Michael Taylor sits on the deck of his Little Harbour home and gives me a rueful look. “It’s such a tragedy,” he says. Now a belonger, Michael has had a home on Anguilla for twenty- six years. He tells me his story. Back in 1991 he and a friend, both with an interest in renewable energy, wanted to discover whether wind power had any potential for Anguilla. At their own expense, they installed anemometers and gathered four years of wind data which was analysed by independent wind resource scientists and wind plant developers. The results were simple and irrefutable. Anguilla was blessed with extremely favourable wind resources that could generate power. On the basis of these results, the developers were very interested in bringing a commercial wind power project to Anguilla. The results were presented to Government and ANGLEC in 1995. The project was stonewalled.
Eighteen years later, there is still no wind power on Anguilla. There is no renewable energy generation of any kind being undertaken by Anguilla’s utility provider. There has been a flurry of MOUs, numerous policies on energy and the mitigation of climate change, with their attendant press releases and public consultations. Despite soaring diesel prices, despite the recognition by this Government that the conventional diesel approach to electricity generation is unsustainable, despite the fact that a transition to local renewable sources of energy will reduce costs; despite all of this, there has been no action.
Anguilla is now in the midst of an energy crisis. A marked decrease in tourism earnings, coupled with escalating costs of the imported fuel used for electricity generation, has resulted in business closures and residential disconnections particularly among low-income families. ANGLEC currently carries out between twenty and thirty disconnects per day. Anguilla’s total reliance on imported fossil fuels, combined with a small consumer base, results in some of the highest and most volatile energy prices in the world. Anguilla pays far more for its power than do consumers in the UK or the USA, because Anguilla is a small island. But even within the small island states of the Caribbean, Anguilla’s rates (approximately US $0.43 per KWh) are still amongst the highest in the region. Minister Evan Gumbs commented in the House of Assembly that “Anguilla has no control over the price of diesel fuel in the world market and thus has no control over its imported price. It therefore follows, to a large extent, that we on Anguilla have little or no control over the price we pay for electricity” until we reduce our reliance on it.
A quick glance at the statistics shows the extent of our woes. In 2011, ANGLEC’s total fuel costs were EC$54.11 M – a 31% increase over the previous year. (Source: Anguilla Electricity Company.). ANGLEC used this diesel – over 5 million imperial gallons – to generate its electricity in 2011. That’s enough diesel to fuel 17,000 cars for a year. In 2011, fuel costs were 77% of overall operating expenses, according to ANGLEC’s Annual Report. With fuel costs such a major proportion of total costs, responsible management would be trying to reduce costs by finding alternatives to diesel. In its 2011 Annual Report, ANGLEC makes a commitment to renewable energy, stating: “We expect that a sustainable model for renewable energy integration will be finalized by all stakeholders in 2012.” In this time of crisis, our renewable energy sources of wind and solar are like manna in the desert. But they need to be harvested.
Even purely on an economic argument, our reliance on diesel imports must be reduced significantly. But we must also do our part to reduce our emissions. Anguilla’s contribution to worldwide carbon emissions is negligible (the entire Caribbean region contributes less than 1% of global emissions) but the Government claims to be committed to low carbon development and Anguilla is already feeling the repercussions of climate change. When the Chief Minister signed the Clinton Climate Initiatives MOU for the ‘Island Diesel Replacement Project’ in November 2012, he stated: “Both the Government of Anguilla and [the] Clinton Climate Change Initiative recognise that, as climate change accelerates, small island nations such as Anguilla will suffer a disproportionate share of the consequences, despite contributing very little to global greenhouse gas emissions. I would like to thank President Clinton and [the] Clinton Climate Initiative for taking a keen interest in Anguilla to support our goal to reduce greenhouse gases and reduce our impact, as small as it may be, on the heating up of the planet and partnering with us to achieve the same.” Specific information about the project’s MOU was not released at the time of signing. When approached for details about the project, for this article, officials at MICUH refused to comment. Tommy Hodge, General Manager at ANGLEC, described the project as a “bold and noble initiative” to reduce Anguilla’s fossil fuel usage to zero. But it remains to be seen exactly how the Government is planning to carry forward this initiative.
