Bloomberg New Energy Finance’s outlook shows renewables will be cheaper almost everywhere in just a few years.
Solar power, once so costly it only made economic sense in spaceships, is becoming cheap enough that it will push coal and even natural-gas plants out of business faster than previously forecast.
That’s the conclusion of a Bloomberg New Energy Finance outlook for how fuel and electricity markets will evolve by 2040. The research group estimated solar already rivals the cost of new coal power plants in Germany and the U.S. and by 2021 will do so in quick-growing markets such as China and India.
The scenario suggests green energy is taking root more quickly than most experts anticipate. It would mean that global carbon dioxide pollution from fossil fuels may decline after 2026, a contrast with the International Energy Agency’s central forecast, which sees emissions rising steadily for decades to come.
“Costs of new energy technologies are falling in a way that it’s more a matter of when than if,” said Seb Henbest, a researcher at BNEF in London and lead author of the report.
The report also found that through 2040:
BNEF’s conclusions about renewables and their impact on fossil fuels are most dramatic. Electricity from photovoltaic panels costs almost a quarter of what it did in 2009 and is likely to fall another 66 percent by 2040. Onshore wind, which has dropped 30 percent in price in the past eight years, will fall another 47 percent by the end of BNEF’s forecast horizon.
That means even in places like China and India, which are rapidly installing coal plants, solar will start providing cheaper electricity as soon as the early 2020s.
“These tipping points are all happening earlier and we just can’t deny that this technology is getting cheaper than we previously thought,” said Henbest.
Coal will be the biggest victim, with 369 gigawatts of projects standing to be cancelled, according to BNEF. That’s about the entire generation capacity of Germany and Brazil combined.
Capacity of coal will plunge even in the U.S., where President Donald Trump is seeking to stimulate fossil fuels. BNEF expects the nation’s coal-power capacity in 2040 will be about half of what it is now after older plants come offline and are replaced by cheaper and less-polluting sources such as gas and renewables.
In Europe, capacity will fall by 87 percent as environmental laws boost the cost of burning fossil fuels. BNEF expects the world’s hunger for coal to abate starting around 2026 as governments work to reduce emissions in step with promises under the Paris Agreement on climate change.
“Beyond the term of a president, Donald Trump can’t change the structure of the global energy sector single-handedly,” said Henbest.
All told, the growth of zero-emission energy technologies means the industry will tackle pollution faster than generally accepted. While that will slow the pace of global warming, another $5.3 trillion of investment would be needed to bring enough generation capacity to keep temperature increases by the end of the century to a manageable 2 degrees Celsius (3.6 degrees Fahrenheit), the report said.
The data suggest wind and solar are quickly becoming major sources of electricity, brushing aside perceptions that they’re too expensive to rival traditional fuels.
By 2040, wind and solar will make up almost half of the world’s installed generation capacity, up from just 12 percent now, and account for 34 percent of all the power generated, compared with 5 percent at the moment, BNEF concluded.
Kelly Tomblin, who has been the face of the Jamaica Public Service Company (JPS) since she joined the light and power company as president and chief executive officer in 2012, is on her way out of the company, and heading to take up the CEO position at the United States-based power company, INTREN, effective July 10.
Tomblin will take over the day-to-day running of the firm from Loretta Rosenmayer, the firm’s founder and current CEO, who will now chair the board of what has become one of the leading utility contractors in North America.
Up to press time, Tomblin was off the island and unavailable for a comment. However, 4-traders.com, a reputable international stock market and financial news website, said Tomblin had confirmed to them that she is to be the new CEO at INTREN.
“INTREN would not be what it is today without Loretta’s vision, leadership and unwavering commitment to high standards and values,” Tomblin was quoted by the website as saying. “I am honoured to lead the INTREN team and continue the progress evolving before me.”
According to reports, Tomblin was selected from a competitive selection process from a strong field of candidates.
“She is a highly impressive and respected executive known for her ability to build diverse, meaningful cultures in a collaborative leadership style. As a recipient of the prestigious 2016 Platt’s Global Energy CEO of the Year Award, Kelly topped an impressive list of finalists leading companies in the United States and around the world,” the website stated.
