OfReg and CUC to define ‘fair price’ on solar

| 19/11/2022 | 40 Comments
Cayman News Service
Solar panels on the Tomlinson Furniture Building (Photo courtesy of Affordable Solar Cayman)

(CNS): Both the Utility Regulation and Competition Office (OfReg) and Caribbean Utilities Company have begun separate and independent studies to gather evidence on a price that is fair for solar providers and for customers as the Cayman Islands inches towards a much-needed expansion of alternative, renewable fuel supplies. But in the face of the current energy and climate crisis, the regulator is advising people not to install solar panels until these studies are finished and the new CORE and DER programmes have been rolled out by CUC and approved by OfReg.

The two studies are expected to be completed by the end of November 2022. Once both parties have reviewed the studies, the new iteration of the Consumer Owned Renewable Energy (CORE) and Distributed Energy Resource (DER) programmes will be announced.

In a press release issued Friday, OfReg said both studies would ensure the cost of solar electricity purchased from customers with distributed generation renewable energy systems is fairly priced and reasonable to be passed on to other customers on the grid. But OfReg also said customers should be cautious when ordering new solar systems and remain patient until the new structure and payment guarantees are in place.

“Some solar installers are selling solar to customers without having access to a programme which has been approved by the regulator and the grid owner,” the regulator stated in the release.

It added that the future CORE programmes might have different energy rates than those currently being charged, and customers should consider that a return on investment cannot be estimated until the new rates are determined. Those rates are unlikely to be determined until later next year, further adding to what has been years of delay in making any meaningful move in the Cayman Islands towards using solar to generate electricity.

Gregg Anderson, OfReg’s Executive Director of Energy, said the approved programmes are designed to provide opportunities for customers to install rooftop solar systems. They allow customers to connect small-scale solar systems or wind turbines to CUC’S distribution system and to reduce their monthly energy bills by generating their own electricity while remaining connected to the grid.

“However, there are a lot of issues at play in terms of essential costs to maintain and protect the local grid’s reliability and stability,” Anderson said. “These include determining an appropriate cost of service for utilities, the full ‘value of solar’, which will potentially determine the rate at which solar customers are credited, amended CORE and DER agreements and utility concerns about potentially losing revenue.”

Anderson added that the OfReg study was critical to understanding the costs and benefits of solar so that the national energy policy is based on an accurate perception of the value of solar energy.

“OfReg acknowledges that rooftop solar electricity generation is an integral part of the National Energy Policy (NEP) energy transition goals and is taking the necessary steps to support strong solar growth,” he said.

CUC’s VP for Customer Services & Technology Sacha Tibbetts said CUC has always been committed to bringing solar energy into the mix, as stated in its Integrated Resource Plan.

“The IRP provides for a rapid increase in renewables connected to the grid, which will deliver cleaner energy at competitive and more stable costs,” he said. “We continue to work with the regulator to bring renewables to our grid, to meet the needs of the customers as well to ensure that our grid remains safe and reliable.

“CUC has consistently said over the years that when we add renewable energy to the grid it cannot compromise reliability, nor should there be any additional substantial costs to the entire customer base. We embrace effective and fair competition.”

According to the country’s national energy policy, the target is for the Cayman Islands to be generating 70% of its power from renewables, mostly solar, by 2037, but only around 3% of the power consumed here is currently generated from solar.

The two studies that will help determine rates and hopefully push the rollout of more renewables are the Value Of Solar Study (VOSS) by OfReg, and the impact on the fuel efficiency of CUC’s existing generating engines if more renewable energy is connected to the grid before its battery storage project is finished next year.  

In 2020, CUC announced that the CORE programme was fully subscribed. However, OfReg approved an extra 3 megawatts of capacity to the programmes, which has since been fully allocated. Both parties have agreed that there will be a two-week notice period prior to the introduction of the new CORE and DER programmes.

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Category: Business, Energy, Science & Nature, utilities

Comments (40)

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  1. Anonymous says:

    So I want to go off grid with 2000 kWH per month of panels and batteries, how much does it cost? The quotes I got indicate it is not reasonably possible to break even vs CUC during the likely lifespan of the equipment. If I could sell CUC theexcess during the day at the present rate it would still barely break even. I canimport the equipment myself for less than half the Cayman price but the solar people will only work on what they sell.

  2. Caymanian says:

    This is all a crock of sh!t.

    CUC is playing games and Offreg is playing along.

