wind energy potential in jamaica

A Review of the Jamaican Energy Sector and Development Opportunities

WIND ENERGY POTENTIAL IN JAMAICA

The Romanian Agency for International Development Cooperation - RoAid

JAMAICA

The study was financed by the Government of Romania, through the Romanian Agency for International Development Cooperation - RoAid, as part of the 2018 Official Development Assistance Program

Studiul a fost realizat cu sprijinul Guvernului României prin finanțarea oferită de către Agenția de Cooperare Internațională pentru Dezvoltare – RoAid, prin programul de Asistența Oficială pentru Dezvoltare aferent anului 2018

An overview of Jamaica’s electricity sector and potential for wind power generation

The Romanian Agency for International Development Cooperation - RoAid

March 2019

List of Contents

Abstract 7

The Jamaica Electricity Generation Mix 9

Jamaica Wind Generation Potential 11

The Financial Model 14

Wind Farm Financial Calculations 16

Energy Policy and Renewable Support Schemes 19

Fuel Consumption in the Power Generation 25 System of Jamaica

Wind Power Penetration Scenarios 26

The Feasibility Study 30

List of Contents

FiguresFigure 1 The Jamaica Electricity Generation Mix

Figure 2 JPS Selected generation Assets Map

Figure 3 Jamaica Selected Sites for Wind Power Development

Figure 4 Selected Testing Areas and Wind Farm Arrays

Figure 5 Figure 5: LCOE Results for eight key technologies

Figure 6 Print-out of the Wind Farm Financial Model Results for a

notional 50MW wind farm - USD 2 184/KW installed costs

Figure 7 Print-out of the Wind Farm Financial Model Results for a

notional 50MW wind farm - USD 1 600/KW installed costs

Figure 8 FIT and Auction Schemes

Figure 9 World Wide Auctions: Solar PV and Wind

Figure 10 Countries that have awarded renewables in auctions in 2016:

technology, quantity and price

Figure 11 Countries that have awarded renewables in auctions in 2016:

technology, quantity and price

Figure 12 The green certificate support scheme effect on renewable

power in Romania

Figure 13 Jamaica Power Generation System - Fuel Consumption

Calculations

Figure 14 Scenario 1 - An additional 50 MW of wind power installation




Figure 18 State and Trends of Carbon Pricing 2018 (May)

7


ABSTRACT

The aim of this paper is to present various wind power development scenarios, which could decrease oil consumption in the power generation sector in Jamaica, decrease elec-tricity tariffs to consumers, and decrease overall payments for oil imports in the economy of Jamaica.

Jamaica’s energy system is highly dependent on imported fossil fuels, and petroleum imports account for over 90 percent of electricity production. This oil import dependency comes at a high cost, as import costs are high and can be expected to increase further as oil prices rise in the future. Electricity prices for Jamaica’s people have increased in recent years. Consequently, according to the Jamaica Ministry of Science and Technology, the country is charting a new path to energy security based on domestic renewable energy sources in order to build an energy system that is socially, economically, and environmen-tally sustainable.

Prohibitive electricity rates burden businesses and citizens throughout the country, which relies on oil imports to meet 90 percent of its energy needs. This leaves the nation at the mercy of fluctuating oil prices that can make it difficult to budget and plan effectively.

To ease its dependence on imported oil, Jamaica has set itself an ambitious target: gen-erate 30 percent of its energy from local renewable sources, such as hydro, wind and solar power, by 2030.

The shift to sustainable sources of energy comes at an especially urgent time, considering Jamaica’s vulnerability to the effects of global warming: rising sea levels, coral bleaching, and changes in the frequency of tropical storms that impact the Caribbean.

The Government’s primary objective is to diversify the national energy supply into a mix of energy sources for energy security. The policy of the Government of Jamaica is that there is no restriction on the sources of electricity generation and may include solar photovoltaic, wind, hydro, biofuels/biomass and waste to energy solutions, petroleum coke, coal and natural gas.

