Bermuda is searching for alternative energy sources
Belco's high electricity prices came under fire from Finance Minister Bob Richards recently, focusing attention on the power provider's reliance on fuel oil, as well as its profits.
Sam Strangeways spoke to Economic Development Minister Grant Gibbons about what Government is doing to find alternative sources of energy for Bermuda.
Government's 2011 White Paper on Energy promised a “bright, exciting” future “not bound by fossil fuels” for Bermuda.
But, two years on, the Island remains as reliant on them as ever and the cost of electricity keeps rising — a fact not lost on Economic Development Minister Grant Gibbons.
“It's an issue that Government is very much looking forward to tackling,” he said. “There are a lot of pieces to addressing this challenge of high energy prices.”
Dr Gibbons, whose Ministry includes the Department of Energy, said he understood the frustration felt by many about steep bills from Belco, the Island's only electricity provider.
That discontent was voiced by his Cabinet colleague Bob Richards earlier this month, with the Finance Minister accusing Belco of taking advantage of its “monopoly power” by charging too much and reaping in the profits.
Dr Gibbons said he appreciated where Mr Richards was coming from, particularly in light of rising prices, with the latest Consumer Price Index showing consumers paid three percent more for their electricity in March than in February.
“It's been a long-term trend,” said the Minister, adding that he also appreciated the challenges faced by Belco.
“Belco runs on diesel and fossil fuels to generate their electricity,” he said. “Part of their problem is that a good portion of their pricing structure is based on the price of oil. We need to look at alternative ways. I know Belco is doing this.”
The 2011 White Paper detailed how Bermuda became dependent on fossil fuels derived from oil when “they were cheap, easy to transport and could power a wide variety of machines”.
It noted: “Unfortunately, as our use of fossil fuels has grown we have become increasingly aware of a range of issues related to their use and now realise our choice was short-sighted and is neither environmentally nor economically sustainable.”
Dr Gibbons said the White Paper, which will be revised, was a “little dated” but contained a “lot of good things ... which we are now moving ahead on”.
He explained Government was exploring energy production from wind and waves, along with combined heat and power plants (CHP), photovoltaic fuel panels and the “real prospect of a solar farm” at the old Navy munitions pier at the airport.
“We'd like to move forward to a point where we have different independent power producers feeding energy into the grid,” the Minister said.
He added that such projects involved a good deal of initial cost for the producers and they'd need the ability to sell power back to Belco.
“One of the areas that we are working on now, and we have got a number of people looking at it, is the whole issue of interconnectness.
“@ Tynes Bay right now, some of the power generated by waste to energy is sold back to Belco at a certain rate. The rate is important and is known as a feed-in tariff. There is a need to find a rate that is fair and equitable.”
He said Government had to consider: “What are the interconnectness arrangements? What are the feed-in tariffs? Is the grid capable of handling an intake of megawatts?”
He added: “Part of it, obviously, would be up to the grid [Belco] as to what they are going to require but part of it may be the responsibility of the independent power producer.
“There are issues there, but I think the point is we would like to be able to move towards a situation where we have other people, whether it be households [or others] generating energy.
“That's going to require some logistical and infrastructural changes, which we are going to have to work through and which Belco will have to be a key part of.”
The Minister said it was highly likely that the new authority tasked with regulating the telecommunications industry, would also take on energy — with its remit to include setting feed-in tariffs.
The authority would replace the Energy Commission, Dr Gibbons said.
“The structure is there and it's a full-time professional structure and much better suited to dealing with some of these areas. That's going to require legislation. During the course of this year, we'll be probably moving in that direction.
“The challenge that I think we have inherent with the Energy Commission is it does not have a lot of power. It doesn't have the teeth required to address the issues.
“[We need] a stronger regulatory structure and a lot of co-operative arrangements. Over the course of this summer we are working through policy direction and working with different stakeholders.”
He said Belco had “many of its own proposals” and was “pushing for alternatives as well”.
