July 2010

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The most pressing problem facing the country at this time is not crime and violence, but the arrangement that we have with the Jamaica Public Service. The first chief executive officer under the new arrangement, Charles Matthews, had told us from very early that a time was coming when many Jamaicans would not be able to afford electricity, and it seems we did not believe him. How could it be otherwise, given the kind of contract that his company was able to secure with the Government of Jamaica?

How could we have agreed to an arrangement that exposed the entire economy to the kind of disaster that we are now facing, and why did it take so long for us to realise that the situation was unsustainable, and take timely steps to correct it? The Jamaica Manufacturers Association, Jamaica Hotel and Tourist Association, the Jamaica Exporters Association, and numerous other consumers have been complaining bitterly for a long time, and more recently, the Spanish ambassador to Jamaica has added his voice to the chorus. God bless Jesus.

Severe cash-flow problems

By the time the cost of electricity is factored into the prices of even the most basic goods, half of them get left at the cash register and of those people who are able to pay their own electricity bills, they can hardly buy anything else. As the disposable dollar is being taken away, businesses are losing their customers, resulting in severe cash-flow problems and as they struggle to pay their own exorbitant electricity bills, they find it extremely difficult to pay anyone else, including their staff. Even taxes become hard to pay. The domino effect takes over and before you know it, corruption sets in.

As economic activity slows down with demand, so will revenue collection and this time, enforcement will not be of much help. We must address this problem urgently. We will not meet the International Monetary Fund conditionalities if we don’t.

It is also in the JPS’s interest that this matter be resolved as soon as possible as the current arrangement is leading to a stalemate. It is quite possible to arrive at a modified contract that will allow all concerned to make a reasonable return on their investment.

I am, etc.,

VICTOR NUGENT

St Ann’s Bay

Jamaica Gleaner

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A loan programme by the National Housing Trust, designed to assist its contributors acquire and install solar water heaters, has come under fire from clean energy interests who say the programme is flawed.

But loan subscription figures from the NHT show that the solar facility is a popular programme among homeowners, surpassing even the agency’s expectations.

David Barrett of the 11-year-old Jamaica Solar Energy Association – a non-governmental organisation made up of manufacturers, retailers, marketers, installers and providers of solar energy, and academics – says the loan programme’s repayment terms are discouraging to many persons interested in accessing the facility.

“One is that the loan period is not long enough for a device that is guaranteed by the manufacturers for 25 years,” Barrett said at an energy forum in Kingston.

“You have something like a five year payback period of the loan and that’s too short,” he said.

To qualify for the loan, persons-must prove they are property owners, which Barrett cited as a disincentive, and he argued that the terms just did not fit the needs of a small family.

“The interest rate, although it is okay, is not attractive enough for persons to make that investment, so it is not doing that well,” Barrett said of the NHT programme.

Not underperforming

But the housing trust has provided data to help dispel the notion that the loan programme is underperforming.

According to the agency, 1,391 persons have received loans under the programme to date, against the NHT’s projected 1,326 loans.

NHT finances the purchase and installation of the system at interest rate of three per cent repayable within five years – plus a five per cent service charge.

The loan is capped at J$250,000.

The data provided by the trust showed that in the first year of the programme 203 persons received loans, 23 more than they had expected.

In 2007-08, some 230 persons, 77 less than projected, were successful in their applications. In 2008-09, loan approvals almost doubled to 401; and last year the numbers rose even higher to 489.

So far this year, 68 persons were successful in their loan applications.

Information gleaned from the NHT’s website confirmed that the solar water heater loan is available only to NHT contributors who possess a title for a residential property or who have enough funds in their contribution accounts to cover the cost of the system.

However, the water heater does not have to be installed on the premises being used to secure the loan.

Jamaica Gleaner

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The Jamaica Public Service Company Ltd (JPS) has erected the first of four wind turbines for its Wind Power Plant at Munro in St Elizabeth. The construction of the wind power plant comes as part of the electric utility’s fuel diversification effort, which will see a reduction in the company’s dependence on imported fuel.

The other three turbines will be erected during this month, while construction continues on the Power Plant’s substation. The project, which is costing the utility approximately J$800m, will add 3 megawatts of power to the national grid.

President & CEO of JPS Damian Obiglio; vice-president of Generation Expansion Valentine Fagan; and manager of expansion projects, Alston Watson, discuss the ongoing work at the Munro Wind Power Plant.

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A program in which people get loans from municipalities for energy efficiency upgrades and pay it back in property taxes is heating up.