The country has two main operational wind farms, Wigton (three phases with a total in-stalled capacity of 62.7 MW) and BMR Potsdam in the Santa Cruz Mountains with 36 MW installed. The performance to date illustrates a capacity factor in the mid 30s and wind measurements in a variety of other regions of the island are equally promising. The studies show that most of the wind energy tends to be produced in the afternoons and evenings, which is when the residential consumption peaks, which is quite promising in terms of balancing the electrical grid. Since most of the existing power generation on the island is oil-based, with engines and turbines that are quite flexible, the future looks good for a sig-nificant penetration for fluctuating wind power generation.

8

We have developed a financial model with associated spreadsheets; these spread-sheets analyze the decrease of oil consumption in the country and avoided associated oil import costs in 50MW stages, starting with 50 MW up to 200 MW. The attached tables illustrate that depending on additional wind power penetration, more than USD 85m p.a. could be avoided in terms of oil payments.

As a concrete example, a 100MW wind farm will decrease the fuel oil consumption by 82 851 tons, or USD 43m at current prices. Furthermore, the CO2 emissions from electricity generation will decrease by 227 804 tons.

As next steps in the wind farm development program we propose the development of a bankable feasibility study for the construction and financing of a wind farm in one of the following selected sites: Point Morant, Spur Tree, Rocky Point, Lucea and Robin’s Bay.


9

THE JAMAICA ELECTRICITY GENERATION MIX

We have analyzed the current electricity generation mix in Jamaica, with the details illus-trated in Figure 1.

Figure 1. The Jamaica Electricity Generation Mix

Location/Name Plant type Manufacturer Fuel Year Heat Rate Heat Rate Average Installed Output Output Fuel Notes and Observations

of Comm Load Capacity Gross Net Consumptionkj/kwh btu/kwh Factor % MW MWh MWh mmbtu

Total Electricity System Avg. 10.305 9.767 5.200.884 5.089.805 50.799.326

Old Harbour - St Catherine JPS Steam Francotosi #6 1968 15.913 15.083 76,30 30,00 151.500 143.300 2.285.137JPS Steam Hitachi #6 1970 14.023 13.292 88,90 60,00 388.300 370.200 5.161.262JPS Steam GE #6 1972 12.622 11.964 86,40 65,00 414.500 396.300 4.959.070JPS Steam GE #6 1973 12.485 11.834 59,10 68,50 302.200 285.900 3.576.272

Hunts Bay - Kingston JPS Steam GE #6 1976 12.995 12.318 84,00 68,50 405.800 378.600 4.998.456JPS Gas Turbine John Brown #2 1974 16.508 15.647 89,30 21,50 43.100 42.900 674.403JPS Gas Turbine GE #2 1993 14.639 13.876 90,80 32,50 103.600 102.200 1.437.536

Bogue - St James JPS Gas Turbine John Brown #2 1973 16.767 15.893 90,00 21,50 35.200 35.000 559.430 to be converted to gas from fuel oil

JPS Gas Turbine PW #2 1990 17.445 16.536 92,00 14,00 13.200 13.100 218.269 to be converted to gas from fuel oil




JPS Gas Turbine PW #2 2001 11.721 11.110 96,80 20,00 101.600 101.100 1.128.771JPS Gas Turbine GE #2 2002 13.255 12.564 95,90 38,00 227.900 226.800 2.863.331 CCGT Montego Bay 2 GT X 40 + 1 ST 40

JPS Gas Turbine GE #2 2003 12.969 12.293 94,20 38,00 213.400 212.300 2.623.303 CCGT Montego Bay 2 GT X 40 + 1 ST 40

JPS Steam (CCGT) GE 2003 23,30 38,00 81.200 74.000 CCGT Montego Bay 2 GT X 40 + 1 ST 40

Rockfort - St Andrew JPS Diesel Engine Sultzer #6 1985 9.516 9.020 69,90 18,00 103.600 101.100 934.462Diesel Engine Sultzer #6 1985 9.888 9.373 83,10 18,00 126.900 119.400 1.189.372