During her time at JPS, Tomblin introduced several energy saving projects, as well as the use of liquefied natural gas in the country’s energy mix, even as she guided the light and power company through a profound transformation.
“This evolution comes at an extraordinary time for INTREN,” a report quoted Rosenmayer as saying. “Our momentum is strong, and our management team and employees have built an exceptional company that is one of the most trusted and respected in the industry. I’m confident Kelly is ideally positioned for her new role to continue our growth.”
INTREN has been an innovative solution partner, dedicated to building and maintaining the infrastructure of the energy industry for more than 25 years, and has served many of the nation’s foremost utility companies, private contractors and developers, and municipalities and cooperatives.
CEO of Solar Buzz Jamaica, Jason Robinson, says the Jamaica Public Service Company, JPS, is using scare tactics to keep businesses from leaving the grid and turning to alternative energy.
In a recent interview with the Gleaner newspaper, JPS CEO Kelly Tomblin was quoted as saying that it could be forced to raise electricity rates if its top customers leave their grid.
Robinson says could mitigate any losses from clients who’ve switched to alternative energy by running a more efficient operation and doing more to combat theft.
He says JPS is already doing a lot to diversify its own fuel sources to keep energy costs down.
And, Robinson is also criticizing the power company for being hypocritical.
He claims JPS has been offering to set up small LNG plants for large companies, which would also take them off the grid.
Power utility boss Kelly Tomblin views Softbank’s acquisition of Fortress Investment Group, to which New Fortress Energy is affiliated, as positive for furthering plans to build out gas facilities in Jamaica,
American company New Fortress Energy is a gas supply partner to Jamaica Public Service Company (JPS).
Last November, the partners celebrated the commissioning of Jamaica’s first LNG-fired plant at Bogue in Montego Bay, and they are about to start development on another gas facility in St Catherine. In both cases, New Fortress invests separately in the gas-supply infrastructure, while JPS develops the power plant.
The marine terminal and gas power plant development at Old Harbour in St Catherine is to get off the ground “in a couple of weeks,” said Tomlin, the president and CEO of JPS, on Friday.
JPS secured funding locally for its plant, while New Fortress planned to finance the project themselves with cash rather than debt, Tomlin, who noted that the acquisition by Softbank means “they will have a lot more cash”.
New Fortress did not return Gleaner calls up to press.
Last Wednesday, the two parties jointly announced a US$3.3 billion deal for Softbank of Japan to acquire New York-based Fortress Investment Group. Fortress, which is co-chaired by Pete Briger and Wes Edens, said its senior executives would remain with the company.
“I am in dialogue with Wes Eden,” said Tomblin. “I am assured that this acquisition doesn’t harm the project and that also he is excited about this deal; and so too the members on the ground who work for New Fortress,” said Tomlin.
Asked about any other implication to Jamaica, she said there would be “absolutely none”.
New Fortress plans to build and operate a liquefied natural gas marine terminal and pipeline within the Portland Bight area or close to the Goat Islands, according to the environmental report released last year.
The project will be executed through affiliate NFE South Holdings Limited. The marine terminal will feed gas to the 190MW plant that JPS will be developing at Old Harbour.
Asserting that “we must get it right”, Prime Minister Andrew Holness has urged utility regulators to take seriously their role in helping the Caribbean ease its dependence on oil and embrace technologies and renewables key to energy diversification.
The regulators’ role, he said, is linked to the creation of partnerships with investors who want returns, consumers and governments pushing for the economic development of their countries.
Holness was addressing the opening ceremony for the 14 Organisation Of Caribbean Utility Regulators (OOCUR) conference at the Secrets Resorts & Spa in Montego Bay, St James.
A variety of issues are set for discussion over three days by the more than 160 regional and international experts.
However, Holness, noting the importance of energy to the region’s development and the current high levels of dependence on oil, made it clear that the issue should be at the top of the agenda.
“Energy is clearly the mission-critical frontier,” he said, pointing to the role of Jamaica’s Office of Utilities Regulation (OUR) in helping Jamaica introduce liquefied natural gas (LNG) as part of the energy mix.
