Wigton and the viability of wind energy

The following is the second of a two-part series. Part One was published last week.

William Saunders, Guest Columnist

The technical success of Wigton in providing reliable energy with no greenhouse-gas pollution encouraged the company and parent, Petroleum Corporation of Jamaica (PCJ), to expand the plant. In April 2005, one year after the initial commissioning, Wigton signed a memorandum of understanding (MOU) with a consulting firm to determine the feasibility of an extension. Ultimately, it was determined that the farm could be rationally expanded with the addition of nine 2MW turbines, totalling 18MW.

The project was designated Wigton 2. It would save an additional 32,400 barrels of oil equivalent per year and avoid emission of about 46,000 tons of carbon annually. The Petroleum Act obliges the PCJ to transfer technology. Wigton, already the largest wind farm in the English-speaking Caribbean, would now become the training ground for transfer of technology to the region.

While the technical studies were under way, the Office of Utilities Regulation (OUR) requested in March 2008 competitive bids for 640,000MWh per year of renewable energy. Neither the PCJ nor Wigton applied. The Jamaica Public Service Company (JPS) was the only successful applicant, bidding for the installation of 3MW of wind-energy generation to be located in an area close to Munro College, hence the name Munro Wind Plant given by the JPS to the project. Interestingly, the JPS rates agreed with OUR for this plant were not the prevailing avoided costs, but an approved rate significantly in excess of the then published avoided costs and greater than that currently approved for Wigton - US$0.103 per kWh. The approved JPS rates also include provisions for escalation.

New capacity

Under the terms of the JPS licence, competitive bids need not be invited for the supply of new generating plant for power supply to the grid of less than a maximum of 15MW. However, the maximum rating of Wigton's new project exceeded that limit. Therefore, although the PCJ committed to the purchase of these turbines in June 2008, operation of Wigton 2 at its maximum rated capacity would require modification of the JPS licence. A new Wigton board was appointed in July 2008, and almost immediately afterwards, held discussions with the OUR to find an acceptable solution that would allow the plant to fully utilise all the new capacity procured.

In September 2008, the OUR assured Wigton that "the office could only justifiably consider your application once the current tender process had been concluded and in the event that there is still a shortfall in meeting the tendered capacity from qualified competitive offers". The only project approved after evaluation of the renewable proposals was the JPS, with two projects: one, the extension of an existing hydroelectric facility, and one for 3MW of wind power. Consequently, the generating capacity approved for construction after conclusion of evaluation of the bids received resulted in a shortfall of about 54MW from the stated objective. Based on the assurance of the OUR that it would be inviting further proposals, Wigton, therefore, anticipated that the OUR would have issued a further invitation for proposals for renewable energy generation project. This would have allowed Wigton to apply for the full 18MW plant as well as the additional wind-energy capacity Wigton/PCJ had by then identified.

Unfortunately, this new invitation did not materialise in 2008, 2009, or 2010. Why wasn't this done? Could it be because the OUR is of the opinion that renewables, wind and solar, are too expensive for Jamaica? Throughout 2009 and 2010, Wigton made several attempts to find a solution to the dilemma of obtaining a licence for the 18MW farm, but to no avail. The solution proposed by the OUR was for Wigton to apply for a licence for 14MW (seven of the nine turbines), following which a power purchase agreement (PPA) would be concluded with the JPS. After this agreement was concluded, the OUR would then allow Wigton to negotiate another agreement for the remaining 4MW. It appeared, however, that such approval was contingent upon the Government of Jamaica rescinding the extension order of 2006, which gave the PCJ exclusivity to develop indigenous renewable energy.

The problem with this option, however, is that Wigton could not conclude a PPA as the dispute regarding reactive power had not been settled under the terms of the existing contract, and given the positions adopted by the JPS and the OUR on this issue, the matter cannot be settled without arbitration. However, this would be counter to government policy. This is called a conundrum.

Could reduce Jamaica's oil bill

Wigton has purchased, installed, and commissioned 18MW of wind-generation capacity, but, as has been already pointed out, a technicality in the licence under which the JPS operates limits the maximum output from the new facility to 15MW. The OUR has also not yet invited tenders for additional renewable power as they claim that the PCJ extension-of-functions order does not allow this action. The opportunity to reduce the country's oil import bill is being frustrated by the possibility of requiring 3MW of fuel-free generation to sit idle, thus depriving the country from savings in excess of US$1.4 million annually. The JPS has agreed that in this instance, the 15MW restriction can be relaxed. The OUR must also agree. This still leaves the issue of price and reactive power charges unresolved.

Why can't Wigton be contracted as a regular independent power provider (IPP) without any guaranteed power availability - that is the JPS would commit to take whatever power may be available from Wigton, with Wigton not guaranteeing any minimum power availability? The JPS would then pay Wigton monthly for whatever energy was purchased, and this expense would be included in the 'fuel and IPP charge' in the consumers' bills, just as is done currently for all IPPs. The Jamalco and Caribbean Broilers contracts also do not specify any minimum availability of power. In fact, the Wigton supply should be priced on exactly the same basis and level as Jamalco's. There is no compelling reason why the kWh rate should be any less.

Reactive-power billing issues would still need to be resolved. The JPS should be asked to be specific in identifying the points on which it disagrees with the technical and economic conclusions of the study submitted by the British consultants engaged by Wigton to review reactive billing issues. If the points of disagreement between the JPS and the British consultants cannot be resolved after mutual discussions, the issues in dispute must be submitted to arbitration.

The country cannot continue to lose as many dollars as is now the case on what ought to be a relatively straightforward technical issue. The OUR should encourage the development and use of indigenous resources as prescribed in the act.

William Saunders is the former chairman of Wigton Windfarm. Email feedback to columns@gleanerjm.com and wvsaunders@hotmail.com.