Upper White River - St Ann JPS Hydroelectric GE 1945 97,40 3,20 27.500 27.400Lower White River - St Ann JPS Hydroelectric GE 1952 96,10 4,80 38.600 38.500Roaring River - St Ann JPS Hydroelectric GE 1949 60,90 4,10 21.300 21.200Rio Bueno A - Trelawny JPS Hydroelectric GE 1966 88,10 2,50 15.400 15.300Rio Bueno B - Trelawny JPS Hydroelectric GE 1988 84,00 1,10 5.800 5.800Maggotty A - St Elizabeth JPS Hydroelectric Maloney 1959 96,40 6,00 42.900 42.800Maggotty B - St Elizabeth JPS Hydroelectric Maloney 2008 60% 6,00 31.536 31.221Rams Horn - St Andrew JPS Hydroelectric 60% 0,40 2.102 2.081Constant Spring - St Andrew JPS Hydroelectric 60% 0,80 4.205 4.163

Wigton 1 PCJ Wind 33% 20,70 59.840 59.840Wigton 2 PCJ Wind 33% 18,00 52.034 52.034Wigton 3 PCJ Wind 33% 24,00 69.379 69.379BMR Potsdam - Malvern BMR Wind 33% 36,00 104.069 104.069Munro JPS Wind 33% 3,00 8.672 8.672

Dr Bird I - Old Harbour Bay, West Kingston JEP Diesel Engine Barge #6 1995 9.750 9.242 85% 74,00 551.004 551.004 5.092.217 Ridgeline Industrial Heat Rate Estimate

Dr Bird II - Old Harbour Bay, West Kingston JEP Diesel Engine Barge #6 2006 9.750 9.242 85% 50,00 372.300 372.300 3.440.687 Ridgeline Industrial Heat Rate Estimate

West Kingston Power JEP Diesel Engine #6 2012 8.343 7.908 85% 66,00 491.436 491.436 3.886.304 6X11 MW Wartsila 12V46 Medium Speed Diesel HFO

Winward Road, Kingston JPPC Diesel Engine #6 1998 8.498 8.055 85% 60,00 445.000 445.000 3.584.254 2 X 30 MW MAN B&W 2-stroke 9K80MC diesel engine

Jamalco, Bauxite Plant Jamalco #6 15.000 14.218 85% 11,00 81.906 81.906 1.164.540 Ridgeline Industrial Heat Rate Estimate

Fossil Fuel fired system heat rate calculation:Fossil fuel fired generation 10.768 4.717.546 50.799.326

Total System Power Generation 5.089.805Todal Hydro Power Generation 188.465Total Wind Power Generation 293.994Total Fossil Fuel Power Generation 4.607.346

New Projects PlannedJamalco Halse Hall, Clarendon Jamalco gas-fired cogeneration gas 2020 120,00 New Fortress Energy - contractor

Alpart Refinery Alpart gas-fired gas 2020 230,00 dedicated to the alumina refinery

Old Harbour Bay, St Catherine JPS gas-fired gas 2021 190,00

Additional Notes and Observations:Wartsila 46 Heat Rate New and Clean 8.100 wartsila.com, 3% heat rate degradation applied

MAN B&W 2-stroke 9K80MC Heat Rate New and Clean 8.250 445.000 Ridgeline Industrial estimate, 3% applied, 2015 output

Figure 1. The Jamaica Electricity Mix

10

Jamaica Public Service Corporation (JPS), owns most power production facilities on the island – please refer to Figure 2 for a map of its selected generation assets. It has a fossil fuel fired installed capacity of 600MW, gas and steam turbines, fueled by a mix of fuel oil # 2 and fuel oil # 6. The newest facility is the GE Frame 6, 120 MW Combined Cycle Gas Turbine plant at Montego Bay. It also owns 29 MW of small hydroelectric power plants, and a small 3MW wind farm at Munro. JPS is planning to build a new 190 MW gas-fired power plant at the Old Harbour Bay site, with New Fortress Energy as the contractor.

The Petroleum Company of Jamaica, PCJ, is the most active wind developer with 63 MW installed at Wigton.