PACE energy loan programCalifornia is one of 19 states that have passed legislation for PACE participation. Above, Daniel Morabito, left, and Sal Sanchez of SolarCity install solar panels at a home in West Los Angeles. (Allen J. Schaben, Los Angeles Times / October 18, 2009

By Steve GelsiJuly 5, 2015

Reporting from Berkeley

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BY Ariel SchwartzFri Jul 2, 2010

Green construction

Think the trend of businesses making green office renovations is just a passing fad? Not according to the latest issue of EL Insights, which reports that the U.S. green building market value will balloon from $71.1 billion now to $173 billion by 2015. Commercial green building is expected to grow by 18.1% annually during the same time period from $35.6 billion to $81.8 billion. In this case, green building is defined as building with resource use and employee productivity in mind.

green building graphic

The explosive projected growth can be attributed both to a growing recognition of green building’s potential cost-savings as well as incentives from the government (i.e. the multi-million dollar Sustainable Communities Challenge Planning Grant program and the Sustainable Communities Regional Planning Grant program). Green renovation will also comprise a significant portion of future green building, thanks in no small part to government projects like then Recovery through Retrofit initiative, which offers $80 billion energy and environmental retrofits for federal buildings.

The growth in green building will lead to a number of changes in the larger building market, according to EL Insights: Construction workers will increasingly seek out green training programs, companies will spend more cash on green building technology (GE is already doing with its ecomagination initiative), and homes touting green building features will do better on the real estate market. All of this will result in cost savings for building and home owners, who will reap the benefits of lower energy and heating bills.

So if you haven’t been paying attention to the U.S. Green Building Council, now is the time to start–the non-profit offers virtually endless amounts of information on green building studies and LEED certification.

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Following the most recent announcements and pronouncements about Liquefied Natural Gas (LNG) has been an interesting experience for me. A “game changer” is how it is being positioned. Changing the game for whom and when? There is much talk about the significant savings to come from the LNG project. Some US$1.2 billion savings in energy costs is how the argument is being presented.

Question – over what period will these savings be realised and by whom? Government proposes to spend $1b of taxpayers’ money in the project. In what ways and over what time will this investment be recouped? Where is JPSCo in all this cheap talk?

Environmental benefits

Soon after I had resigned as permanent secretary in the Ministry of Energy and Mining, I engaged in a conversation regarding LNG. Having expressed concern in the manner it was beginning to be positioned to Jamaicans, with focus entirely on pricing, I opined that a better strategy was to spell out its environmental advantages. I was concerned that based on everything I had learnt about LNG, by the time it became available to the householders of Jamaica, light bills would perhaps not actually be reduced to the extent they were led to believe would happen.

The person with whom I was talking declared that environmental matters were of little interest to most people and that anyone not in support of LNG was a traitor to Jamaica. Despite my clarification that I was not opposed to LNG per se, but rather to the tack being taken in selling it to Jamaicans she continued to “huff ‘n puff”. Her friends seemed to have fed her the “sweet drink”. She seemed to have willingly drunk it and thereafter appointed herself “missionary spreading the gospel of LNG”.

PAULWELL… questions the ability to deliver LNG to Jamaicans at the cost benefits being promoted.

Paulwell is right!

Former Minister of Energy, Phillip Paulwell, has voiced some of the concerns I have regarding LNG. He questions the ability to deliver this product to Jamaicans at the cost benefits being promoted by the government. He highlights the significant infrastructural work required to deliver gas to households. Say what you may about Paulwell, the man has a brain which he uses and has been making some valid interventions.

The process and quite likely progress of delivering LNG to householders and the business community will in all probability cost much more than the U$600 million plus the price of gas that is being fed to Jamaicans. The timeline of 2012 for its implementation is likely to be a pipe dream. Wake up, we are already half-way though 2010! Skilfully, we are told that this deadline is contingent on the project remaining “on track”. Yet we have no idea if the 2012 timeline was based on fast-track, that is, with most optimistic projections, which all of us who run businesses know is tantamount to the “road to hell paved with good intentions”.

Paulwell questions the extent to which the bauxite sector, a key stakeholder in supporting the LNG initiative, is “on board”, meaning not just word-of -mouth support but a signed commitment. He also knowledgably alludes to LNG prices within the context of global oil economics. The price of LNG, though cheaper than oil, does track that of oil. When oil prices climb, so does the price of LNG. Similar to discoveries of natural gas with new technologies able to explore and exploit it are discoveries of oil reserves with new technologies to go “where no one has gone before”.

One does not get the impression that Paulwell is arguing against LNG but rather that the country be given further and better particulars regarding the project. That is also my position. Beyond party politics there must be deeper commitment to Jamaica. Some time ago a politician seemed aghast and mildly amused when I told him that my first and foremost duty was to my country, not to any minister or to any politician or party. He thought I was joking. Based on my subsequent action, he learnt that I was quite serious.

