Editorial | Accelerating renewables

The intention of the Government’s Generation Procurement Entity (GPE) to soon open bids for 220 megawatts of renewable energy is an important development at a critical time, which the authorities must not allow to falter.

Indeed, they should accelerate the installation of the 100MW of renewables which GPE awarded to two companies, Wigton Wind Farm and Sunterra Energy Jamaica, 14 months ago.

It has been suggested that implementation of the Wigton and Sunterra projects has been complicated by uncertainty over the future of Jamaica Public Service (JPS), the monopoly transmission and distribution company, whose existing licence expires in July 2027.

The government has told the company, whose major shareholders are the Japanese firm, Marubeni and South Korea’s East-West energy, that it won’t renew the licence in its current form. If the parties can’t reach an agreement, the government will be obligated to acquire Marubeni’s and East-West’s combined 80 per cent, and probably find new buyers for JPS, given the administration’s lack of appetite for running JPS.

These issues, apparently, have impacted the negotiations for power-purchasing agreements (PPAs) between, on one hand, JPS, and, separately, Sunterra and Wigton.

However, as the current international energy situation makes clear, Jamaica has no room for uncertainty and further delays in its power general strategy, including its plan that at least 50 per cent of the electricity on the national grid be generated from renewables by 2030.

IMPORTS

Jamaica imports about 90 per cent of its energy needs (crude oil, refined petroleum products, LNG), translating in recent years to about 21 million barrels of oil and oil-equivalent a year. Its oil bill has hovered close to US$2 billion annually.

For the fiscal year starting April 1, the government – based on its expectations of developments in global oil markets – crafted its budget on US$60-a-barrel oil, particularly West Texas crude. That represented a price drop of three and half per cent on the average price the country paid for oil up to December, and 19.3 per cent below US$74.4 per barrel in 2024-25.

Instead, since US President Donald Trump and Israel’s Benjamin Netanyahu launched their war on Iran more than a fortnight ago, the price of oil has rocketed, especially after Iran not only hitting back at oil-producing Gulf countries with US military bases, but effectively closed the Strait of Hormuz, through which over a fifth of the world’s seaborne oil passes.

In recent days, West Texas Intermediate has traded at close to US$97 per barrel, while Brent, the international benchmark crude, has hovered close to US$110 per barrel. Looked at another way, the price of West Texas crude is over 61 per cent higher than what the government projected. This is in a context where, based on past imports, each US$1 increase in a barrel of oil adds about US$6.3 million, or over J$980 million, to what Jamaica pays for crude, which accounts for about 30 per cent of all petroleum imports. Other fossil fuels’ prices also track crude’s upward movement.

Jamaica has no control over oil price hikes, but the increased petroleum prices work their way into the national economy in the cost of goods and services, electricity for petrol homes, petrol for vehicles, power for factories, foods in shops, etc.

ENERGY SECURITY

Which makes the Government’s policy of expanding Jamaica’s use of renewables sensible, beyond lessening the release of Earth-warming greenhouse gases into the atmosphere. It enhances energy security, and, hopefully, as energy-storage technology advances at an increasingly lower price.

With respect to the latter, the GPE’s proposed new invitation to bidders is significant, given its inclusion of 100 MW of battery energy storage systems (BESS). All things being equal, battery storage systems should reduce the need for fossil fuel generating redundancies, for those days when the sun doesn’t shine or the winds are too still to turn turbines. So, the performance of the planned BESS technologies will be closely watched for their impact on costs.

Further, the proposed 220MW of additional renewables is about 21 per cent of Jamaica installed generating capacity. When added to the existing renewables (about 12 per cent of capacity) and the 100MW that is to come onstream, it should push renewables on the national grid to over 42 per cent.

Additionally, prior to being told that its existing licence wouldn’t be renewed, JPS exercised its first right of refusal to replace 171 MW of its own generating capacity, which is beyond its life cycle. Those oil-fired plants were to be substituted with renewables, including storage. If implemented, that would add another 16 per cent to the stock of renewables, relative to current overall generating capacity. That would push the island well over the 50 per cent renewables target.

There is no time to waste on getting it done.