AZUREST Partners and Cambridge Project Development are saying that natural gas electricity generation can happen in Jamaica in little over a year.
The two firms’ joint submission to the Office of Utilities Regulations (OUR) proposes to use natural gas-fired power barges, which can be built within 12 to 15 months after getting the go-ahead from the Government.
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An LNG offshore terminal designed for unloading, storage and regasifying liquefied natural gas. Azurest and Cambridge propose to build power barges that would be fed by small LNG ships.
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What’s more, they believe that they can access liquefied natural gas (LNG) economically, “because we will have our own LNG source in the US Gulf Coast, the cheapest gas source in the world”.
The idea is to directly feed the power barges located in Jamaica from its fleet of smaller LNG supply vessels.
“Our smaller ships, of a scale appropriate to Jamaica, make our LNG transport process economical,” said Kenneth Allen, managing director of Azurest.
Allen said that his proposal allows for a modular approach to building out the generating capacity — each barge can provide 100 megawatts (MW) of capacity — but if allowed to build all of the 400 MW, its LNG-fired plants could save the country US$415 million annually.
“If we are allowed to put in all of our 400 MW of clean LNG high-efficiency generation capacity, then we should be able to reduce the price paid by the Jamaican public by at least 10 US cents (from 40 US cents to about 28 US cents), or about 25 per cent across the whole country,” he said.
Five entities have presented proposals to the OUR in response to its announcement in February that it would review proposals to supply generation capacity.
The OUR aims to advise the Government of the final results of its analysis on Monday.
Jamaica Public Service Company (JPS) also submitted three proposals for consideration by the OUR, according to the power company’s CEO, Kelly Tomblin.
The proposals are for the construction of 360 MW of new generation capacity, using combined cycle technology and a combination of fuel sources: natural gas as primary fuel, with Automotive Diesel Oil (ADO) as backup fuel; natural gas as primary fuel with inlet air cooling power enhancement, and ADO as backup fuel; and Liquefied Petroleum Gas (LPG) as the primary fuel.
However, Wartsila Caribbean, which is the proposed technology provider for three of the bids, including the Cambridge/Azurest joint venture, has said that its reciprocating engines are a good deal more efficient than the combined cycle gas turbines (CCGT) being proposed for use by JPS.
The reciprocating engines could save over US$100 million a year more than the proposed CCGT, according to Wartsila Caribbean Vice-president Rodney George — and that’s even without LNG.
“Bogue is a living example where the CCGT plant has a combined cycle efficiency of only 40 per cent,” said George. “In comparison, the JEP (Jamaica Energy Partners) West Kingston plant with Wartsila reciprocating engines, have a simple cycle efficiency of close to 45 per cent… regardless of what fuel is utilised, be it LNG, LPG, or ADO, the efficiency quotient remains the same.”
Despite suggestions to the contrary, JPS is confident that combined cycle technology is of far greater benefit to the country than other options being considered, such as diesel engine technology, according to the JPS boss.
“While we haven’t seen the other proposals, our information shows that CCGT not only offers lower overall costs through greater efficiency and lower operating and maintenance costs. It is also more environmentally friendly,” Tomblin said. “Although JPS and the GOJ continue to evaluate all potential gas supply options, if the immediate supply options for LNG do not result in the desired reduction in electricity charges, LPG (Liquefied Petroleum Gas) is a great option.
“LPG is more accessible right now and can be easily incorporated in our long-term plans for fuel diversification and price reduction,” she added. “The current prices show LPG providing attractive cost reductions for our customers.”
In the meantime, George proposes that the use of backup liquid fuel such as heavy fuel oil (HFO) is “not far-fetched given the uncertainty of securing LNG or LPG supplies”.
Allen said that if the other bidders aren’t using LNG, “they are probably not the lowest cost solution for the Jamaican electricity consumer”.
Cambridge is a developer of energy and environmental infrastructure projects focused on the Caribbean and has in-house experience successfully developing over US$2 billion in projects in the Caribbean Basin, as well as the long-term management of over 12 independent power plants.
Azurest Partners is a financial advisory and capital-raising firm, where team members have collectively raised over US$900 million in equity and US$2 billion in debt financing for clients in the US, UK and Africa.
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THE EDITOR, Sir:
As many countries, including Jamaica, continue to baffle with extremely high energy costs, the debate continues to rage on to viable alternatives that will allow for a less costly and sustainable outcome that reduces dependence on fossil fuels.
As a youth advocate, this particular issue affects everyone, and especially our youth. I did some research to identify some tips that our Government and key stakeholders should take into consideration. These tips include:
Family planning:
KINGSTON, Jamaica
Monopoly power distributor, the Jamaica Public Service Company (JPS), has reported a two-thirds drop in its annual net profit to US$12.7 million (J$1.18b) following flat sales last year.
Kelly Tomblin, JPS president and CEO, all but blamed the losses on “reduced consumption, at least for paying customers”. She spoke at the Jamaica Chamber of Commerce forum on energy at the Knutsford Court Hotel in Kingston.
