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Alternative sources of energy and the Bahamas

By LARRY SMITH

IT’S been two years since the summer of 2008, when oil rocketed to $147 per barrel and we all began frantically looking for ways to cut our energy costs. And it’s been one year since the Copenhagen conference on climate change failed to set a clear global agenda to address one of the greatest challenges of our time.

These issues are inextricably linked, with the potential to cause serious harm for small island nations like the Bahamas. And tackling them requires a massive shift in the way we produce power, which is not easy.

The world is in a transition phase between the old energy infrastructure and new clean energy. And as economist Joseph Stanislaw noted recently, “Energy is no longer just about oil and coal. It is a metaphor and vehicle for political and economic development. The mark of a successful modern government will be its ability to find a niche for its country in the clean-energy revolution.”

Several weeks ago, the Caribbean Renewable Energy Forum brought together 300 government, industry and finance leaders at the Atlantis Resort on Paradise Island. So it is reasonable to ask just where things are with energy reform.

Well, first let’s take a look at the global headlines.

According to Clean Energy Trends 2010, some $100 billion of the stimulus package in the US was earmarked for clean-tech investments; South Korea has committed $84 billion to clean-tech investments through 2013; stimulus programmes for sustainable energy in the EU are estimated at $26 billion; and China will spend more than $600 billion on clean energy over the next decade.

Despite the recession, combined global revenue last year for solar power, wind power and biofuels grew by almost 16 per cent (to $144.5 billion). And investments in new clean-energy electricity generation have outpaced those for fossil fuels for the past two consecutive years.

Clearly, the move towards clean energy is one of the leading forces behind the global economic recovery, with the world’s major economies all competing to dominate in a range of clean-tech sectors that could trigger the next industrial revolution.

The result is that we can now envision a world where most energy is produced from renewables, most vehicles run on low-carbon electricity, and green buildings are the norm. But experts say progress requires a concerted public and private commitment, along with the necessary policy and regulatory reforms.

That’s because the obstacles are significant. The global direct subsidy for fossil fuels is around 10 times that for renewables, despite the fact that as immature technologies renewables should attract more support. The 2011 US budget seeks to cut billions in subsidies for fossil fuels and add billions in support of renewable fuels and energy efficiency, but it has yet to be approved by a bitterly divided Congress.

I came away from the recent Caribbean Renewable Energy Forum with the sense that, although high electricity costs throughout the region create an attractive market for renewables, regulatory and policy reform is still a long way off. Consequently, we are missing out on growth in this sector.

A recent article in CleanTech Investor Magazine points out that “the high cost of imported oil uses up scarce hard currency reserves, reduces competitiveness and diverts funds away from social and economic development. The generation capacity of several countries is close to peak demand and the Bahamas, the Dominican Republic, Jamaica and Guyana regularly suffer blackouts.

“There are no incentives to generate clean energy and no sanctions for polluting. The region lacks a clear regulatory framework and some islands have no energy policy legislation. The punitively high cost of electricity in the Caribbean makes it unlikely that subsidies will be required. What will be needed, however, is capital and political will.”

Speaking at the Atlantis conference, Charles Galante, of Real Infrastructure Capital Partners, said the jury on renewable energy was still out across the region because of the lack of declared government policy and utility support. “Oil prices are the same as last year, and not much has changed in terms of debt and equity funding. There needs to be regulatory certainty and cash flow confidence to produce a return in 10 years.”

Utilities Minister Phenton Neymour acknowledged that there was a long way to go to reform the Bahamian energy sector. “Our biggest challenge is that we have an electricity monopoly facing change and uncertainty. We have to move away from what the utility understands to accommodate new technologies. We are reviewing changes in the regulatory regime now, and there is the possibility of a renewable energy act to create the right framework.”

According to Glen Laville, the Environment Ministry’s project manager for a range of Inter-American Development Bank-funded initiatives, procurement contracts have been issued for over 150,000 energy efficient lightbulbs and 130 solar water heaters to be installed in public housing. About 30 volunteer homes will also be fitted with solar panels to produce electricity. These installations should be completed before the end of the year, after which their performance will be evaluated for six months.

These pilot projects will provide hard numbers on renewable energy applications in the Bahamian environment. Meanwhile, Fichtner, the government’s Frankfurt-based energy consultants, have produced a comprehensive report on ways to reduce our dependence on oil.

Their report found that hotels and homes in the Bahamas could generate energy savings of more than 50 per cent using simple efficiency measures such as changing lightbulbs, monitoring energy use, installing solar water heaters and pool pumps, and implementing awareness campaigns. That is equivalent to 27 per cent of existing power demand.

Alternative sources of energy considered most feasible for the Bahamas include solar water heating, solar photovoltaics, wind farms, waste-to-energy plants, ocean thermal energy conversion, and using pine trees on Abaco and Grand Bahama as fuel for standard power plants. A 20 Megawatt biomass plant would require a 200-square-kilometre forest, of which about 10 square kilometres would be cut annually for fuel, Fichtner said.

According to those involved, it could take another couple of years and a couple of million dollars to reform our energy sector by developing and passing a renewable energy act and other regulations. But lurking in the background of this discussion is a major wild card.

The Isle of Man-based Bahamas Petroleum Company holds oil exploration licenses covering more than 15,000 square kilometres of Bahamian waters south of Grand Bahama and southwest of Andros. These are close to producing onshore oil fields in northern Cuba and south-central Florida, and BPC has identified 22 exploration leads that could hold “giant accumulations” of hydrocarbons.

“BPC is proud to have been able to shed light on the very great prospectivity of the Bahamas for world scale oil and gas discoveries,” the company’s website says. “We believe it likely that further studies, including new seismic, will result in the identification of drillable prospects in the licences.”

The leads are located in water depths ranging from 15 to 1300 feet, with reservoir depths estimated at 5,000 to over 18,000 feet. Experts say they could contain multiple oil and gas fields, each with 500 million barrels of oil equivalent, and production could be achieved within three to 10 years from the time that drilling begins.

Although drilling is currently on hold while environmental regulations are being developed, the benefits to the Bahamas if significant oil reserves are confirmed would include infrastructure investment, production royalties of 12.5 to 25 per cent, unlimited supplies of compressed natural gas for power plant operation, and the construction of a refinery on Grand Bahama.

It will surely be a tough call for any government to resist the lure of oil and gas revenues should these optimistic projections be confirmed.

What do you think?

Send comments to

larry@tribunemedia.net

Or visit www.bahamapundit.com



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