A Strategic Switch: LNG, Solar & More
Chairman of the Board of Directors of Bahamas Power and Light Company (BPL) Dr. Donovan Moxey recently explained how the national utility intended to increase generation capacity across the archipelago without significant capital outlay. Part of the answer focused on the Shell NA LNG Power Plant, scheduled for completion in early 2022, but the broader answer is a matter of structure.
Addressing members of the press who came to hear him speak at a meeting of the Rotary Club of Nassau on February 19, 2019, Dr. Moxey explained.
“When you enter into a power purchase agreement (PPA) with an independent power producer (IPP), the responsibility of that independent power producer is to make the capital investment in infrastructure. That’s one of the reasons why, from BPL’s perspective, we wanted to get out of the generation business, because there’s a huge capital expenditure associated with generation,” Dr. Moxey said.
He estimated the cost of generation infrastructure at between $1 million and $1.5 million per megawatt, suggesting a cost of $30M to $45M for a 30 megawatt generator.
“That’s a huge capital expenditure that you have to put in place. And on top of that you have what is called “O&M costs” – operation and maintenance – and then of course you have the fuel costs associated with that.
“So when you enter into a PPA relationship with an independent power producer, it’s their responsibility to make that investment, not BPL’s (responsibility).”
Dr. Moxey added that when it comes to installation of solar generation in the Family Islands, that also is a matter of structure.
“Our approach to solarization of the Family Islands – except for a couple of pilot projects, and we’ve identified two or three pilot projects which BPL will cover – all of those other solar opportunities will be sent out to RFP (requests for proposals) and we’re looking to do PPAs with independent power producers,” he said.
“Again, when you switch strategically to get out of the generation business, it’s the independent power producers that you sign the PPAs with that actually pay that capital cost, so our capital outlay for the additional generation essentially is very, very low, if anything.”
The first BPL RFPs for solar generation in the Family Islands are expected to be released in March 2019.