JPS revenues dipped by almost US$12 million to US$1.14 billion (J$106b) for the year, according to financials published on the Jamaica Stock Exchange.
Dividend payments to its Asian and Jamaican owners were slashed year-on-year resulting in a more than 200 per cent rise in cash to US$27.7 million for its year ending December 2012.
The power utility paid out US$5 million in ordinary dividends compared with US$44 million a year prior when net profit amounted to US$34.35 million.
The utility is owned by Japan’s Marubeni Corporation, 40 per cent; South-Korea-based Korea East-West Power (EWP), 40 per cent; Government of Jamaica, 19.9 per cent; while 3,000 shareholders own the remaining 0.1 per cent of the shares.
EWP became a shareholder in April 2011 when it acquired the 40 per cent stake previously held by Abu Dhabi-based TAQA.
The company recorded a slight increase in fuel costs which totalled US$777 million for the year ending December 2012, compared with US$765 million in the prior year. Such costs are usually passed on to customers.
Working capital also increased to US$147 million from US$139 million year-on-year.
Equity increased US$7.6 million to US$387 million year-on-year.
The cost of fuel, as well as old inefficient plants, has weighed on the company’s service delivery and its bottom line. JPS has presented Government with its own proposal to develop a new energy plant but has not disclosed the proposed fuel mix.
The OUR says it will respond to that proposal, as well as others from potential investors in renewables, in March.
business@gleanerjm.com
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Monopoly power distributor, the Jamaica Public Service Company (JPS), has reported a two-thirds drop in its annual net profit to US$12.7 million (J$1.18b) following flat sales last year.
Kelly Tomblin, JPS president and CEO, all but blamed the losses on “reduced consumption, at least for paying customers”. She spoke at the Jamaica Chamber of Commerce forum on energy at the Knutsford Court Hotel in Kingston.
JPS revenues dipped by almost US$12 million to US$1.14 billion (J$106b) for the year, according to financials published on the Jamaica Stock Exchange.
Dividend payments to its Asian and Jamaican owners were slashed year-on-year resulting in a more than 200 per cent rise in cash to US$27.7 million for its year ending December 2012.
The power utility paid out US$5 million in ordinary dividends compared with US$44 million a year prior when net profit amounted to US$34.35 million.
The utility is owned by Japan’s Marubeni Corporation, 40 per cent; South-Korea-based Korea East-West Power (EWP), 40 per cent; Government of Jamaica, 19.9 per cent; while 3,000 shareholders own the remaining 0.1 per cent of the shares.
EWP became a shareholder in April 2011 when it acquired the 40 per cent stake previously held by Abu Dhabi-based TAQA.
The company recorded a slight increase in fuel costs which totalled US$777 million for the year ending December 2012, compared with US$765 million in the prior year. Such costs are usually passed on to customers.
Working capital also increased to US$147 million from US$139 million year-on-year.
Equity increased US$7.6 million to US$387 million year-on-year.
The cost of fuel, as well as old inefficient plants, has weighed on the company’s service delivery and its bottom line. JPS has presented Government with its own proposal to develop a new energy plant but has not disclosed the proposed fuel mix.
The OUR says it will respond to that proposal, as well as others from potential investors in renewables, in March.
business@gleanerjm.com
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The Office of Utilities Regulation (OUR) last night opened a window of opportunity for firms wishing to submit proposals for a new electricity generating plant that would use liquefied natural gas (LNG) as its main fuel source.
According to the regulator, it will complete its review of the current proposal by the Jamaica Public Service (JPS) and other expressions of interest by the end of next month.
“Following the completion of this review, the OUR will formulate an opinion as to the feasibility of the offers and advise the Government whether it is worthwhile to proceed to finalise negotiations with any of these companies, including JPS,” the State agency said in a news release.
“This gives all entities which have expressed an interest, including JPS, a window of opportunity for a review of their proposals before the OUR returns to the market, if necessary,” the regulator said.
“The OUR will then await Government’s decision whether to sole source the project, which seems most feasible by way of readiness and also achieves the overall objective of reducing electricity prices in the shortest time. If such a project cannot be identified, then the OUR will go back to invite public tender,” it added.
The decision comes after the OUR, on February 1, informed the JPS and its shareholders that it had terminated the request for proposal (RFP) process in relation to the 360 MW project.
The OUR said it ended the process after JPS missed a third deadline on January 30 to complete the requirements under the RFP for the 360 MW project and had requested a 30-day extension.
But the JPS explained that the project scope changed significantly since 2011 when it was granted approval to proceed with construction of the plant.
“JPS’ role initially was simply to construct the plant, but late last year the company was asked to take on the additional responsibility of identifying a supplier and managing the process of procuring the LNG,” the light and power company’s President and CEO Kelly Tomblin said, adding that JPS has not participated in fuel procurement in the past.