BMR Jamaica is the owner of a 36 MW wind farm in Potsdam, Malvern, and is considering further investments in renewable energy.

Jamaica Energy Partners, JEP, has an installed capacity of 190 MW, the aptly named Dr Bird I and Dr Bird II power barges have together 124 MW, whereas the West Kingston Power plant has another 66MW from six Wartsila Medium Speed Diesels.

Jamaica Private Power Company, JPPC, owns a 60 MW power plant in Kingston, the Win-ward Road plant. Two twin stroke 30MW each MAN diesel engines power this plant.

Jamalco is planning to build by 2020, a 120MW gas-fired plant (also built by New Fortress Energy); it currently operates a 11MW heavy fuel oil fired plant.

Jiquan Iron and Steel Company (JISCO), the owners of the ALPART Alumina Refinery in Nain, St Elizabeth, are planning to build a 230MW gas-fired power plant to serve its internal electricity requirements.

source: gastopowerjournal.com

Figure 2. JPS Selected Generation Assets Map


11

THE WIND POWER GENERATION POTENTIAL IN JAMAICA

There is ample potential for wind power generation in Jamaica, on top of the operating 100MW indicated in the previous version.

Existing wind studies have shown that the selected sites illustrated in Figure 3 have vast wind resources:

Point Morant up to 500 MWLocated on the western tip of the island, benefitting from the prevailing western Atlantic wind

Spur Tree 300 – 400 MWLocated in the middle of the island, benefitting from the mountain-valley cascade effect

Rocky Point 200 MWLocated in the south of the island, unique peninsula shape benefitting from southern sea winds

Lucea to be determinedLocated in the North-Eastern point of the island, benefitting from the proximity to the sea

Robin’s Bay, St Mary to be determinedLocated in the north-west, benefitting from the prevailing western Atlantic wind

Selected Wind Development Sites and Installed Capacity Generation Potential

12

Figure 3. Jamaica Selected Sites for Wind Power Development


13

The potential arrays of wind turbines and selected wind testing areas are indicated in Figure 4.

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Figure 4. Selected Testing Areas and Wind Farm Arrays

14

THE FINANCIAL MODEL

A detailed financial model is required in order to calculate the financial viability of the wind power project. This is important for both equity and debt investors, and, depending on their appetite for risk, will determine the amount of debt the project can support.

Selected data for the financial model are the upfront costs that are incurred until the project starts generating revenues:

• Development costs:

o Detailed feasibility study costs o Permitting costs o Tendering costs o Other costs including personnel and logistics not included in the above

• Construction costs:

o Turbine equipment and installation o Civil works including access roads, platforms and foundations o Electrical works including substation equipment and grid interconnection o Other construction costs

• Project management costs - these are higher when the developer/investor manages the various construction contractors through a project management company, and lower when the turbine supplier undertakes a full EPC (Engineering, Procure and Construct) contract with a higher overall cost usually.

• Financing Costs - if there is debt financing, there will be financing fees and interest during construction incurred and capitalized during the construction period.

Wind farms do not have fuel costs but there will be operating and maintenance costs during the project’s operational life, which will also include parts replacement.

There will be personnel costs, as well as administrative and financing costs during oper-ations. Of utmost importance during the operational section of the financial model is the projected capacity factor derived from the wind resource study.

The financing section will include the calculations for the repayment of the various loans, debt service reserve calculations, loan life cover ratio calculation, other ratios required by the various banking institutions.


15

The financial reports, the cash flow statement, the balance sheet, the profit & loss account, tax payments, dividend distribution, are all modeled for the projected lifetime of the wind farm.

The financial model will also calculate the levelized cost of electricity (LCOE).

The LCOE measures lifetime costs divided by energy production, as upfront costs do not paint a complete picture. Wind energy has zero fuel cost, but will have higher upfront cap-ital costs that fossil fuel fired projects.

The LCOE calculates the present value of the total cost of building and operating a power producing installation over an assumed lifetime. It also allows the comparison of different technologies, such as wind, solar, gas, coal, (which have unequal life spans), project size, different capital costs, risk, return and capacities.

