Column: Pimentel On Bermuda’s Energy Future

November 23, 2018

Dennis Pimentel Bermuda October 2018[Written by BELCO President Dennis Pimentel]

Friday, November 30th will mark an important step toward reaching an historic milestone in Bermuda’s history.

The last Friday of this month is the deadline for submissions for comments on the integrated resource plan [IRP] for Bermuda’s energy future.

This step is a direct result of the Electricity Act 2016 [EA], which became operative in October, 2016 and legislated the requirement for the Regulatory Authority [Authority] to request of BELCO an integrated resource plan. Production of an integrated resource plan is now the standard practice for many countries around the world and each sets out an energy plan for a determined time period.

Under the EA, the Authority is empowered to ask the licensed transmission, distribution and retail [TD&R] licensee – in this case BELCO – to develop an IRP that will detail the strategic energy direction for Bermuda going forward. Though written by BELCO, the IRP is not BELCO’s plan. The final IRP is approved by the Authority and belongs to all of Bermuda.

BELCO submitted the IRP on February 15th of this year and for the last 9 months, the IRP has been subject to consideration by the Authority and public consultation. As part of the legislated IRP process, the EA also stipulates that the Authority must seek proposals for bulk generation or demand side resources and it received eight such proposals. These proposals must be taken into consideration by BELCO when it drafts the final version of the IRP. Going forward, any new generation requirements will be procured by BELCO as directed by the Authority in connection with the IRP.

The IRP process is fully open and transparent – all proposals and comments are posted online and the public has until Friday, November 30th to comment. All details of the IRP process and how to make a submission, together with a copy of the IRP, are on the Authority’s website at www.rab.bm.

What is clear, and encouraging, is that the IRP process has been vigorously discussed and debated in online forums, through public meetings and reported on in the media. What is also clear, and less encouraging, is the misinformation that has been spread about the IRP. A few facts may help clear up some of this misinformation.

While the IRP is a plan for Bermuda’s energy future, it is not set in stone. The IRP will be updated as market conditions and technologies change. In fact, a new IRP will be requested by the Authority at least every five years to ensure that Bermuda is kept on the correct course and adjusts when necessary.

The trap we must avoid in Bermuda is to set unrealistic goals that will hurt us all in the long run. Of course, we all want to reduce our reliance on heavy fuel oil and diesel in favour of a cleaner fossil fuel and renewables so that we can reduce carbon emissions to help curtail the effects of global warming to which Bermuda is so susceptible. But to be overly aggressive and set unrealistic goals comes at a cost – both financially and socially.

With local bills already too high, and efforts ongoing to reduce BELCO’s costs, it is unreasonable to ask the people of Bermuda to pay substantially more than they currently pay and further increase the cost of living simply so a higher proportion of electricity can be generated by renewable means.

BELCO has and continues to embrace renewable technology. We have installed solar panels at our Serpentine Road location, we have committed to replacing our entire vehicle fleet to electric, and electricity is fed into our grid from 474 homes and businesses across the island via private solar installations. These private solar installations contribute approximately 4 megawatts [MW] of installed capacity.

Under our capital plan, we are installing a Battery Energy Storage System [BESS] that allows us to continue to provide a high reliability of electricity while using less fuel. With the BESS, an estimated $2 million per year will be saved in fuel costs. The lithium ion batteries used in the BESS are built to have a 20-year lifespan. At end of life, they will be shipped back to the US and disassembled as part of a recycling plan.

When the solar plant at the airport comes online this will add another 6MW of installed capacity. Add in the 4.5MW of power generated from burning waste at the Tynes Bay facility and Bermuda will have approximately 10% of its installed generating capacity from renewable sources. This is certainly a good start.

More renewable capacity could be added to the mix outlined in the IRP, and in the future most likely will be, but any large generation system such as an offshore wind farm would require extensive – and expensive – upgrades to BELCO’s grid. Those costs would be burdened on to the customer. Bermuda should only make the necessary investment in the appropriate technology when it is able to afford it.

Cost is just one of the critical factors in determining Bermuda’s energy future and the key is finding the right balance. Setting bold goals may be good for headlines, but we must make decisions based on thorough research, detailed calculations and best practices that have been developed in similar jurisdictions. We can also learn from their mistakes. We have put together a plan that is achievable, cost effective and goes a long way towards reducing our emissions. By switching to natural gas as a fuel, we can cut our carbon emissions by more than 30%. That is equivalent to removing all the internal combustion cars on the road today. We would also be able to eliminate the majority of nitrogen oxides [NOx], sulfur oxides [SOx] and particulates that are produced by burning liquid fuels.

As can be seen in the following energy mix for the USA, conventional generation in one form or another will be a very important part of any country’s total generation capacity for the foreseeable future. The US Energy Information Administration [EIA] reports that the approximate percentage breakdown of the energy generating mix in the USA in 2017 was: natural gas at 32%, coal at 30%, nuclear at 20%, hydro at 7%, wind at 6% and solar at 1%. The remaining 4% consisted of other generating means such as geo-thermal and biomass fueled power plants.

