How to open solar plant
THE EDITOR, Sir:
Recently, I have been hearing talk about the development of a coal plant in Jamaica. First, anyone who says there is such a thing as clean coal is lying. Second, why not go solar?
The opening of a coal plant would be a step backward, while the rest of the world moves forward. The United Kingdom, the United States, and Canada have all committed to phase out their coal facilities in the near future. In the US, coal accounts for 24 per cent of CO2 emissions. Climate change is real. Last year was the hottest in 136 years of record keeping. Given that Jamaica is completely surrounded by water, this is not something we should take lightly.
Another thing is partnering with a Chinese firm. Have you been to Beijing recently? Well, if you haven't, don't forget to take your mask.
A NEW PROJECT
If I had the wherewithal, I would use the fact that we have sunshine year round and open a solar plant. Here's how I would do it:
- For the first plant, I would partner with a solar panel manufacturer or a company that has experience developing turnkey solar plants (there are a number of them in the US). The other partner would be a Jamaican firm.
- Second, you are going to need funding. Typically, solar plants operate with a higher debt ratio than other companies given the predictability of the cash flows. Normally, solar plants sign long-term contracts (15-plus years) to sell power to the grid for a set rate. This is how banks get comfortable with lending money to a new project that is not up and running yet. So I would recommend signing a contract with the Jamaica Public Service that is possibly guaranteed by the Government of Jamaica.
- Once the contract has been signed and a proper business plan is in place, you can get funding. I would recommend using a syndicate of banks vs a sole lender. Also, probably a 30-40 per cent equity contribution, with the rest being debt.
- Another thing I would ensure is a 'minimum domestic clause' in the contract. This would state that at least 50 per cent or more of the project-development cost is spent in Jamaica on Jamaicans, whether it be labour or raw materials.