The LCOE is crucial to making an informed decision to proceed with the development of a commercial scale project such as a wind farm.

A recent LCOE Calculator, developed by the Danish Energy Agency (www.ens.dk/en), provides the following results for the eight key generation technologies using the default settings for the year 2020, see Figure 5.

Figure 5. LCOE Results for eight key technologies

Key Assumptions: Technology data primarily from “Projected cost of generating electricity 2015” (IEA, 2015). However financial (CAPEX and OPEX) data for PV and wind are from the Danish Technology Catalogue. Annual full-load hours for coal, gas and biomass technolo-gies: 5,000, nuclear power: 7,000, onshore wind power: 3,150, Offshore wind power 4,500, solar PV: 1,700. Discount rate: 4% real. Projection prices for fuel and CO2 are from the IEA New Policy Scenario 2015, World Energy Outlook, 2015. FGD: flue gas desulphurisation.

16

WIND FARM FINANCIAL CALCULATIONS

The fully bankable financial model we have developed calculates the required feed-in tariff for a notional 50MW wind farm, with a 35% net annual capacity factor, which we deem typical to the wind resource on the island.

The two scenarios we considered differ in terms of total installed costs per KW. The Re-newable 2017 Global Status Report (REN21) is estimating 2 184 USD/KW as the total in-stalled cost for wind power in Central America and the Caribbean, significantly above the world median figure of USD 1 600/kw, and certainly above the India and China prices of USD 1 200/kw.

The 2 184 USD installed cost per KW will require a feed-in-tariff of 104 USD/MWh for a 7.5% unlevered project return, or a 11.6% levered equity return with a 40/60 debt/equity ratio. The total project cost in such a case would be USD 109m.

Please refer to Figure 6 for selected the financial model outputs relevant to this scenario.


17

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Print-out of the Assumptions and Results Sheet of the Wind Farm Financial Model

18

If the lower installed cost per KW is used, i.e. USD 1 600/KW, a tariff of only USD 80/MWh is required to achieve the same return requirements, and the total project cost is USD 80m. Figure 7 illustrates the selected financial model results in this case.

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Print-out of the Assumptions and Results Sheet of the Wind Farm Financial Model


19

ENERGY POLICY - RENEWABLE SUPPORT SCHEMES

FEED-IN-TARIFF (FIT)

A feed-in tariff (FIT) is a policy mechanism designed to accelerate investment in renew-able energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology. Rather than pay an equal amount for energy, however generated, technologies such as wind power and solar PV, for instance, are awarded a lower per-kWh price, while technologies such as tidal power are offered a higher price, reflecting costs that are higher at that time

In addition, feed-in tariffs often include “tariff degression”, a mechanism where the price (or tariff) ratchets down over time. This is done in order to track and encourage techno-logical cost reductions. The goal of feed-in tariffs is to offer cost-based compensation to renewable energy producers, therefore providing price certainty and long-term contracts that help finance renewable energy investments.

Feed-in tariff policies have been put in place in numerous countries, including Algeria, Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iran, Republic of Ireland, Israel, Italy, Kenya, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Pakistan, Portugal, South Africa, Spain, Switzerland, Tanzania, Thailand, Turkey and the United Kingdom. Some FIT schemes are combined with the auction system.

Unprecedented levels of renewable energy deployment have been achieved in several European countries using guaranteed national tariffs for feeding electricity into the trans-mission grid by private operators on a priority basis. Despite far less sunshine, a relatively significant of the world’s solar capacity was installed in Germany with a feed-in policy that promoted technical innovation, climate protection and job creation. Operator reim-bursement was guaranteed for 20 years to insure payback of capital-intensive generation equipment and to stimulate new investment

A few schemes, however, proved to be unsustainable at a certain point for certain coun-tries, for instance in early 2012 in Spain the Rajoy administration suspended the feed-in tariff for new projects. Nevertheless, Spain became a world leader of solar and wind gen-eration.

