The Energy Minister, Phillip Paulwell has signaled that the Alpart bauxite plant is expected to be back up and running in the first quarter of
The former head of the Government‘s liquefied natural gas (LNG) steering committee Chris Zacca, is downplaying the impact of the extended delay in the introduction of this product to the country’s fuel mix.
Zacca, who now heads the Private Sector Organisation of Jamaica, told a recent Gleaner Editors’ Forum that criticisms about the State’s slow movement on this critical matter are unfounded.
“I have made the point consistently that if you had all the LNG in the world today, you would have to burn it in your stoves at home because there is nowhere to burn it, so you have to combine your schedule to their (the Jamaica Public Service Company’s) schedule to build a new power plant,” said Zacca.
Without that generating plant there is no project, so the delays are not an issue,” added Zacca.
For years the price of LNG was a fraction of the price of oil, but with increased demand for natural gas in recent years the price has started to increase, with a recent Morgan Stanley research document showing the price at December 2011 more than double what it was in December 2010.
LNG was priced at approximately 50 per cent of oil in 2010.
“Our problem with fuel in this country has resulted … from us trying to make the best be the enemy of good. If we had moved 10, 12 years ago to a new fuel solution, whatever it may have been, even though it might not have been perfect at the time by, now we would have been way ahead of the game,” said Zacca.
According to Zacca, “LNG is not going to come in, no matter what way you do it, at a fraction of the cost of oil. I think, if we are lucky, we can get it 20 per cent below the current price (of oil).”
http://jamaica-gleaner.com/gleaner/20120819/lead/lead6.html
We were truly impressed with what Phillip Paulwell has done at his home – the conversion to solar as its primary source of electric power.
Mr Paulwell, of course, is not the first person in Jamaica to do this. But as minister with responsibility for energy, his may be a persuasive example for a more robust Jamaican engagement of renewable energy sources, to reduce the use of petroleum that accounts for more than 90 per cent of energy. Oil is not only expensive, but more environmentally pollutant than other fuels.
Additionally, sunshine, as a fuel, is plentiful. The sun is estimated to generate more energy in an hour than the world’s requirement for a year.
The downside of solar energy to power a national grid, as with many renewables, is its supply and distribution instability, and the cost of technology – though declining – is still relatively expensive. The cost will have to reach grid parity with other technologies before it begins to replace other fuels.
Solar beneficial but …
In the meantime, however, some firms and private individuals will find solar a useful and attractive alternative to oil and other hydrocarbons. Some governments may even find it economically, politically and environmentally strategic to encourage its use, which we presume to be the point of Mr Paulwell’s showing off of his solar panels and storage batteries.
Indeed, most people will find extremely attractive, and would be happy to enjoy, an 83 per cent decline in their monthly electricity bills from the light and power company, as has been reported by Mr Paulwell. He now pays around J$4,000 a month.
But there is a catch. Few Jamaicans could upfront the J$2 million that Mr Paulwell invested for his home conversion. Given his past bills, Mr Pauwell will recoup his investment in around seven years and could reasonably enjoy returns on his capital for another eight.
So, as attractive as these numbers seem, the returns are too far in the future and the upfront costs too high to encourage hordes of individuals to leave the national grid for solar. Nor are firms, except for the few for which the economics are compelling, likely to do so in droves.
Mr Paulwell, wearing his energy hat, has to run on many tracks at the same time. He must promote policies that will make solar and other renewables attractive and affordable.
An economically competitive grid
But more urgently, he has to ensure that there is a more efficient and economically competitive national grid.
At around US$0.40 per kilowatt-hour, Jamaica has among the most expensive electricity in the Caribbean. This has been a major contributor to the denuding of the Jamaican manufacturing sector and also has a hobbling effect on services – whose operations are heavily electricity dependent.
There has been much heated debate in recent years on these issues, including, at one point, a decision to proceed with a conversion to natural gas at some of our power plants. The Jamaica Public Service Company has the monopoly for the transmission and distribution of electricity, and won the tender for more than 400 megawatts of gas-fired power plants. That process, however, seems to have run out of steam, as, it appears, have Mr Paulwell’s other energy initiatives.
Energy is too important a matter to be subject to the Jamaican penchant for talk without effective action.
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.
http://jamaica-gleaner.com/gleaner/20120716/cleisure/cleisure1.html
Jamaica is hoping to establish a floating LNG barge like this one found on the website of the US Federal Energy Regulatory Commission, posted courtesy of www.lngoneworld.com.
