The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Power & Light is racing against time to have its new $95m electricity plant ready to meet peak summer demand after plans for its cooling system literally hit the rocks.

Tribune Business can reveal that the state-owned utility’s scheme to cool the 132 mega watts of newly-installed generation capacity by digging four 800-foot deep wells at Clifton Pier is in danger of running aground because the area’s rock structures have proven far more difficult to penetrate than first thought.

BPL has so far managed to reach just over 50 percent of the target depth on two of the four wells and, with summer’s peak demand just three-and-a-half months away, it has ordered an alternative radiator system as a back-up in case the original strategy fails.

Several drill bits have already been broken in efforts to reach the required well depth, this newspaper has confirmed, with sources suggesting that only two of the seven Wartsila-supplied engines which comprise BPL’s new generation capacity are currently online and being used amid the wait for a cooling solution.

Tribune Business also understands that BPL management was advised against the well cooling solution by Wartsila, which urged the state-owned utility to instead purchase a closed radiator system, but executives decided to press ahead despite the supplier’s recommendation. The drilling woes, though, have finally forced them to alter course.

And, besides the challenges in penetrating the rock, this newspaper was also told that decades of oil spills and other BPL-related pollution at Clifton Pier means that the water pulled up by the wells to-date us unusable because it contains multiple forms of waste and harmful chemicals.

The situation is likely to both alarm and infuriate BPL’s long-suffering residential and business customers on New Providence, as it will raise fears of a repeat of summer 2019 when virtually all parts of the island were subject to daily load shedding and blackouts often lasting a minimum three hours due to the utility’s aged and poorly-maintained generation capacity being unable to meet demand.

Desmond Bannister, minister of works, confirmed the potential dilemma facing BPL when contacted by Tribune Business after this newspaper’s contacts alerted it to the situation at Clifton Pier. He admitted that “everything has to be in place” on the cooling system by May so that the new plant is fully operational in time to meet the peak summer electricity demand that kicks-in come June.

The minister, who has responsibility for BPL, said the state-owned utility monopoly was “fully confident” that a cooling solution will be place before summer 2020. He hinted, though, at differences over what that solution should be by saying he preferred the radiator solution to the wells that management was focused on.

When asked why the cooling situation had not been thought of and addressed much sooner, given both the size of the $95m investment and the long lead time - the deal for the engines’ purchase, shipping and installation was signed in early March 2019, almost one year ago - Mr Bannister suggested the answer stemmed from the complete confidence engineers have in their chosen solutions.

“Let me say this,” he told Tribune Business. “There is engineering thinking and there is practical thinking. When I look at something I like to have two to three options due to reality. An engineer may have confidence in one thing working.

“It was never anticipated that the wells would be such a difficult thing because of the coral there. This is the situation. BPL has three options for cooling those wells. They’re looking at all the options in addition to digging the wells.

“The first option is to utilise the 800-feet deep wells. They have challenges with the coral there, and have broken a number of drill bits. They are at a little over 400 feet on two of them, and they continue to work to dig those wells.”

BPL’s other two options, Mr Bannister explained, are to bring in cooling water from “another source”, such as the utility’s other stations at Clifton Pier, or the radiator system that was identified as the preferred solution by Wartsila.

“That system is on order,” the minister added. “It’s going to be delivered shortly before summer. In my view, that’s the most reliable source. Having all those options open to them is critical to BPL.”

Mr Bannister said the present winter season, with its reduced energy demand, meant that BPL did not need all seven Wartsila-supplied engines to be operational now. All were undergoing testing and rotation amid preparations to hook them up to the grid.

“They’re not seeking to run all of them right now. That was never the intention They don’t have to have them operational fully until June,” he told Tribune Business. “When we come into June it’s critical to have them operational, and BPL is fully confident it will have the cooling system in place before then

“There are two things. They have to test all the engines and ensure they operate appropriately at the right standard. The second thing is to ensure they have the cooling system in place for the summer peak season.

“Right now we’re at a time when we don’t need all those mega watts. By May everything has to be in place. It has to be operational in June. They’ve ordered the radiator system and expect it to be here soon. In my view that is going to be the most reliable way to deal with it, but I’m not an engineer. I believe they’re counting on being able to use those wells as much as possible, but from my perspective I like the idea of radiator cooling.”

Besides keeping the lights on during summer 2020, the Wartsila engines are also critical to reducing energy costs for Bahamian households and businesses and offsetting the extra costs associated with BPL’s imminent $580m refinancing.

Dr Donovan Moxey, BPL’s chairman, told last month’s Bahamas Business Outlook that the 30 percent greater efficiency of these seven new units means they will reduce the fuel costs that make up 50-60 percent of BPL customer bills.

This will achieved because they burn less fuel than BPL’s existing generation capacity to generate the same amount of electricity. And Dr Moxey said the planned switch from automotive diesel oil (ADO), currently the most expensive fuel source available, to heavy fuel oil (HFO), which will be enabled by the Wartsila-supplied engines, will reduce BPL’s generation costs by a “further 30 percent”.

Combining these two savings gains, he added, should offset the addition of the new debt servicing charge that will be added to BPL customers’ bills to help repay the $580m borrowed from local and international investors.

The cooling system wait, and delay in bringing all the Wartsila engines online, also helps explain prior warnings by BPL and Mr Bannister that the debt servicing charge - equivalent to 15 percent of a customer’s current consumption - may initially increase overall bills.

And revelations of BPL’s cooling system woes are especially ill-timed because the utility is still waiting to obtain the ‘credit rating’ from international agencies that will allow it to place the $580m refinancing and determine the price (cost) Bahamian consumers must pay to investors.

Dr Moxey, when contacted on the cooling system situation, responded by saying that “some of the things” reported to Tribune Business were not correct. He declined, though, to identify what these were and Mr Bannister’s comments confirmed what this newspaper had been told was largely correct.

“Some of the things you just outlined to me are not correct,” Dr Moxey replied. “I’m not going to respond to any of it. I’m not going to provide any feedback or comment. Some of that stuff is clearly not accurate. I’m not going to get into any of it, I’m really not. I’m not going to put anything to it. Whoever the sources are are doing it to cause confusion, muddy the waters or don’t know what the facts are.”

Tribune Business had been alerted to the situation by a source who said: “Two of the seven engines are up and running out of the seven. The forgot to make provision for the water to be pumped through the engines. Wartsila updated the engines and, $100m later, somebody forgot to pump water through the engines to keep them cool.”

Another added: “They’re trying to put four 800-foot wells down there, and they’ve been unable to do one because the drill bits keep breaking as the rock is so hard.”