Feed-in tariffs have been proven to be the most efficient and effective support schemes for promoting renewable electricity as illustrated in EU studies, the International Energy Agency, The European Federation for Renewable Energy, and Deutsche Bank.

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AUCTIONS

Renewable energy auctions, sometimes also called ‘demand auctions’ or ‘procurement auctions’ are a type of support mechanism for renewable energy technologies. In most cases the renewable energy auctions are organized by the government of a country, or a designated state-owned entity. They will specify the capacity (MWW) or the electrici-ty generation (MWh), which is up for auction, as well as the generation technology and sometimes the generation location. Project developers can then submit a bid to the auc-tion, outlining their project proposal and stating the price per unit of electricity at which they will be able to realize their project. The government then evaluates the different offers, ranking them based on their price and other criteria. The best candidates are then selected and the government signs a power purchasing agreement with the successful bidders. Auctions are very flexible and can be organized in many different ways. In order for an auction to succeed it is important that it is adapted to the country’s specific circum-stances, these depend on the goals the country wants to achieve through the auction.

Countries that have successfully implemented the auction process are Mexico, Brazil, Morocco, South Africa, Oman, the US and to a certain extent China. These are places with generous and well-known wind resources and the auction process allows for both a sus-tainable level of tariff and acceptable returns for the investors.

The following Figures 8, 9, 10, 11 and 12 highlight the geographical spread and results of recent FIT and auction schemes.

Figure 8. FIT and Auction Schemes

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A review of the Georgian Energy Sector and Development Opportunities

source Renewable Energy Target Setting and Support Schemes Allen Eisendrath 2017

Figure 9. World Wide Auctions: Solar PV and Wind

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source IRENA_Renewable_Energy_Auctions_2017

Figure 10. Countries that have awarded renewables in auctions in 2016: technology, quantity and price

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source IRENA_Renewable_Energy_Auctions_2017

Figure 11. Countries that have awarded renewables in auctions in 2016: technology, quantity and price

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GREEN CERTIFICATES

A green certificate is a tradable commodity, which proves that certain electricity is gen-erated using renewable resources. One certificate could represent the generation of one Megawatt-hour of electricity, or it could differ between various types of renewable tech-nologies, such as in Romania.

In Romania when the scheme was introduced wind generation received 2 certificates for 1 Mwh produced, solar received 6 certificates, small hydro 2-3, etc....

Green certificates represent the environmental value of renewable energy generated and the certificates can be traded separately from the energy produced. Several coun-tries use green certificates as a means to make the support of green electricity generation closer to a market economy instead of more bureaucratic investment support and feed-in tariffs. Such national trading schemes are in use in e.g. Poland, Romania, Sweden, Italy, Belgium (Wallonia and Flanders), and some US states.

The green certificate scheme contributed greatly to the development of renewable gen-eration in Romania, see Figure 12 , with 4000+ MW wind and solar having been installed since 2008 when it was introduced. The scheme has now ceased, as it proved in the end to be unsustainable, both for the investor and the end consumer [who was paying for it in the electricity invoice]. As the capital costs for wind and solar energy have significantly decreased, other options are now considered, such as contracts for differences, auctions, etc…

Supported Technology MW GWh MW GWh MW GWhWind 560 460 3.200 6.614 4.000 8.400Hydro - less than 10MW 387 719 637 1.189 729 1.359Solar 0 0 180 260 260 320Biomass 14 67 425 2.050 600 2.900

2010 2015 2020 est.

Figure 12. The green certificate support scheme effect on renewable power in Romania

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FUEL CONSUMPTION IN THE POWER GENERATION SYSTEM OF JAMAICA

Based on the generation mix considered in Figure 1, which precedes any natural gas fired production, the average heat rate for the fossil fuel based production is calculated as 10 768 btu/kwh. An annual fuel oil consumption of 1 274 817 tons is calculated using a weighted average calorific value of 42 040 kj/kg. Current oil prices (Gulf Coast Charleston 17-Jan-2019) indicate a cost of USD 515/ton, or an annual outlay on fuel oil of USD 656m.

