By Graham Morse
The way we generate and distribute electricity is changing. Now we have the opportunity to choose where we get our power from: to be our own mini power station, or to be tied to the utility company’s grid.
PV solar panels allow consumers to generate their own electricity. And here in Cayman we can generate plenty. The trouble is it hasn’t been economic to store it for use during the night. So most of the homes and businesses in Cayman which generate their own power use CUC’s CORE (Customer Own Renewable Energy) program: they sell their power to CUC, and buy the electricity they use like everyone else.
But recent development in the production of lithium-ion batteries is a game-changer. Compared with lead-acid batteries, which have been around for a hundred years, lithium-ion batteries are smaller, lighter, produce constant power and have a greatly extended life. But because there was limited demand, they were very expensive. Now, fueled by growing demand from electric vehicles, battery manufacturers have gone into mass production, bringing down the cost. Tesla led the way. Last year they announced the launch of ‘Powerwall,’ a home power storage battery system that will fit on your kitchen wall.
And the cost of battery storage has plummeted. Five years ago it was over $1000 per KW, today it is $250 per KW and it is forecast to drop by 75% over the next year five years. This means that it is now financially viable to install a battery system that will store the power made in the day for use at night. Homes and businesses have a choice: burning fossil fuel and rising process with CUC, or going ‘off-grid’ – described in the industry as ‘grid defection.’
The first company in Cayman to announce that it will be completely off-grid is NCB’s Cayman Technology Centre, just off the Cayman National roundabout, which, when completed, will have four 15,000 sq ft. multi tenanted buildings. It is understood that other substantial Cayman businesses are already considering going off-the-grid, as are residences, and as the price of battery storage continues to drop, many more will follow.
This trend is being partly driven by road blocks put up by the ERA and CUC that signal their resistance to the adoption of renewable energy. Take these three examples:
CUC’s CORE program has recently been closed for new users, having reached an ERA imposed maximum of 4MW (4% of Cayman’s peak capacity). Prior to that decision, the ERA had twice cut the price CUC pays consumers for the power they generate, making the program less attractive and creating an uncertain future for the burgeoning local renewable energy industry.
The ERA impose limits on the amount of renewable energy homes and businesses can produce (20KW systems for homes and 100KW for businesses), and planning and BCU approvals can take six months.
Perhaps most significantly, CUC have refused to allow consumers to use the power they generate and buy electricity from CUC at night (known as back up or stand-by supply). This would make good sense, and indeed CUC are legally obliged to do this under section 3.6 of their Transmission and Distribution license. But CUC has never given consumers this option. The historical precedent has always been that you have to be 100% on the grid or 100% off the grid. And until now consumers had no choice: going off the grid was not an economic proposition. Now they do have a choice because the falling price of battery storage is making it viable.
CUC, like many other utilities worldwide, are clinging to an old business model when all around them is changing. They need to rethink how they adapt to a new energy world, and still make money. Utility companies in the USA are already doing this, reinventing themselves as grid managers, buying energy from a range of producers and distributing it. If the current status quo remains, grid-defection is inevitable. CUC should accept that, and allow homes and businesses to have back up supply – as they are mandated to do – and buy energy back from them on terms that make sense for both parties. That way a consumer can still reduce their costs via solar and batteries, but CUC can still retain them as a revenue source rather than lose them completely.
Not everyone can afford the investment required to go off the grid. The transition of energy and utilization of solar and battery technology indeed works best for all when they are connected to the grid. Utilizing the CUC grid along with these off-grid systems requires fundamental change in vision by CUC and the ERA, and a willingness to increase collaboration with consumers and renewable energy providers. There seems to be little indication of this happening anytime soon.
Indeed just the opposite. It is understood that the ERA is considering imposing duty on batteries (all renewable energy equipment is currently duty free). It is a pointless effort that will not stop the inevitable grid defection caused by the current policies, and only seeks to further paint the ERA as out of touch with the realities of a world in energy transition.
When great industries face change there is always resistance from skeptics and those with entrenched interests. When the automobile was first invented, the British Parliament enacted Locomotive Acts (also known as the Red Flag Acts), to restrict the speed of vehicles to 4mph in the country and 2mph in the city. A man with a red flag was required to walk in front of vehicles pulling multiple wagons. The impetus for these draconian laws came from the railway industry and horse drawn carriage operators. New legislation in 1896 substantially changed the laws and allowed the automotive industry to develop.
The Cayman Islands should not be seen as the man with the red flag. The world wide-energy industry is inexorably transitioning from fossil fuels to renewable energy sources. The bottom line is that energy is shifting from the utility to the consumer. There is no stopping it as much as the ERA and CUC may try; at best they can only delay the inevitable, but that delay will not be in the best interests of the Cayman Islands. They should accept this fundamental transition as fact, and adapt accordingly.
Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one most adaptable to change.”
Graham Morse is a board member of the Cayman Renewable Energy Association (CREA).
Any opinions expressed here are the author’s own.