Belco aims to reduce cost of electricity

  • Ageing lines: this cable was 67 years old when it finally failed. Belco plans to invest $125 million to modernise the distribution system over the next five years (Photograph by Jonathan Kent)

    Ageing lines: this cable was 67 years old when it finally failed. Belco plans to invest $125 million to modernise the distribution system over the next five years (Photograph by Jonathan Kent)

  • Old and new: Belco will be renewing its grid with cables like that, pictured right, replacing decades-old cables like the one next to it (Photograph by Jonathan Kent)

    Old and new: Belco will be renewing its grid with cables like that, pictured right, replacing decades-old cables like the one next to it (Photograph by Jonathan Kent)

  • Sean Durfy, Belco's CEO

    Sean Durfy, Belco's CEO


This rotten and damaged electricity cable dates back to 1951, the year when the Royal Naval Dockyard officially closed as a British military facility and Earl Cameron made his big-screen debut in Pool of London.

After 67 years of service within the island’s electricity distribution grid, it has finally given up the ghost. The burnt-out cable is representative of an ageing grid not designed to meet today’s electricity demands.

As Belco publicly stated last year, about 25 per cent of its underground cables are more than 60 years old. An additional 15 per cent are more than 50 years old.

However, much needed upgrades are now under way. Over the next five years, Belco will carry out a $125 million project to modernise the transmission and distribution network, including cables, substations and the installation of advanced meters.

The work will help to improve the reliability and efficiency of electricity delivery, something that Belco is responsible for under its Transmission, Distribution and Retail licence granted by the Regulatory Authority.

The work will help to improve the reliability and efficiency of electricity delivery, something that Belco is responsible for under its Transmission, Distribution and Retail licence granted by the Regulatory Authority.

The ongoing grid improvements, coupled with new generating equipment and a proposed switch to natural gas as a principal fuel — all part of Belco’s $250 million capital plan — are expected to yield great efficiencies.

Sean Durfy, chief executive officer of Belco and its parent company Ascendant Group, said: “The whole aim of the exercise for us is to get the cost of electricity down and we believe we can do that over the next five years.

“We know we have some of the highest rates in the Caribbean region and we know we have to get the cost of electricity down. We know the high cost of electricity has an impact on our customers and on the Bermuda economy.

“We have been running the company in a certain way for 100 years and you can’t just stop that — it’s going to be a step-by-step process.

“But within five years, we believe we will be able to manage our costs down to the point that our rates will be comparable with other islands.”

In March, the Regulatory Authority gave Belco the go-ahead to build the North Power Station and to retire some of its ageing and inefficient generators.

Mr Durfy said the project would provide work for about 100 people over two years. He said the project was “fully wrapped”, meaning that any cost overruns would be borne by the contractor, rather than Belco.

The main contractor for the project is BWSC, a Danish company that has built 180 power plants in 53 countries over the past three decades.

Belco will decommission 80 megawatts of generating capacity and replace it with 56 megawatts of new capacity from the four new engines, supplemented by a battery energy saving system, known as BESS. The massive batteries, with an output capacity of 10 megawatts, will be housed in the new power station on land off Cemetery Road.

BESS will contribute to efficiency as well as reliability of the supply. “When a unit goes down you have to have other engines ready to ramp up quickly. The batteries will give us more time to do that,” Mr Durfy said.

The new engines will run on the light and heavy oil fuels Belco burns today, but will be easily convertible to natural gas — should the island decide to opt for that fuel in future. They will use a single chimney stack, while one of the two chimneys in Belco’s existing plant will be removed.

“It will adhere to modern noise and vibration standards and although it’s an industrial site, it’s built to ensure the best aesthetics,” Mr Durfy said.

The project will allow Belco to reduce the number of engines at its Pembroke plant from 17 to 12.

Also, a pilot programme is under way with advanced meters that will give both the customer and Belco more information about electricity consumption. The aim is that eventually, customers will be able to access meter information online through Belco’s portal.

For the company, the meters will provide valuable data about fluctuating demand that will help it to better manage supply to different parts of the island.

Belco submitted its Integrated Resource Plan — comprising proposals for the future of electricity supply in Bermuda — to the RA in February this year. Next comes a consultation period, giving the public the chance to have their say.

The plan incorporates an increase in the role of renewable energy, which will gain a significant boost from a six-megawatt capacity solar farm scheduled to be built within months at the munitions pier of LF Wade International Airport, land also known as “the finger”.

Mr Durfy said while solar energy from rooftop installations and the utility-scale facility in the East End would make a significant contribution to supply, it could not replace the island’s need for baseload capacity from engines burning oil or gas.

“To replace the 60 megawatts of capacity, you’d need about 175 acres for the necessary solar panels — about three or four times the size of Hamilton,” Mr Durfy said.

Wind turbines constructed at platforms out at sea are another option. But Mr Durfy, who has in the past been involved in projects to build vast 150-turbine wind farms in the North Sea, said the five or six 10-megawatt turbines Bermuda would need, would not be economically efficient. He added that the wind tended to drop at the times of year when electricity demand was at its highest.

Successive government have advocated more competition in the electricity sector, something Mr Durfy believes will not achieve the desired result of a better deal for consumers in a market the size of Bermuda.

“I believe that opening up this market to competition will not necessarily lead to reduced pricing — I stand by that view and several studies support that,” Mr Durfy said.

Because Belco is a monopoly supplier of electricity, it was the regulator’s role to replicate the competition, Mr Durfy said. That was why Belco had to adhere to service standards and a grid code and needed to justify and get approval for any rate increases.

Belco aims to have an entirely electric fleet of vehicles by 2022. Mr Durfy hopes to see the popularity of electric vehicles continue to grow on the island and not only because it will boost electricity sales.

“It just makes sense for the island,” Mr Durfy said. “Electric vehicles have about 65 per cent of the operating costs of internal combustion vehicles, because there are fewer moving parts.”

The cost of charging an electric car was as little as one fifth what it costs to fuel a conventional vehicle, he estimated.

A mass move to electric vehicles would boost electricity demand, allowing Belco to spread its fixed costs wider, leading to lower electricity costs per kilowatt hour, Mr Durfy argued.

“Electricity demand is falling about 1 per cent a year, but if the island’s vehicles were 100 per cent electric, we estimated it would add 10 to 12 percentage points to demand,” he added.

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Published Apr 25, 2018 at 8:00 am (Updated Apr 24, 2018 at 11:00 pm)

Belco aims to reduce cost of electricity

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