Figure 13 illustrates these numbers. If we consider a notional 100 MW wind farm, with a 35% net capacity factor, the resulting 306 600 MWh produced could displace 82 851 tons of fuel oil, or about USD 43m at current oil prices. With the help of estimates in light fuel CO2 emissions, as calculated by the Institute for Advanced Materials, the Joint Research Centre of the European Commission, we see a reduction of 227 804 tons of CO2 equiva-lent, a significant achievement.

Average Fossil Fuel System Heat Rate btu/kwh 10.768 based on Ridgeline Industrial System Calculations, figure 1 - The Jamaica Electricity Mix,

the fossil fuel fired system heat rate calculation

Weighted Average Fuel Calorific Value kj/kg 42.040 a combination of fuel oil # 6 and # 2 (ratio 8/2 - #6/#2)

Weighted Average Fuel Calorific Value btu/kg 39.848

Estimated Power Generation Fuel Consumption mmbtu 50.799.326 based on Ridgeline Industrial System Calculations, figure 1 - The Jamaica Electricity Mix,

the total electricity system fuel consumption in mmbtu

Weighted Average Fuel Calorific Value kj/kg 42.040 a combination of fuel oil # 6 and # 2 (ratio 8/2 - #6/#2)

Weighted Average Fuel Calorific Value btu/kg 39.848

Power Generation Fuel Consumption ton 1.274.817

Weighted Average Fuel Prices USD/ton 515 a combination of fuel oil # 6 and # 2 (ratio 8/2 - #6/#2)

Gulf Coast Charleston 17-Jan-2019 Fuel #6 USD/ton 660Gulf Coast Charleston 17-Jan-2019 Fuel #2 USD/ton 479

Power Generation Fossil Fuel Cost USD 000s 656.786

Wind Power Generation Installed Capacity MW 100 selected scenario

Capacity Factor 35,00% based on preliminary wind measurements in various sites in Jamaica

Wind Power Generation Output MWh 306.600

Avoided Fuel Oil Consumption mmbtu 3.301.469 based on the average fossil fuel system heat rate

Avoided Fuel Oil Consumption ton 82.851Avoided Fuel Oil Consumption Value USD 000s 42.685

CO2 emissions / MWh ton/MWh 0,743 light fuel oil emissions in power generation estimate, see

Inst for Advanced Materials - Joint Research Centre - European Commission

CO2 emissions avoided tons 227.804UN Carbon Credit CO2 price USD/ton CO2 10 estimate based on a 5-15 USD/ton CO2 range - EU CO2 prices currently at EUR 20+/ton

CO2 emissions value of credits USD 000s 2.278CO2 emission value USD / MWh 7,43

Figure 13. Jamaica Power Generation System - Fuel Consumption Calculations

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WIND PENETRATION SCENARIOS

This section will look in detail at selected numbers associated with four different wind power penetration scenarios, in tranches of 50 MW.

Figure 14 presents the effects of an additional 50MW of wind power production. At a capacity factor of 35%, the annual output will be 153 300MWh. The associated avoided fuel oil consumption is 41 426 tons, or USD 21m at current prices. 113 902 CO2 ton equiv-alent of emissions are avoided. The marginal fuel cost for electricity produced by fuel oil in the current generation mix is USD 139.17/Mwh, which is one of the reasons electricity is expensive for Jamaica’s consumers, both domestic and industrial. Previously, we have calculated likely wind power tariffs of between USD 80 and 104 / MWh, depending on the installed capital cost. Installing additional wind power generation will decrease the cost to Jamaica’s consumers.

Figure 14. Scenario 1 - an additional 50 MW wind power installation

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Figures 15 to 17 show three more scenarios of an additional 100 MW, 150 MW and 200 MW of wind power generation in Jamaica. The latter would result in a reduction in oil con-sumption of 165 703 tons, or USD 85m annually. The avoided emissions will be 455 608 CO2 ton equivalent.

