How reducing 20% CET on Li-Ion Batteries heralds a Jamaican Hydrogen-Electron Based Economy in 2030

“The expectation is that both regular customers and members of the private sector will be able to bring in these batteries at a reduced cost.......Without commenting on any specific project, what it now means is that a number of projects will now be more attainable in terms of cost”.

State Minister in the Ministry of Industry, Commerce, Agriculture and Fisheries, Floyd Green, commenting on the request for the removal of the CET on Li-Ion Batteries

Alternative Power is finally getting a real boost in Jamaica.

This as the Government of Jamaica is removing the CET (Common External Tariff) on Li-Ion Batteries for JPS Co (Jamaica Power Service Company's) as reported in the article “JPS To Get Tax Break On Lithium Batteries”, published Sunday June 9, 2019 by Neville Graham, The Jamaica Gleaner. 

This is to be used as an energy storage solution to support the US$25 million plant that will installed at JPS Co Hunt’s Bay power station in Kingston. Slated to produce some 24.5 megawatt, the plant, which is being installed with Li-Ion Batteries, has been in construction since February 2018.

It will use Li-Ion Batteries to store excess power from Power generation during the day to supply spikes in peak power during the night.

JPS power stations are being upgraded as reported in the article “JPS Full Switchover From HFO To LNG To Go Beyond 2020”, Published Wednesday February 6, 2019, The Jamaica Gleaner.

These plans are being upgraded to run on either:

1.      LNG (Liquid Natural Gas)

2.      ADO (automotive diesel oil)

The switchover affects four (4) power plants

1.      120 MW Bogue Power Station in Montego Bay (completed and commissioned in 2016)

2.      190 MW Old Harbour Power Station in St Catherine (under redevelopment)

3.      25 MW Hunts Bay Power Station

4.      40 MW Rockfort Power Station

JPS Co began construction in February 2018 of the 25 MW Hunts Bay as reported in the article “JPS breaks ground for US$21.6m hybrid energy storage facility”, published Tuesday, February 27, 2018, The Jamaica Observer, which will have a combination of two (2) storage options:

1.      Low-speed flywheel

2.      Li-Ion batteries

This removal of the CET will save JA$1 billion in CET, as JPS Co is set to import some US$40 million (JA$5.4 billion) worth of Li-Ion Batteries. They already have 50% of that amount in Jamaica worth some US$26 million (JA$3.5 billion).

So how did the removal of the CET occur?

JPS Co and the CET – GOJ got CARICOM approval for 2-years tax free Li-Ion Batteries

This removal of the CET is possible thanks to COTED (Caribbean Community Council for Trade and Economic Development) in the week of Sunday June 2^nd 2019 granting permission to the Government of Jamaica to suspend the CET for two (2) years.

So on March 7, 2019, the committee for the review of energy and technology tax incentives decided to apply to COTED to have Li-Ion batteries imported into the region CET-free. COTED, which has headquarters in Georgetown, Guyana, agreed in May 2019 to allow this to happen.

Thanks to this agreement, all Jamaicans will be allowed to import Li-Ion Batteries into Jamaica CET-free, not just JPS Co alone, as noted by State Minister in the Ministry of Industry, Commerce, Agriculture and Fisheries, Floyd Green, quote: “The expectation is that both regular customers and members of the private sector will be able to bring in these batteries at a reduced cost”.

Also, expect more Renewable energy projects to get stated in Jamaica, said Floyd Green: “Without commenting on any specific project, what it now means is that a number of projects will now be more attainable in terms of cost”.

So why does JPS Co need Li-Ion batteries?

JPS Co and Power Supply - Stable Power supply by smoothing out

JPS Vice-president for energy delivery, Blaine Jarrett, first made mention of the 24.5 megawatt plant at Hunts Bay in April 2019. She stated its purpose was to:

1.      Maintain consistent power supply

2.      Stop power fluctuations

Strangely, this was not being caused by faulty JPS Co Equiptment.

Rather, it was being caused by the increased use of alternative energy power systems e.g. wind and solar as I had explained in my blog article entitled “How JPS Co Hybrid Storage Plant Prevents Islandwide Outages as Solar Power usage increases”.

 

The storage facility will allow the company to maintain consistent power supply and curtail the power fluctuations as explained in the article “JPS Invests US$25m In Storage Facility To Address Power Fluctuations”, published Sunday April 14, 2019 by Steven Jackson, The Jamaica Gleaner.

