Oil
Jamaica continues to combat its energy challenges by drilling for gas and oil.
A shift toward nuclear power is also a possibility.
That
The government has signed a deal with Canadian oil and gas exploration company, Fagres, to begin the process of drilling for oil in Jamaica come next year.
At least one expert has serious concerns about the Jamaica Public Service Company Ltd’s (JPS) plans to build the country’s first liquefied natural gas (LNG)-fired plant at a cost of J$52 billion in St Catherine. The 360-megawatt plant is touted to reduce the country’s electricity bill by 30 per cent.
Denzil Williams, head of the Department of Management Studies at the University of the West Indies, Mona campus, said he was not convinced this was the right move because if it backfires, it could cost Jamaica dearly.
Serious issues to consider
“If we get LNG going and if we build this plant, then we can see some savings in our electricity bill but, when you go into the details of it, you recognise that it is not just about building the plant, but there are some more serious issues we have to consider,” he noted.
Speaking during a public forum on ‘The Budget, The Debt, The Future’ hosted by Jamaicans United for Sustainable Development at the Department of Management Studies at the University of the West Indies last Thursday, Williams said there were some critical questions that needed to be considered.
“What if LNG does not come to Jamaica? What if there is a disruption in the supply of LNG? What is the backup fuel if LNG fails?” he asked.
He said at this stage, there was no clear indication if these things were considered by the relevant authorities and if an effective backup plan was in place.
“If we do not secure that source of LNG and get it over on this part of the shores and they have to use that combine cycle gas turbine plant to power electricity later on, we will be in a more dangerous position than before. Because we will be using a much more expensive backup fuel, as the combine cycle gas turbines can only use automotive diesel oil,” said Williams.
He said the Office of Utilities Regulation should publicly address these concerns.
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Hillary Alexander (right), permanent secretary in the Ministry of Science, Technology, Energy and Mining, shares a joke with Richard Brewster (left), project manager of the Energy Efficiency and Conservation Programme, and Professor Ishenkumba Kahwa, dean of the Faculty of Pure and Applied Sciences at the University of the West Indies, Mona, during the launch of the programme at the Jamaica Conference Centre in downtown Kingston yesterday. – Ian Allen/Photographer
Science, Technology, Energy and Mining Minister Phillip Paulwell has warned that government agencies and ministries that do not cut their energy bills will feel it in their pockets.
“With your current consumption as your benchmark, please be advised that starting today, your energy cost must only go down. If you increase consumption, … you can expect a negative impact on your overall budgetary allocation,” he said, quickly adding that he was speaking with the firm authority of the finance minister.
Paulwell was addressing the launch of the Energy Efficiency and Conservation Programme, which is the end product of the Energy Efficiency and Conservation Technical Assistance (EECTA) agreement first signed in 2009 between the Government and the Inter-American Development Bank. The programme has a total cost of US$20 million and seeks to reduce energy consumption in the public sector. Paulwell reeled off staggering figures of Jamaica’s energy crisis.
“Some 90 per cent of Jamaica’s energy is supplied by imported petroleum. Next to debt servicing, energy consumes the largest amount of our foreign-exchange earnings,” he said.
Among other data, the EECTA collected analysis of government facilities’ energy consumption and conservation measures. An audit of Jamaica’s energy situation showed the Government used more than 411 gigawatt hours annually, more than 10 per cent of total electricity consumed in Jamaica.
Significant increase
“The total GOJ bill for electricity has moved from about J$560 million in January 2009 to the current figure of nearly J$1.2 billion at February 2012. That’s an increase of more than half a billion dollars or some 108 per cent. This increase is annualised at J$7.2 billion. This … spells crisis,” he said.
He implored heads of agencies, ministries and other public-sector institutions to examine the findings of the audit report and to determine their next step. He noted the Government had access to the electricity bills of every government agency and would be monitoring usage. He challenged ministers and permanent secretaries, especially, to develop and implement an energy-efficiency road map and to set targets for their energy consumption.
“Each year, central government will issue an energy allocation, and just as there is pressure to stay within the Budget, we will apply pressure to have all of the ministries stay within the energy allocation.”
Improving efficiency
Paulwell noted that the programme would specifically deal with replacing incandescent bulbs and fluorescent lighting systems with LED fittings, and improving the insulation and seeding of building envelopes to reduce heat loading and air-conditioning requirements. There will also be the replacement of old air-conditioning systems for more modern, efficient ones.
“(We will also be) implementing a system for monitoring and evaluating to ensure the sustainability of the initiative and to identify and train, within all our ministries, teams of energy wardens … to oversee the gains of the programme and that the gains are achieved.”
Another component of the programme is an education-awareness initiative to sensitise the public and private sectors regarding energy efficiency (EE) and energy conservation (EC) cost and benefits. There will also be workshops and seminars for stakeholders on EE and EC procurement and management. Paulwell also noted that apart from the savings to the country’s energy bill, the programme would also provide jobs.
