Zia Mian, Contributor 
Mian
About 95 per cent of the electricity used is generated by burning heavy fuel oil or automotive diesel (diesel). The balance comes from renewable sources (hydropower and wind power). Oil demand for power generation accounts for about 21 per cent of Jamaica's oil imports.
The electricity peak demand grew at an average of 4.1 per cent per annum from 327 Mega Watt (MW) in 1990 to 626MW in 2006. To assure reliability, the public utility company (PUC) normally maintains a 25 per cent spinning reserve; which can be brought online in case one of the largest generation units fails.
The total power generation capacity is 997 MW, which includes 600MW belonging to PUC (JPS); 150MW is maintained by the bauxite/alumina companies; and 184MW is owned and operated by the independent power producers (IPPs). IPPs sell electricity to the PUC for transmission and distribution. Under the 2001 Electricity Licence, the PUC has an exclusive right to transmit and distribute the electricity. Since April 2004, the new generation capacity can be acquired through competitive process (under the auspices of the Office of Utility Regulation).
About 57 per cent of PUC's and almost all of the self producers' generation capacities have been in service for over 30 years. Hence, 53 per cent of the generation plants are old and therefore have low efficiency and reliability. For example, the efficiency of the old oil-fired steam units is about 26.8 per cent. It means that for every 100 barrels that are used to generate electricity, 73.2 barrels end up warming the air or the sea water (lost heat).
Investment decisions
Diesel pump
In the past, generation capacity expansion plans have suffered from delays in investment decisions. As a consequence, to avoid costly power outages, the PUC or owners (mainly the government) generally added the new capacity on an emergency basis by acquiring readily available gas turbines (GTs) to meet the system demand. At present, about 156MW of the GTs use expensive automotive diesel (diesel). The generation efficiency of GTs is about 24.4 per cent. In addition there are about 112MW of combined cycle gas turbine units, which also use diesel (efficiency factor: 40.7 per cent).
The average efficiency factor for slow-speed and medium-speed diesel plants is about 42.5 per cent and they are fired on heavy fuel oil. The overall national power generation efficiency in 2006 was estimated at 32.2 per cent. This translates into net heat loss of 68.8 per cent. Considering that the current fuel oil price is about US$73 per barrel and the diesel is priced at about US$140 per barrel, the use of gas turbines to provide base load capacity is extremely expensive.
In addition, in 2006 the system distribution losses averaged at 23 per cent. This means that for every 100 kWh that the PUC sent out, it could only bill for 77 kWh. The rest was unaccounted for and remained un-billed. While some of these losses are technical and unavoidable, the major portion is non-technical, which also includes the electricity that might be stolen. The Jamaican system losses, when compared to industry norms, are considered high. For example, the average system losses for Latin America and the Caribbean region are estimated at 15 per cent.
Global competitiveness
All these statistics add up to the price of electricity, which in Jamaica's case is high and directly impacts the regional and global competitiveness. In 2006 the average price of electricity to the Jamaican consumer was USą23.6. This comprised USą9.7 cents on-fuel component and USą 13.9 fuel component. In 2007 the fuel component is expected to increase considerably.
By comparison, in Trinidad and Tobago (T&T) the average electricity price is about USą4.5. This gives T&T manufacturers an edge over regional producers in general and the Jamaican producers in particular. In 2006 the non-energy sector in T&T grew at 6.5 per cent and the manu-fracturing sector at about 11.5 per cent. In 2007 the non-petroleum sector is projected to grow at 7.5 per cent. The employment in the manu-fracturing sector is over 50,000; representing about 10 per cent of the employed labour force.
In 2006, the household sector in Jamaica accounted for about 35 per cent of the electricity sales. In June 2006 Petroleum Corporation of Jamaica commissioned a Household Energy Survey, which was done by the Planning Institute of Jamaica and STATIN. The survey results show that many households, particularly in the rural areas, share meters. Many of the individuals sharing meters do not pay increases in the electricity bills.
About 8.2 per cent of all the households did not pay for electricity service that they received, with a higher proportion of urban households. The survey also showed that a higher proportion of households headed by individuals less than 40 years of ages did not pay for electricity, as compared to households headed by older persons.
The recent experience is that the peak demand for electricity is not growing at the historic rate. In 2003 average household consumption for electricity was estimated at 200 kWh/month. In 2006 it had declined to 180 kWh/month and in 2007 it is expected to average at 176 kWh/month.
Zia Mian, a retired senior World Bank official, is an international consultant on information technology and energy.
The issues in the electricity sector are:
Timely acquisition of new capacity through competitive process to ensure integrity of the system.
Making appropriate technology choices in order to improve the electricity generation efficiency from the current average of 32.2 per cent.
Diversifying the fuel type and sourcing in order to ensure security of supplies and reduce the cost of fuel input; which is a direct pass through to the consumer.
Establishing a retirement plan for the 30+ year old power plants and replacing them with modern and more efficient plants which are based on alternative fuels.
Where economic and feasible, identifying and developing indigenous power generation sources (such as hydro and wind power; and co-generation opportunities).
Developing strategies to reduce the cost of electricity to the consumers.
Developing measures to reduce transmission and distribution losses to acceptable levels.
Introducing measures to promote energy conservation.
Integrating bauxite/alumina and PUC generation capacity.
In the next article I shall discuss these issues.
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