The Tribune

Bahamas Power & Light's (BPL) Wartsila engines require a further $4m investment to make them "tri-fuel ready", its chief executive said yesterday said, adding that they are not presently capable of burning three fuel types.

Shevonn Cambridge, speaking at a Prime Minister's Office media briefing, said the seven engines acquired for $90m by the former Minnis administration as a solution to New Providence's pre-COVID load shedding require further work before they can run off liquefied natural gas (LNG) fuel.

The 132 Mega Watts (MW) of new generation capacity were promoted as tri-fuel engines, capable of burning heavy fuel oil (HFO) and light fuel oil (LFO or diesel) as well as LNG, with the latter designed to begin the transition to cleaner burning, more environmentally-friendly, fuels at BPL. However, Mr Cambridge said the seven Wartsila engines are presently not capable of using LNG.

He added: “The original proposals we received were that they were to be tri-fuel, and I think some decisions were made based on time constraints and parts and other things. So while they're not tri-fuel ready, they are tri-fuel capable and that means that they will require some work to convert them to being tri-fuel.

“So, as designed, they are dual fuel LFO and HFO engines, and to get them to be tri-fuel will require an additional $500,000 investment. I think we have made some recent inquiries, and that has gone up significantly as a result of all the things that are happening on the market with supply chain issues...... To convert the Wartsila engines to tri-fuel will cost $4m.”

Confirming that he has briefed Prime Minister Philip Davis KC on the issue, Mr Cambridge added: "The engines were designed to operate a certain way. But certain amendments and modifications were made during the project execution that has resulted in them not performing as the project was originally envisioned. And that has resulted in some eating or eroding of some of the fuel savings benefits that were envisioned with the project, as well as some of the operational performance issues.

"To be more specific, the engines were originally supposed to be tri-fuel engines and a standalone plant. I think some events occurred during the planning phase of that that required an immediate need for additional capacity, as well as the time constraints. And so there were some modifications made to the original design, and that has resulted in the production ability of those units to produce as they are designed to be [becoming] somewhat compromised."

However, sources close to the Minnis administration described the "tri-fuel capable" concerns as a red herring. They explained that, since the supply of LNG was several years away under the terms of the agreement then being negotiated with Shell North America, there was never any intention that the Wartsila engines immediately be fitted out or made able to burn this fuel source. Instead, the focus was placed on ensuring their optimal use of HFO, which is cheaper than diesel.

Mr Cambridge, meanwhile, explained why BPL and the Government elected not to continue with Wartsila's operations and maintenance (O&M) contract. "The Wartsila plant, I think, started somewhere around 2018. We first got commercial power from that unit in December 2019. At that time, the decision was made to put the operation and maintenance of that plant in the hands of the O&M, which would be Wartsila," he added.

"So, they had a two-year contract, which was subsequently extended for another year into a third year. But in reviewing that contract, we had some concerns. And not really with Wartsila, but just with the efficiency of that, the efficacy of that pool arrangement from a financial and operational perspective. And so we made the decision to cancel that contract in December 2022, and we've taken over the management of the O&M ourselves."

Mr Cambridge said this summer's heatwave has sparked the “highest consumption peak on record" of 278 MW for New Providence. BPL had planned for a peak of 265 MW, with current available generation capacity standing at 300 MW.

To further boost generation capacity, BPL will invest around $40m in a solar farm that is expected to come online by late 2024. “The returns and the benefits from that outweigh the costs," Mr Cambridge added. "We will see that type of capital investment is driving down the fuel costs, and basically, our estimates are that that's going to result in about a two cents per kilowatt hour decrease in the fuel charge. Based on our current sales and production, every one cent is about $15m a year in revenue when you look at it in terms of on average.

BPL also plans to commission a tariff study to restructure its rates. Mr Cambridge said the utility has not enjoyed an increase in its base tariff, which is supposed to cover all its operating expenses. since 2010. The utility is working on releasing a Request for Proposal (RFP) to secure a consultant who will advise on this project and conduct the necessary studies.

“Once the tariff study is completed, we will be working along with our stakeholders on a strategy for rate adjustments across all classes. This will be a major undertaking but, inevitably, it will reap the benefits for a leaner, greener utility where efficiencies drive down the cost of energy and, at the same time, create the energy security we need in a small country," Mr Cambridge said.

Among the concepts that this will introduce are “budget billing, time of use, demand side and EV (electric vehicle) rates” in order to transform BPL into a modern utility. The process is expected to last between six to 12 months, but Mr Cambridge did not commit to a timeline when the RFP will be issued.