This is especially true for customers in the Rural areas such as Clarendon, Manchester and Montego Bay, who will experience fewer power cuts following the installation of the storage facility.

The need for such a power storage facility arose out of board discussions at JPS in mid-2017 after the islandwide power outage that occurred on Saturday August 27^th 2016. The JPS Co was referred to the OUR (Office of Utilities Regulation), who recommended several recommendations (The Jamaica Observer, 2016, November 17), many of which are flawed and were based on blaming managers and supervisors.

In my MICO WARS blog article entitled “OUR tells JPS Co to do Load Impedance Matching to prevent future Islandwide outage”, I recommended the use of Li-Ion Batteries or Sulphuric Acid Battery storage of Excess power to meet the demands of increasing load on the Electricity Grid or a drop in load due to our increasing use of Alternative Energy solutions or sudden emergency e.g. Hurricane or Earthquake.

Both are a cause for concerns, as they create fluctuations in the demand for Electricity or Load, making it hard for the JPS Co to produce enough power to supply demand.

So how does this help JPS Co Hunt’s Bay power station help with stabilizing our power supply?

JPS Co and Li-Ion Battery Storage - Power Fluctuations due to Alternative Energy Installations

Peak energy usage in Jamaica occurs between 6.30 p.m. and 9.30 p.m. According to JPS Co., this matches the time that:

1.      Solar plants reduce power generation due to mid-day peak

2.      Wind farms optimally generate power at nights but after peak periods

The result is an oversupply of electricity from Alternative sources, which results in a drop in demand for Electric Power. This excess energy changes the Power demand curve for JPS Co Electricity, resulting in what is called in academic circles as well as among Power Engineers as the Duck Curve .

That excess energy from Alternative Energy sources has to be stored, otherwise it will go to waste. The Stored Energy at the new Hunts Bay Power Plant facility would be brought into play at peak periods when this occurs, utilizing the power already stored in Li-Ion Batteries and Flywheels to smooth out this spike in demand.

But part of the problem as I have argued is the increasing usage of Solar and Wind turbines by customers as well, which is affecting JPS Co supply of power to their customers as argued in my blog article entitled “How JPS Co Hybrid Storage Plant Prevents Islandwide Outages as Solar Power usage increases”.

If the Load is too small at peak period, as would be caused by excess power from customer solar Panels and Wind Turbines, JPS Co will produce too much power on the Electricity Grid. This decrease in load occurs at night when customers switch to their Battery storage systems for their Alternative Energy solutions, be it Solar or wind power and often happens during what should be peak power usage.

It can also occurs during a natural disaster when everyone disconnects their breakers, causing a sudden drop in Load and hence fewer houses needing electricity. This excess power generated by their generators has to be stored, as JPS Co cannot turn off their generators as they are not so easy to just shut down; they are only turned off for maintenance every 1000 run Hours and this procedure takes 24 hours to achieve and is an expensive process.

So that excess energy has to be stored in some form, be it in Batteries or in some form of Kinetic storage e.g. Flywheel or an Elevated Dam, so that it does not go to waste and keeps the plant functioning efficiently.

If the Load is too large at peak period, as would be cause if everyone SIMULTANEOUSLY were to suddenly switch on all their heavy current appliances at the same time, JPS Co will produce too much power on the Electricity Grid. This sudden increase in load can occur during a major event e.g. sports event, heat wave in a country or during the holiday, such as at Christmas time and may occur during what should be peak power usage.

JPS Co would end up producing too little power to meet rising customer demand on the Electricity Grid. During this period of time, JPS Co has to find excess power has to be stored, as they cannot turn on their generators as they are not so easy to just turn on if they are off for maintenance. So that excess energy has to be stored in some form, be it in Batteries or in some form of Kinetic storage e.g. Flywheel or an Elevated Dam.

Li-Ion batteries are the perfect short-term solution, with long-term solutions being a Dam on a high elevation as well as large Flywheel technology to store excess power. This facility can be used to store excess power if the Load is too small at peak period or provide electricity on demand if the Load is too large at peak period for the reasons detailed above.

Combined with increased SmartMeter deployment, JPS Co will be better able to monitor the load from Commercial and Household consumers and thus anticipate more precisely fluctuations in Electricity demand.

Hence the need to reduce their cost to allow JPS Co and other players in the Power Generation sector to have access to them for their Power Backup solutions. So will this benefit regular consumers and householders?