“The OUR approved the funding for the conversion of the Jamaica Public Service Bogue plant to enable the move from heavy dependence on oil to diversifying to LNG. I applaud the OUR in this regard for being a strong regulator and helping to make this move a reality – to take Jamaica on this new platform. This is a great example of collaboration among Government, regulator, and utility,” Holness added.
A shipment of LNG supplies arrived in Jamaica last week Saturday, and in two weeks, is expected to be in full use.
The prime minister emphasised that regulators have to take seriously their role in helping the Caribbean Community implement the Caribbean energy policy that was approved in 2013.
That policy promotes a shift in sustainable energy through increased use of renewable energy sources and energy efficiency, among other things.
“OOCUR, you have your work cut out for you as not only is Jamaica focused on diversifying its energy mix, so, too, is CARICOM, and we must get it right in the region. Access to affordable energy is a necessary requirement for addressing sustainable development in the region,” Holness said.
He also argued that while there is need for partnership with all stakeholders in the provision of utilities, the providers must insist on self-regulation to ensure that standards are upheld and service delivery is at a high quality.
Earlier, Albert Gordon, chairman of OOCUR, said the conference was happening at a time when regulation was becoming more important for sustainable development.
The conference schedule has placed heavy emphasis on renewable energy and investment.
Jamaica and many other small-island states of the Caribbean are heavy importers of oil, which increases their vulnerabilities to external shocks such as sharp oil price rises. Except for Trinidad and Tobago, the only net exporter of oil and natural gas, all other Caribbean countries are net oil importers.
“For importers other than Suriname, around 87 per cent of primary energy consumed is in the form of imported petroleum products. Imports are mostly diesel fuel for electricity generation, gasolene for transportation, and liquefied petroleum gas used as cooking gas in households,” experts noted in a paper titled ‘Caribbean Energy: Macro-Related Challenges’ released in March by the International Monetary Fund.
This, they said, has led to consistently high electricity rates, which affects the competitiveness and development of CARICOM nations.
As LNG partner New Fortress Energy begins shipment of liquefied natural gas to the island, power distributor Jamaica Public Service Company (JPSCo) is indicating that savings will depend on pricing, which varies from month to month.
Chief Financial Officer of the Jamaica Public Service Company (JPSCo) Dan Theoc told the Jamaica Observer: “The cost of LNG at Bogue is likely to be cheaper than the cost of oil next month (September) when Bogue is expected to come on line.”
But, based on current price differentials and the fact that Bogue will only represent approximately 12 to 15 per cent of the generation mix, it is expected that total savings — based on this price differential – will be marginal (less than five per cent), all other things remaining equal, Theoc told the Business Observer.
Spot prices for LNG on the Henry Hub (HH) index registered US$2.82 per million Btu in July after starting the year at US$2.28 in January and falling to US$1.73 in March.
Crude, on the West Texas Intermediate index, started the year at US$30.32 per barrel and crested at US$44.65 in July.
“Unfortunately, we cannot say definitively what the impact of natural gas will be in the future because of the volatility in oil prices relative to natural gas prices,” Theoc said.
JPS will be buying natural gas from Fortress under a 20-year exclusive gas supply agreement and they will be responsible for all of the supply chain logistics and infrastructure costs.
That includes the mode of delivery to the island, the frequency of delivery, the storage of the LNG, the regasification and the distribution by pipeline to the property.
Theoc noted, “We will pay for gas based on the Henry Hub Index plus an agreed margin (which we cannot disclose), similar to how we buy fuel today from Petrojam based on the US Gulf Average Mean Index plus an agreed margin.”
In general, he added, “It is worth noting that the HH index in the past five years has been far less volatile compared to Oil-based Indices (like US Gulf, WTI and Brent Crude), so we view the move to HH as being a plus for price stability.”
It is expected that Bogue will actually make up 12 to 15 per cent of the generation mix on natural gas and that when the 190MW plant in Old Harbour comes on line in 2018, approximately 40 per cent of our generation mix will be based on gas-fired power plants.
In general, it is expected that renewables penetration will increase from five per cent in 2015 to 12 per cent by 2018.