A plunge in the price of natural gas has made it cheaper for utilities to produce electricity. But the savings aren’t translating to lower rates for customers. Instead, United States electricity prices are going up.
Electricity prices are forecast to rise slightly this summer. But any increase is noteworthy because natural gas, which is used to produce nearly a third of the country’s power, is 43 per cent cheaper than a year ago. A long-term downward trend in power prices could be starting to reverse, analysts say.
“It’s caused us to scratch our heads,” says Tyler Hodge, an analyst at the Energy Department who studies electricity prices.
The recent heat wave that gripped much of the country increased demand for power as families cranked up their air conditioners. And that may boost some June utility bills. But the nationwide rise in electricity prices is attributable to other factors, analysts say:
In many states, retail electricity rates are set by regulators every few years. As a result, lower power costs haven’t yet made their way to customers.
Utilities often lock in their costs for natural gas and other fuels years in advance. That helps protect customers when fuel prices spike, but it prevents customers from reaping the benefits of a price drop.
The cost of actually delivering electricity, which accounts for 40 per cent of a customer’s bill on average, has been rising fast. That has eaten up any potential savings from the production of electricity.
Utilities are building transmission lines, installing new equipment and fixing up power plants after what analysts say has been years of underinvestment.
This may reverse what has been a gradual decline in retail electricity prices. Adjusted for inflation, the average retail electricity price has been drifting mostly lower since 1984, when it was 16.7 cents per kilowatt-hour.
“The ratepayer is going to have to foot the bill,” says David Wright, vice-chairman of the South Carolina Public Service Commission and president of the National Association of Regulatory Commissioners.
PRICE INCREASE EXPECTED
The average US residential electricity price is expected to be 12.4 cents per kilowatt hour for the June-to-August period, up 2.4 per cent from the same time last year. For the full year, electricity prices are expected to rise two per cent.
In a typical summer month, that would mean an extra $3 on a residential bill, which includes the cost of generating the power and delivering it to a home, plus local taxes and fees.
Electricity pricing is complicated, and it differs from state to state. In states where power providers are allowed to compete, such as Texas, Pennsylvania and New York, customers can shop around for cheaper electricity, although delivery charges are still set by regulators.
Natural gas has plummeted in price because of a dramatic increase in US gas production over the past few years and a warm winter that allowed supplies to build up.
Even though coal accounts for 38 per cent of all power produced in the US, natural gas plays an outsized role in determining the price of electricity.
The price paid for electricity from the last power plant fired up to meet demand at any given moment is what sets the wholesale price for a given region. And since gas-fired power plants are usually the most expensive, they tend to be fired up last.
– AP
http://jamaica-gleaner.com/gleaner/20120712/business/business1.html
Jamaica continues to combat its energy challenges by drilling for gas and oil.
A shift toward nuclear power is also a possibility.
That
Governor-General, His Excellency, the Most Hon. Sir Patrick Allen, has said that the Government will be redoubling its efforts to resolve the country
Approximately one thousand persons are expected to get jobs to construct a Liquefied Natural Gas, LNG, plant in Old Harbour, St. Catherine.
Labour Minister Derrick Kellier and Charge d
The LNG problems continue for the Jamaican government as predicted by everyone currently not in government. After all the guarantees of cheap LNG it seems government cannot even give a price for which they think the LNG will cost. So you are probably asking yourself how could they be pushing something that they are not sure of current or future price? Couldn’t that possibly mean that maybe in the future LNG might be just as costly as currently energy sources since its unpredictable? Trinidad has already warned us that the days of cheap natural gas are gone and don’t look to them for any cheap supply. If you don’t remember click here. Anyway just check out the Gleaner article below and then shake your head wonder what Mr. Zacca’s response will be in tomorrows paper. For something that would be so costly and yet is so unpredictable for Jamaica it begs the question why can’t government let go. Hmmm.
Prospective bidders on Friday complained that two months before the close of tender for the supply of 480 megawatts of new generating capacity to the national grid, they are yet to be provided with the indicative price at which liquefied natural gas (LNG) is to be sourced.
Because of this, the potential bidders warned they may not be able to produce competitive bids.
“Because you don’t have a firm price where fuel is concerned, without knowing what the price of gas is going to be, it is impossible to do a bid which embraces gas as the fuel strategy,” said Wayne McKenzie, general manager of Jamaica Energy Partners.
“In the power-purchasing agreement, gas has to be the fuel of choice.”
McKenzie was addressing the Government’s plan to add LNG to the mix of fuels – replacing up to 15 per cent of oil, according to previous reports – in generating electricity.
