By Dashan Hendricks
With Liquefied Natural Gas (LNG) from the United States, Jamaica is now on the path towards an energy revolution which, if managed properly, could change the fortunes of the country. Jamaica had set its heart on getting LNG for a long time. There were disappointments along the way in trying to get the fuel from Trinidad and Tobago. Other efforts to get LNG from other sources failed. Jamaica was lucky to be on the forefront of the export of the fuel from the U.S.
LNG will certainly help to bring stability in the price of electricity each month. That however is some time away. What must be recognised is that these shipments of LNG are to supply a 120 megawatt power plant at Bogue in Montego Bay; a plant which is significant in the country's energy production, but not significant enough for it to have a wide-scale impact on energy prices in the early stages. The full impact on energy prices from the introduction of LNG in the fuel mix to generate electricity in Jamaica will not be felt until the larger 190 megawatt plant in Old Harbour, St Catherine, comes on stream in 2018. When that materialises, Jamaicans will see energy prices which are more stable than they are now.
It has been touted that prices will be lower as well. How much lower will the prices be in 2018, is still left to be seen. What must be recognized however is that the much touted aim of reducing energy prices by at least 30 per cent in 2018, was set from the base price of 42 U.S. cents per kilowatt hour for electricity in 2012. That would mean bringing prices to 29 U.S. cents per kilowatt hour. The Ministry of Energy in the preceding administration said prices could fall 50 per cent below the 2012 level, when renewable - chiefly wind and solar - are introduced in the mix. That's 21 cents per kilowatt hour! Those prices were achieved earlier this year when oil prices, which form the base of electricity generation in Jamaica, fell below US$30 a barrel in February. Large commercial customers were getting electricity for 16 cents to 18 cents per kilowatt hour.
Beyond the current focus on LNG, the next push in price stability for energy must come from a focus on renewable energy, more broadly. The Jamaican Government has outlined a policy to achieve 30 per cent of the country's electricity from renewables by 2030, but the progress towards that target in Jamaica, compared with the rest of the world, has been slow.
Take for example, in 2004, six per cent of Jamaica's electricity was generated from renewable sources. In 2012, that portion amounted to eight per cent. Since then, the country has approved several requests for proposals to generate electricity from renewable sources, pushing the total output over 10 per cent at the end of 2015. Compare that with the progress worldwide and a different picture emerges. In the decade up to 2014, the global trend in renewable energy shows a 53-fold increase in solar photo voltaic capacity, a 15 fold increase in biodiesel production, a 10 fold increase in concentrated solar thermal power (CSP) capacity and a 10 fold increase in wind capacity. The global growth in renewable energy production has been so spectacular, the International Energy Agency (IEA), the World Bank and others, in looking back, say renewable energy production targets set for 2020 were met and exceeded by 2010.
Jamaica needs to up the ante and even be more aggressive in its renewable energy target. Setting a target of getting 30 per cent of electricity generated from renewable sources by 2030 shows a lack of ambition and seriousness about energy security. For too long, the country has been held to ransom by fossil fuel producers, mainly oil. Switching from oil to gas will bring price stability. The United States is a great friend of the country, but it still means Jamaica will be depending on imports for its energy future. Targeting renewables and implementing them brings greater energy security. For the most part, renewables are cheaper than conventional sources such as oil, gas and coal. A boost in production of those fuel sources has made those energy sources cheap enough to cause some to think investing in renewables right now is not prudent. For the future, it is. That means Jamaica must doggedly pursue renewable energy solutions. That must be done in a comprehensive way. For example, it must not only be a stated policy, but like the U.S. state of California, which has legislated a renewable energy target, Jamaican authorities must show they are serious about securing the country's energy future. It means the target for renewables must be more aggressive. Pushing the target to having 50 per cent of electricity generated from renewables by 2030 must be a stated aim. Jamaica's energy market is small compared to California, so it is much easier to do.
However, a more secure energy future must not stop at generating more electricity from renewable sources. It must include an energy policy which looks at the creation of micro and smart grids. A greater push can be made for net zero energy buildings in the construction sector. These require bold steps and a bold push. I was heartened recently when the young senator, Matthew Samuda, brought a motion to the Upper House to ban plastic bags and styrofoam boxes and cups. That motion is still in Parliament, but it has drawn a commitment from the country's largest producer of styrofoam to include enzymes in the product to cause it to break down within five years. Maybe a similar push in renewables will bring a similar response. The major electricity provider in Jamaica is a willing partner in the renewable space. Let's test the water with a bolder energy target for renewables for Jamaica's energy security.
Dashan Hendricks is RJR's Group Business Editor