The consequence, Theoc said, will be an improvement in fuel diversity from a situation where 95 per cent of production was oil-fired last year to a situation where less than 50 per cent is fired by oil.
The CFO said the pending award of a gas project to Jamalco will also potentially increase the percentage of generation units which are fired by natural gas by about ten per cent to further replace oil-fired units by 2019.
BY AVIA COLLINDER Business reporter email@example.com
LNG is coming to Jamaica
New Fortress Energy, the company which has won the contract to supply the island’s sole power distributor the Jamaica Public Service Company (JPS) with LNG for substations in Bogue, Montego Bay and another to be developed in Old Harbour, St Catherine, said it buys supplies from sources worldwide.
The company has declined to comment whether its suppliers include Trafigura Beheer, from which the Jamaica Observer understands it has sought to make buys.
Meanwhile, the Electricity Sector Enterprise Team (ESET) has indicated to theBusiness Observer that it does not matter where in the world the gas comes from.
Trafigura is the world’s third-largest private oil and metals trader. That company is also seeking to grow its market for LNG supply globally.
However, in 2011 the Dutch company was involved in controversy for a $31-million political donation to the the People’s National Party administration, which was then the governing party.
The company continues to sell supplies through third-party deals to the local market, including spot purchases made by Petrojam.
Describing the surge in LNG demand as an “LNG revolution”, Trafigura says on its wesbite that it plans to double supplies sold year over year from base year 2013 when the company transported one metric tonne (mt) of LNG globally.
The company has three full-time traders based in Geneva supported by its US Natural Gas team in Houston, Texas, and a European Natural Gas team, working with 27 LNG regional offices in key export and import countries across the globe.
However, as to sales programmed for Jamaica, the company said it has no comment.
“We don’t comment on our day-to-day commercial arrangements,” Victoria Dix, media liaison for Trafigura said when asked to channel questions about the Caribbean market, including Jamaica.
Bloomberg describes Trafigura Beheer as the world’s current largest LNG trader, reporting at year end December 2015 that the commodity trader “boosted the amount of LNG handled to 4.2 million metric tonnes in the financial year ended September 30, from 1.7 million a year earlier following a doubling in volumes… that made it the world’s biggest independent LNG trader.”
A source close to New Fortress Energy told the Business Observer that it is normal for ships to swap cargo and there may have been spot purchases, but that there is, however, no long-term relationship with Trafigura.
More directly, the company, through a spokesperson, said it sources LNG from all over the world.
“In addition to supplying our own gas from the United States, New Fortress Energy sources gas from all over the world. As a matter of policy, we cannot comment further,” New Fortress said.
He stated that in relation to Bogue, “we’re making significant progress and are excited to provide natural gas to help further Jamaica’s clean energy transition. We’re in close coordination with JPS on the process and timeline”.
Chairman of ESET Dr Vincent Lawrence told the Business Observer on Monday that the source of LNG was immaterial.
“ESET is not aware of any trades, swaps or short-term source arrangements that New Fortress Energy may make in satisfying its contractual arrangements with JPS.
“NFE under its Gas Supply Agreement arrangements can supply gas from any origin. However, in ESET granting approval of the Gas Supply Agreement between JPS and NFE, in order to ensure security of supply, NFE had to demonstrate as to its long-term ownership of and access to gas from the United States including the ability to obtain any required export permits.”
Lawrence added, “The contractual arrangements are private and between two private companies,” further adding that “the GOJ is not a party to the contractual nor day to day delivery arrangements”.
The island is moving towards the majority use of LNG as fuel for energy, with the aim of reducing dependence on oil which is subject to price volatility.
To that end, JPS has retrofitted its 115MW gas turbine plant in Montego Bay from automotive diesel oil to dual fuel use. The conversion, it was projected, will result in an approximate 40 per cent fuel price reduction.
New Fortress has also secured the supply contract for the JPS’s planned 195MW plant in Old Harbour which is being razed and will be rebuilt and expanded.
Start-up of LNG use at the JPS Bogue plant is due to begin in August, when construction of fuel lines and storage facilities are expected to be completed.