Christopher Zacca, head of the LNG steering committee created under the government’s push towards introduction of the gas by December 2012, was present at the consultation, but had no clear answers on the matter.
“The commercial structure of LNG is currently under review and we are working towards an indicative price as soon as possible,” said Zacca.
Neither was the Office of Utilities Regulation (OUR) – which convened the session – able to assist.
“The preference is that we would have the prices before then. If we don’t have those prices, we will use the prices that are in our study to hold a reference across the board,” said Peter Johnson, project manager at OUR.
The government has made LNG a critical component of its new energy policy and there will be a bias for contracts which are in compliance with its use in the assessment of bids for the new 480 MW of capacity.
McKenzie contends that, coupled with other requirements in the request for proposal and power purchase documents, it will result in “very very conservative bids and instead of getting the cost of electricity down, might just get it higher,”.
According to OUR analysts, the use of LNG as the preferred fuel for the 480 MW supply could lead to reduction in the cost of electricity by an estimated 10-20 per cent.
Exclusive right
Jamaica Public Service has the exclusive right to transmit and distribute electricity throughout Jamaica.
According to information obtained from the request for proposal document, the utility, at the end of 2009, had a customer base of 584,623.
The gross peak demand to date, it said, is 644 MW, and the average system load factor is approximately 74 per cent.
JPS supplies this demand from a functional firm-system capacity of approximately 785 MW, of which 190 MW is provided by independent power producers.
Of the 595 MW of capacity owned by JPS, 292 MW of the base-load is more than 33 years old, representing inefficient plants within the system that are now being replaced.
The new capacity is to be supplied in two tranches – 360 MW by January 2014, and the other 120 MW by January 2016.
Bids for the new capacity are to be submitted by the end of March 2011.
The days of cheap natural gas are gone, Trinidad’s Minister of Energy and Energy Affairs Carolyn Seepersad-Bachan has said.
The low-cost sources of gas were fast depleting and it will cost more to find and extract new reserves, she said.
Seepersad-Bachan’s statement came in response to an appeal by Methanol Holdings Trinidad Ltd’s (MHTL) CEO Motilal Rampersad for governmental support in keeping MHTL competitive in the downstream energy industry internationally.
Rampersad spoke during the commissioning ceremony of AUM1 Complex at the Point Lisas Industrial Estate. The Jamaican government is relying on Trinidad to supply it with cheap natural gas as it looks to rely more on the commodity. This news will come as yet another set back to its energy policy. Already there are allegations of rampant corruption at its Petroleum Corporation of Jamaica (PCJ) and controversy surrounds the awarding of a contract for a liquified natural gas facility to the former head of the PCJ. Only this week, former President Bill Clinton called on Jamaica to use its natural resources of solar and wind and focus more on renewable energy rather than imports that cost around 10 per cent of GDP.
MHTL, one of the largest producers of methanol in the world, is a subsidiary of the CL Financial empire and is considered one of the most profitable entities in the financially troubled conglomerate. Finance Minister Winston Dookeran recently said MHTL may be divested and listed on the international stock market.
Seepersad-Bachan said while Government “is committed to the expansion of the downstream sector, we need, however, to accept that there is no more cheap gas available”.
She said, “Most of the explored acreage, the available low-cost sources of gas are depleting very quickly and, as a result of that, we are on an exploration drive.”
She said even in the current bid round just closed, Government expected the cost structures to go up and, as a result, production cost would rise.
“In addition to that, as we move further out into deep-water area, you recognise the high capital-intensive, high-risk areas that we’re dealing with and therefore, as result of that, gas prices will not be what [they] used to be.”
She said Government recognised the challenges gas-based projects face in terms of the cost structure and competitiveness and, as a result, Government will partner with the companies to identify creative and innovative strategies to address these challenges.
This, she said, is also why the National Energy Corporation of Trinidad and Tobago Ltd (NEC) has been requested to conduct a study to establish a framework for the execution of energy audits for plants in the Pt Lisas area.
“We want to encourage all of the industries based at Point Lisas to improve on their energy efficiencies because gas prices have been increasing significantly so it is a challenge that is faced by all.”
Last Tuesday’s function was to celebrate the completion of the US$1.7 billion project, the first for ammonia and urea plants that are integrated into a complex capable of producing third-stage downstream products of 60,000 metric tonnes per year of melamine and 1.5 million metric tonnes per year of urea ammonium nitrate solution.
The AUM ammonia plant was started in March 2009 and fully commissioned by June of the same year.
All other plants of the complex have been mechanically completed since March 2010.
