Homes and businesses can expect up to $40 million in cost savings annually as the Cayman Islands begins its transition to renewable energy over the next few years, utilities boss Richard Hew has claimed.

The Caribbean Utilities Company CEO says a handful of projects currently in the pipeline, including new solar farms with battery storage and the proposed introduction of liquefied natural gas, will lead to significant savings for consumers in the near future.

The company calculates savings of between $50 and $70 per month on customer’s bills.

The monopoly utility is banking on large-scale solar farms, backed up by battery power, as the key means to accelerate a switch to clean energy. And it is adamant that liquefied natural gas should be used as a “transitional fuel” in the interim.

Hew did not rule out the possibility of wind farms, ocean thermal energy conversion and even nuclear power playing a role in future, although CUC has no current plans in those areas.

Hew, speaking to business leaders at an information session earlier this month hosted by the Chamber of Commerce, also highlighted consumption as a key challenge. He endorsed a suggestion for new legislationto introduce new minimum standards for air conditioning units and insulation on homes as a means to help keep power costs low.

Here are some of the key takeaways from his presentation.

Renewable energy transition is a must

“We need to get off the diesel-fuel rollercoaster,” Hew said, blaming the fluctuating fuel price, as well as the spiralling summer temperatures, for spikes in energy bills.

While there are a number of alternates to diesel fuel, CUC is principally interested in solar.

“Solar is the least expensive and cleanest source of energy available today,” he said, indicating a commitment to both large-scale farms and rooftop solar.

He highlighted large, utility-scale solar farms as the key means to increase the amount of energy Cayman gets from renewable sources from 3% to its ambitious target of 100% by 2045.

While Hew expressed support for rooftop solar, his presentation indicated this could account for, at most, 25% of the island’s power supply.

CUC continues to push for liquefied natural gas

Arguing that it is a cleaner and cheaper option than diesel, Hew doubled down on CUC’s ambitions to switch to natural gas as a “transitional fuel” en route to a renewable future.

Even with the infrastructure investment needed, he claimed it would cost consumers less than diesel. He said it would also significantly reduce CO2 emissions and diversify the fuel supply.

“This is an opportunity to quickly move to a lower carbon fuel with stable pricing, and then move on to something greener in the future,” he said.

Households could save up to $840 annually

A combination of new battery storage, LNG fuel conversion and three or four solar projects will result in “annual savings for consumers in the range of $40 million”, Hew said.

Asked to clarify what this would mean for customers, CUC said the typical household would save between $600 and $840 each year based on average consumption figures. Those savings are set against the current cost of diesel and would vary depending on the fluctuating price of that fuel.

He set the ambitious target of achieving this within five years and indicated that all those savings would go to customers and not to CUC’s bottom line.

“We’re excited about it. I don’t know any other industry that can say to you over the next five years that we can bring your costs down significantly,” he said.

However, Hew added a cautionary note that the speed of progress also rests with the government and the regulator.

What’s next?

The Utility Regulation and Competition Office, OfReg, opened the bid process in April 2022 for a 23MW solar farm, anticipated to be the first of many utility-scale solar and battery installations.

CUC has confirmed that it is among the bidders.

Hew said the company had received indications that news on that bid should be coming out in weeks.

The longer term aim, he said, is for 140MW of solar plus storage at utility scale – six times what will be provided by this one project.

CUC aims to be a bidder on those energy supply projects but would have to compete with others in a competitive process organised by regulator OfReg.

Solar farms could take up 700 acres

Hew indicated that while CUC, as the purchaser of electricity, is aware of plans for wind and other renewables that could be an option for Cayman, it is largely interested in solar.

Hew anticipates that around six or seven solar farms will be required. Land use for large solar farms has been an issue, however. He indicated that it would likely take around 700 acres to provide the solar capacity necessary to meet the targets of the National Energy Plan over the next decade.

While rooftop solar will play a part, he said utility-scale farms were needed to make bigger inroads. He added that CUC would not look to build on mangroves and highlighted a previous Department of Environment assessment that indicated around 1,200 acres of land could be suitable. CUC has also purchased land it believes could be used for that purpose.

Hew said, “700 acres sounds like a lot because we are not a big island. But in the whole scheme of things, it is not that significant, given the benefits that will come from it.”

Nuclear a longer-term possibility

Asked during the question-and-answer session about the possibility of nuclear power playing a role in Cayman, Hew indicated it could be a longer-term possibility.

Nuclear is currently not an option under the law and Hew said that would have to change if and when “micro nuclear proves safe, viable and cost effective”.

There’s currently no global model for the small-scale nuclear energy supply that Cayman would require, although the concept is used to power military submarines.

“We’ve been following micro nuclear for a long time … I think it is going to be a major player globally,” he said, noting that anything in Cayman would need to be a far smaller scale than what is done elsewhere.

“The tech they are looking at for small nuclear is lower grade, safer reactions.”

Electricity use increasing

Efforts to hit renewable energy goals are complicated by the fact that it is a moving target.

Cayman’s energy demands have increased by around 20% over the last seven years, according to Hew. That’s attributable to a growth in population and increased temperatures, making energy-guzzling air conditioners work harder to keep homes cool.

Hew expects this pattern to continue, pointing to the number of new developments on island as evidence of more customers and more power demand in the pipeline. Equally, temperatures are expected to continue to increase.

Defending CUC prices

Consumption, not pricing, is what is driving large increases in bills, Hew claimed.

He said CUC rates were cheaper than many of its Caribbean neighbours and bills were higher because people use more electricity.

“We’re certainly not the most expensive in the region. We just have very high consumption,” he said.

He highlighted poor insulation and insufficient-quality air conditioners as key culprits, noting that some customers had radically reduced costs by retrofitting their homes to be more energy efficient. He said anyone buying a new home would be wise to take advantage of upgrades to insulation and air conditioning, which would more than pay for themselves in reduced bills over time.

He added that record high temperatures in recent years meant air conditioners were working harder to keep homes cool, at higher costs.

Asked about the possibility of introducing new minimum standards for home insulation and air conditioning, Hew endorsed the concept.

“We have in the region of 1,000 to 2,000 customers who are struggling because their bills are significantly higher than they can afford,” he said.

“It is a problem we do need to tackle [as a country] and a big part of that is in my view … is to have minimum standards for insulation of homes and efficiency and proper installation of air conditioners.”

Click here to to view original article.