New Fortress is also slated to construct an expandable 100MW, natural, gas-fired, cogeneration plant for alumina producer, Jamalco, replacing a previous plan for a coal-fired alternative
The Jamaica Public Service Company (JPS), managers of the national electricity grid expects Golar LNG to ship liquefied natural gas to Jamaica, despite its heavy losses.
Golar is contracted to New Fortress Energy (NFE), the latter being JPS’s selected partner to develop and supply natural gas to the Jamaican utility. New Fortress is five months behind schedule with deliveries.
JPS President and Chief Executive Officer Kelly Tomblin said that even in the worst-case scenario, the power utility remains protected.
“Golar is a public company with a market cap of about US$1.5 billion and a balance sheet with over US$4 billion of assets. It’s been in business since 1946 and is widely followed by investors all over the world,” said Tomblin in a response to Gleaner queries.
“New Fortress Energy has indicated to me that they have been a dependable and reliable partner in preparing to deliver gas to Jamaica. JPS is protected contractually if New Fortress fails to bring gas, as required in the gas supply agreement.”
NFE earlier this year contracted Golar for two years to ship LNG to Jamaica. The first shipments will feed JPS’s plant at Bogue in Montego Bay, which has already been retrofitted to burn gas as well as diesel oil.
In early June, NFE acknowledged Gleaner queries regarding the implications of Golar’s finances, but did not follow through with a response.
Golar reported net losses of US$80 million for its first quarter ending March. The loss was mainly because of its US$61.5 million in operating expenses, towering over its US$18.6 million in revenues for the period. Over 12 months, Golar posted a US$197.6-million net loss for financial year 2015 and US$43 million in net losses for 2014.
Last month, CEO Gary Smith resigned, and its former CEO, Oscar Spieler, retook control of the company amid restructuring of the operations.
Tomblin expects the LNG projects at Bogue and, later, at Old Harbour, along with additional capacity from renewable plants, to reduce the power utility’s reliance on heavy oil from 95 per cent to 50 per cent in the medium term.
Reacting to concerns that the raising of taxes on fuel has resulted in the spike in electricity bills consumers will face this month, Finance Minister Audley Shaw is arguing that the increase in special consumption tax (SCT) on heavy fuel oil (HFO) is only a nominal percentage of the rate increase the Jamaica Public Service Company (JPS) announced last week.
In response to questions from The Gleaner, the minister said that of the 12.8 per cent increase the JPS intends to apply, the increase in the SCT on HFO “translates to a mere 2.3 percentage points” or 18 per cent.
“As estimated in the tax measures, the effect of the increase in the overall SCT (specific and ad valorem) on HFO and LNG is approximately J$1.35 billion (or approximately US$11 million) in fuel costs to JPS. This would then approximate to a cost of US0.36 cents per kWh,” the minister said.
“Given the US two-cent-per kWh increase by JPS to consumers and the impact of the increased SCT of US0.36 cents per kwH to JPS costs, the percentage contribution of the tax to the pending JPS electricity bill increase would be 18 per cent. Therefore, the increase in SCT on HFO translates to a mere 2.3 percentage points of the 12.8 per cent electricity bill increase.”
Additionally, Shaw said he at no point stated that the increase would not affect the rates of the JPS as no one specifically asked him about the SCT on HFO.
“With reference to the comments by the minister of finance and the public service at the post-Budget press conference, it should be noted that the minister spoke to a question posed on the impact of the J$7.0 increase in SCT on fuel used for the purposes of ground transportation,” the statement read.
“The minister’s comments were not geared towards the impact of LNG or HFO on electricity prices. There were no questions posed about the effect of the increase in the overall SCT (specific and ad-valorem) of HFO.”
The increase in SCT on HFO that was announced during Shaw’s May 12 Budget presentation was one of three reasons Jamaica’s only power distribution company attributed to this month’s increase.
During his post-Budget press conference on May 13, Shaw, in responding to concerns that the new tax measures would affect light bills, said: “The argument also is that JPS light bills will go up as a result. And I want to remind everyone that this tax (on fuel) does not apply to Jamaica Public Service at all. It is only related to SCT for fuel for road transport only.”