So the Government and ANGLEC have both publicly signed up to bring renewable energy to Anguilla. They have recently been working on the implementation of another initiative – the Anguilla Renewable Energy Integration Project (AREIP). This project started in February 2012 and is estimated to have cost over US$200,000. The final AREIP report was submitted to MICUH on 26 October 2012.
The Anguilla Renewable Energy Project was funded by the Climate and Development Knowledge Network (CDKN) which, in turn, is funded by the British and Dutch Government Development Ministries. AREIP focuses on three priorities: to reduce Anguilla’s carbon footprint through the use of renewable energy sources; to build a strong legislative and regulatory framework for the integration of renewable energy; and to increase Anguilla’s energy security and ability to manage the impacts of climate change within the context of low-carbon sustainable development. The AREIP report concludes that, “Anguilla’s renewable energy potential is good and likely to help the country save on fuel costs and stabilize energy prices in the long term.”
AREIP Up Close: Technicalities
AREIP screened a range of available and proven renewable energy technologies, including wind and solar. Its findings were that solar, wind and waste-based energy would reduce electricity costs. Solar photovoltaic (PV) would be undertaken both on a utility scale and through distributed generation by households and businesses. Wind energy also offers potential at utility scale, operated by ANGLEC or a company that sells its electricity to ANGLEC.
Anguilla has plentiful supplies of wind and solar resources, but they are variable sources of energy. Too much variable energy can destabilise the grid, at times giving it more power than it actually needs and at other times leaving it with insufficient power to meet demand. AREIP recommends the implementation of a hybrid system, using diesel-generated electricity as the base-load resource with renewable sources, as available. This enables ANGLEC to supply reliable electricity while reducing the amount of diesel necessary to meet electricity demand. AREIP further recommended that the government amend ANGLEC’s licence and the Electricity Supply regulations so that ANGLEC develops, procures or contracts utility scale renewables in a way consistent with best practice. This means least cost planning, public consultations and competitive and transparent procurement processes.
Distributed Generation
A legislative review was undertaken. As consumers and businesses already have the right to use renewable energy sources and to use land for their generation, an amendment to the Electricity Act was proposed. The amendment focused on enabling distributed generation developers (households and companies) to be able to sell the electricity they generate back to ANGLEC at a reasonable price, providing they have a contract.
Costing the Earth
The price at which ANGLEC sells power to its customers covers not just the cost of generating the power, but the cost of distributing it. When a customer sells their excess power back to the grid, ANGLEC’s cost of generation is reduced, because it has avoided using diesel to generate that portion of electricity. But the other costs of supplying energy, maintaining the distribution and providing back-up/stand-by capacities remain the same. For this reason, tariff structures should identify these services separately.
Following implementation of the Amendment to the Electricity Act, a cost of Service Study (COSS) should be undertaken in order to clarify the costs to supply diesel generated electricity. This would enable the creation of a disaggregated tariff structure which would clearly show customers the costs for the other services they continue to receive from the utility and for which they will continue to pay. So, as more customers generate solar power for themselves, ANGLEC can still recover from them the cost of its distribution system, back up supply and standby generation that are necessary to continue to provide electricity to all customers.
Net Billing
With a net billing system, the utility buys back power from the consumer at a rate equivalent to the cost of generation saved; the cost of the fuel the utility did not have to purchase by receiving energy from the distributed generator. The rate paid to customers will be equal to the avoided cost of generating the same amount of electricity with fossil fuel. Only this amount is then subtracted from the bill for power bought from the utility. A ‘Net Bill’ is sent to the customer. This approach protects both the utility’s financial viability and those customers who cannot afford to invest in renewable energy and who continue to rely on conventional electricity from the utility.
