Bahamas Eco-Forum

Bahamas To Go Ahead With Exploratory Oil Drilling

Environment Minister Ken Dorsett said the government would not require a national referendum - as previously promised - before going ahead with licensed exploratory oil drilling. He added that an updated regulatory framework would be implemented before drilling takes place.

"The new regulations are substantially complete already and will be presented to Cabinet very shortly," Dorsett said. "Exploration drilling is of course the only way the Bahamian people will be able to get a scientific answer to the burning question as to whether petroleum reserves even exist in commercial quantities in our waters. Obviously, we are not going to have a referendum on a hypothetical proposition.

"If during the course of licensed exploration activities, commercial quantities of oil are, in fact, discovered in our waters, we would then engage the Bahamian people in an extensive public information programme to ensure that all important facts are laid before the people for their consideration and discussion, well in advance of a national referendum on the matter."

As part of this public information process, he said, the government would provide a timeline for production and engage in a national dialogue on how oil revenues should be used. Exploration data will not be available until late 2014 or early 2015.

New Government Proposes Green Energy Policies

by Larry Smith

The new Progressive Liberal Party government, which took office in May, has issued its first statement on the future of energy in the Bahamas.

In a communication to parliament last week, Environment Minister Kenred Dorsett said the PLP government was committed to lowering the cost of electricity by continuing the previous FNM government's upgrade of generating facilities on New Providence.

"Reliability upgrades and replacement and rehabilitation of auxilliary equipment, and considering additional heavy fuel baseload generation, is an integral part of reducing electricity prices, and is a priority for the Bahamas Electricity Corporation," he said. "Increasing baseload generation could save BEC $100 million annually."

But former BEC Chairman Michael Moss said this would cost hundreds of millions in upfront costs that the utility simply could not afford. "To achieve $100 million in savings would mean doubling the installed capacity at Clifton Pier," Moss said. "BEC's bottom line cannot sustain that, so unless the government is coming to the rescue I don't see it happening."

Dorsett also said the government was considering serious proposals from the private sector for the production of energy from solar plants, waste-to-energy plants, ocean thermal conversion facilities and wind farms. None of the proposers was identified, but a quick review of this site will confirm that talks have been ongoing with a variety of investors for years.

Perhaps the most substantive part of the minister's communication was his confirmation that the government would "work assiduously" to amend the 1956 Electricity Act, introduce a Renewable Energy Act with provisions for net billing, and create an independent sector regulator. Reform of the regulatory framework for energy was a key recommendation made by German consultants to the previous government.

"We must remove the legal impediments of exclusive rights for the generation and sale of eletricity," Dorsett said. "The prohibition of self-generation and interconnection to the grid." He added that incentives would be put in place to help reduce energy demand and promote the use of alternative energy sources.

These incentives would include further reductions of import duties on energy-efficient appliances, as well as tax deductions for businesses that carry out independent energy audits and undertake energy conservation measures. He said the government would also conduct energy audits and retrofit public buildings with solar panels.

Dorsett said the Bahamas Electricity Corporation would pursue alternative sources of fuel, such as liquified natural gas or compressed natural gas, in an effort to reduce costs. BEC Chairman Leslie Miller has also talked about negotiating a long-term fuel supply contract with the Venezuelan state oil company - PDVSA - in the belief that this will cut fuel costs.

But former Chairman Michael Moss told the Nassau Guardian that he doesn't see how any deal with Venezuela could make the price of oil for the Bahamas cheaper in the long term. Venezuela is bound by OPEC pricing and production quotas, but the country operates a regional alliance called Petrocaribe that provides for deferred payments, but at market prices.

"At some point it must be paid," Moss said. "It's low-interest credit - like going to the gas station and buying your fuel with a credit card. I don't think the Bahamas wants to increase its debt at this point."

Forecasting a public-private partnership for the production of solar power by BEC, Dorsett also said consumers should be encouraged to generate their own renewable energy.

"In time we can become known as the islands in the sun for our tourism business as well as for power generation. The Bahamas can and will become a world leader in alternative energy, creating hundreds of good-paying jobs and economic opportunities for Bahamians."

New Regional Report on Economic Impacts of Climate Change

by Larry Smith

A new regional report says the economic impacts of climate change could cost Caribbean countries up to 5 per cent of annual Gross Domestic Product over the next four decades, if if no mitigating action is taken.

The report was published last month by the UN's Economic Commission on Latin America and the Caribbean. Assessments were conducted in different economic sectors across 14 countries, including tourism in the Bahamas.

Here's a brief look at the top 10 highlights:

Agreement to Build OTEC Plants in Bahamas

by Larry Smith

Ocean Thermal Energy Corporation of Lancaster, Pennsylvania has signed a Memorandum of Understanding with the Bahamas Electricity Corporation to explore renewable energy resources in the Bahamas.

