By YOURI KEMP
Tribune Business Reporter
Bahamas Power & Light (BPL) last night confirmed it aims to end its reliance on rental generation by fall 2021 in a move that would save long-suffering consumers $2m-plus per month.
The state-owned utility monopoly, confirming its objective to stand on its own generation feet, said it had already reduced its dependency on Aggreko’s rental generation fleet by ten megawatts (MW) - a move it said would save customers around $400,000 per month.
With 105 MW of rental generation remaining, and accounting for a still-significant percentage of New Providence’s generation capacity, BPL said it is opening the bidding to other suppliers given that the Aggreko deal expires in June 2020.
The new tender, it added, will secure “a maximum 40 MW of rental generation” to ensure that BPL has adequate capacity to meet summer 2020’s peak demand and prevent a repeat of last year’s daily load shedding that impacted most Bahamians for three successive hours or more.
However, BPL said its reliance on rental generation will only be ended when the last 90 MW of permanent, multi-fuel generation capacity are installed at Clifton Pier’s “Station D” by summer 2021. That station, an investment of $70m, will be constructed by BPL but is ultimately supposed to be sold to Shell North America - along with the 132 MW “Station A” - as part of the latter’s 222 MW power plant.
“We have already done away with ten MW of rentals, bringing our complement of rental generators down from 115 MW, at a cost of close to $2m, to 105 MW, at about $1.6m,” BPL said in explaining why it has issued a Request for Proposal (RFP) for more rental generation.”
“The contract between BPL and Aggreko for 105 MW will fully expire in June 2020. The new contract will be for no more than 40 MW. Once again, we will be stepping down our rental generation significantly as we move to transition completely out of rental generation in the fall of 2021. The reduction will lead to a drastic drop in our outlay for rentals.”
The utility added: “BPL has determined that securing a maximum of 40MW of rental generation is prudent in order to ensure that we are able to have available backup generation for summer 2020.
Per our procurement policy, BPL is required to send the need for new rental generation out to tender. We will continue to require rental generation until Station D (90 MW) comes online at the end of summer 2021. As previously noted, BPL intends to be completely free from rental generation in the fall of 2021.”
BPL’s statement came after Desmond Bannister, minister for works with responsibility for the utility, said it would need rental generation for a “good part of the summer”. He added: “What’s happening is that BPL’s rental general contracts have expired. They expired this month.”
He added that BPL has “a procurement process, so they can put it out there. They just can’t put it out there without trying to get the best price for the Bahamian consumer. They are going to need rental generation for the good part of the summer. Until Station D comes on they still don’t have the fuel mix they want to have.”
Besides the $2m monthly rental cost paid to Aggreko, BPL’s reliance on temporary generation has also hurt Bahamian consumers in other ways. The rental units all run off the most expensive fuel, automated diesel oil (ADO), meaning that BPL’s dependency on them for a major percentage of its generation capacity has increased the fuel charge component of consumer bills.
Paul Maynard, the Bahamas Electrical Workers Union’s president, told Tribune Business of the move to end rental generation reliance: “I keep telling you they can’t do that until they have all of their ducks lined up. Their ducks aren’t lined up yet.
“They have to use rental generation until they can get their own system stabilised. That will not really be a thing until 2021, when they get their next 90 MW in place. Then they can do that.”
“The thing is Aggreko, they are paying them $25m-plus a year so they have to get rid of that. So that’s why I believe they are going to retake it out and get somebody else.”