We believe that once all consultations have been held and the IRP is approved by the Authority, it will be a plan that benefits all of Bermuda by striking the right balance to ensure safe, reliable and cost-effective energy.

For over 100 years BELCO has provided safe and reliable electricity. In fact, BELCO is amongst the world’s leading power companies in terms of system reliability at 0.99952, with 1.0 being perfect reliability. The generations of Bermudians that have built the plant and company from the ground up should be proud of all they have achieved. Serving Bermuda is at the heart of everything we do.

We urge everyone to participate in the IRP process – read the plan online and submit any comments you may have. Our energy future belongs to all of us and now is the time to have your say. Please visit www.yourenergyfuture.bm to learn more about our plan.

- Dennis Pimentel

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Comments (15)

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  1. Family Man says:

    Not sure why Belco is so hot and heavy for natural gas. Yes, it produces less carbon than oil but it requires a huge investment in new infrastructure to deliver and store LNG. And it just locks us into another foreign and volatile energy source for 20 years.

    The price of natural gas has increased by 50% in the past year. what will it be next year?
    The price of oil is the same price today as it was a year ago but who knows what it will be years from now.

    The price of wind and solar fuel is still zero.

    • Toodle-oo says:

      One thing that I’ve yet to see discussed is the power output per unit of fuel , LNG vs oil .
      If I’m not mistaken it’s going to take a lot more LNG to fuel those new generators per unit of electricity produced than the current heavy oil.
      So , even if LNG is and were to remain cheaper than the oil that BELCO currently uses it’s still going to take a greater quantity of it to produce the same amount of energy.
      Not disputing that burning it is cleaner though even if larger amounts of hydro carbons/ greenhouse gasses are released into the atmosphere at the point of mining it.

    • lol says:

      Renewable does not equal cheaper. If you don’t understand that you dont understand what is required to make it happen.

      • Family Man says:

        Renewables are a known fixed cost. We have a good idea of the fixed investment cost, we have a good idea of maintenance costs and we know the ‘fuel’ cost.

        Who knows what price LNG will be in 5 years time.

        If you don’t know what the cost of fuel is in 5 years time, you don’t know what you’re doing. Or maybe you do, and you’re just sticking it to the rest of us.

        • 2 Bermudas says:

          Yes you do because you can lock in a price today for say the next 5 years. Duh!!

  2. 2 Bermudas says:

    Guy makes some good points. I’d rather us focus on putting lines underground rather than spend money on expensive renewal energy. It’ll make this island look less third-world and my power won’t go out every time a squall comes through!!

    • Retro says:

      Yeah, I’m surprised after what happened to Puerto Rico that putting the lines underground isn’t the first priority.

    • lol says:

      distribution lines wont go underground

    • Paul Costelloe says:

      Even if the OHLs were replaced with (insulated) ABC Belco would save a fortune in vegetation control.

  3. Real Deal says:

    Well Belco should publish something like this periodically for the public. because before this (if it is true)in the public’s eyes it feels like Belco was doing nothing to move forward into the future.

  4. Ratepaya says:

    Fair points from belco but d renewable energys are cheaper so why doesnt their plan use them? The airport solar project selling power for 10c I hear, thats less than my fuel adjustment I’ll take some more of that there please.

  5. Nick Hutchings says:

    Good afternoon Dennis, thank you for opening this public forum with your op-ed. As you say, “our energy future belongs to all of us”. To start on a light note, I’d like to say: Wow, even the CEO of BELCO believes in global warming!
    I think it is very important to note that all the major stakeholders in the IRP process are dedicated to reducing our carbon foot print and eliminating nitrogen oxides [NOx], sulfur oxides [SOx] and particulates produced by burning liquid fuels for energy production.
    This common ground is a good place from which to build a consensus as to the direction our energy future should take, particularly since clean energy is stipulated in the purposes of the Act.
    So to be clear, we are not discussing whether we should have clean energy or not but rather the best way to achieve that goal in the least cost, most reliable and sustainable way that maintains a high quality of service.
    You argue that a 20-year commitment to LNG as a bridge to a renewable future is the best way forward. Etude argues that the time is right to move directly to renewable energy burning LPG in BELCO’s generators, or another IPP’s if BELCO cannot convert, for load balancing. LPG is preferred in this scenario because its far lower infrastructure costs makes it financially much more flexible.
    To quote James Robo, CEO of NextEra Energy, one of the three largest electricity utilities in the US, “Without incentives, wind is going to be a $0.02 or $0.03 product early in the next decade. Battery storage will be $0.01 on top of that. (…) That is going to totally transform this industry.” If he is right, flexibility will pay big dividends in the near future.
    Your main argument against the Etude plan is an unspecified capital cost to upgrade BELCO’s grid architecture to receive a meaningful amount renewable generation.
    Clearly, policy makers, the RAB and ratepayers now require an independent grid assessment to make an informed decision weighing the cost of upgrading the grid, whatever that is determined to be, against the economic risk of stranded LNG infrastructure.

  6. Fair Play says:

    Progress for me that Belco’s CEO engages as openly as this.

  7. TheRealBeyondSmartLady says:

    Bermuda should just run on the moon power. It is the best.