Only the amount of electricity that can be reliably and safely integrated into the electricity grid would be purchased. Distributed generators would sell their excess, unused electricity to ANGLEC via a Standard Offer Contract (SOC) with a contract term equal to the lifetime of a given system. The price ANGLEC would buy at would be published in the SOC, to allow people to determine what the financial benefit would be of interconnections. Those that invest in renewable systems would be assured of earning a return on their investment through an agreement they know will not change during their investment’s lifetime. And to protect the integrity of the grid, all distributed generators would have to comply with technical standards before interconnecting to the grid.
Utility Scale Solar Power
The AREIP approach also enables ANGLEC to recover its costs in implementing renewable energy at a utility scale. Under the ‘Rules for Renewable Energy’ that are part of AREIP, renewable energy will be integrated in a way that will not increase electricity bills. ANGLEC would do least cost electricity expansion planning: in other words it would select renewable options only if they are the least cost option for meeting energy needs.
AREIP recommends that utility scale renewable energy should move forward with a competitive bidding process for a design, build, operate, maintain contract (DBOM) 1 MW solar PV array. According to the ANGLEC Annual Report 2011, “A solar plant was chosen as a pilot project because of its unique advantages in being easy to deploy (minimal design issues), lower intrusion on the surrounding community and scalable (i.e. as additional solar panels and equipment are added the size of the system can be increased).” About 4 – 5 acres of land are required per megawatt of solar PV installed.
Grid Stability
AREIP sets a cap for incoming renewable energy inputs from both utility scale and distributed generation. This enables ANGLEC to manage the amount of variable energy being integrated to the grid and so maintain grid stability. ANGLEC has a 24 MW diesel generating capacity and peak electricity demand is currently around 15 MW. AREIP limits the renewable energy quota to 2 MW in the initial start-up phase.
Diesel generators supply ‘base-load’ power that can be increased and decreased as needed to meet demand, with variable machines and staged engines that can be adjusted to react to fulfil different output requirements. The diesel generators are necessary to even out the surges and troughs of renewable generation supply because, as yet, there is no viable battery storage component available to store any excess solar power. Unless balanced out, these fluctuations in supply are damaging to capital plant. Intelligent weather forecasting systems and simple radiance meters are available, however. Their use would allow ANGLEC to forecast likely solar power inputs and plan the delivery of output to maintain a reliable electricity supply. By limiting the grid-tied component to 2MW, AREIP gives ANGLEC a bedrock of stability during the initial process of conversion to a mix of diesel generation and renewable energy sources.
AREIP aims to provide the legal and regulatory framework necessary for the integration of both distributed generation (small-scale generation at consumers’ homes or by commercial entities at their business locations) and utility scale (large scale) renewable energy into Anguilla’s national grid. The analysis and recommendations were prepared by technical consultancy Castalia LLC, an independent consulting firm.
The goal of AREIP was the procurement by ANGLEC of a 1 MW utility scale solar installation, together with an initial target of 1MW of distributed generation. Anguilla’s current peak demand is about 15 MW, so a total of 2 MW of renewable energy represents about 13% of Anguilla’s current peak demand. ANGLEC’s Tommy Hodge strongly believes that “energy diversity is a strong component of energy security”. To be wholly reliant on just one source of generation makes Anguilla vulnerable, but a mix of solar, wind and diesel can give Anguilla the flexibility and strength to manage power needs. AREIP takes Anguilla on its first steps along the path to a renewable energy future. AREIP will enable ANGLEC and the Government to begin the learning process of understanding how to integrate renewable energy into a closed grid.
What About The Neighbours?
Elsewhere in the region, first steps have led to epic journeys. Puerto Rico has implemented 30 MW of solar power, as well as the largest wind power project in the Caribbean – 95 MW, enough to power the equivalent of 30,000 homes. In the Dominican Republic a wind farm of 33 MW was inaugurated in 2011, with an additional 52 MW phase planned. It has also undertaken the development of solar power plants with a total capacity of 116 MW. Curacao has two wind plants that supply 7% of total energy demand and it is estimated that that supply will increase to 30%. Aruba has a 30 MW wind farm that has been operating since 2010.
