The Tribune

• New 177 MW power plant for Nassau fuelled by LNG
• Questions over why located at Blue Hills, not Clifton
• Private sector backs steps to tackle electricity ‘killer’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government yesterday pledged Bahamas Power & Light (BPL) and its customers will ultimately enjoy $126m in annual savings through “desperately” needed energy reforms that “won’t happen overnight”.

Jobeth Coleby-Davis, minister of energy and transport, in unveiling the Government’s strategy for change signalled that New Providence businesses and households will not feel the full benefits until 2026. This is when construction of a new 177 Mega Watt (MW) generation plant fuelled by liquefied natural gas (LNG) is due to be completed at the Blue Hills power station.

She confirmed that Shell, the multinational energy giant, will supply the LNG fuel that is key to the baseload generation strategy for New Providence, while Bahamas Utility Company, a wholly-owned subsidiary of BISX-listed FOCOL Holdings, will be the independent power producer (IPP) responsible for supplying lower-cost, cleaner energy to BPL’s grid and the latter’s customers.

No details were provided on the power purchase agreement (PPA) that will govern this supply, such as the agreement’s likely duration; the locked-in price at which Bahamas Utility Company will sell energy to BPL and its transmission and distribution network; and other key terms and conditions. This suggests such details are still being finalised and negotiated (see other article on Page 1B).

However, Mrs Coleby-Davis said the installation of a new heavy fuel oil (HFO) burner at BPL’s Clifton Pier power station, along with two new 30 Mega Watt (MW) generation turbines equipped to burn LNG at the same location, were projected to save businesses and households a combined $66m per year in fuel costs. The timing for when this will be realised was not mentioned, and it is unclear if the $66m is part of the $126m annual savings.

The Davis administration’s reform drive, branded as “a new energy era” for The Bahamas, was given a guarded welcome by a private sector that for decades has called for an urgent solution to this nation’s “killer” problem of high-cost, inefficient and unreliable energy supply.

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that it was “about time that we tried to crawl out of this third world operation” with BPL and wider energy sector. He added that the proposed reforms will help The Bahamas to “reduce or eliminate” the carbon footprint created by BPL’s 100 percent reliance on fossil fuels for power generation.

“I think not just the automobile industry, but everybody from a personal perspective as well as other companies, are all dealing with the same thing,” Mr Albury said. “The inefficiency, the high cost and unreliability is a killer. Generators have become, for some time now, an essential piece of equipment for any business or home.

“Any reform is welcome. It’s a step in the right direction. I know LNG has been thrown around for a while. Leslie Miller was a big proponent. Anything they can do to get us off heavy fuel oil and automotive diesel oil (ADO) is a good thing.”

Mr Albury said the estimated $125.6m in annual electricity cost savings, which Mrs Coleby-Davis said will result from improved generation efficiency and switching to the lowest-cost fuel source, will be “a pretty substantial knock in the right direction” given The Bahamas’ estimated 400,000 population.

“It seems like a very aggressive approach, but it’s definitely well-needed. Desperately needed,” the BMDA chief told this newspaper. “It’s rough being a tourism-driven market, people coming here and the power is off, then it’s on. I can’t tell you how much money we have lost. We have UPS (uninterruptable power source) on everything but they get fried because of the instability. We replace those rather quickly.

“I think it’s about time we tried to crawl out of this third world operation. It’s very welcome, an excellent move. Now we’ve got to see it come to fruition. I’ll keep my fingers crossed.” Philip Davis KC, in a video filmed to promote the Government’s energy reforms, branded them as “game changing” but conceded the strategy would take time - likely several years - before its full impact is felt.

“We all know that our country’s electricity infrastructure is decades old, it’s breaking down, it is too expensive, and it cannot transmit clean energy,” the Prime Minister said. “Small changes aren’t enough. We are taking it all on, upgrading and modernising the grid, solar power.

“That’s how we get to lower prices and more reliable electricity. It will not happen overnight but it will be game changing; a new energy era for The Bahamas.” Robert Myers, the former Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chairman, yesterday gave his backing to the reforms but questioned why the new LNG-fuelled power plant is to be located at Blue Hills and not Clifton Pier.

“The plan should have been executed by the last administration and the one before that,” he told Tribune Business in a messaged reply. “This administration should be commended for this critical and necessary action. Let’s pray that it is action that is delivered by those employed to carry out the plan and not lip services and excuses.

However, Mr Myers said supplying LNG to a power station located in close proximity to Nassau’s residential and commercial areas raised potential safety issues. Parliament recently passed the Natural Gas Act to address regulation and safety in handling fuels such as LNG, but he argued: “It makes absolutely no sense to place the LNG plant at Blue Hills.

“Why would this not be at Clifton where the LNG has to be offloaded and stored? This seems dangerous and very expensive. Please explain the logic and upside of this decision. We would remind the decision-makers that over the years there have been numerous breaches to the relatively inert diesel fuel line that currently runs from Clifton Pier to Blue Hills.”

Mrs Coleby-Davis, in unveiling the Government’s energy reform strategy, billed LNG’s introduction as a move “set to revolutionise energy generation in New Providence” by providing a cleaner, lower-cost fuel that will reduce electricity prices, boost efficiency and offer an alternative to ADO and heavy fuel oil.

“The bulk purchase of LNG will be sourced from Shell. Other partners in the LNG implementation will include Bahamas Utility Company (BUC) as the independent power producer under a purchase power agreement (PPA),” she added.

“By 2026, we will construct a state-of-the-art 177 MW combined cycle LNG plant at the Blue Hills power station. This innovative facility will feature four natural gas units paired with two steam turbines, maximising efficiency by utilising excess steam from the gas units.

“This combined cycle configuration will be the most cost-effective generation solution in the BPL fleet. It will replace the 107 MW of rented generation capacity and address the 63 MW generation shortfall under contingency conditions, enhancing redundancy and resilience,” Mrs Coleby-Davis continued.

“In addition to the new units, BPL will convert two of its original generators at the Blue Hills power station, completing the transition to a more efficient and resilient system. BPL and its consumers are projected to save approximately $125.6m annually through fuel switching and improved engine efficiency.”

The extent of the reduction in Bahamian light bills as a result of these changes was not disclosed apart from the projected all-in savings for New Providence consumers. Mrs Coleby-Davis, though, affirmed that “the cost of energy should fall over time because of the efficiency upgrades at BPL”.

Besides the new LNG-fuelled plant at Blue Hills, the minister detailed other improvements as including “the installation of a new HFO boiler at Clifton Pier to save $36m per year in fuel costs” plus “installation of two new 30MW LNG burning units, which will save $30m per year in fuel costs”. In addition, BPL’s debt is due to be refinanced in Bahamian dollars, converting from US dollars to save costs.