The value of these CO2 emissions, or the CO2 emission credits vary from country to country, the band is quite wide, between USD 0 and 139 per ton of CO2 equivalent. For further information, please refer to Figure 18, which is based on the World Bank’s latest report on the matter, “State and Trends of Carbon Pricing 2018 (May)”.

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World Bank and Ecofys. 2018. “State and Trends of Carbon Pricing 2018 (May)”, by World Bank, Washington, DC.

Figure 3 / Prices in implemented carbon pricing initiatives

uS$ 0/ tCo2e

uS$ 10/ tCo2e

uS$ 20/ tCo2e

uS$ 30/ tCo2e

uS$ 40/ tCo2e

uS$ 50/ tCo2e

uS$ 60/ tCo2e

uS$ 70/ tCo2e

uS$ 80/ tCo2e

uS$ 90/ tCo2e

uS$ 140/ tCo2e

uS$ 130/ tCo2e

uS$ 120/ tCo2e

uS$ 110/ tCo2e

uS$ 100/ tCo2e

139 Sweden carbon tax

77 Finland carbon tax

64 Norway carbon tax (upper)

55 France carbon tax

36 Iceland carbon tax

27 BC carbon tax29

Denmark carbon tax (fossil fuels)

101 Switzerland carbon tax, Liechtenstein carbon tax

9 Beijing pilot ETS

1 Tianjin pilot ETS

Fujian pilot ETS,3 Mexico carbon tax (upper), Japan carbon tax

7 Shenzhen pilot ETS

5 Chile carbon tax

16EU ETS

21Slovenia carbon tax, Korea ETS

4RGGI, Chongqing pilot ETS, Norway carbon tax (lower)

2Estonia carbon tax, Hubei pilot ETS, Guangdong pilot ETS

<1 Mexico carbon tax (lower), Poland carbon tax, Ukraine carbon tax

8Portugal carbon tax, Switzerland ETS

25UK carbon price floor,

Spain carbon tax, Ireland carbon tax, Denmark carbon tax (F-gases)

6Shanghai pilot ETS, Saitama ETS,

Tokyo CaT, Colombia carbon tax, Latvia carbon tax

Alberta CCIR, 23 Alberta carbon tax

New Zealand ETS, California CaT, 15 Ontario CaT, Québec CaT

Note: Nominal prices on april 1, 2018, shown for illustrative purpose only. The Australia ErF Safeguard Mechanism, British Columbia ggirCA, Kazakhstan ETS and Washington Car are not shown in this graph as price information is not available for those initiatives. Due to the dynamic approach to continuously improve data quality using official government sources, the carbon tax covering only F-gases in Spain and F-gas tax in Denmark were added. Prices are not necessarily comparable between carbon pricing initiatives because of differences in the sectors covered and allocation methods applied, specific exemptions, and different compensation methods.

US$/tCO2e

Figure 18. State and Trends of Carbon pricing May 2018, by World Bank, Washington

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THE FEASIBILITY STUDY - NEXT STEPS

As a practical next step we suggest the commissioning of a bankable feasibility study, which, once complete, should allow for the development and construction of further wind farms with private funding. The relevant sites would be one of: Point Morant, Spur Tree, Rocky Point, Lucea and Robin’s Bay.

Such a study should include:

• The IFC (International Finance Corporation)/World Bank compliant Environmental Impact Assessment (EIA) - the World Bank environmental, health and safety guide-lines for wind energy are annexed to this document;

• The wind resource study - the Jamaica Wind Energy Atlas, recent in depth wind measurements, as well as the recent performance of the Wigton, Malvern and Munro wind farms will provide valuable data points for assessing the detailed wind resource at the site of the future development;

• The geotechnical study;

• The topography study;

• The grid connection study;

• The detailed financial model;

The strict scope of the feasibility study could exclude:

• The permitting of the wind farm (heavy on resources when developing on agricul-tural land);

• The tendering for wind turbine equipment, electrical equipment, and civil works

The latter activities are part of the development process, but could be included in a larg-er scope of a study.

wind energy potential in jamaica

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