“This programme will employ energy auditors, engineers, architects, as well as suppliers of air conditioning and energy-efficient fixtures to install over 5,000 air-conditioning units islandwide and over 100,000 lighting fixtures. This is sure to have a ripple effect on the entire economy.”
The Jamaica Public Service Company (JPS) is willing to consider coal as an alternative fuel source for electricity generation, but it first wants to execute plans to develop the LNG plant to which the Government finally gave the green light just over a week ago.
A University of the West Indies think tank has conducted research which shows that LNG was a less expensive option to oil, but a more expensive alternative to coal-generated energy, which they found was the most efficient source in powering a light bulb.
JPS chief executive officer Kelly Tomblin – a 25-year veteran of the utilities business in the United States and other markets and who took up the position at the light and power supplier three weeks ago – said the company and its shareholders were interested in investing in any long term solution for Jamaica, including coal.
However: “As an outsider, if I look to where we are, I would encourage us to execute on the plans that we’ve all agreed to as a first step,” Tomblin said.
“We believe that long-term fuel diversity is a number one issue,” Tomblin told the
Transformation of the energy sector, to bring more players into the industry so as to achieve greater efficiencies and reduce costs to consumers, was the key focus of the Minister of Science, Technology, Energy and Mining (STEM), Phillip Paulwell, during the first 100 days of his stewardship.
The Minister, recognising that Jamaicans are burdened by the high energy prices, said the time has come to liberalise the sector and introduce a fully competitive arrangement that
Kelly Tomblin, the new CEO of the Jamaica Public Service Company (JPS), the light and power company, has started well. Rather, in her first interview with this newspaper, she was soothing.
But neither empathy nor intent to soften the hardened image of the JPS will be enough. If JPS is to be a player in Jamaica’s energy future, it has to be fully engaged in efforts for the efficient delivery of power to customers, which will require it to be a vastly more efficient operation.
Put another way, it just won’t do for the JPS to use two barrels of oil equivalent to generate the electricity to light a simple 100-watt incandescent bulb for a year. Nor can it be tolerated that more than 70 per cent of the fuel, mostly expensive oil, it consumes goes to waste, producing nothing.
Indeed, JPS has to convince Jamaicans that it can, and will, be a serious contributor to efforts to slash the price of electricity from around US$0.41 per kilowatt-hour to the US$0.10-US$0.15 required for the Jamaican economy to have a reasonable chance of competing with its neighbours.
In this regard, the contribution of the Energy Think Tank at the University of the West Indies, Mona, to the energy debate, by making the issue accessible to most people – such as with the light bulb example – is important.
The group bases its conclusion on the fact that the value of a barrel of oil equivalent is 1.7 megawatt hours, or 1,700 kilowatt-hours (kWh). A 100-watt incandescent bulb, burning continuously for 365 days, or 8,760 hours, would consume 876 kilowatt-hours, or 51 per cent of the electricity output of a barrel of oil equivalent.
But at the rate at which JPS converts its fuel to electricity, the company gets only 35 per cent of its energy value. Old equipment and other inefficiencies mean that 65 per cent goes up in smoke – literally.
Rethink both cost and technology
Of the electricity generated by the little more than one-third of a barrel of oil that is actually converted to power, 23 per cent is lost in transmission and distribution, a combination of technical loss and consumer theft. So, only 27 per cent of the potential energy from a barrel of oil burned by JPS reaches its consumers, or, in this case, the Energy Think Tank’s 100-watt bulb.
That’s untenable!
We note Ms Tomblin’s allusion to the 360-megawatt gas-fired plant that JPS won a tender to install, which promises to cut the cost of electricity by a third. That is a start, but hardly the full solution to an energy-competitive Jamaican economy. For while fuel type is critical, it is not the only issue relevant to the delivery of competitive power in Jamaica. Plant technology, for instance, will be important, as well its financing cost.
These matters need to be fully and honestly ventilated – from all angles. So, too, must be the matter of competition.
On the latter point, given her assertion about the inefficacy of multiple grids in small countries, we suppose that Ms Tomblin has not yet been fully briefed on the competition model for transmission and distribution floated by the Government.
We look forward to an informed discourse, but urgent action.
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RESEARCH CONDUCTED by a University of the West Indies energy think tank indicates that coal is the most efficient energy source in powering a light bulb.
Arguing that given the current inefficiencies in the electricity production and distribution system, it takes approximately two barrels of oil to keep a 100-watt light bulb burning continuously for a year, the think tank said using coal-generated energy to do the same job would reduce the cost significantly.
“Using LNG instead of oil would cost roughly half the amount to burn the light bulb, and using coal would be about one-seventh the cost,” the group said.