“The AUM government will aggressively seek out alternative energy sources and reduce the cost of electricity to every single household and business. Alternative energy sources will be explored such as wind, solar and geothermal.”
AUM Manifesto 2010
So Where Are We Now?
AREIP came to a close on January 31, 2013, after a year of consultation and stakeholder co-operation. The final report, complete with recommendations, was produced in August 2012. According to the minutes of the special EXCO meeting held on October 23rd 2012, in which the final AREIP report was presented to Ministers, Council accepted the recommendations presented by Castalia: “Council is committed to make every possible effort to reduce the cost of electricity on the island and to implement the recommendations.”
Despite this commitment, the project closed without meeting its objectives. Tommy Hodge told The Anguillian that ANGLEC had received about twenty responses from companies interested in bidding for the utility scale solar power project. ANGLEC was evaluating these responses with a view to forming a shortlist. That evaluation process is now on hold while ANGLEC’s board is “reviewing its strategic initiatives”. Distributed generation has also suffered a similar fate. The legislation amendments to enable interconnection of customers with renewable power generators were to be drafted by the Attorney General’s chambers. The draft amendments should then have gone to EXCO for approval and on to the House of Assembly to be gazetted by the end of 2012. But nothing has been heard of them for several months.
Getting Ahead of the Curve
Businesses and consumers are not waiting for Government to act. They are implementing effective solutions to unsustainable electricity bills, regardless. CuisinArt is one example. Planning approval has been granted for a 1MW off-grid solar PV array. This will be used to generate the electricity to power their reverse osmosis plant which desalinates seawater for use on the resort. This was a logical step since desalination, of all CuisinArt’s electricity requirements, has the least direct impact on customers so fluctuations in supply are less critical. Irrigation of the golf course and resort landscaping amount to 90% of CuisinArt’s water needs. And ANGLEC’s prices make desalination prohibitively expensive. There is a beautiful symmetry to this equation. On sunny days, when the most water is required to irrigate the property, the solar plant will produce the most electricity to power the reverse osmosis plant. On days of low solar generation, with rain or no sun, irrigation needs are correspondingly lower. And, by storing the product of solar power – desalinated water – rather than the solar power itself, CusinArt do not have to invest in costly and environmentally damaging batteries. Water is much easier to store than electricity.
CuisinArt have submitted a planning application for a further 3.5 MW, again, off-grid. When the new golf course hotel and villas are completed, the CuisinArt total demand will rise to about 7 MW. Solar power will help them meet a large proportion of this demand.
Meanwhile, homeowners are also switching over to renewables. One large villa currently under construction will use solar technology to produce hot water and run the pool pump, while a 4 KW solar PV system will supply other electricity loads.
“Council is committed to make every possible effort to reduce the cost of electricity on the island and to implement the recommendations.”
EXco Minutes October 2012
Will Renewable Energy bring down costs?
To provide a reliable electricity supply at reasonable cost, Anguilla will need diesel generation for some time to come. The aim of AREIP is to reduce this dependence to a responsible minimum. A utility scale project of 1 MW would represent nearly 5% of ANGLEC’s total electricity demand. While it will not reduce costs initially, it is a toe in the water – crucial first steps along the path to developing renewable energy on a broader scale.
The renewable sources of wind, solar and waste can make a significant contribution to Anguilla’s energy mix and can decrease and stabilize the cost of electricity in the medium term. The longer we delay implementing them, however, the longer the medium term becomes. We are wasting precious time. Every self-produced and consumed kilowatt–hour represents a savings as compared to the retail cost of electricity. It also represents a reduction in fuel consumption by the utility, lower fuel costs and lower emissions.