Sweet talk

Politicians need to know that service to country means more than “roundin’ up dem mouth, believing dem talking nice and soundin’ bright”. Based on the numerous snickers and in some cases outright laughter I’ve heard from media as well as those who tweet, when these people begin to pontificate in what they may believe are sweet-sounding words, very few believe them. Many laugh loudly behind these politicians’ backs, while others, especially those under 30, tweet away with expressions like LMAO (laughing my … off) and ROL (roll over laughing) when commenting about them and their words.

Jamaicans are reading through the act and the staged performances. They are looking at the actions of politicians on all levels, including the company they keep, the assets and lifestyle they boast. Many are being found wanting, not just in sincerity but in their ability to deliver on promises and to take the country forward.

Jamaicans from all walks of life are moving beyond those who aim to sound “posh to impress white people”, as one tweeter recently described the affected delivery of a politician, to just wanting to hear “the truth, the whole truth and nothing but the truth”. As it relates to LNG, give Jamaicans the unvarnished truth even if the savings on our light bills may not be the much-vaunted 30 per cent. There are other benefits to the country!

Anyway, with the intervention of the OCG to save Jamaica from any LNG mix-up, some truth will be revealed! Jamaica may be a long way off from the cheap gas being promised. In the meantime the sun shines bright and “breeze blow” sweet. Solar and wind energy anyone?

Jamaica Observer

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Energy ministry officials yesterday said that policies that will give private entities access to Jamaica Public Service Company’s (JPS’) distribution lines to provide its own electricity at several sites across the island, among other energy related issues, will be comprehensively addressed by September.

Senior energy engineer in the Ministry of Mining and Energy, Fitzroy Vidal told the Business Observer at the Observer headquarters in Kingston that ‘wheeling’, which concerns the development of terms and conditions that would allow a private entity to provide its own electricity at multiple geographical locations transiting JPS’ network, was currently supported but pricing still remains an issue.

“There is nothing which precludes anybody at the moment from wheeling power. The policy supports it right now,” he told journalists. “The issue is the price or the rate… we are addressing several policies now which by September would have comprehesively addressed all of these issues. In the same way we use these policies to deal with the Wigton rates. It is the electricity policy that will address wheeling and the regulatory environmnent and pricing.”

Energy Minister, James Robertson, said he viewed wheeling as an opportunity to encourage the use of renewable energy.

“All these policies will be harmonised to make sure thare are no policy conflicts,” added Vidal.

THE Office of Utilities Regulation (OUR) had set its sight on a June date to make a determination on a new regulatory mechanism that facilitate wheeling in its its corporate plan for the next three years — currently available on the regulator’s website for public comment — the OUR said it would “conduct public consultations and issue a Determination on ‘wheeling’, by June 2010″.

“(Wheeling) concerns the development of terms and conditions that would allow a private entity to provide its own electricity at multiple geographical locations transiting JPS’ network, a scenario that is contemplated by Condition 2 clauses 11 and 12 of the JPS All Island Electricity Licence,” said the regulator.

The OUR said it was responding to “interest among private entities to self-generate electricity for supplies at disparate geographical locations”, adding that the process could “only be facilitated if there is in place some kind of wheeling arrangement with JPS”.

Robertson noted that the section of the policy was being tailored to accommodate the National Water Commission, the state-run utility company that is among the largest users of electricity and which would have scores of pumping houses across the island.

Jamaica Observer

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ENERGY Minister James Robertson yesterday dismissed ethanol as a prime alternative energy source to help Jamaica reduce it debilitating oil bill in an apparent about-turn on Government’s energy policy direction.

“You will not hear me talking about ethanol,” Robertson declared at a special meeting held with energy stakeholders at the Observer’s Beechwood headquarters in Kingston to discuss the introduction of liquefied natural gas (LNG).

James Robertson shows projections for Jamaica

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An older post from our friend Sam reminding us of the dangers of LNG.

LNG VS SOLAR POWER

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FOR some time now the Minister of Energy and Mining James Robertson has been advocating Liquified Natural Gas (LNG) as Jamaica’s preferred energy source, maintaining that its cost would put less stress on the Balance of Payments than oil does. Last Tuesday he announced the selection of Belgium’s Exmar, and its consortium, as preferred bidder to develop a LNG project to supply Jamaica with cheaper energy.

Robertson proclaims switching to LNG could save Finance Minister Shaw US$350 million on the country’s annual oil bill and that manufacturers and householders are set to realise up to 30 per cent cheaper rates.

ROBERTSON

The Exmar consortium is expected to complete the LNG project by the first quarter of 2013.

