Momentum Gathering for Changes in Jamaica’s Energy Sector

Mr. Gerald Lindo is a Senior Energy Engineer with the Ministry of Energy & Mining in Jamaica

From left to right: Fitzroy Vidal, Senior Director, Energy, Ministry of Energy & Mining; Honorable Laurence Broderick, MP; Mark Konold, Caribbean Energy Roadmap Project Manager, Worldwatch; Gerald Lindo, Senior Energy Engineer, Ministry of Energy & Mining

On September 19th, a group of engineers met in Kingston, Jamaica during the Annual Conference of the Jamaica Institute of Engineers (JIE) to discuss the future of Jamaica’s energy sector. This year, the first two days of the week-long event were devoted entirely to discussing the country’s energy challenges and the way forward. The Principal Director of the Energy Division in Jamaica’s Ministry of Energy and Mining (MEM), Mr. Fitzroy Vidal, gave one of the keynote speeches detailing Jamaica’s National Energy Policy (NEP) and the progress towards its implementation.

It was a brisk and upbeat meeting, and Mr. Vidal’s speech was well received. Questions abounded on the direction of Jamaica’s energy sector and on the proposed considerations of innovative green technology solutions aimed at ensuring the country’s energy security and long term sustainability. However, underneath the cordiality and spirit of the conference was a smouldering worry, an elephant in the room: the tremendous price that Jamaicans pay for electricity.

The cost of electricity in Jamaica is just under US $0.40 per kilowatt hour (kWh) – about 4 times what the typical consumer pays in the United States. High electricity prices result primarily from Jamaica’s reliance on old and inefficient electricity generators that use imported petroleum – Jamaica generates over 90 percent of its electricity from diesel and heavy fuel oil, perhaps the most expensive and inefficient conventional fuel available. Most of the generation capacity in the island nation is more than thirty years old, with low efficiency and high maintenance costs. Energy imports amount to 13 percent of the nation’s GDP. The tremendous drag this has on the economy of Jamaica has resulted in strong public outcry for reform and modernisation of the energy sector. A large part of the outcry is targeted towards the Electric Utility Operator and the Utility Regulator – the Jamaica Public Service Company (JPSCo) and the Office of Utilities Regulation (OUR), respectively.

The Cabinet of the Government of Jamaica approved the country’s National Energy Policy in late 2009, and by 2010, the bicameral Houses of Parliament ratified it with an affirmative vote of bipartisan consensus. It was the first long-term policy for energy that the country had ever approved, with prescriptions up until the year 2030. The policy is context within Jamaica’s National Development Plan, Vision 2030, an ambitious policy plan designed to move Jamaica from the status of a developing nation to a developed nation by the year 2030. The policy is designed to create “a modern, efficient, diversified and environmentally sustainable energy sector,” and it provides a platform for Jamaicans to tackle the problem in a systematic way. A key aspect is ensuring the affordability of energy supplies through supply diversity, renewable energy and a regulatory environment that encourages new investment. The policy also encourages energy conservation and efficiency to mitigate the impact of energy prices and promote responsible use of energy throughout all sectors of the economy.

Even against this backdrop, there was optimism at the JIE meeting. Notwithstanding the challenges, immense opportunity exists in Jamaica. The country is ripe for large investments in energy, and there are ample opportunities for efficiency improvements. According to figures reported by the Statistical Institute of Jamaica and the US Energy Information Administration, the island nation uses about 15,000 BTU to produce one dollar of economic output – about twice the energy intensity of developed countries. Public and private investments in efficiency could substantially reduce the cost of energy while lowering Jamaica’s carbon footprint.

It was in this context that Mr. Vidal presented the JIE with the progress report on the government’s efforts in energy sector transformation – and it was clear that the Government was in the implementation phase. The Jamaican Government has been moving with urgency in the two years since the policy was approved. Projects currently underway with the support of international development partners touch on every goal and priority area of the National Energy Policy.

Jamaica is already on its way to increasing the share of electricity produced from renewable sources to 20 percent. This will involve expansions in biomass, small hydro and wind energy, and the government is taking an active role in promoting these ventures. The approach is multifaceted and includes the packaging of projects for investments to be undertaken by the private sector based on the resource feasibility assessments.

Simultaneously, progress is being made in energy efficiency. The Jamaican Government plans to reduce electricity consumption in the public sector by at least 15 percent (though Mr. Vidal indicated that the total could be as high as 39 percent once all projects are implemented). This is being done in part with a US $20 million investment in public sector energy efficiency improvements, supported by the Inter-American Development Bank over the next 4-5 years. Similar investments are being supported by the International Bank for Reconstruction and Development (World Bank), the PetroCaribe Development Fund and other international development partners.

The Jamaican government is also looking at making investment easier through regulatory reforms. With energy costs as high as they are, there is considerable space for the private sector to solve energy supply problems profitably, provided that the investment and regulatory environment is transparent and facilitatory. A US $15 million project funded by the World Bank is directed in part towards helping the Jamaican government in this regard. The MEM, Jamaica’s OUR, the Petroleum Corporation of Jamaica’s Centre of Excellence for Renewable Energy (CERE) and the Bureau of Standards of Jamaica are all receiving considerable investment support that will allow Jamaica to better guide its policy development and implementation, to monitor the regulation of its electricity sector and to institutionalize energy efficiency standards. The Worldwatch Institute has been engaged with the help of the German Government to develop a Low Carbon Energy Roadmap for Jamaica. The Roadmap will examine regulatory and policy measures – such as feed-in tariffs, renewable energy financing models and building code reforms – that will facilitate investments which lower Jamaica’s carbon footprint and reduce costs to consumers.

A large part of the progress towards added renewable generation capacity, regulatory reforms and energy efficiency hinges on Jamaica’s ability to embrace a smart energy strategy. This includes smart metering, smart grid technology and the intelligent integration of electricity, transportation, telecommunication and water resource management. Mr. Vidal’s presentation included a vision of Jamaica’s renewable energy sector development over the next 5 years, where he described smart metering both as a means of demand management and for greater penetration of distributed generation. That this emerging technological approach to energy networks was specifically mentioned in Jamaica’s National Energy Policy is demonstrative of the long-term view that the policy takes.

Closing off his speech, Mr. Vidal was bombarded with the usual gamut of questions and comments from the conference attendees. There was excitement and hope, and maybe a touch of astonishment. As Jamaica moves towards a low-carbon, energy efficient future, there will no doubt be more discussion and excitement.

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