"The 34.7MW is still very small on the scale of what JPS generates, so right now you will not see any decrease in your electricity bill," Rohan Haye, operations manager at the Wigton Wind Farm, told The Sunday Gleaner recently.
"We have to really increase the capacity for you to see any appreciable difference," Haye added in reference to the approximately 500 MW generated by the JPS.
According to Haye, Wigton Phase Two improves on the technology used in Phase One with more features. "There is still room for even more improvements, and we have already started to look at the possibility of a Wigton Phase Three," Haye said.
The Government has projected that by next year, 11 per cent of the country’s electricity will be generated by renewable energy.
The Wigton Wind Farm Limited, a subsidiary of the Petroleum Corporation of Jamaica (PCJ), was commissioned in 2004 and saves the country millions of dollars each year by reducing the amount of oil imported. It has also resulted in reduced carbon emissions.
"A cornerstone of this policy is diversifying our energy base. We will find new ways to power our economy and to reduce the amount of energy we use," Energy Minister James Robertson declared last year at the launch of the expansion programme.
"This policy will also enable us to reduce pollution and thereby protect the health of all Jamaicans as they go about their daily business. It will demonstrate that Jamaica is a responsible global citizen as we minimise our emissions of greenhouse gases, and reduce our carbon footprint," Robertson added.
The power produced by the wind farm is sold into the national grid under a 20-year power-purchase contract with the JPS.
The expansion is expected to allow the wind farm to sell the JPS enough energy to power about 24,000 homes.
Revisiting Jamaica’s energy crisis by James Robertson
The continued debate regarding Jamaica’s energy future is indeed very timely, particularly in the face of rising oil prices on the world market.
Coal is an inexpensive fuel in countries where it is produced but, for countries where it is an imported fuel, the converse is true.
The capital outlay for coal is on average two and a half times higher than that of LNG and takes two to three times as long to set up. Coal may be cheaper as a fuel input, about half price now, but the final cost, taking all factors into account, is far more expensive.
In the past few years, coal has been subject to price hikes and supply disruptions, which disprove the argument that is often made about coal prices being stable. For example, in the last quarter of 2010, international coal prices moved by 33 per cent from US$90 per metric tonne to US$120 per metric tonne. During this period, natural gas prices were stable.
A 120-megawatt coal-fired power plant, such as what Jamaica is considering, for example, produces approximately the same amount of gas that contributes to global warming as 150,000 cars.
Air pollution from coal-fired power plants includes sulfur dioxide, nitrogen oxides, particulate matter and heavy metals.
In an average year, a typical coal plant in Jamaica would generate 1,200 tons of nitrogen oxide (NOx), as much as would be emitted by 60,000 late-model cars. NOx leads to formation of ozone (smog), which inflames the lungs, burning through lung tissue and thus making people more susceptible to respiratory illness.
Four hundred and forty-four thousand tons of carbon dioxide (CO2), the primary human cause of global warming – as much carbon dioxide as cutting down 19 million trees.
Eighty-six tons of carbon monoxide (CO), which causes headaches and places additional stress on people with heart disease.
Compared to coal, natural gas emits fewer dangerous chemicals and about half as much carbon dioxide as coal. It is, therefore, considered a cleaner fuel source. Natural gas from LNG is even cleaner than pipeline natural gas, as the contaminants are removed in the liquefaction process, e.g. natural gas from LNG emits no sulfur oxides (SOx) at all.
LNG as an Alternative Fuel
Jamaica is in dire need of a quick solution to the high price of energy. The only possibility that offers the Jamaican economy a break from high oil prices in the near term is to generate electricity from new, efficient natural gas-fired, combined-cycle power plants.
In a bid to identify the most economic programme for power generation in Jamaica, last year the Office of Utilities Regulation (OUR) conducted a generation expansion study which covered the period up to 2029. The study identified a need for new baseload power by 2014, at latest, and showed that natural gas was a more economic choice than coal for power generation.
Oil and LNG are the only two fuels that can meet the 2014 timeline for a new baseload.