Solar costs have decreased dramatically and Anguilla has seen a rapid upturn in the number of solar PV systems and solar water heaters installed within the last two years. While upfront costs can be high, starting at around US $6,000 for a 2 KW system (Source: Caribbeanrenewable.blogspot.com), payback time for the return on investment is now as low as three years. Payback on a solar water heater is now less than two years. A commercial solar system works out to US $0.20 per kilowatt hour (Source: solarbuzz.com). A very attractive rate when compared to ANGLEC’S US $0.43.
What Will Happen If AREIP Is Shelved?
What was the point of AREIP, if, as it appears, it has been shelved? If the Government was just going to tear up the agreement, why didn’t we take CDKN’s $200,000 and supply solar panels for our hospital, schools or government buildings instead?
With or without AREIP, solar is inevitable. The industry’s best scientists are working to find a solution to the problem of storing unused power. Soon, new technologies will make it environmentally, technically and economically viable to store excess renewable energy. Smart microgrids will manage demand to maximise renewable power supplies by shutting off equipment that is not required to operate continuously. It will then become possible to rely on renewable energy without needing ANGLEC’s storage and back-up services.
Diesel fuel prices are likely to continue to rise, pushing ANGLEC’s prices up even higher, making solar even more attractive. As more customers buy into solar equipment, prices for bringing in that equipment will fall. Will more residential and corporate customers be tempted to go off-grid entirely if ANGLEC persists in what seems to be a Canute-like policy of obstructing renewable integration? If they go off grid, ANGLEC will not have access to their excess electricity. More seriously for ANGLEC, these consumers will no longer help to carry the non-fuel costs of the country’s energy infrastructure. ANGLEC needs the momentum of middle-class Anguillians to adopt the technology and stay on-grid, or it will be left with a shrunken customer base of businesses with fluctuating demand and lower-demand, lower-income families. As one concerned resident puts it, “A perspective change is needed. If the result of AREIP is a cheaper – more effective power supply – everybody wins. ANGLEC needs to get ahead of the wave rather than try to swim to keep up.”
Inertia
It is unclear why the Government or ANGLEC is stalling on the implementation of AREIP – a project which does no more than comprehensively outline the way to implement a policy objective the MICUH has fully endorsed. Especially when it has the potential to bring long-term financial benefit to all the people of Anguilla. Even if there are concerns about the wisdom of a distributed generation integration project (concerns which Castalia fully addressed) it still makes sense, on every level, to pursue a utility scale project.
If, as is stated, ANGLEC earns no profit on diesel – passing it on at cost to the consumer – then why does it appear so committed to continuing its use when there are alternatives? Perhaps because Government reaps a 7% duty on all fuels imported onto Anguilla? Perhaps it is the Cost of Service Study which is proving difficult. In order to set the price at which it will buy power back from distributed generators, ANGLEC needs to quantify all its costs. It needs to quantify the ‘avoided cost’ of the diesel not used to generate that amount of power. Set the diesel price high and it will have to pay that high rate to customers, which will cut into its profits. But if it sets it low, then customers will wonder why they pay US $0.43 per kilowatt hour. ANGLEC’s costs will come under the microscope; this might be making it a little uncomfortable. As an unregulated private company with a monopoly, ANGLEC is subject neither to the market nor to regulation in the public interest – an arrangement that gives Anguilla the worst of both worlds.
Anguilla has an amazing opportunity to decrease its importation and use of fossil fuels and to meet the goals of climate change policies. Anguilla is blessed with abundant natural, renewable resources – but they are being squandered. What we need now is Rumpelstiltskin to start spinning this straw into gold, because the Government seems strangely unwilling to do so. AREIP delivered all the tools necessary for renewable energy integration into the hands of Government. But still Anguilla is being disenfranchised.
This Government was elected in 2010 on a manifesto that pledged as follows: “The AUM government will aggressively seek out alternative energy sources and reduce the cost of electricity to every single household and business. Alternative energy sources will be explored such as wind, solar and geothermal”.
It is time to call in that pledge. As my interview with Michael Taylor draws to a close, the wind catches one of my papers and plays with it, bringing it down to rest just out of my reach. Like it’s trying to tell me something.