    They know all the numbers.

    What we the consumers need is Hybrid capability. Forget this stupid buyback system. Allow installers to be able to be offgrid until needed. Store your power and use when you need.

    This whole crap sell to CUC at .01 and they sell it to ithers at .26 is the same sh!t banks do with our money. Give you .005% and charge others 9% to borrow YOUR money. Its a damn racket.

    We need a sensible contract that states 1. You can go offgrid or hybrid or sellback 2. If you sell back when you buy back its only a negligeble admin fee cost.
    3. Alternative energy cost needs to be SIGNIFICANTLY less than generation cost because it simply is.

    Stop playing the damn games CUC and Offreg

  3. Anonymous says:

    Simple. CUC pay solar generated power the same they charge their customers less an agreed amount for the provision of this infrastructure. Given this is already there the marginal cost should be almost zero.

  4. daniel johns says:

    When the fuel surcharges are more than the electricity use, we have a problem folks..

  5. Anonymous says:

    That electricity costs the same during the day as it does in the middle of the night, tells you everything you need to know about this arrangement.

    • Anonymous says:

      Another private sector board. remember airports authority couldn’t fix the parking problem and during the holiday weekend they ran out of parking spaces.

      why do we constantly think that these private sector boards can work with the current model of political appointments.

      Only the Governor and Deputy Governor advertises for persons to serve on their boards.

    • Anonymous says:

      I hear you, but bear in mind long term that means that electricity will be cheapest at two points in time – during the middle of the day when there will be a lot of cheap, large scale solar, and in the night when demand is low. This will make the afternoons and evenings the most expensive, naturally. Many of the benefits extolled from time of use pricing about lowering general system costs take place in jurisdictions where generation is purchased on the margin with day ahead or shorter peaking rates across large transmission networks and tons of generation resources. Not really applicable in a small island (and islanded) grid.
      That means that businesses, by and large, will benefit from their use during the day, and homeowners will bear the higher evening costs because they won’t be able to shift their usage as much outside the evening time. Some might be moved to night with delay settings, but practically it won’t be that much.
      Frankly, I’m not sure it’s the direction we really want to move, excepting people who can work remotely (a small minority these days). Studies in developing countries, which may not be applicable here, also find that time of use pricing structures tend to increase costs to lower income groups, which makes for poor social policy as well.

  6. Anonymous says:

    This is like putting FIFA in charge of soccer.

  7. Anonymous says:

    What I would like someone to eplain to me is this. Why are we being charged four times for the same electricty? These are the charges from my current bill as an example.

    Energy Charge kWh 1,825 $0.1185 $216.26
    Govt. Fuel Duty 1,825 $0.013337 $24.34
    Fuel Cost 1,825 $0.235627 $430.02
    Renewable Energy kWh 1,825 $0.007265 $13.26

    I understand that solar is part of the source of electricty so yes we will be charged for it as with the fuel generators. CUC says they produce 161 MW by the plant and 5 MW solar. My issue is if solar is “part” of the source, it is a then a percentage of the electricity we use is solar (8.3% 161 MW) and the rest oil/diesel (91.7% of 166 MW). Why are we being charged a rate for solar for 100% of the usage, a rate for fuel for 100% of the usage, duty on fuel used on the 100% usage and a rate for the usage of the full 100%.

    Shouldn’t it be..

    Energy Charge kWh 1,674 (95%) $0.1185 $198.37
    Govt. Fuel Duty 1,674 (95%) $0.013337 $22.33
    Fuel Cost 1,674 (95%) $0.235627 $394.44
    Renewable Energy kWh 151 (8.30%) $0.007265 $1.10

    How the bill is presenting is that we paying oil/diesel fuel charges, duty and usage on solar power which uses no fuel, has no import duty on fuel it doesn’t use and already has it’s own general usage charge.

    With the added charges and subsidy and relief, instead of the $500.04 I have to pay, I should be paying $442.18. I even adjusted the subsidy and relief on the 1,733 kWh made by oil/diesel.

    Now you look at that and say why am I b*tching about $57.86? CUC says it has 31,000 customers which is both residential and commercial customers which at $57.86, is an extra $1,793,660 a month (on average? $21,523,920 an year?) Is CUC overcharging it’s customers? I know there are customers that use less than me but think of businessness what use a hell of a lot more electricty and how much more they are being fleeced.

