OfReg blames CUC for stifling solar with low CORE rates

(CNS): The utility regulator has approved new rates and capacity brackets to increase the number of people on Grand Cayman taking up renewable energy generation options. OfReg said CUC’s Consumer Owned Renewable Energy (CORE) programme rates have stifled the adoption of green energy in Cayman and have done nothing to advance sustainability goals in the energy sector.

From 1 November, it is imposing a new rate of 21 cents per kilowatt hour for 7.5kW and below and 17.5 cents above 7.5kW up to 15kW.

The new rate is a significant increase for smaller producers, who currently receive 17.5 cents per kWh for up to 5kw and just 15 cents up to 10kw. However, CUC has stated that the increase in this rate has the potential to increase the cost of power for everyone.

In a press release, OfReg stated that following much deliberation on the status of the CORE programme and the more recent “lacklustre demand for CORE under the previous fee regime”, a decision was made to approve new rates aimed at increasing consumer uptake and participation in self-owned renewable energy generation options.

Officials stated that after reviewing the history of the former CORE programme, it was evident that the previous iteration did not create the incentives necessary to advance it or the country’s national energy generation and sustainability goals.

OfReg Interim CEO Sonji Myles said the regulator works to support the aims of the National Energy Policy.

“It must regularly consider how to enhance CORE feed-in-tariff programmes, exercise our statutory power to authorise CUC to purchase renewable energy from consumers, encourage the promotion, development and use of renewable… or alternate forms of energy by consumers and champion the need to permit, promote and incentivise the use of renewable and alternative forms of energy by consumers, so as to reduce the load on any Transmission and Distribution system and demand for fossil fuel,” he added.

OFReg said the CORE programme had disincentivized the uptake of renewables, which have seen a decline in demand in recent years despite the increasing cost of fossil fuel energy generation. This left around 4.4MW of unused renewable/alternative energy capacity available for the taking.

OfReg Chair Samuel Jackson said there should be viable options for people to participate in renewable energy generation for themselves and reduce their electricity bills. “Equally important, moving to renewable forms of energy generation reduces the demand on fossil fuels, which in turn moves us closer to a more sustainable and greener Cayman.”

Responding to the change, CUC said it supports the development of renewable energy programmes that benefit all electric consumers on Grand Cayman.

“We learned about these new CORE rates yesterday, and based on our initial review, the OfReg-approved rates appear to be higher than current fuel costs and will, therefore, potentially increase costs to consumers as CORE energy will now be higher than the cost of fuel that it displaces,” a CUC spokesperson said.

“In all of our proposals to OfReg, CUC has always strived to lower the cost of energy. The current CORE and DER programmes, which reduce energy costs for all consumers, have been open for subscription since July 2023, and several hundred customers have already subscribed to the programmes. We look forward to discussing this new rate with OfReg and continuing to pursue low-cost renewable energy programs that benefit all customers.”

CUC has previously said that it believes its CORE rates are fair and that it would not increase the rates it pays those customers despite the pressure from the Cayman Renewable Energy Association, and it would not “support paying inflated prices for energy” from rooftop producers as it would have to pass the cost on to regular customers.

CUC has also argued that the very small domestic solar market is not being constrained by its approach to CORE or its rates but by grid stability. It has also said that the estimated cost of electricity from a utility-scale solar plant is in the 10 to 11 cents range per kWh, which is why it continues to advocate for more utility-scale renewable energy.

Up until now OfReg had not challenged CUC’s approach.

However, the take-up of the latest release of access to the grid has been poor. Despite the ambitious green energy targets set out in the new National Energy Policy, the needle has barely moved in years on green energy generation, which remains about 3% of Cayman’s entire electricity generation.

CNS has reached out to CUC for comment on this latest move by the regulator, and we are awaiting a response.

Meanwhile, officials at OfReg said the new CORE rates and capacity brackets apply to all the available and unused capacity, estimated to be 4.4MW. The new rates and brackets will not apply to any existing programme agreements, including those under extension, or subject to any request for further extension made before the public announcement of the 2024 CORE-Renew Programme.

The new rates become effective on 1 November 2024. The CORE-Renew Programme will be applied on a trial basis and re-evaluated at least twelve months after its implementation date.

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