The CEO of OfReg says that his team will be conducting a rigorous analysis of the process that led to the contracting of Cayman’s first commercial-scale renewable energy plant which opened on 20 June.  He hopes the analysis will provide insights into what was done right, and more importantly what was done wrong or could have been done better, which he believes will help as OfReg moves toward implementing the Government’s National Energy Policy (NEP) goal of achieving 70 per cent renewable energy in Cayman’s public electricity supply mix by 2037.

For more information, please below the press release along with the graphic which shows the average cost of electricity from solar.

Regulator To Take Closer Look at Renewable Energy Options

Grand Cayman, Cayman Islands – 28 June 2017 – The CEO of OfReg, the utilities regulator, says that his team will be conducting a rigorous analysis of the process that led to the contracting of Cayman’s first commercial-scale renewable energy plant which opened on 20 June. He hopes the analysis will provide insights into what was done right, and more importantly what was done wrong or could have been done better, which he believes will help as OfReg moves toward implementing the Government’s National Energy Policy (NEP) goal of achieving 70 per cent renewable energy in Cayman’s public electricity supply mix by 2037.

“This (the contracting process) has been a long journey that began six years ago when CUC issued its Request for Expressions of Interest,” said J. Paul Morgan. “Despite a number of setbacks over the years, the process and negotiations continued to the point where our predecessor – the Electricity Regulatory Authority (ERA) – was able to approve the Power Purchase Agreement (PPA) and Interconnection Agreement that was signed by CUC and Entropy in 2015. Now, as the regulator, it is our responsibility to do a post mortem on how we got to this point in anticipation of the next round of solicitations, and also to ensure that consumers’ benefits and welfare are maximised.”

The NEP was approved unanimously in the Legislative Assembly in March 2017. The goals of the Policy are to decrease the costs of energy as a priority; increase environmental sustainability; increase energy security; and contribute to the economic development of the energy industry.

Morgan said that he has received many expressions of concern about the contracted price of US$0.17 per kilowatt hour that CUC will be paying Entropy for the energy delivered. However, he argued that there is no point of reference in Cayman for renewable energy, and that because this is the country’s first solar farm, there was at the time a huge learning curve with associated costs that will probably not be a factor in subsequent projects of this type.

“We cannot compare Cayman to the US or any other country for that matter, even other islands in the Caribbean. There are significant costs to doing business in the Cayman Islands. From legal fees to shipping costs to the price of land; all these factors impact the bottom line and would have been taken into consideration when setting the price,” he said. “However, we don’t expect this price to remain fixed, and part of the analysis we are going to do involves determining how we can continue to bring the price down to a point that will satisfy both the consumer and the provider.”

Morgan suggested that perhaps an option may have been to cancel the procurement when the process seemed to be taking too long, but that these are issues that will be analysed during the “post mortem.”

He also said that when this deal was finally struck, the Jamaica utilities regulator had a year or so before concluded a deal for US$0.17 per kilowatt hour for a 35MW facility, and at the same time solar was being reported in Grenada at between US$0.21 and US$0.44 per kilowatt hour. However, since then Jamaica has announced a new deal for a new solicitation at US$0.084 per kilowatt hour, and the island of Kauai in Hawaii is trading at US$0.11 per kilowatt hour, albeit with significant subsidies.

“While we must be careful to always compare apples with apples, the lessons from this, as well as the reality, is that the costs of renewables, in particular solar, are falling rapidly. The falling costs of batteries as storage is also redefining the renewables landscape and proposition as a provider of firm capacity. At the same time, generation from wind is increasingly proving to be competitive with conventional fossil fuels,” said Morgan. “This means there is room for growth in the industry here in Cayman and clearly for more competitive pricing.”

He insisted, however, that the introduction of 5MW of energy from solar into Cayman’s national grid is a signal to the world that the country is prepared to promote and invest in innovation. It also demonstrates that the Cayman Islands must be considered as a serious partner for anyone who wishes to invest in renewable and emerging technologies even as OfReg seeks to ensure that consumers and the economy generally realise the positive benefits that must accrue from these partnerships.

Morgan expects the analysis to take three months to complete, after which the results will be made public.

For more information about regulation of the electricity sector, contact Louis Boucher on [email protected] or 946.4282.

Photo Caption: This chart shows the impact that the 5MW plant has on bringing the average cost of solar down in Cayman (CUC’s CORE + Entropy). The price lowers the cost of solar on Grand Cayman, which is in alignment with the goals of the NEP.