Divorcing the JPS
JAMAICA’ S INTEGRATED resource plan (IRP) to see US$7.3 billion of investment in the electricity sector by 2037 is, therefore, critical to costreduction efforts.
Similar to its Caribbean counterparts, Jamaica’s energy sector depends heavily on imported fossil fuels such as petroleum – a significant portion of the ultimate cost of electricity to consumers. The energy sector accounts for 29 per cent of fossil fuel consumption, data from the Inter-American Development Bank (IDB) show.
“Energy planning is crucial for defining the initiatives needed to lower cost, provide reliable energy, and improve grid resiliency and sustainability,” the IDB noted in its response to The Sunday Gleaner on what Jamaica needs to do to reduce the high cost of electricity.
The OUR also noted the need for diversification of the fuel-generation mix.
While the country has made strides to war du ti li sing more renewable energy sources, up to last year, just 13 per cent of electricity production was generated by renewables, with natural gas accounting for 59 per cent, data from the Ministry of Science, Energy and Technology shows.
The ministry, however, did not provide an update on the IRP or shed light on where the country currently stand son the energy-diversification targets.
However, despite the operators having to pass the initial investment costs to consumers, Gordon believes Jamaicans will eventually feel the effects of this pass-through in their electricity costs.
With the trend of increasing prices for natural gas, heavy fuel oil, and even diesel, alternating the use of the fuel sources when prices dip would, in theory, lead to cost savings for production.
“But what has been happening on the grid is that you’re running the more expensive plants at the expense of the cheaper ones because of how the system is designed,” Gordon reasoned.
Wisynco Group Limited, a manufacturer and distributor of food, beverages, and paper products, cut its reliance on the JPS by establishing a co-generation plant to slash the burdensome line item. The company expects a 20 per cent reduction in its obligation to the JPS.
Having projected to save US$1 million a year, the company is now realising the savings it projected, CEO Andrew Mahfood told The Sunday Gleaner.
Many small businesses, however, do not have that ability to wean themselves off the JPS grid and lament the impact of high electricity costs on global competitiveness.
Speaking to the recent OUR-approved rate increase – which sees Rate 20 (small commercial entities) paying J$122.45/kWh for the first 10kWh and J$9.03/kWh for each additional kWh, president of the Young Entrepreneurs’ Association (YEA), Cordell Williams-Graham said the increase “will prove challenging for many MSMEs”.
Improving the JPS’s customer relationship with MSMEs would also go a long way towards supporting the sector, she said.
“Businesses could be consistently paying their bills on time and still get disconnected for missing one monthly payment,” WilliamsGraham complained.
The YEA president called on the Government to implement an online electricity usage monitoring system for MSMEs to upload data on their consumption trends, which could then act as a guide for initiatives and incentives for the sector.
The roughly seven independent power producers (IPPs), including renewable energy providers, in the island are hoping their push to have the Government grant them permission to supply the industrial sector will lead to cheaper costs to householders. If the burden on the JPS to serve this large sector is reduced, they believe, its consumers that will feel the benefit in their pockets.
The IPPs have made a submission to the Joint Select Committee on the Electricity Act (2015) to consider their recommendation.