    Can you imagine Fosters or Hurleys or Kirk Market that have HUGE coolers running 24/7 or how much hurt the smaller mom n pop stores are being pinched running their drink/frozen food coolers 24/7? Or the Hospitals with all of their equipment?

    Now if we are actually being charged correctly, then how the bill is structured in its presentation is very MISLEADING and should be changed. Can CUC or Ofreg explain this to me please as I am obviously a simple minded, island born person who can only count to 10 with my hands, 20 with my feet and 21 with my pants down.

    • Sunny Disposition says:

      Simple. That $13.26 is the fee you pay for allowing renewable energy generation to substitute for the 6.13% of total generating capacity ‘lost’ to renewables energy- in this case, solar. Whilst CUC has ‘lost’ this generated capacity, it still has to maintain the transmission grid to distribute it as well as maintain the ‘spinning reserve’ required to feed that energy back into the grid when the sun sets and all those solar panels go dark. There is regrettably no free lunch here…

      • Anonymous says:

        So at that rate, 100% solar would cost him $210.47 a month? Or do we add energy charge for $198.37? Total $408.84? Should do this immediately nless the numbers mean something else. It does seem like some of these numbers are made up and designed to conceal the facts.

    • Anonymous says:

      I’ve asked this question before and here’s how it was explained to me. The total costs for each component are passed through spread over the total energy, rather than the specific costs passed through over the specific energy from each source. The end amount is the same, however you calculate it. Using your example:

      Energy Charge kWh 1,825 0.1185 $216.26
      Fuel Cost kWh 1,825 0.235627 $430.02
      Govt Fuel Duty kWh 1,825 0.013337 $24.34
      Renewable Energy 1,825 0.007265 $13.26

      At the bottom of the bill, the % of energy from renewables from the relevant month is provided. In this case, 3.0%. (The amount of solar installed, the 8.3% you provide, doesn’t produce outside the daytime, so the actual energy % is going to be lower.)

      3% of 1,825 works out to 54.75 kWh (call it 55 kWh). So the other way to show the bill with specific costs to specific energy would be:

      Energy Charge kWh 1,825 0.1185 $216.26
      Fuel Cost kWh 1,770 0.242949 $430.02
      Govt Fuel Duty kWh 1,770 0.013740 $24.34
      Renewable Energy 55 0.241091 $13.26

      This makes sense when you think about how much is being paid to CORE customers for renewable energy (now 17.5 cents or 15 cents, but at the beginning it was around 38 cents), reduced by the cheaper solar from the farm in Bodden Town. So right now, with stupidly high fuel prices, the cost of solar is nearly at the same level. This is coming down because the newer solar is coming in cheaper, but it’s been really high (proportionately) for the past decade.

      The energy charge is the cost to deliver the electricity and run the system, so it will always be the total energy used, even if you break up the parts of where the energy came from.

      Hope that helps! It was certainly eye-opening for me.

      • Anonymous says:

        Now that does make more sense so what CUC needs to do is show that in their billing like you broke it down because the other way makes it look REALLY sketchy.

  8. Anonymous says:

    Whole thing is a joke on all sides. Let’s be clear though on one thing: CUC does not now nor ever want consumer owner renewables. They’re perfectly happy to have renewables that they own. Rooftop solar is a threat to their revenue and profit, full stop. They don’t want it.

  9. Anonymous says:

    No expert in this sector (though know a good thing or two about markets), but seems to me that the studies are a big waste of time. Let market forces decide this issue. If, as Mr. Whittaker states, there is pent up demand, then the rates paid for solar are clearly too high because everyone is clamoring to get in at current levels. If they were too low, nobody would hear about solar because they’d all be out of business since nobody would want to join any of the programmes. Here’s what I propose – let people bid in their systems with their preferred price for a couple of months. At the close of the bid period, systems are accepted lowest to highest first, until availability is used up. Everyone wins. Everyone who gets accepted has a rate they were willing to take, and the rest of us don’t pay for arbitrary rates decided by irrelevant parties and factors. For those that don’t get accepted because their bid rate is too high, as the price of technology keeps falling they will eventually have a chance to make whatever their earning target is with a lower, future bid. Anything else just means that we’re paying unnecessarily rents, which is inefficient.
    Now who do I send my consultancy invoice to at OfReg? Found the current value of solar for them in less than 15 minutes.

  10. Anonymous says:

    The fact no average citizen thinks that anything good will come from these studies tells you what you need to know.