Tomblin said that, despite her company’s best efforts, the market is not supporting earlier estimates of LNG prices as low as $8.50 mmbtu. “We have received indicative prices of upwards of $12.50 mmbtu for LNG and the related infrastructure, which we estimate would result in a reduction of approximately 20 per cent in electricity costs,” she explained.
Last night, the OUR said it has given JPS until Friday, March 15, to submit details of an alternative proposal for provisioning of electricity generation capacity.
“This was in response to a letter, containing a broad summary of its latest offer, sent on Thursday, January 31, 2013 by the JPS,” the OUR said, adding that it has advised the responsible minister of this process and he is in concurrence.
The OUR said that several other companies have expressed interest in providing electricity (generation capacity) since the termination of the RFP process.
“Those companies have also been given until March 15, 2013 to concretise their unsolicited submissions into firm proposals,” the regulator said.
“A meeting was held with JPS, following which the OUR informed the company that it would be allowed to submit the details of what is now considered an unsolicited proposal. The OUR will only entertain firm proposals in a state of readiness to be finalised with minimal negotiations. The proposals must be to provide electricity only and must be accompanied by the relevant fuel supply and other financing agreements,” the regulatory agency said.
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The Office of Utilities Regulation (OUR) has given the Jamaica Public Service Company (JPS) until March 15 to submit the details of an alternative proposal for supplying 360 megawatts of power to the national grid.
Earlier this month, the OUR had announced it had ended the request for proposal process with the JPS for the 360 megawatts power plant.
A day after missing the January 30 deadline to provide final details of how it would undertake the project, the JPS had made an alternative proposal to the OUR.
But in a release last night the OUR said the company
The Office of Utilities Regulation (OUR) has given the Jamaica Public Service Company (JPS) until March 15 to submit the details of an alternative proposal for supplying 360 megawatts of power to the national grid.
Earlier this month, the OUR had announced it had ended the request for proposal process with the JPS for the 360 megawatts power plant.
A day after missing the January 30 deadline to provide final details of how it would undertake the project, the JPS had made an alternative proposal to the OUR.
But in a release last night the OUR said the company
As you read this, Phillip Paulwell, Jamaica’s energy minister, is likely playing Mas in Trinidad at its annual carnival. Jamaicans may be minded to say that he is playing something else.
People here are also likely to conclude that the energy minister’s sojourn to Trinidad, and whatever he may be getting up to in Port-of-Spain, San Fernando, Arima, Diego Martin, or wherever, also says something about Mr Paulwell’s sense for priorities. That is a matter on which we would like to hear the view of Prime Minister Portia Simpson Miller.
First, though, we must make clear that this newspaper does not begrudge Mr Paulwell, or anyone else, his right to annual holidays. Nor would we normally care should any Jamaican decide to jet off to Port-of-Spain to join a carnival band, swig rum and dance up a storm at the Savannah. Which, of course, is not a claim we make of Mr Paulwell, not withstanding our unease at his absence from Jamaica at this time.
Here is the context. Jamaica faces not merely a crisis, but an energy emergency. Our sense, though, is that no one in the Government, including the portfolio minister, seems to grasp either the depth or the immediacy of the problem – at least not sufficiently for it to impinge on the bacchanal.
In Trinidad and Tobago, where the music of ‘Despas’, Destra, Machel and others may be echoing in Mr Paulwell’s head, firms pay around US$0.05 per kilowatt-hour for electricity. The Trinidadians have oil and gas and enjoy government subsidies on their power bill.
In energy-deficient Jamaica, we pay upwards of US$0.41 per kilowatt-hour for electricity, which is a significant input in production and a high price which helps to make Jamaican firms uncompetitive. Indeed, over the past decade and a half, several plants that built things in Jamaica have migrated in favour of Trinidad, with which we run a trade deficit of nearly US$1 billion.
ENERGY WAFFLE
For more than a decade, Jamaican administrations have waffled and procrastinated over an energy policy to deliver cheaper electricity prices. Recently, under Mr Paulwell’s watch, there has been the final slow-motion collapse of a project that was to make liquefied natural gas (LNG) as the fuel of choice and to deliver electricity at between a 33 and 40 per cent below current prices.
Last week, for instance, the Office of Utilities Regulation (OUR) rescinded the Jamaica Public Service Company’s (JPS) position as the preferred bidder on a 360-megawatt, gas-fired power plant because the light and power company missed deadlines to demonstrate that it could meet the benchmark price. The problem is that JPS, having assumed the effort to source the fuel after the Government backed out, has been unable to find LNG cheap enough for the project to make sense at the target price.
Minister Paulwell claimed to have been blindsided by the OUR actions, suggesting that he was in favour of giving JPS additional time, without the continued financial burden of a performance bond, to rescue the deal. The upshot has been a state of confusion, in the Government and elsewhere, over energy. The situation is in need of a steady and steadying hand.
In the midst of this situation, Mr Paulwell chose carnival – the kind of stuff that would make Les Green‘s day.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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