Something fishy about OUR and JPS
Densil Williams, Guest Columnist
The Office of Utilities Regulation (OUR) and the Jamaica Public Service Company (JPS) came out swinging over the past two weeks in rebuttals to an article I wrote that was published in the April 22, 2012 issue of The Gleaner. The article was titled 'Shock treatment: Can JPS do more to reduce energy cost?'
Not surprising, JPS was first out of the blocks with a response to the article. Valentine Fagan, vice-president of power plants at JPS, tried to clear the air on some questions I had posed in my article. Unfortunately, the expert did not do a good job.
Similarly, Michael Bryce, director of consumer and public affairs, proffered a response to some questions that were asked of the OUR. Again, his responses raised even greater concerns about the role and relevance of the OUR.
In their respective pieces in the April 29 and May 6 editions of The Gleaner, respectively, both Fagan and Bryce have tried to refute the claims in my April 22 article by first setting up a straw man by stating that my contribution was deficient in its technical analysis. This is just a red herring. They have not provided any evidence to buttress their claim. This article will respond to the central points in both the OUR and JPS responses. I do not intend to write a response to all the issues raised by both men.
The central issue I raised in my article of April 22 was whether or not JPS is using the most efficient technology to generate electricity in order to help in the reduction of the cost of energy. The article went on to compare the combustion turbine engines and the reciprocating diesel engines, two options that JPS had for use in its generation of electricity for its new 360MW plant. JPS chose the former, and I questioned why.
In his response, Fagan tried to explain why JPS chose gas turbines, and not the diesel engines. Fagan, an engineer with more than 30 years of experience in the field, provided a theoretical justification as to why gas turbines are better than the diesel engines. This is what he wrote:
"The information provided by the equipment suppliers who submitted proposals to JPS clearly indicates that the combined-cycle gas turbine (CCGT) plants are more efficient:
1) Using natural gas, the CCGT technology is 8.4 per cent more efficient than the diesel technology.
2) Using ADO (automotive diesel oil) as backup fuel, the combined-cycle technology is 12.4 per cent more efficient than the diesel technology.
And, it is important to note that these efficiency projections are backed by performance guarantees from both equipment suppliers."
Now, theoretically, Fagan's report is correct in some instances. In a combined-cycle mode, the combustion turbine plant does give a higher overall fuel efficiency compared to a diesel engine plant of similar size.
However, when the variable of ambient temperature is taken into consideration, these performance guarantees cannot hold up. As an experienced engineer, Fagan should know this. The performance guarantees that JPS reported are under normal ambient temperate, i.e., cooler climate. In Jamaica, we have high ambient temperate, i.e., a hot climate. It is a known fact that this has significant implications on the performance of the gas turbine plant because of its inherent design.
Power output, efficiency
Experts have indicated that both power output and efficiency suffer dramatically as the temperature gets hotter. Indeed, some evidence suggests that degradation starts to occur after 15°C for the gas turbines, while for the diesel engines, degradation starts at 35°C. Average temperate in Jamaica is around 28°C. Empirically, the efficiency numbers from JPS and the private power companies can be used to buttress this fact.
For JPS, its Bogue plant, which uses the gas turbines, has a combined-cycle efficiency of only 40.8 per cent. This is JPS's own number. Fagan knows this. On the other hand, the Jamaica Energy Partners plant, which uses reciprocating diesel engines, has efficiency of around 44 per cent when operating in simple cycle. Generally, when manufacturers give guaranteed plant efficiency numbers, they normally include the associated operating temperatures at which these guarantees are made. The OUR should be aware of this.
As it relates to the OUR, it is surprising that Bryce admitted that:
"For the natural gas electricity-generation project, having a secondary fuel option would allow the plant to be commissioned and start operating if there was any misalignment between the commissioning of the generating plant and the commissioning of the natural gas project. This dual-fuel facility is also a contingency feature which facilitates system reliability and security should there be any disruption to the natural-gas supply. (Such disruptions could include, for example, operational or maintenance requirements of the natural-gas system, or severe natural occurrences)."
He went on to say:
"... Resulting from the rigour of the analysis, the CCGT proposal, operating on natural gas as the primary fuel, was deemed to be the more cost-effective option, rather than the reciprocating engine proposal.
"According to the submissions, the CCGT proposal has guaranteed heat rates of 7,033kJ/kWh (efficiency - 51 per cent) and 7,457kJ/kWh (efficiency - 48 per cent) for operation on natural gas and ADO, respectively.
Comparatively, the MSD proposal has heat rates of 7678kJ/kWh (efficiency - 46 per cent) and 8,513kJ/kWh (efficiency - 42 per cent) for natural gas and heavy fuel oil (HFO), respectively. This shows that the efficiency of CCGT using natural gas/ADO is better than that of diesel engines using natural gas/HFO/ADO, contrary to the view of the writer. Moreover, this information is consistent with industry standards."
Clearly, the OUR and its consultants swallowed up the theoretical rationale proffered by JPS. As a regulatory body, shouldn't it have asked tough questions about the performance of the engines under different contextual situations? Did the OUR investigate the role of the ambient temperature in the report of the efficiency numbers? I am sure it knows the efficiency levels of the IPPs. Why did the OUR ignore these in its decision-making process?
Is the OUR satisfied that the 'guaranteed' performance will be realised under high temperature in Jamaica? Did the OUR compare the actual performance of the gas turbine plants in other countries under similar operating conditions such as those in Jamaica? Did it compare the guaranteed efficiency numbers given for the Bogue plant with the actual performance of that plant?
I think these are fair questions to ask of the OUR. If the watchdog has done these and its decision is to go with gas turbines, I will be comfortable then.
While I appreciate all that JPS has done in terms of investments in the energy sector, as well as its bold move to bid for the 360MW plant, I want to be sure that some of the mistakes made in the past regarding the technology used in the generation of electricity are not repeated.
I am very concerned about Jamaica's business uncompetitiveness, and there is no doubt that the cost of energy is among the top variables contributing to this. It is, therefore, important that we get the energy solution right and leave personal and corporate agendas out of a national problem.