Marketing Renewable Energy Consultancy in Trinidad & Tobago

Renewable Energy (RE) is once again at the forefront both locally and internationally with the recent display of two opposing views, one by the Prime Minster of Trinidad & Tobago (T&T) versus another by the President of the United States of America (USA).

The T&T Prime Minister, following his return from RE and Energy Efficiency (EE) conscious Chile, reaffirms his country’s commitment to the tenants of the 2015 Paris Climate Agreement, with specific objectives to be achieved via the reduction of the utilization of fossil fuels and the promotion of RE and EE. The American President, on the other hand, following his return from the recently concluded 2017 NATO summit in Belgium,  unexpectedly announced his country’s withdrawal from the same agreement.

With these political decisions fresh in our minds, it is worth noting that the success of any RE & EE related product or service introduced into a market is not only based on the political environment but also on the effectiveness of the marketing plan designed for its promotion.

The T&T RE Market in the past has been virtually non-existent with the present grid-connected RE sources accounting for less than 1% of all grid-connected generation. However, the prospects of the future RE market appear to be more favourable with the Government’s target of 10% Penetration of RE of the total forecasted Electricity Grid Capacity by 2021, specifically from Wind, Solar and Waste to Energy (WtE) technologies. It is expected that the Government will continue to take the lead in the local RE Market, with the implementation of fiscal incentives and amends the relevant legislations to allow for grid connection.

It is expected that the Government will continue to take the lead in the local RE Market, with the implementation of fiscal incentives and amendments to the relevant legislations for grid connection. However, there will still be room for the introduction of private sector investment in distributed renewable generation sources (DRGS), such as domestic Solar Photovoltaic and Wind Turbine generators as a further means to increase T&T’s energy security and reduce our reliance on fossil fuels.

Although there is now a more optimistic outlook of the T&T RE Market, further considerations must be made to the fact that (i) the market is still in its Infant Stage and (ii) the cost of fossil based energy in T&T is relatively cheap at less than US$0.06/kWh for Residential Customers and even cheaper energy charges for Industrial Customers with an additional Demand (kVA) Charge. These low rates would result in DRGS having payback periods in excess of 9 years, which renders them less attractive. Thus, a more paternalistic approach to managing the introduction of DRGSs to T&T via the provision of consultancy as a service to all segments of the market for more optimally engineered solutions is required. This RE Consultancy Service must be marketed as a convenience to the customer where it is the consultant who would determine the optimal engineering design and specification solution to the DRGS application that is desired by the customer.

The effective marketing of RE Consultancy Services as a convenience for the customer is one of the pillars of roll out of DRGSs in T&T as it is essential for the removal of some of the existing barriers to entry the T&T RE Market. Even with the existing barriers to entry to the RE Consultancy Service T&T Market there are still a few RE Product Distributors that act as RE Consultants such as Smart Energy Ltd. and Solar Power Concepts Ltd. Thus the existing competitive landscape for RE Consultant Services is weak as there are just a few players who predominantly focus on Solar Technologies only. While the positioning of RE Consultancy Services should be one where the customer views engaging with a consultant before the initiating of any type RE Project solution being essential to its success.

In that same vein, the success of the RE Consultancy Service Company is based on the marketing plan effectively defining the market segments. Failure to effectively segment the T&T RE Market for opportunities would result in:

  • Marketing to customers who are less willing to pay the premium for RE Consultancy;
  • Providing only a limited range of initiatives to appeal to customers; and
  • Using unfocused marketing techniques

In addition to the typical criteria used to segment the market such as demographic, geographic, physiographic and product benefit criteria, the criteria should initially start with the RE type desired by the customer, followed by the maximum aggregate capacity of the DGRS into segments similar to the existing T&TEC Tariff Structure, for example:

  • Up to 5kW, for single phase, 3-wire, 115/230volt DGRS installations serviced under the Domestic and General Tariff (Rate A),
  • Up to 50kW, for single and three phase, 4-wire, 115/230volt DGRS installations serviced under the Commercial Tariff (Rate B),
  • 50kW to 200kW, for three phase, 4-wire 115/230volt DGRS installations serviced under the Industrial Tariff (Rate D1), and
  • Single DRGS with output greater than 200kW shall be installed for self-generation as stand-alone equipment which does not export to the Grid.

In the end, the effective marketing of RE Consultancy Services according to the specific market segments would help to mold the perception and attitude towards DGRSs and assist achieving nationwide adoption of RE.

 

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The economics of wind power in Jamaica

In late 2013, the Office of Utilities Regulation (OUR) named three preferred bidders for the supply of up to 115 MW (megawatts) of electricity generation capacity from renewable energy. The three preferred bids amounted to a total 78 MW of energy only renewable energy capacity, including two projects offering energy from wind amounting to 58 MW, and one offering solar amounting to 20 MW. The proposed delivery price to the grid ranged from US$0.1290 to
US$0.1880.