    CUC=Fox guarding the henhouse
    OfReg= a farmer milking a bull

  11. Anonymous says:

    i just want solar and batteries enough to be off grid, with maybe cuc as back up.

    this is where the future is. Let us put up extra panels and we will sell our excess to cuc.

    oh wait, not allowed,, not allowed and not allowed. And the strata has to agree as well, it is not a shared roof! come om.

  12. Anonymous says:

    Spare me. Just get the rate hikes over with and let’s carry on.

  13. Anonymous says:

    If Ofreg have commissioned an independent study into what the cost of solar should be, why does CUC need to do its own study unless it is, yet again, to try to cloud the waters with what the fear price of solar should be? CUC has shown itself time and again to be the problem. We have been running the CORE program for years and only 3% of our electricity is from renewables.
    CUC is not being really truthful when it says it is supportive of solar power. It is only supportive when external generators including residential solar is being done on its terms OR when it can generates solar itself as it is proposing to do, without there being any real competitive process in place.
    It is now time that government splits up CUC into generation and grid as completely separate units. Only then will we be able to have a level playing field where the true cost of electricity is understood and Cayman can then choose how it wishes to go forward in the long term.
    At the very least Cayman needs to do away with the CORE program and move to net metering so that those who wish to install solar can do so with enough return on investment to move renewables in the right direction. We should be ashamed of the 3% number and shows that CUC is not supporting our move to greener energy generation.

  14. Anonymous says:

    I currently earn 0.175c/kWh on my rooftop solar.
    I sell it to CuC, and then as a consumer, I buy it back from CuC at 0.36/kWh all in.
    Solar customers are not the problem. CuC is the problem.
    We should never be in the position where solar customers are “profiting” from existing customers. CuC is already in the business of doing that

    • Anonymous says:

      What I hear is – “I pay the same rates as everyone else, but I get to sell energy that will turn me a profit on my solar system and then some.” Cry me a river. Most of us just have to pay for the energy, including yours.

    • Anonymous says:

      So you paid maybe $15-18k for your system (assuming 5kW). It will likely produce about 185,000 kWh over the next 25 years. At that credit rate, you will earn $32,375. You achieve payback on your system cost around year 12-13 and are purely profiting for the next 12-13 years. Walk me through the issue?

  15. Anonymous says:

    To me it sounds like it is better to wait awhile than get ripped off by providers who think they will be able get rich in a year while squeezing the life out of us. Thanks Offreg and CUC. Personally I look forward to fair pricing.

    • Anonymous says:

      Fair for who that is, CUC or Joe average trying to scrape an offset to their bill. It’s never going to be fair for the average Joe while OfReg panders to CUC.

      • Anonymous says:

        I was thinking fairness to the average trying to scrape an offset to our bill as you so aptly put it.

    • Anonymous says:

      Lol whatever it is, it will not be fair to you. That’s a rose colored view and that isn’t how capitalism works bobo.

  16. James says:

    This press release is yet again a great example of OfReg and CUC creating a misleading information by not providing all the context to consumers related to rooftop solar.

    Here’s some relevant facts to understand.

    1) The stopping and starting of the solar programs have been going on for half a decade now and that is 100% the responsibility of OfReg and CUC, not solar companies or solar customers. As such what they have created is a situation where customers who want solar end up waiting time and again for months to get in into the solar programs (which abruptly shut down without warning) and when it is announced to be re-opened is quickly gone again. This is for 2 reasons… 1) insufficient and timely capacity planning means they do not add enough capacity to the grid to meet demand and 2) customers and solar companies who do sign contracts and await the reopening are the ones who always get in first; on a first come first served basis.

    It is OfReg and CUC who literally “create” a race for the capacity and this press release is telling customers not to do it, when not doing so is likely to result in you NOT getting into the programs over the persons that proactively had their applications and contracts ready to go on day1. You have 5 years of historically evidence to base this on so this press release is highlighting nothing new.

    To be 100% clear the solar association agree this is a 100% ridiculous system for both customers and solar companies to have to forced into; but it is a situation created entirely by OfReg and CUC, not solar companies, customers or even government.

    So understanding that context, this press release is quite self serving and laughable and is again another example of the folks creating the problem providing misleading information and suggesting other factors are the problem versus what the true reality is.

    2) This Value of Solar study was forced on OfReg to do it ultimately by the solar industry and consumers lobbying the government; as they (ERA/OfReg) refused for YEARS to carry it out and saw no value in it.

