Time to tackle energy

Steve Marston, Guest Columnist

It is 9 a.m. on Tuesday, June 28, a normal workday, and my entire office staff is sitting in darkness, enduring our fifth - or is it sixth - prolonged power outage for the year at our business place, after suffering another outage late afternoon the previous day. I congratulate my management team and board for supporting our recent investment in a solar photovoltaic system that only provides 2kW of our 40kW electrical load but facilitates operation of phones, servers and critical computers - at least for a few hours while we wait on JPS to fix the current problem.

A lot of time is being spent debating the buy-back rate and type of contracts required between the Jamaica Public Service Company (JPS) and the consumer to encourage renewable energy investments.

Two weeks ago, Winston Hay wrote an excellent article in The Sunday Gleaner challenging the Office of Utilities Regulation about its recommendation for use of net billing and the princely offer rate of 10.73 US cents/kWh and pointed out other options to be considered along with a comparison to the rate offered in Cayman. While I agree with his comments, the reality is that, for our own company, the proposed plan will have little or no impact on our company's decision to expand the capacity of our renewable energy systems.

The investment will be justified by:

Not having to send staff home because of prolonged power outages: We lost five days of work last year and 21/2 days already this year. The least-cost scenario is the wasted operating costs and the highest-cost scenario includes lost profits.

Not having to compromise productivity because most of my staff are unable to do any work for periods of a few minutes to hours (the June 28 power outage ended after 11/2 hours). These are not counted in my lost-day calculations above.

Avoiding the costs of purchasing and operating a standby generator and/or a battery backup system for our computer/phone network.

Saving 39 US cents (ignoring GCT) for each kWh that our solar system generates.

Our corporate social and environmental responsibility.

When we crunch the numbers, the fact is that the avoided cost of lost productivity outweighs that of the energy savings and the return on our significant investment is about five to seven years. Since we want to continue running our business with minimal disruption by any outside party, we consider investment in renewable energy (and energy conservation) as a critical aspect of our business strategy. The fact is that the financial benefits derived from exporting electricity to the grid are a relatively insignificant addition to the above.

That aside, we recognise that realistic purchase rates and a simplified process would encourage consumers to invest in renewable energy plants and export surplus electricity to the grid.

Additional issues

Additional issues that should be considered are:

Access to funds - the Development Bank energy funds are a good start (10 years at 10 per cent), but has anyone tried to figure out why so few, if any, consumers have accessed the funds? Believe me, we tried, but after being asked to pledge personal assets, guarantees and facing a myriad of paperwork, we gave up and used our internal funds instead.

Continue the current incentive package for renewable energy and energy-conservation products - even for another one to two years before phase-out.

A public-private sector approach to tackling energy cost reduction, rather than the present separate efforts.

The energy crunch is not new, and it is obviously here to stay, as high oil prices, inefficient generation plant/distribution systems and a profit-motivated monopoly will keep the costs relatively high, with perhaps a modest downward reduction from the LNG project (whatever the final form is).

It seems that we spend too much time complaining and waiting on others to solve the problem rather than seriously reducing our own energy costs. Some of our clients have managed to reduce their electricity bills by 25-63 per cent by upgrading their air-conditioning systems and/or lighting and adding key accessories and controls to achieve paybacks of one to three years. We advise them to first save money by serious energy-conservation efforts and then reinvest these savings in other energy-conservation efforts (with longer paybacks) and renewable energy sources.

Maybe we need to realise that the future is perhaps not with LNG, nuclear, coal (or whatever the current recommendation is) and maintaining the existing centralised grid, but with a decentralised system, utilising hundreds or thousands of small generation sources, with many of them being renewable energy or new, more efficient 'small' plants such as fuel cells or micro-turbines.

Steve Marston is chairman and CEO of CAC 2000 Ltd. Email feedback to columns@gleanerjm.com and smarston@cac2000ltd.com.