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US$4-M hydro plant in St Ann a lucrative possibility

Wigton Windfarms limited plans to more than double its capacity over the next three years at a cost of approximately US$50 million.


Through wind energy projects that are to be pursued should lead to an 18 MW expansion on Wigton lands during the first phase, at a cost of US$43.2 million.


Additionally, the government-owned power producers plans to execute a shareholder agreement with interested parties for a joint venture company leading to development of a small hydro 2 megawatt (MW) facility at Laughlands, St Ann at a cost of US$4.1 million by the last quarter of this year.


The Petroleum Corporation of Jamaica (PCJ), the state agency charged with securing the island’s energy hopes to derive up to 30 megawatts (MW) of electricity from the flow of water, through such partnerships.


Hydro and wind are the most competitive renewable energy sources with fossil fuels but the hydro plant stands out as the more lucrative.
Wind generation, as with the case of Wigton Wind Farm, the state-run power generation company, yields around a third of installed capacity, contrasting the 80 per cent or more of installed capacity that one can get from hydro plants.


According to the estimates done by Wigton, the capital cost for the 18 MW windfarm will run at around US$2,400 per kilowatt (kW) installed, while the Hydro plant will cost just over US$2,000 per kW.

Conventional petroleum-based generating plants run at less than US$1,000 per kWh.


The firm capacity of the plants, or the actually amount supplied to the nation’s power grid, show an even higher capital cost for wind, placing it at nearly three times the cost of hydro.


Mikel Oerbekke, a director of Eco-Tec, a technology firm operating out of Westmoreland, Jamaica, however, says the higher costs of both should not be looked at in isolated of the avoided cost of oil needs.

“One megawatt-hour (MWh) cost between US$110 and US$118 for oil,” said Oerbekke.


This means that the 55.95 million kWh of actual electricity production exported to the Jamaica Public Service Company (JPSCo), from April 29, 2006 to April 28, 2007 would have offset the US$6.2 million in spending on oil.


Renewable energy projects can also benefit from trading carbon credits for reducing greenhouse gas totals under the Protocol’s Clean Development Mechanism (CDM).


Wigton currently has an eight-year contract with the Netherlands to sell its credits at a fixed price of 5.5 euros per ton of carbon dioxide saved between 2004 and December 2012.


Oerbekke estimates that a well-negotiated contract can yield 15 t o20 euros per tonne of carbon dioxide (CO2). The upfront cost of establishing a project within the CDM runs around US$60,000 and carbon trading contracts tend to be restricted to under 15 years.
This means that smaller projects tend to not be viable under the initiative.


Should the two MW hydro plant in St Ann supply 80 per cent of its installed capacity to the grid, the plant would generate 14 million kWh of electricity within a year.


According to the United Nations Framework Convention on Climate Change (UNFCC) 1,200 kWh of electricity generated through renewable energy offset one tonne of carbon dioxide emission.

This means that the hydro plant could earn up to 230,000 euros per year from 11,670 tonnes of carbon credits.


Aside from carbon credit earnings, In order to encourage the development of renewable energy projects, the government is offering power providers a 15 per cent premium on the avoided costs of building new generating capacity.


In its Declaration of Generation Avoided costs the Office of Utilities Regulations (OUR) last September, set out possible rates to be offered to renewable energy plants of 6.1 to 6.9 US cents per kWh.

Using the lower figure, the two-MW hydro plant could earn US$854,000 per year in revenues.


Wigton, which is rated as a 20.7 MW plant, is estimated to have made a profit of $39 million from sales of $197 million.

That plant cost US$25.7 million to build five years ago.


Source: http://www.jamaicaobserver.com/



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