Renewable energy sources

IN RECENT times, an old military term – VUCA – has made its way into the business world’s vernacular. Its applicability to the electricity industry is particularly relevant, considering the volatility, uncertainty, complexity and ambiguity associated with the sector.

Regulators often juxtapose the stunning pace of development in the telecoms sector against the sluggish technological progress in the electricity sector. If Alexander Graham Bell – the inventor of the telephone – were revived and transported through time to the present, he would likely not recognise the technology he created. The ‘phone’ is no longer a chunky, two-piece, wired device used solely for voice communication. The smartphone, which represents the pinnacle of development in telecoms, is now a small, wireless, handheld gadget, which, in addition to voice communication, enables the user to take pictures, watch movies, send text messages, catch a ride, order cheap Chinese food, and craft spectacularly written newspaper articles. Contrarily, Thomas Edison and George Westinghouse – the pioneers of the electricity industry – would be quite comfortable with what they see today, since the basic model they fashioned at the end of the 19th century remains mostly intact. Since what seems like the Fred Flinstone era, fossil fuel has been converted into energy at power stations, transmitted at high voltages over long distances to substations, then broken down to lower voltages for the ultimate enjoyment of consumers. Despite the dominance of this archaic model, the rumble of change is unmistakable. Indeed, the transformation has already begun and a new electricity industry is poised to emerge. developing states that are net fuel importers inevitably face high electricity rates. This challenge is predominantly a result of geography and demography. Caribbean islands cannot capture the benefit of economies of scale in electricity generation and distribution as a result of their relatively diminutive sizes and populations. Being islands, by nature, they are unable to interconnect with the electricity networks in adjacent countries to take advantage of reduced prices. This inability to interconnect to neighbouring electricity grids necessitates expensive investments in generation plants to ensure (or at least attempt) service reliability.

Remoteness and diminutiveness also negatively impact the transportation costs of key energy inputs. For instance, in pursuit of fuel diversity and lower input costs, the Jamaica Public Service, with the backing of its primary regulator, embarked on a project to substitute natural gas for diesel fuel on its 120MW combined cycle plant in Montego Bay. Interestingly and unavoidably, the infrastructural and transportation costs involved will constitute roughly 70 per cent of overall fuel costs at the plant. Amazingly, getting gas to the plant is much more expensive than the actual gas used by the plant.

The region’s vulnerability to natural disasters is another major factor keeping Caribbean electricity prices elevated. Most, if not all, electric utilities operate without conventional insurance coverage on their transmission and distribution lines. Because of the risks associated with potential hurricane damage to lines in the region, insurers – some of whom have been known to insure assets as vulnerable as Don King’s hair – are scared away. Consequently, the cost of occasionally rebuilding significant portions of the electricity network drives up electricity prices.

Smallness, insularity, remoteness and vulnerability to natural catastrophes lead to incredibly high electricity prices in the region. Even larger Englishspeaking Caribbean islands, like Jamaica, whose rates are comparatively lower than smaller islands, aren’t immune to this phenomenon. At 24.7 US c/kWh the average electricity price in Jamaica in 2015 was more than twice as expensive as Florida’s 10.11 USc/kWh (see Figure).

A slew of emerging technologies offer hope to Caribbean islands burdened by high electricity prices. Three in particular stand out as most promising – (1) advances in renewable energy sources; (2) developments in the smart grid; and (3) innovations in energy storage.

The global drive to reduce carbon emissions has sparked the search for power generation solutions harnessed from renewable resources. In recent times, solar photovoltaic technologies and wind have offered great promise as sustainable renewable energy options. This is particularly interesting to Caribbean nations given our abundance of sunshine and breeze.

In 1980, solar energy cost US$30 per Watt. Today, that cost is about US$0.50 per Watt. In 1980, wind energy cost US$0.55