OTEC refutes OfReg CEO’s claims over cost

| 13/12/2018 | 49 Comments
Cayman News Service

Artist’s rendition of OTEC platform

(CNS): Cayman OTEC International Ltd, a company proposing to build an ocean thermal energy conversion plant of the North Coast of Grand Cayman, has said the acting CEO of OfReg, Gregg Anderson, was incorrect when he told Finance Committee recently that the project rate is too high to be viable. In a press release from the company about Anderson’s comments last month, the company said his comments came “as a surprise”, as Cayman OTI claims it has offered a price that is substantially lower than the current rates incurred by Cayman consumers for energy.

When Anderson appeared before the parliamentary committee in November, as law makers approved the changes to the 2019 budget, questions were asked about this pending project. The OfReg chief suggested that the technology had not been proven in a commercial environment and it was too expensive.

He said OfReg had not ruled out the proposal but he said the “rates are not passing muster”. Anderson said that if it worked, this type of project could help drive down the use of fossil fuels and reduce carbon emissions, but until a better rate was offered, it was unlikely to be a solution for local energy needs.

However, Cayman OTI said they have not only offered lower rates at the start than people currently pay for electricity but there would be further reductions through “substantially lower capacity charges as diesel generating units are retired”.

The company said it agreed with OfReg that rates need to be competitive and it was meeting that requirement. Cayman OTI that in June 2018 it had received notice from OfReg that it had accepted the proposed pricing, but in September the company was told that it was CUC that had contested the pricing based on its Integrated Resource Plan.

“Cayman OTI still awaits to compare our proposed pricing and that projected by CUC,” officials from the company said in the release. “Cayman OTEC is an innovative project within the guidelines of the National Energy Policy. Neither the consumer nor the government is taking any financial or other risks associated with the development of our proposed renewable energy project. OTEC power is available 24/7 and is uniquely positioned to replace existing fossil fuel plants, complementing solar and wind generating units in a diversified portfolio of renewable solutions,” it added.

The company indicated that its proposal was submitted to the previous Electricity Regulatory Authority in May 2016, and more than two and a half years later it had requested that it be submitted to the OfReg board for regulatory approval.

The particular proposed venture has been on the cards since OTI entered into its first agreement with CUC in 2011. In 2014 it moved ahead with an environmental impact assessment for a plant off the coast of North Side. But the project still appears to be on the back burner.

In October the minister responsible for energy, Joey Hew, mentioned the project during his speech at an energy conference. But although it is mentioned in the government’s 2017 National Energy Policy in passing, the document does not include any energy generation from this type of technology in its statistics reflecting where Cayman’s power will come from over the next 20 years.

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Category: Business, utilities

Comments (49)

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  1. Laughing says:

    Has OFREG figured out how to fix telephones yet?

  2. Jim says:

    Big mistake to contract to buy power from this and get saddled with diesel equivalent pricing for the next 25 years the way we are with the solar farm. Reasonably priced solar panels and storage batteries are already being implented at much less cost than we are paying for our puny solar farm. In a few years we can have a system that is immune to fuel prices, ocean corrosion, waves, high winds and easy to keep all the electrical components well above high water. Batteries are advancing rapidy, well worth the wait. The Tesla system in Australia was brought online in 100 days and is working much better than expected, and better, cheaper batteries are very close to market.
    http://www.digitaljournal.com/tech-and-science/technology/tesla-s-big-battery-in-australia-has-defied-all-expectations/article/533773

  3. Anonymous says:

    If people take off their conspiracy theorists hats for a moment and pretent that the USA is not trying to kill off every other forms of energy except fossil fuels.

    Let’s also pretend for a moment that the USA also invests in research of alternative energy generation such as electricity from nuclear energy, hydroelectric, geothermic, solar, wind and others…

    Then a clear question naturally arises, why has this not been deployed or even tested as a prototype anywhere in the USA or its US territories? Like Guam, Hawaii and other places?

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  4. Anonymous says:

    Seems to be we would be better off exploring the enourmous kinetic enery in waves.

    https://www.youtube.com/watch?v=7ZN5CthZhvg

    There are several promising theories on this, and many use stationary platforms which would be far more reliable, and much more resilient to protect during storms. However in all these projects, the main problems are the complex designs, and extremely expensive parts and operational for these projects. Building and operating in the ocean is many times more expensive than on land. So this thing would have to produce a lot of energy, for cheap compartivly to a diesel generation on land and the cost of shipping the fuel.

    Otherwise is this is all just an excersice in academics and bad business models.

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    • Anonymous says:

      Cayman’s waves are, in general, too small for good wave energy production. OTECs strength (in theory) is that it doesn’t drop production on calm days (waves & wind) or cloudy/rainy days (solar). (In a hurricane everything drops production.)

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  5. Anonymous says:

    I need to travel to 30 conferences just to make sure.

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  6. Anonymous says:

    “Practical difficulties for Commercialization”

    Up to a third of the power generated via OTEC is used to operate the enormous water pumps, which can fail, intakes fouled or clogged with marine life/debris/growth, all in a highly-corrosive and weather-exposed environment, with all of this investment, tethered precariously to the seafloor on a barge…in the tropical hurricane belt. This is why it hasn’t yet happened ANYWHERE on a scale that means anything. A cool idea in theory.

    https://www.explainthatstuff.com/how-otec-works.html

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  7. Anonymous says:

    Anyone else notice that Hon. Joey Hew, the Minister for Energy, is the brother of Mr. Richard Hew, the Managing Director of CUC?

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  8. Brian Tomlinson says:

    Can we see the Environment Impact Statement that they started work on in 2014?