At this point in time market conditions are favourable to LNG but like other commodities prices are subject to fluctuation and volitility. At this point in time there is little difference between the prices of oil and natural gas. It may be wise for the Government to consider a more diversified energy strategy that considers solar, wind, hydro and nuclear energy rather than opting primarily for LNG. Nevertheless the Government of Jamaica has actively been exploring the possibilities of LNG since 2001.

In real terms, therefore, Tuesday’s development is the culmination of efforts across two administrations and four Energy Ministers namely, James Robertson, Anthony Hylton, Phillip Paulwell, and Clive Mullings.

So why has the LNG option gained traction now?

Mainly because of two technological advances in the production of natural gas. Hydraulic Fracturing and Horizontal Completions have so dramatically changed the supply and pricing dynamics of the natural gas market, that it has become a buyers’ market for Jamaica and other importers.

For years, gas has been produced from shale with natural fractures. However, modern hydraulic fracturing has allowed producers to create extensive artificial fractures within the shale. Horizontal drilling has also revolutionised the industry by allowing the creation of extensive borehole surface areas in shale that is up to 10,000 feet deep. The resulting technological advances have birthed what is now commonly referred to as ‘Shale Gas’.

Shale gas production has literally shook up the entire global energy market, with proven reserves practically doubling in the United States in the last two years – to the extent that that country is an excess producer.

Even more significant, it is now possible to tap vast reserves identified in places as diverse as Qatar, Brazil, Algeria and Venezuela. Indeed, world supply of natural gas has so expanded that the buyers’ market now prevailing is expected to last for – at minimum – another 2 years. This is relevant because Jamaica’s consortium will be required to tie-down a long-term supply contract well within the next two years. In the LNG market, contracts typically run for twenty years and longer. The question that must be factored in here though is at what price? That must be the major determinant. Jamaica cannot afford to neglect its very own natural resources as it seeks to drastically reduce its fuel bill.

LNG’s potential was seriously considered by former Energy Minister Anthony Hylton. For to the point where he issued a Request For Proposal (RFP) for a facility to be established near Port Esquivel. The initial objective, he explained, was to supply the bauxite and mining industries in that area, as well as JPSCo. That effort was eventually dealt a body-blow, with Trinidad and Tobago coming up short on its agreement to supply the gas, as set out in a 2001 Memorandum of Understanding.

During the last Administration’s tenure Hylton said: “I became acutely aware of the extent to which the ‘energy component’ played a role in the cost structure of Jamaican products, and perhaps even contributed to the ‘de-industrialising’ of Jamaica”.

In addition to identifying a cheaper and more stable alternative to oil, Hylton aimed to a achieve “a certain coherence” in the then administration’s energy policy. “At the time, we were also looking at doing a major refurbishment of Petrojam, and it certainly didn’t make sense to look in the direction of a ‘dirty energy’ option such as coal – given the importance of Jamaica’s tourism industry, and given the fact that ‘carbon emissions’ was becoming a big issue”.

Hylton had a point. For despite the vast differences in manufacturing output, Jamaica has a larger carbon footprint per person than China.

Hylton’s forward-thinking replacement, Phillip Paulwell favours a more diversified mix which does not rely solely on LNG: He is reported to have commented, “I believe in natural gas as one of the fuel sources in a policy mix to diversify Jamaica’s energy sources”.

Paulwell, who assumed office in 2002, immediately embarked on an all-out mission to break Jamaica’s over-reliance on petroleum. It is widely acknowledged that under his stewardship, Jamaica witnessed the greatest push – up until that juncture – towards identifying a truly diverse energy mix.

Says Paulwell about his role in pursuing the LNG option, “I was the one who engaged Venezuela, and it resulted in the signing of an MOU. In fact, we were well on the way towards convincing the Venezuelans to exploit their natural gas reserves”. Having regard to the nature of the market, however, Paulwell was convinced that without a clear upfront gas supplier, he would not have taken the risk of advancing the project.

The country, however, changed leadership in 2007, with Clive Mullings serving as Minister of Energy. Under Mullings’ tenure, market supply conditions for LNG were not as favourable. He however continued the push to diversify the country’s energy mix.

Mullings was succeeded by James Robertson a politician renown for his “industriousness” He moved quickly to put together an RFP, initiated the bidding process, and selected a preferred bidder with whom to commence and complete negotiations by year-end. It does come as some surprise that only two bidders have stepped forward.

Says former Energy Minister and envoy Anthony Hylton about this week’s announcement of a preferred bidder: “I support the current administration’s push to ‘Catch the Curve’, because the country is in dire need of a more competitive form of energy. It is in the national interest that we do so”.

Jamaica Observer