Li-Ion Batteries and Alternative Energy - 50% Renewables by 2030

Li-Ion batteries are the go-to storage solution for everything from smartphones, Electric Vehicles to Tesla's PowerWall as explained in the video below.

“Batteries that come in as part of a renewable system come in duty-free and GCT free and certain types of batteries, the tariff code also allows them to come in duty free. Lithium ion batteries, unfortunately, is not on that list,” stated a source close to the energy review committee in an interview with The Financial Gleaner.

The addition of renewable to the grid is part of a JPS Co's energy diversification programme. JPS Co's energy mix is currently as follows:

1.      11% from renewables

2.      50% from LNG

3.      39% from heavy fuel oil

The plan is to use more LNG now that the LNG Terminal will soon be up and running as reported in the article “PM Says Newly Commissioned LNG Terminal Will Reduce Energy Costs”, published JULY 20, 2019 by ALECIA SMITH, The Jamaica Information Service.

JPS Co is pushing for 80% power coming from LNG in the next five (5) years. Energy storage is part of JPS CO's solution with the Jamaican Government action making this easier for at least 2 years, to quote State Minister Floyd Green: “As far as our ministry is concerned, we have to look at how we can assist in meeting those energy goals. We found that one of the barriers is the sheer cost of the importation of lithium ion batteries. While the cost is coming down, the attendant duty adds to the cost”.

At least the Government of Jamaica is pushing for 50% renewables by 2030, with Energy storage being part of the plans as State Minister Floyd Green points out: “What we have done is to take that policy, broke it down and look at those areas that touch and concern us, especially the trade and duty-related issues, and we’ve done what needs to be done to remove those barriers that we can impact.”

This first with my recommendation that they seek to have 50% to 100% coming from Renewables as I had opined in my blog article entitled “How New Fortress Energy LNG fuel for JUTC Buses is a step towards a Hydrogen-Electric Economy in 2030”. 

So what are the long term implications?

JPS Co and the Future - Energy Sector Liberalization 

The impact of this will be deep.

Not only will it stabilize JPS Co power and potentially lower the cost of delivering Energy, but it could also help with lower the homeowner cost of installing and deploying Alternative Energy solutions.

It would also encourage Jamaicans to switch to Electric Vehicles come 2025, once enough Electric Charging Stations are installed in 2020 as predicted in my blog article entitled “ATL Automotive and JPS islandwide Network of Electric Charging Stations by 2020”.

It would also make Hybrid-Electric JUTC Buses and eventually other forms of Mass Transport a reality, lowering the cost of Transportation as predicted in my blog article entitled “Why JUTC going Hybrid indicates removal of 60% import duty on Electric Vehicles”. 

Ultimate, this excess of Energy from Alternative and LNG may even result is Jamaica switching to a Hydrogen-Electric Economy as long opined in my blog article entitled “How New Fortress Energy LNG fuel for JUTC Buses is a step towards a Hydrogen-Electric Economy in 2030”. 

This as cheap energy would not only make operating business in Jamaica easier, but it would allow us to branch into using that excess energy, especially Wind Energy to produce Hydrogen and extract Uranium from seawater for export as predicted in my Geezam blog article entitled “How PCJ Offshore Windfarm may be used to export Hydrogen and Uranium”. 

We could eventually switch over to a Hydrogen-Electron Based Economy where our Energy would be generated by generators fueled by Hydrogen obtained from the Electrolysis of water, Cars running on Hydrogen Fuel cells and Cooking Gas filled with Hydrogen Gas as opined in my blog article entitled “UTECH and Hydrogen as Cooking Gas – How Hydride Salts make Hydrogen Cooking Gas and Fuel Cells possible”      

Finally, it will hopefully push the Government of Jamaica into following the example of Costa Rica and dismantling the JPS Co Monopoly.

This would set the stage for introducing Alternative Energy-powered Mini Grids and enabling Competition in the Energy sector as opined in my blog article entitled “How JPS Co App for Digital smartmeter means paying Electricity Bill via Mobile Money”. 

Energy Sector Liberalization is possible come 2030 when Li-Ion Batteries, LNG and Renewables are a permanent part of Jamaica's Energy Mix in 2025!!!

References

1.      The Jamaica Observer. (2016, November 17). OUR tells JPS to fix system to prevent future outages. Retrieved from http://www.jamaicaobserver.com/news/OUR-tells-JPS-to-fix-system-to-prevent-future-outages_80614