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  9. Anonymous says:

    OfReg will have to hire a consultant to help them understand the complexities of Cayman OTI, and then they will have to have to hire another director just to oversee that function, all of which must be seen as a cost to the power produced.

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  10. Anonymous says:

    They related to Oxitec?

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    • Anonymous says:

      No. Oxitec is a company name. (OXford TEChnologies?) OTEC is an acronym. Ocean Thermal Energy Conversion.

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  11. Anonymous says:

    BUILD IT!

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  12. Jim says:

    Be careful. We are stuck with the solar farm at 17 cents CI per KW while new solar is coming on line at 1/10th of that.

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  13. Anonymous says:

    What are the operational and maintenance cost for this contraption? It’s already expensive to simply burn diesel and spin a generator to produce electricity in the simplest way. How much will all those extremely complex moving/floating/rusting parts cost to upkeep in the ocean? What kind of staff costs are required to run this contraption? How much will it cost to protect that contraption during storms? How many tropical countries power themselves this way? How long does the system last before it has to be renewed?

    I’m not saying this is snake oil, but it does sound grandioso. Be very careful not to be suckered by extremely expensive snake oil.

    Show me the money and who has been using this effectively. Otherwise this is just an expensive experiment on the tax payers backs… us.. And I have a sneaking suspicion that some could be making a very significant bankroll somewhere on this project.

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    • Anonymous says:

      Neither the consumer nor the government is taking any financial or other risks associated with the development of our proposed renewable energy project.

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      • Anonymous says:

        8:59 Then where is the money coming from? Even if OTI can attract gullible investors to bankroll this they’ll still be seeking things like duty concessions and offsets from CIG to sweeten the deal. And if (when?) it all goes belly up who picks up the tab for clearing up the mess? We do!

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      • Anonymous says:

        Except you want a long term deal with CUC to buy the electricity.

      • Anonymous says:

        Fair enough, then I would suggest to make public the implementation costs, the yearly operational costs, cost per KwH generated and overall total power capacity of the contraption. Also who will be backing these numbers? And who will be responsible for paying for which part of the project?

        Who is assuring this technology will work and who will be responsible if it doesn’t?

        And if it doesn’t turn out to be feasible to run this thing cost effectively, then who will be resonsible pay to defunct the operation?

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    • Anonymous says:

      Of all your questions one can be answered “How many tropical countries power themselves this way?” = None!
      A prototype was planned in southern china, have not seen results.
      This is basically theoretical, sorry but we will not get the first one and we certainly shouldn’t take this risk.
      Answer to all your other questions clearly “nobody knows”

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  14. Anonymous says:

    ‘The OfReg chief suggested that the technology had not been proven in a commercial environment and it was too expensive.’ That is absolutely correct, not one commercially viable OTEC generating plant is in operation anywhere in the world. In effect this will be experimental and as such nobody, including Cayman OTI, has any idea what the final costs are going to be. Right now all OTI can do is quote a ballpark figure and keep their fingers crossed they can meet it. For an island this size that’s very dangerous nonsense.

    CUC latched onto OTEC back in 2007 for reasons that have never been clear. At the time they used it as an excuse to obstruct (using ‘we’ve got a better idea’ arguments) plans to introduce solar and wind power so what the heck are they playing at now?

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  15. Anonymous says:

    Please do not locate this monstrosity off North Side.

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    • Anonymous says:

      Don’t worry 10:35 if they do it won’t be around very long. The first decent storm is going to dump the whole thing at the bottom of the Wall. That’s the insanity of it – a floating platform on the end of a long pipeline in a completely unsheltered area of the ocean? Over the years I’ve seen enough shore installations on these islands ripped up by high seas to know that is going to end in tears and a huge insurance claim. Maybe that’s the plan?

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      • Anonymous says:

        I just don’t want it to land on my house. I guess the answer will be to dredge a hurricane hole for it to hide in in North Sound when the big one comes.

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  16. Anonymous says:

    Greg Who???

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  17. Anonymous says:

    “The company said it agreed with OfReg that rates need to be competitive and it was meeting that requirement. Cayman OTI that in June 2018 it had received notice from OfReg that it had accepted the proposed pricing, but in September the company was told that it was CUC that had contested the pricing based on its Integrated Resource Plan.”

    Sure lets have competition but at monopoly prices… sad.

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  18. I Smell a Panda in the Ring says:

    OfReg again playing to the wishes of CUC and major CUC shareholders. Pure greed and protectionism, and now lies in order to justify acceptance of OTI’s proposal.
    Now it’s obvious that certain parties do not want the status quo to change and will do or say anything to keep that way.
    Do people realise that what OTI propose will not burden the Cayman Islands people any cost or penalty, except buying the power through CUC? And if the world’s oil supply is threatened we stand to be hedged against inflated fossil fuel cost by utilising this technology.
    Then again, CIG would lose its precious revenue from diesel if this technology takes the place of CUC diesel engines in the future.
    Once again Cayman will be behind the curve when another Caribbean island accepts this technology without prejudice.

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    • Ytho says:

      “Once again Cayman will be behind the curve when another Caribbean island accepts this technology without prejudice.”

      Accept unproven technology with no predjudice? That doesn’t seem wise to me. Why does it seem wise to you?

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      • Anonymous says:

        1:12 It seemed dumb to me in 2007 and over a decade later my opinion has not changed. As a well respected conservationist, who comes from a very famous diving family, said to me at R-C in 2007, ‘It doesn’t work, end of story!’

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      • Anonymous says:

        Unproven and very likely snake oil.

        Show me the money amd which country is running one of these.

  19. Anonymous says:

    Come on Greg!

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