The company already has an interconnection policy which allows householders with small-scale renewable energy generation systems to feed excess power to the grid at the same rate they pay for power.
And it has put together potential commercial agreements for larger-scale operations.
The last Government, meanwhile, put rebates in place for those wanting to import alternative, and greener, means of producing power, such as solar water heating systems and solar photovoltaic electric generating sets.
But Dr Gibbons said such systems, which don't come cheap, had not really taken off here yet.
“The White Paper was very optimistic in terms of the take-up in terms of solar panels and solar thermal [energy] and it's been a much, much slower uptake than I think the writers of the White Paper anticipated. One of the reasons for that is cost.”
He described photovoltaic panels as a “very interesting solution for Bermuda”, along with solar thermal energy, where the sun is used to generate hot water.
CHP plants, he said, have been “talked about for some time” and could potentially prove effective in Bermuda.
“Instead of using 40 percent of your fuel, you can use 80 to 90 percent of it. You are using that to produce cold water and steam for other purposes. It's a much more efficient method of generating [power].”
Natural gas, and how it could be used here, is also being seriously investigated.
Dr Gibbons said: “The United States, in the last few years, has become an almost independent producer of natural gas. They may be an exporter in the next few years. The price of natural gas has come down dramatically.
“Natural gas is a much cleaner fuel and has a lower carbon footprint. One of the abridging strategies here is to use possibly a source of liquefied or compressed natural gas as an alternative to bringing in lots of diesel.
“Belco is looking at it and there are other people looking at it as well. It's going to require a fair degree of investment, capital assets.
“You have to find a steady source of fuel to get it here. You need to turn it back into compressed natural gas — you have to deliquefy. It requires a certain amount of physical plant.
“We think at the very least this could provide better stability in terms of the price of fuel here, which is a key piece of the costs of electricity. It would also provide other opportunities. It's a cleaner, greener fuel in that sense.
“It's not as good as solar or wind but it could be a nice bridging technology, let's say for the next five or 20 years.”
The Minister said he agreed with Mr Richards that the cost of energy was a factor in Bermuda's ability to attract business here, including hotel projects.
“They [hotels] are very sensitive to it, because they have a very narrow operating margin. That's been an issue for many of the existing ones and ones considering Bermuda as well.”
Dr Gibbons said Government was committed to finding cheaper electricity but it had to be sustainable.
“We can't have a situation where we have power outages because the wind drops for a few days or because we are in heavy cloud. It does require quite a bit of cooperation, working together and sorting through these problems.”
* Bermuda's first electrical generator, a 50 kilowatt gas unit, was installed in the City of Hamilton in 1907. It couldn't meet increasing demand so additional generators were soon imported via steamship.
* Since November 2010, Belco has allowed residential customers with small-scale energy production systems to feed excess power to its grid at the same rate they pay for power. The company says take-up has been limited so far — probably due to heavy initial costs.
* The Energy Commission, which is likely to be replaced by a more powerful regulatory body, does not release its annual reports to the public — nor does it have to. The Energy Act 2009 requires only that it provides the relevant Minister with a report on its activities, not taxpayers. Visit www.energy.gov.bm for more information on the Commission and the Department of Energy.
* A Corporation of Hamilton plan to install solar panels at Bulls Head car park has stalled. The idea was to have a system owned and operated by an investor consortium, which would sell electricity to the city, allowing for long-term fixed energy rates and shade on the upper level of the parking lot. Edward Benevides, chief operating officer and Corporation secretary, said last week: “There is nothing further to report on the request for proposal which was delayed recently. Belco must create an electricity buy-back model, in consultation with the regulatory body, before the City can evaluate any project to be viable.”
* A local company has put a proposal to Bermuda Hospitals Board for a combined heat and power plant at King Edward VII Memorial. Patrick Caton, from Caliper Engineering Services, told
The Royal Gazette this week: “The proposal initially offered 20 percent net operations savings to KEMH on energy, with no capital cost. [We are] awaiting an answer as to whether we can explore deeper to identify further areas of improvement.”