The agreement calls for the construction of two 10 megawatt OTEC (ocean thermal energy conversion) plants on New Providence and Andros in a "first of its kind' deal to commercially produce clean energy, potable water and sustainable aquaculture using ocean water. BEC's peak load is 230 megawatts.

"If the MOU achieves its full potential this would put us on the cutting edge," BEC chairman Michael Moss said. "It's going to mark our first tangible steps in renewable energy. We may not have pursued other renewable energy opportunities as aggressively as we ought, and we're going to look more seriously at solar and tidal energy."

Bahamas Could Become Oil-producing Province

by Larry Smith

Domestic production of oil and gas is the real elephant in the Bahamas. And if you think the opposition to LNG terminals here was vociferous, just wait until the campaign to stop oil drilling begins. At stake will be a potential transformation of the Bahamian economy and environment.

Five oil wells have been drilled in Bahamian waters since 1947, when the first was drilled off Andros. In 1959 there were oil shows from a well on the Cay Sal bank. And wells drilled off Long Island and at Great Isaacs north of Bimini in 1970 both had minor oil shows. The last well was drilled by Tenneco in 1986, but was abandoned due to a collapse in petroleum prices.

The latest entrant - the Isle of Man-based Bahamas Petroleum Company - is convinced (as most experts have been for years) that major oil and gas reserves lie under the Bahamian seabed, and technology has now advanced to the point where they can be exploited economically. This will have a huge impact on our marine environment, because a significant percentage of any oil produced offshore spills into the sea.

LNG Exports from US Could be Part of Energy Mix

by Larry Smith

The extraction of oil and gas from beneath the Bahamian seabed is a medium-term likelihood that many may instinctively oppose for environmental reasons. But we could cut costs and pollution now by generating electricity from liquified natural gas - imported from the US.

That's a scenario made possible by the development of large, unconventional gas fields in the US. Right now, the cost of natural gas is much cheaper than oil, and burning gas instead of heavy fuel oil or diesel produces 30 per cent less pollution.

The recent increase in North American gas reserves, combined with projected growth in global demand, will make the US a major liquified natural gas exporter over the next few years, experts say. This is in sharp contrast to previous years, when the US was seeking to import LNG from the Middle East and Trinidad.

Natural gas accounts for about 16 per cent of the global energy mix, but the US has near zero LNG export capacity. Existing LNG import terminals in Louisiana and Texas are already adding liquifaction capacity to allow for major LNG exports by 2015.

Prospects for Energy Reform

by Larry Smith

So here we are, two years after the last oil shock, and prices are over $100 per barrel again, with some forecasters saying they could pass the 2008 high of $147 a barrel that sent everyone scrambling to cut energy costs.

Already we are hearing the usual cries for government relief. And those cries will only get louder as higher prices filter through to gas pumps, electricity meters and store shelves. But in our case, there is very little the government can do beyond providing short-term consumption credits - and that comes at a cost to BEC's solvency.

Highlights from Fichtner Report on Sustainable Energy in The Bahamas

Energy Efficiency
•46 energy audits conducted in hotels, homes and public buildings

•Potential energy saving of 53% for hotels, which is 10% of total power demand in 2009

•Potential energy saving of 57% for all Bahamian households, which consume 40% of all power

•If best global practices were applied that could rise to 83% in energy savings

•Potential energy savings in existing homes and hotels about 605 GWh, equivalent to 27% of present power demand

Renewable Energy
•Solar, wind, and biomass (pine) have a potential of more than 100 TWh per year - 47 times the present power demand of the Bahamas

•Solar power more economical at $100 per barrel oil price, but investment costs expected to fall to achieve economic viability against BECs avoided cost as well as household tariff

•Wind resources are mediocre, but some sites studied have potential. Two sites on Grand Bahama could produce 88 MW and one off south shore of New Providence could generate 96 MW                              

•New Providence offshore wind farm site is almost economically viable, but requires further investigation. Should start with 20mw

•Studied 10 wave energy sites from Grand Bahama to Mayaguana                                                          

•Four sites exist where wave energy was estimated at 10 kW per metre, with others at around 8 kW/m  

•In addition to high initial costs, and devices are not immediately available for deployment                                                                                                                                                  

•Few tidal energy sites in Bahamas with high flow velocities, and current speed data does not exist            

•Costs for tidal energy are high, and devices not immediately available for deployment                         

•Ocean thermal  is possible west of New Providence (to produce 50 MW) Energy Efficiency

•46 energy audits conducted in hotels, homes and public buildings

•Potential energy saving of 53% for hotels, which is 10% of total power demand in 2009

•Potential energy saving of 57% for all Bahamian households, which consume 40% of all power