The preferred bidders were:

1. Blue Mountain Renewables LLC, to supply 34 MW of capacity from wind power at Munro, St. Elizabeth;

2. Wigton Windfarm Limited, to supply 24 MW of capacity from wind power at Rose Hill, Manchester; and

3. WRB Enterprises Inc., to supply 20 MW of capacity from Solar PV from facilities in Content Village, Clarendon.

The 20 MW solar farm will be the first of its kind in the Island, however Jamaica’s first grid-connected wind-powered generator was commissioned in February 1996 at Munro College. This wind turbine-generator, a Vestas V27 – 225 kW, was also the first grid-connected wind-energy source in the English-speaking Caribbean. The project was funded primarily by the Environmental Foundation of Jamaica (EFJ), but also included a long list of local companies and individuals. The total installation cost of the facility was US$300,000. However, much of the local services, such as JPSCo’s services and Alpart’s crane services, were donated free of cost.

The overwhelming success of the the Munro College wind turbine encouraged the Petroleum Corporation and the Government of Jamaica to commission Jamaica’s first large scale wind farm at Wigton (in the parish of Manchester) in 2004. The initial 20.7 MW wind farm, which came to be known as Wigton I, comprises of twenty three (23) NEG Micon NM52 – 900 kW wind turbines. The project was financed at a total cost of US$26.2 million with equity injection of US$ 3.2 million from the Petroleum Corporation of Jamaica (PCJ), a US$ 16 million loan from the National Commercial Bank of Jamaica (NCB) and a grant of US$ 7.0 million from the Netherlands Government.

A midst several changes, including $150 million in lost revenues due to unfavorable energy rates and $120 million due to penalties imposed by JPS for reactive power demand and a fail divestment attempt in early 2007, the Wigton wind farm was expanded during the period 2009 to 2010 to include nine (9) Vestas V80 -2.0 MW wind turbines. The 18 MW project, now called Wigton II, was financed from the PetroCaribe Development Fund at total cost of US$49.9 million.

In late 2010, JPS (the owner and operator) commissioned its first wind project – a 3 MW wind farm at Munro, St. Elizabeth. This project comprises of four (4) UNISON U50 – 750 kW wind turbines and was completed at a total cost of US$9.3 million.  The Munro wind farm interconnects to JPS 24kV distribution system unlike the Wigton wind farms, which interconnects to JPS 69kV system via a 11km long tie-line. It is worthwhile noting that the grid interconnection cost can account for as much as 8-9% of the total project cost. In the case of the Wigton wind farms the 11kM 69kV line was included in the capital cost of the initial project.

The two new wind farms coming out of the OUR latest request for renewable energy in addition to the national grid are projected to cost US$40 million for the WWF’s (Wigton Windfarm) 24 MW wind farm and US$90 million for the BMR’s (Blue Mountain Renewables) 34 MW wind farm. The cost of these two project forces me to ask one key question “how does public vs private investor wind power projects costs compare?”. I thought that a good way to get a fair comparison was to look at the projects that had/have  the same/similar time horizon. So, I decided to firstly compare the Wigton II and JPS Munro wind farm projects (which were both commissioned in 2010) and secondly the proposed Wigton III and BMR Munro wind farm projects (both scheduled to be commission in 2016), as shown below.

privatevspublic

This comparison revealed two important facts:

1. Private investor wind projects in Jamaica cost more than public wind projects. In the first case, the JPS Munro wind farm cost approximately 1.1 times the cost of the Wigton II wind farm on a per megawatt basis. Similarly, the proposed BMR Munro wind farm will cost approximately 1.6 times the proposed Wigton III wind farm on a per megawatt basis. It would be good to see a breakdown of the project cost to see exactly where the projects varied in term of cost.

2. The cost of wind power has come down by 40% for public projects and 15% for private projects since 2009.

Wind Capital Cost StructureThe cost of a wind project has a lot to do with its total size (economics of scale) however the most common way to compare wind project cost is on a per megawatt basis, as was done here. It is also worthwhile to add that the basic cost components of  wind projects typically include: turbine cost, grid interconnection, foundation, electrical installation, consultancy, financial cost, road construction, control systems, etc. The inserted table gives a break down of the % share of the total cost for each component.

Public projects, in most cases, could have a competitive advantage in terms of the land rental, financial cost and road construction components which could possibly explain to some extent why public projects have been carrying lower project cost compared to the few private projects that we have seen in Jamaica’s recent renewable energy history.

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