The CEO of OfReg, the utilities regulator, says that his team will be conducting a rigorous analysis of the process that led to the contracting of Cayman’s first commercial-scale renewable energy plant which opened on June 20.
He hopes the analysis will provide insights into what was done right, and more importantly what was done wrong or could have been done better, which he believes will help as OfReg moves toward implementing the Government’s National Energy Policy goal of achieving 70 percent renewable energy in Cayman’s public electricity supply mix by 2037.
“This (the contracting process) has been a long journey that began six years ago when CUC issued its Request for Expressions of Interest,” said J. Paul Morgan. “Despite a number of setbacks over the years, the process and negotiations continued to the point where our predecessor –the Electricity Regulatory Authority – was able to approve the Power Purchase Agreement and Interconnection Agreement that was signed by CUC and Entropy in 2015. Now, as the regulator, it is our responsibility to do a post mortem on how we got to this point in anticipation of the next round of solicitations, and also to ensure that consumers’ benefits and welfare are maximised.”
The NEP was approved unanimously in the Legislative Assembly in March 2017. The goals of the policy are to decrease the costs of energy as a priority; increase environmental sustainability; increase energy security; and contribute to the economic development of the energy industry.
Mr. Morgan said that he has received many expressions of concern about the contracted price of US$0.17 per kilowatt hour that CUC will be paying Entropy for the energy delivered. However, he argued that there is no point of reference in Cayman for renewable energy, and that because this is the country’s first solar farm, there was at the time a huge learning curve with associated costs that will probably not be a factor in subsequent projects of this type.
“We cannot compare Cayman to the US or any other country for that matter, even other islands in the Caribbean. There are significant costs to doing business in the Cayman Islands. From legal fees to shipping costs to the price of land; all these factors impact the bottom line and would have been taken into consideration when setting the price,” he said.
“However, we don’t expect this price to remain fixed, and part of the analysis we are going to do involves determining how we can continue to bring the price down to a point that will satisfy both the consumer and the provider.”