The think tank said using current prices, it would cost US$178.70 to purchase two barrels of oil to power the incandescent bulb. It said if coal were to be utilised to do a similar job, it would take only 396 kilograms (871lb) of the product at a cost of US$23.8, or 13 per cent of the cost of oil. The think tank also said liquefied natural gas (LNG) would be a more expensive option to coal. The researchers argue that it would require 333 litres of LNG to power the same 100-watt bulb, which would cost US$83.3, or 47 per cent of the cost of oil.
See full column http://gleaner-ja.com/gleaner/20120423/news/news2.html.
‘Using LNG instead of oil would cost roughly half the amount to burn the light bulb, and using coal would be about one-seventh the cost.’
About 871lb of coal is needed to power a 100-watt light bulb for 12 months.
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The following question was asked recently by a concerned citizen.
How many litres of oil would be needed to run a 100-watt electric bulb consistently for one year? Similarly, how many kg of coal to accomplish the same thing?
On the surface of it, the answer could be calculated by any reasonably smart high-school physics student. We suspect however, given the source of the question, what was being sought was a deeper, more fundamental answer that goes to the core of the energy crisis that Jamaica now faces.
So, first, here’s the easy part. A barrel of oil, often referred to as barrel of oil equivalent (BOE) contains approximately 1.7 MWh of energy. Generation plants in the current JPS system extract approximately 35 per cent of the energy content of a barrel of oil (measured by the average heat rate) and convert it into electricity.
Transmission and distribution losses take away another 23 per cent of this energy before it gets to the customer’s premises. The light bulb ends up receiving 27 per cent (0.46 MWh) of the energy from the barrel of oil. Burning a 100W incandescent bulb for 24 hours a day and 365 days a year (not advisable) requires 876 KWh of energy (roughly equivalent to half-barrel of oil).
Very inefficient
Incidentally, the typical 100W incandescent bulb is very inefficient, converting less than 20 per cent of the energy consumed into visible light, the rest being dissipated as heat so that the amount of useful energy consumed from the barrel of oil in this scenario is really only five per cent.
Nevertheless, the initial answer to our question is that given the current inefficiencies in the electricity production and distribution system, it requires just about two barrels of oil to keep the light bulb burning continuously for a year.
This calculation holds whether the fuel source is oil, gas or coal. It will take 396 kg of coal and 333 litres of LNG to keep the light bulb burning for one year.
Using nominal trading prices for each fuel type indicates the relative costs. So, hypothetically speaking, all other things being equal (of course they’re not but the simplification suits the exercise), using LNG instead of oil would cost roughly half the amount to burn the light bulb, and using coal would be about 1/7th the cost.
The earlier analysis indicates that regardless of fuel, the Jamaican electricity production and distribution system only delivers approximately 27 per cent of the fuel purchased to the end consumer.
Consumers with poor energy conservation practices such as continuously burning incandescent bulbs, or inefficient building air-conditioning systems, contribute further to this energy waste. Jamaica’s oil bill in 2010 was 122 per cent of all export earnings.
A significant percentage of this oil bill is used to produce electricity and, on average, we waste 73 per cent of this costly commodity in delivering electricity to consumers.
What is even more perverse about this situation is the well-known fuel pass-through clause in the electricity tariff structure that requires the consumer to pay for the cost of fuel, regardless of how inefficient the procurement or conversion processes become. Is there a better way? Is there a model of electricity production and delivery that can begin to seriously impact on this seemingly perpetual, but clearly unsustainable situation.
Fundamental conversation needed
While the predominant local energy debates about LNG versus coal, and fuel diversity, are important issues; getting Jamaican industry to a competitive 10-15 US cents/KWh will require a more fundamental conversation about the structure of the industry and the way that usable energy is extracted from a barrel of oil or a tonne of coal.
We believe that there is a different industry model that could potentially suit small island states like Jamaica.
A model that takes advantage of new- generation technologies and more efficient industrial structures capable of delivering electricity at lower cost. A model that can extract more usable energy from the barrel of oil, the litre of LNG or the kg of coal to burn the light bulb while running the air conditioning and the water heater.
We believe such a model of electricity sector reform could potentially impact many of the prevailing issues and concerns currently being contemplated, such as:
- providing more competitive industrial and commercial rates in the medium – long term
- increasing the opportunities for domestic private-sector investment/participation in the electricity sector
- providing increased fuel diversity as a natural consequence of investor-determined choices and risks
- considerably reducing transmission/ distribution losses as a result of a more balanced distribution of supply and demand
- creating practical opportunities for increasing the share of renewables in the supply of electricity.
Space doesn’t permit a more detailed examination of this conceptual model in this article. Suffice to say that it will require a deep commitment to the national interest and the willing participation of all stakeholders in the electricity sector, including the JPS, the OUR and GOJ, the local private sector, academia and consumers.
All have a role to play in helping to return sanity to a very troubled sector. We will complete the presentation and examination of this conceptual model in subsequent papers.
Contributed by the Energy Think Tank, University of the West Indies, Mona
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