Energy & Mining

Light My Fire Jamaica

LNG Investments

In 2016, Jamaica’s total electricity generation grew by 3.3% to 4,349.3GWh, although more than of 80% of generation still relies on heavy-oil fuel energy plants. The government is pushing to […]

In 2016, Jamaica’s total electricity generation grew by 3.3% to 4,349.3GWh, although more than of 80% of generation still relies on heavy-oil fuel energy plants. The government is pushing to diversify the energy mix and use cheaper and cleaner energy. Besides renewable energies, LNG is a strategic priority and the country is witnessing a number of major investments in this field. New Fortress Energy, an energy company from the US, is the key player of the relatively young Jamaican LNG industry.

While LNG has high upfront infrastructural costs, LNG prices are deemed more competitive and less volatile than other fuels. The introduction of LNG in the Jamaican energy mix could significantly reduce the cost of energy for households and businesses in the long run, improving the competitive position of Jamaican industries and providing better visibility for budget planning.
Besides, natural gas will reduce emissions and constitute an interesting complement to renewable energy. In September 2017, T’Shura Gibbs, Regional Director for Jamaica Public Service (JPS), the electricity distributor and leader in electricity generation, declared that by June 2019, 45% of the energy would come from LNG and 15% from renewables.
By then, the 190-MW Old Harbour power plant and 94-MW Jamalco plant will have been commissioned, joining the 120-MW Bogue power plant, which started operations in December 2016. The plant was converted from using solely automotive diesel oil into a duel-fuel plant, utilizing mainly LNG. New Fortress Energy invested over USD200 million in the construction of the LNG terminal.
New Fortress Energy will supply the USD300-million Old Harbour power plant, constructed by Spanish firm TSK Group. Operated by South Jamaica Power Company Limited (SJPC), a subsidiary of JPS, the plant will partly replace the 292MW generated by a 40-year-old power plant in Old Harbour.
JPS also signed a power purchase agreement (PPA) with New Fortress Energy in August 2017 for the 94-MW Jamalco power plant, the first phase of a USD265-million project with 200MW of total planned capacity. New Fortress will construct and operate the cogeneration plant, running on natural gas and diesel as backup, on brownfield space at Jamalco’s alumina refinery complex. The aim is to provide cheaper energy to this electricity intensive company.
Other projects, significant yet of a much lower scale, reflect the shift toward LNG in Jamaica. Red Stripe, the main national brewer and a subsidiary of international giant Heineken, announced in June 2017 a long-term deal with New Fortress Energy to become the first commercial company in Jamaica to be powered by LNG. Red Stripe plans to save as much as 50% of its annual energy costs, representing a gain of over USD300,000 by using LNG for 85-90% of its needs.
The University of the West Indies (UWI) Mona announced in June 2017 that it would construct a USD7-million LNG facility that would also enable the university to half its energy bill, its second-highest costs according to Dr. Paul Aiken, head of the electronic unit at UWI Mona. The plant, supplied by New Fortress Energy and using petroleum as a back up, is due for commissioning by July 2018. The energy company will also provide scholarships and assist in training more than 100 electrical engineering students from the rapidly expanding university
The 2017 Natural Gas Conference, organized by the Office of Utilities Regulation (OUR) and the Petroleum Corporation of Jamaica from October 4-6 was the occasion for Andrew Wheatley, the Minister of Science, Energy and Technology to congratulate recent investments and reaffirm the government’s ambitious goals: “The government is willing to have discussions with all parties who are interested in obtaining the appropriate licenses or permits to deliver these services within Jamaica. … It is this government’s intention to strategically position Jamaica as the regional hub for natural gas. This will ignite prospects in bunkering, shipping and logistics, so we are advising service providers in those industries to get ready.”

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