Wednesday 30 September, 2020

Consumer-generated renewable energy into Cayman- the new frontier

by Arden Burrowes

This is the third of a three-part series

Back to part 1 

Back to part 2

The Cayman Islands Pricing Mechanisms

The Cayman Islands instituted a different pricing policy for eligible prosumers rather than the typical Net-Billing or Net-Metering approach employed by many other utilities globally. The utility company, Caribbean Utilities Company Ltd. (CUC), instituted a Feed-In-Tariff Rate structure (FIT Rate) called the Customer Owned Renewable Energy (CORE) for small RE systems (solar and/or wind). From 2017, large commercial customers, as well as any customers unable to access the CORE programme, may apply to the Distributed Energy Resources (DER) programme which was initially limited to 3MW.

The CORE scheme has been developed to compensate small prosumers (less than 100kW system size) for the energy supplied to the grid at a fixed price, up to a maximum capacity and peak energy demand limit. Total energy consumed by the prosumer is charged at the regular retail rate whether it has originated from the grid or self-consumption). The prosumer is still charged as usual for CUC fuel costs as well as other license and regulatory fees.

Provided that the CORE rate is substantially higher than the regular retail rate, the CORE program incentivizes small prosumers to export renewable energy to the grid with the benefit of also remaining connected to the CUC grid for consumption. 

In February 2019, the territory’s electricity regulator, The Utility Regulation and Competition Office (“OfReg”) authorized an additional 2MW of maximum capacity to the CORE allocation in May 2017 after the previous limit of 6MW was reached in March 2017 (CUC, Feb.2019).

Customers on the DER programme instead have access to Demand Rates from 2017. This pricing structure incorporates both fixed (demand) and variable (energy) based costs. The fixed costs are related to managing peak demand power (kW) at specific times of use versus total power consumed (kWh).

Addition of Battery Storage increases capacity for RE prosumers.

While there are limitations to the current renewable energy capacity under the CORE and DER programs, there is reason to celebrate. On September 162019, OfReg approved the addition by CUC of a 20-megawatt (MW) Battery Energy Storage System (BESS) for use in providing Reserves services (CUC, Sept 2019).  

This BESS system will provide backup power to  the North Sound Road Diesel power plant, thereby improving its operational efficiency, and reducing diesel consumption. In the event of  a power outage, the BESS will provide instantaneous reserve power until other generators can be brought online. 

President and CEO, Richard Hew said: “It is important to note that the cost of providing spinning reserve to supply electrical power will be reduced as CUC will be using stored battery energy rather than diesel to provide reserve power. As a direct result of this project we expect that the fuel savings to the customers will be around $5m per annum.”

As a result of the addition of the BESS, CUC has agreed to increase the DER programme by an additional 12MW. This additional capacity allocated to residential, industrial and commercial prosumers across the island will allow for a further decarbonisation of the Cayman Islands’ energy mix. As these resources are distributed, rather than centralized, it improves the overall resiliency of the islands’ power network in the event of damages due to extreme weather events.

While the CUC has authorised increased capacity to the DER programme, this does not impact the CORE capacity as the energy from the CORE is subject to a fixed feed-in-tariff rather than a Demand rate (CUS, Sept 2017).

Grid Integration Challenges

There are technical challenges to the integration of distributed renewable energy resources but these are challenges that must be overcome. While CUC is encouraged to provide more capacity for small prosumers, there are requirements that must be made to ensure that the reliability of the electricity distribution service is not compromised. 

To address this concern, CUC commissioned an integration study “Interim Renewable Infusion Study, 2017” to assess available capacity for renewables integration. The location of the planned integration sites, the capacity of individual PV generation systems and the total capacity were all evaluated assuming an initial installed capacity of 9MW renewable generation (customer scale plus utility scale) (Leidos, 2017).

In summary, the Renewable Infusion study concludes that the maximum renewable energy that could be safely infused to the system was well in excess of the CUC limit of 29MW “without causing reverse flow, capacity or system voltage issues”. 

Upcoming Opportunities?

The primary focus for renewable power generation on islands has typically been renewable energy generators such as solar photovoltaics and wind turbines. In the Cayman Islands, however, there is an additional technology, Ocean Thermal Energy Conversion (OTEC) which is apparently gaining traction. OTEC utilizes the temperature difference between seawater at the surface and at deeper depths to produce electricity using a steam engine. The advantage of OTEC is that it has the potential to provide renewable baseload power generation.

In the Integrated Resource Plan Report, July, 2017, there was an evaluation of the OTEC technology by Pace Global which assessed the benefits of introducing natural gas for fuel (rather than diesel), the value of energy storage and various baseload renewable baseload power generation technology.

While the technology holds promise, it has not yet got the green-light in the Cayman Islands due to concerns over the commercial viability. A US-based company, OTEC International LLC (OTI) has proposed a floating offshore OTEC platform offshore along the north coast of Grand Cayman.

With respect to this proposal, OfReg Executive Director for Energy, Gregg Anderson, noted in November 2018: “We want them to propose a rate that is going to be acceptable to consumers. Our goal at this point in time is that the rates that we want to see as a yardstick for consumers have divided the cost of fuel or preferably less." (Ragoonath, 2018).

He also expressed concern over the technical viability. Mr Anderson added: “We do not want to put ourselves in a situation where we are going to introduce a renewable source that has not been commercially proven that it is going to increase the cost of electricity to consumers, as opposed to driving it in the opposite direction."

OTI has since defended their pricing proposal through a statement on December 13, 2018, indicating that the energy price offered by CTI is “substantially lower” that the rates paid at that time by Cayman energy consumers (Silva, 2018).

Notably, a French company, Akuo Energy had proposed a 10M.7MW OTEC platform in Martinique named NEMO. This project was officially frozen on April 102018 due to technical difficulties related to the main cold water intake pipe (Akuo, 2018).

Back to part 1 

Back to part 2

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