Future of energy: big savings in the pipeline

By Lindsey Turnbull

Using a variety of measures to curb costs, including ramping up obtaining energy from renewable sources, CUC anticipates savings of around $40 million over the next five to seven years, annually, once all suggested projects are completed and approved by the regulator. Savings which would then be passed directly on to the consumer. This was according to CUC’s President and CEO Richard Hew, who spoke on Thursday to Chamber of Commerce members and the public on the future of energy in the Cayman Islands.

Current priorities for CUC included looking to make solar more reliable and dependable by installing batteries such as storage options for periods of low solar production, the need to reduce CO2 emissions, and price stability and cost reductions. Peak demand had grown significantly over the years and would continue with many new construction projects on the go and rising temperatures. In addition, significant investment would be needed in utility scale solar if the 2024 National Energy Policy targets are to be met, requiring further discussion with OfReg and further studies, which would also need the approval of the Regulator, he advised. More capacity than currently availability will be needed by 2027, he added.    

Reducing consumption to lower costs was a key point that CUC wanted to drive home to residential customers. While we don’t have the most expensive residential and commercial rates in the region, we do have the highest residential consumption in the Caribbean, Mr Hew said.

Looking at the line items on a residential electricity bill, the numbers were volumetric, meaning whatever customers did to reduce their kilowatt consumption would really impact their bills, he said. The best ways to reduce consumption was to get spray foam insulation. Mr Hew said spray foam insulation could drop consumption, as could getting new and efficient air conditioning units, particularly reducing costs in the high consumption months over the summer. Mr Hew provided a number of options in his presentation, including upgrades of AC units, spray foam and window tinting.

“In my view every single house should have spray foam insulation,” he advised and mentioned the need for energy efficiency standards.

He also believed that AC units should have a minimum of 16 SEER rating to be efficient.

There was no doubt whatsoever that the high bills and complaints could be remedied, but the cost of upgrading was a problem for some of their customers, he acknowledged, with between one and two thousand residential customers struggling to pay bills. The people struggling were often those who lived in starter homes and who did not choose upgrades that would have saved them money from the day they moved in.

“It’s a problem we do need to tackle,” he said. “I do believe the Ministry of Sustainability is pushing to have minimum standards for the insulation of homes and efficiency and proper installation of air conditioners.”

Increase in consumption, plus increase in diesel costs equated to increases in energy bills and increase in emissions, he said.

“We need to beat the heat and get off the diesel rollercoaster,” he stated.

Converting to solar

Currently, CUC derives 97% of its energy sources from diesel and the remaining 3% from renewable energy sources, including from the Bodden Town solar farm and the DER and CORE programmes, he explained.

The National Energy Policy has 100% reduction of CO2 by 2050, with interim reduction targets of 30% by 2030 and 70% by 2037.

“These are achievable,” he stated.” I think the 100% maybe achievable. It’s a bit of a stretch because we don’t yet know how to get that final 30% in a cost-effective manner.”

There would be a need for some kind of firm power to assist when there is cloud cover or periods of rainy days. This is when the affordability of LNG would come into play as it would allow for firm power, cost less than diesel and provide for less emissions. It would take vast amounts of solar and battery storage to store energy produced during the day to take customers through the night, he advised. 

Total roof top solar capacity could only meet around 25% of the needs of the island, he said, so Cayman would still need utility scale solar to meet 100% demand. CUC was seeking to do this with utility scale solar.

In the future, we would see more plants like the Bodden Town solar farm and more customers who have rooftop solar, which all need to be integrated, so that there will be a reliable supply of electricity moving forward, he said.

To produce utility scale solar, around 700 acres of land would be needed over the next seven to 10 years to meet the National Energy Policy targets and to get the majority of energy from renewable energy sources.

The intermittence of the production of solar, the land needed to facilitate the volumes needed, rooftop structure, and what to do with the solar panels once they reach the end of their lifespan are some of the challenges associated with solar.

Until Cayman could get to the point of 100% renewables, it would need firm capacity to accommodate cloudy and rainy days, Mr Hew said. Liquified Natural Gas could be used. Natural gas was much cleaner than diesel and didn’t have particulates that caused wear and tear on the units. It was a lower carbon fuel, and readily available from the US, Cayman’s close neighbours, cheaper than diesel, and had significantly less emissions versus diesel.

Dollar impacts

Over the next five to seven years, savings could be seen, he said. Battery energy storage systems would cover outages in the future, thereby burning less fuel and saving around $5 million a year. Conversion to LNG would be a saving of $15m and then the large utility scale solar projects would give an annual saving of a further $25m.

“If we can do all of these things over the next five years, we can get to an annual saving for consumers of $40m dollars,” he confirmed.

Customers would see lines on the bill called ‘Fuel and Renewable Energy’ going back fully to the consumer.

“We’re excited about it. I don’t know any other industry which can say to you over the next five years we can bring down your costs significantly… but we need your help,” he said. “We can move together and make this happen.”