With the cost of crude oil currently at more than US$92.00/bbl and trending upwards, one of our major energy goals is to reduce Jamaica’s dependence on imported crude. As a result, the OUR’s study has confirmed the direction of the country’s policymakers.
It is important to note that most studies which show coal as the superior option for Jamaica were conducted prior to 2001. These studies did not include natural gas as an option and compared only coal and oil.
Forecasts by the energy industry’s major bodies, such as the International Energy Agency, the United States (US) Energy Information Administration and the Massachusetts Institute of Technology, all show gas outstripping and displacing coal and other alternatives as a fuel for power generation in the coming decades and have labelled natural gas as the "fuel of the future". The EIA’s 2011 Annual Energy Outlook projects that between the current period and 2035, the US power sector will see new capacity additions, inter alia, of 135 gigawatts of natural gas, 14 gigawatts of coal and six gigawatts of nuclear power.
Natural gas is the alternative to oil that can be implemented most quickly, and certainly much quicker than coal or nuclear power. Jamaica has reached an advanced stage in the development of an LNG project. The LNG facilities and the new power plants to utilise gas can be constructed within 30 months. In contrast, it would most likely take five to six years to plan and construct a coal-power plant and 10-12 years before it is feasible to implement a nuclear-power plant.
Additionally, the OUR data indicate that the capital cost for a 120MW coal-power plant is estimated at some US$360 million, compared with US$156 million for an LNG plant of a similar capacity.
Examples of Companies Pursuing LNG over Coal
Internationally, a number of companies are switching to natural gas. NRG Energy (NRG, Fortune 500) signed a US$1.9-billion deal to buy five power plants in California from the Blackstone Group. Four of the five plants will burn gas!
Also, in 2010, the Tennessee Valley Authority (TVA) in the United States announced that staring this year, it would begin to idle nine coal-fired generating units at three plants. The TVA plans to build natural-gas generators to replace several of the coal-fired units.
Shale Gas
In North America, technological advances have made it possible to exploit large reserves of natural gas trapped in shale rock, which was previously considered unrecoverable. The availability of shale gas has fundamentally changed the dynamics of the natural-gas markets, substantially increasing the reserves of recoverable gas, particularly in North America. As a result of shale gas extraction, the United States became the world’s largest producer of natural gas in 2009.
Consequently, much of the LNG that was intended to be supplied into the US market is now available to other markets such as Jamaica. Based on projects already committed, more than 100 million tonnes of additional LNG is expected to come on the market in the period up to 2015. Much of this LNG was intended for the United States, but because that market is now in oversupply, this additional LNG will have to find alternative markets. We in Jamaica stand ready to benefit from the increased availability of LNG. In fact, one possible consequence of the vast availability of shale gas in the USA is that the USA itself will become an exporter of LNG and, because of proximity, Jamaica would be a prime market for US-produced LNG.
LNG Security and Supply
While in the initial stages, it is likely that Jamaica’s LNG will be obtained from extraregional sources. It should be noted that Brazil, Venezuela and Colombia are all future significant producers of LNG and, once they start producing, their presence will ensure that natural-gas prices remain moderate in this region.
The terminal configuration is a key determinant in the logistics of LNG supply and, therefore, of price. Therefore, no serious supplier will offer a price until they are aware of the details of the receiving terminal. Taking this into consideration, Jamaica has deliberately pursued a strategy of first determining the LNG infrastructure configuration before approaching LNG suppliers.
Exmar Consortium has been selected as the infrastructure provider and negotiations with Exmar have reached a stage where it is now feasible to approach LNG suppliers. Jamaica intends to source LNG at world-market prices indexed to the Henry Hub benchmark natural-gas price in the USA. With the LNG market now in a state of oversupply, Jamaica is in an advantageous position in selecting the fuel source. Several major global LNG suppliers have expressed interest in the Jamaican market and some even visited Jamaica in 2010 to conduct due diligence.
In conclusion, the Government’s commitment to implementing measures that will ensure sustainable energy future for the country is unwavering.
James Robertson is the minister of energy and mining.