•If best global practices were applied that could rise to 83% in energy savings

•Potential energy savings in existing homes and hotels about 605 GWh, equivalent to 27% of present power demand

Renewable Energy
•Solar, wind, and biomass (pine) have a potential of more than 100 TWh per year - 47 times the present power demand of the Bahamas

•Solar power more economical at $100 per barrel oil price, but investment costs expected to fall to achieve economic viability against BECs avoided cost as well as household tariff

•Wind resources are mediocre, but some sites studied have potential. Two sites on Grand Bahama could produce 88 MW and one off south shore of New Providence could generate 96 MW                              

•New Providence offshore wind farm site is almost economically viable, but requires further investigation. Should start with 20mw

•Studied 10 wave energy sites from Grand Bahama to Mayaguana                                                          

•Four sites exist where wave energy was estimated at 10 kW per metre, with others at around 8 kW/m  

•In addition to high initial costs, devices are not immediately available for deployment                                                                  

•Few tidal energy sites in Bahamas with high flow velocities, and current speed data does not exist                           

•Costs for tidal energy are high, and devices not immediately available for deployment                                                  

•Ocean thermal is possible west of New Providence (to produce 50 MW) and west of Grand Bahama, but no commercial plants yet anywhere in world                                                                                                  

•Biomass energy was investigated based on sugar cane and Caribbean pine                                                             
•Cane has highest biomass productivity and requires smallest plantation area, but had high water and fertilizer demand                                                                                                                   

•Biomass energy production should supply local demand where the resource exists                            

•Potential for 8 MW on Abaco and 47 MW on Grand Bahama produced from biomass - 12.5% of total power demandand west of Grand Bahama, but no commercial plants yet anywhere in world                                                                                                         

•Biomass energy was investigated based on sugar cane and Caribbean pine                                                             

•Cane has highest biomass productivity and required the smallest plantation area, but had high water and fertilizer demand                                                                                                                   

•Biomass energy production should supply local demand where the resource exists                            

•Potential for 8 MW on Abaco and 47 MW on Grand Bahama produced from biomass - 12.5% of total power demand

Caribbean Renewable Energy Forum Set for Nassau

by Larry Smith

Yet another talking shop on renewable energy is planned for Nassau next month.

Billed as "the region’s most significant gathering of policy-makers, utilities, RE  developers, development banks, private equity firms, NGOs, and other key  stakeholders",the Caribbean Renewable Energy Forum will take place at the Atlantis Resort October 14-15.

Some 300 participants from 37 countries took part in last year's Forum in Jamaica. This year's event will be opened by Bahamian Prime Minister Hubert Ingraham. Sixty speakers have been confirmed, including seven government ministers.

The conference aims to address the financial, regulatory, policy and  technological obstacles to renewable energy implementation across the  region. It will also serve as a unique forum for international developers and investors to meet senior regional  stakeholders and get  a handle on investment opportunities.

Panel discussions will focus on the global picture for renewables, RE policy initiatives in the region, utility-scale renewable technologies, financing for renewables, energy efficiency, biofuels and waste-to-energy.

Key speakers will include US Ambassador Nicole Avant; Earl Barrett, general manager of the Wigton Wind Farm in Jamaica; Jerry Butler, CREF chairman; Craig O'Connor, director of the US Exim Bank's Office of Renewable Energy; Ken McClintock, Secretary of State for Puerto Rico; Joel Velasco of the Brazilian Sugarcane Industry Association; Phil Voss of the US National Renewable Energy Laboratory; Peter Williams, managing director of Barbados Light & Power; Bahamas Utilities Minister Phenton Neymour; and Will Wynn, former mayor of Austin Texas and chairman of Austin Energy.

CREF is led by Bahamian Jerry Butler, who previously represented the English-speaking Caribbean on the boards of the Inter-American Development Bank, the Inter-American Investment  Corp, and the Multilateral Investment Fund in Washington, DC.

The Forum seeks to define the regional renewable energy market, pinpoint the legislative and regulatory bottlenecks, and work towards real world solutions using the best available technologies for the region.

Energy Security Inseparable from Transition to a Low-Carbon Economy

by Larry Smith

Thirty years ago a mechanical failure at a nuclear power plant in Pennsylvania released radioactive gases into the atmosphere, forcing the evacuation of 140,000 people from the surrounding area. It was a significant turning point in the development of nuclear power.

As Canadian commentator Jeff Rubin recently pointed out, “The real legacy of Three Mile Island wasn’t what happened back in 1979, but rather what happened - or more precisely didn’t happen - over the course of the next 30 years in the US."

He was referring to the fact that the near-meltdown of the Three Mile Island reactor changed public acceptance of nuclear power plants, and none has been built in the US since. Could the catastrophic explosion at the BP drilling rig in the Gulf of Mexico have the same effect on the oil industry today?