the BPL chief executive said, with each Clifton Pier unit able to generate 1 MW for the utility’s grid.
“Shell went out and did their work, and what they came back with was the best we were going to get in terms of deployment and price right now is Aggreko,” Mr Heastie continued. “They’re in the business of short-term generation; nobody else would be able to come in and do this for as short a time as Aggreko would.
“All the others, to deploy any kind of asset, they all require longer-term commitments that BPL is not willing to do. We could release Aggreko in six months, whereas everyone else was looking for three to five years... Aggreko became the best option for us. Shell looked at all the vendors, and short-term for them would not be short-term for us.”
Mr Heastie conceded that the addition of extra diesel-burning generation units threatens to exacerbate the already-high - and increasing - fuel costs that Bahamian businesses and consumers are paying for, but he argued that BPL’s alternatives were virtually non-existent.
“No one came in with an option that was not using diesel fuel,” he revealed. “To be frank, people were saying they were going to bring in gas units, but they would bring them in and run them on diesel and, when the infrastructure was set up for gas, convert them to gas in the future.
“The only thing available immediately would have been diesel. The argument that using Aggreko would not be the best option falls by the wayside as everyone else was in the same boat using diesel.”
Mr Heastie said Clifton Pier currently lacks the necessary regasification infrastructure to convert fuels such as liquefied natural gas (LNG), and pump them from ship to shore, although Shell’s power plant will require this when it becomes operational in 2021.
With the Clifton Pier fires having damaged, if not destroyed, BPL’s two most efficient generation units, Mr Heastie said the 10 MW of temporary generation was vital to enabling its permanent assets to be taken off-line for critical maintenance upgrades.
“We need the Aggreko units on the ground to allow us an opportunity to take units out in the winter period to do maintenance,” he told Tribune Business. “Without ‘Station C’ [the fire-damaged engines] we lost the flexibility to take the assets off the grid. Aggreko will come in to allow us the flexibility to do the winter overhaul.”
Mr Heastie said this was supposed to have begun in early September/October, but had to be delayed because of the fires. This meant BPL was already behind in ensuring its generation fleet is in the condition necessary to meet peak summer demand.
He added that Clifton Pier’s ‘Station C’ and fire-damaged engines were still in the care of insurance loss adjusters, who were evaluating them to see if they have any remaining value. Until that process is complete, BPL will have no idea of the total loss it faces.
Looking beyond the immediate Aggreko deal, Mr Heastie said BPL was also examining how to “get out of this situation we got ourselves into with the fire” by “bridging the gap between not having to burn diesel and getting back on to something more cost effective for customers”.
As a result, BPL had asked Shell to again evaluate whether Wartsila or MAN Diesel was the best candidate to supply 40 MW of multi-fuel medium speed, four-stroke engines as a medium-term option “to ensure we don’t load shed while doing these overhauls”. Shell’s recommendations are expected by mid to end-November.
Mr Heastie added that BPL was examining whether it could modify Clifton Pier’s ‘Station A’, which contains its oldest generation units, to Shell’s infrastructure needs and enable it to accommodate the proposed new generation units.
The BPL chief admitted that its increasing reliance on temporary generation units for New Providence’s energy supply was “not ideal”. Should Aggreko’s 90 MW be employed at full capacity, they will likely account for between 40-50 percent of a winter demand that typically stays between 190-200 MW.
The present 80 MW generated around one-third of summer demand, with some 60 MW of Clifton Pier’s 135 MW capacity now off-line indefinitely.