    Now since they have been forced to do it, their press releases about the VOSS extol the positive virtues and importance of doing this study.

    As you can imagine to those of us that have been lobbying them for years to do this their claims and comments about its “importance” now comes across as incredible irony and giant hypocrisy, albeit indeed it is critical for Cayman, which is why it was advocated for by CREA for so long.

    3. The reality is OfReg/CUC have had these programs shut down now for almost the entirety of 2022; much to the anger of customers and solar companies. This is the 4th time in 5 years they have done this. It is entirely their responsibility.

    The truth is because customers nor solar companies have any idea exactly when the programs will be “started and stopped” nor how much capacity will be given (how many solar system will be able to be approved once reopened) if you aren’t already “in line” the day the programs are reopening, you are likely going to miss out on having your system approved if you look at what’s happened over the last five years.

    So in addition to being misleading by not conveying all the salient information, if you’re someone who wants solar, this press release is largely very bad advice on top it.

    The proper advice is, until OfReg/CUC stop the constant stop/starting of these programs AND provide sufficient capacity to keep up with demand, you should absolutely pick your solar provider (any provider, there are several out there to choose from) and be ready as soon as the program open as your best hope to be successful in getting solar under this unfortunate “race for capacity” system THEY have created to which we all are subject to.

    Would be great for the media to ensure they get all sides to these types of press release/stories in advance so the full context of these matters can be balanced. In my experience you’re not going to get “balance” by only hearing the views of the Utlity and OfReg when it comes to rooftop solar and distributed generation.

    James Whittaker
    President- CREA

    • Anonymous says:

      Hi James, can you provide a current list of the active organizations within CREA? I can’t seem to find who CREA represents, since the website was last updated in 2018 and the one listed on Facebook doesn’t actually exist. It’s just odd that you never post public notes as a part of GreenTech whenever it relates to your business sector, but CREA hasn’t posted any content about local businesses other than your own in over 5 years. I think you may be confusing the two entities.

    • Anonymous says:

      Yawn. Will wait for someone not trying to take my last dollar to say something intelligent. As far as OfReg, CREA, and CUC are concerned, it’s all just a race to the bottom of my wallet…

    • Anonymous says:

      Thank you for this additional information, James, which has been very helpful.

    • Anonymous says:

      I can’t disagree with what James is saying about how useless Ofreg has been & CUC is using its power as a monopoly to keep its cash rolling in.
      The only fair way is to let people place solar on their homes/businesses & self-use that power that to lower there CUC bill.
      And if you can afford it add batteries & run some or all circuits on your own system.
      The CUC business model is great if you’re are a shareholder, but time to move on let customers put solar on to lower their bills & have some control on what is being paid to CUC.
      Ofreg has not looked after the customer, & time to remove that.

    • Anonymous says:

      Mr. Whittaker you always seem to have a lot of information on the pricing of solar. Most of us regular folks who might want to get solar don’t really know much about how it works. Could you kindly tell us how much you think it will cost us if you are the provider.? Will all providers have to charge the customers the same rate as CUC does for electricity. Also will there be a lot of providers which would mean competitive pricing?

  17. Anonymous says:

    As the monopoly providing electricity to Cayman how has CUC shown that they ” embrace effective and fair competition”?

  18. Anonymous says:

    Those of us that are not fortunate enough to install solar on our residences should take heed of the final part of the first sentence in the third paragraph – “fairly priced and reasonable to be passed on to other customers on the grid”.
    As one of these customers, I am all for solar and the hopeful reduction in electricity costs, but not if I will be expected to pay more to appease those fortunate enough to generate it, e.g. the net metering advocates, high CORE return, etc.

  19. Anonymous says:

    Considering the difficulty to get solar passed by the everyday local who wants to make a difference and the massive price to have local companies install, I think the absolute minimum should be 30 cents per kilowatt hour to buy and 50 cents to sell.

    • Anonymous says:

      You get that those prices get paid for by the rest of us, right? It’s not sticking it to CUC, it’s just a wealth transfer with a hefty profit margin to the rooftop cowboys.

  20. Anonymous says:

    This is going to be questionable as to what CUC and OfReg come up with as a “fair price”.

    • Anonymous says:

      What is your comment based on? Was the previous pricing unfair? And unfair to who, the solar owners or everybody else?

      • Anonymous says:

        Both CUC and OfReg have failed us and lied to us, so why shouldn’t they (together) be questioned (if not distrusted)?

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