Following years of pressure, a report by the utility watchdog OfReg recommending how much customers should be paid for generating solar power for national use has been released more than two years after it was produced.
The Value of Solar Study (VOSS) was launched by OfReg in 2022 with the purpose of determining how much consumers should be paid for generating their own solar power, such as installing photovoltaic tiles on their roof, and selling it back to the power grid.
Announcing the launch of its VOSS study, OfReg said that it would provide “greater certainty” for consumers who were planning on investing in solar power generation.
However, while the report was completed in late 2022, OfReg has only just decided to release it, following a Freedom of Information request by James Whittaker, president of the Cayman Renewable Energy Association (CREA), and a subsequent complaint made by Whittaker to the Ombudsman.
No grounds to withhold report
A statement issued by OfReg Thursday said that, following a recent review by OfReg’s interim chief executive officer Sonji Myles and his team, the regulator decided that there were no valid grounds under the FOI act to justify continued withholding of the document.
In a statement accompanying the report’s release, Myles said, “In the spirit of transparency, accountability and public engagement, we publish this report along with a disclaimer to the public as part of our efforts to support informed dialogue around renewable energy policy and to ensure that key regulatory decisions are accessible and evidence-based.”
A lengthy disclaimer issued with the report stated that “the findings and conclusions presented in the VOSS do not represent the official position, policy, or constitute an administrative determination of the Office”.
The disclaimer went on to say, “VOSS should not be interpreted as binding upon the Office, offering any guarantee of financial returns to any person; confirmation of applicable rates; nor an indication of specific policy direction. Any decisions or actions based on the study would also require the Office to take into account other important factors, including but not limited to economic feasibility, impact on consumers, regulatory requirements and broader energy policy objectives.”
Recommended rates
The report itself recommends that CUC should pay its commercial and residential customers a rate of 24 cents per kilowatt hour but CUC’s own rates have been set at 17.5 or 21 cents per kWh, depending on the size of the provider.
The current rates were increased in November, having previously been set at 17.5 cents per kWh for systems that produce up to 5 kilowatts and 15 cents for systems producing between 5-10 kilowatts.
The increase was approved by OfReg following what it described as “lacklustre” demand for the existing programme, saying that it did not offer the kinds of incentives needed to attract users and failed to “serve to advance the national energy generation and sustainability goals of the country”.
It added, “Instead, it appeared to have had the consequent effect of disincentivising the uptake of consumer-owned renewable energy generation, which has seen a decline in demand in recent years despite increasing cost of fossil fuel energy generation, leaving approximately 4.4MW (megawatts) of unused renewable/alternative energy capacity available for the taking.”
According to the National Energy Policy, Cayman aims to utilise 30% renewable energy by 2030, 70% by 2037 and 100% by 2045.
Lack of transparency
In a statement, CREA said, “We are pleased that the Value of Solar Study has finally been released, we however remain disappointed by the lack of transparency and timeliness in decision making and public disclosure of this critical study.
“It should be noted that CREA first lobbied for this study to be carried out over 5 years ago, it then took approximately two years for it to be actioned by the regulator and almost three years to be released to the public after its completion.”
It added, “Despite the National Energy Policy requirement that rates paid to solar producers must be informed by the value of solar studies; due to the lack of regulatory transparency it remains unclear if or to what extent this study factored into the decision making regarding solar rates.”
CREA said that much of prior delays by OfReg were not the fault of the current management and board, and said it hoped that “the next study is carried out in a more timely and transparent manner and that the experts recommendations are either adhered to and/or any deviations in decision making outside the experts recommendations are clearly explained to the public by the regulator”.
Two other reports on the energy sector are also under pressure to be publicly released following legal wrangling over the last few years.
CUC told the Compass in a statement, “CUC welcomes the publication of the Value of Solar Study and strongly supports increasing solar deployment in a manner that reduces bills and bolsters energy security for the customers we serve. We are seeking to work with the next government and OfReg to accelerate and enable the deployment of 129MW of solar energy by 2027, inclusive of rooftop solar, as detailed in our Certificate of Need submission published in June 2024.”
It say that, as noted in the report, VOSS will be one component of future Feed-in Tariff (FIT) calculations or for alternative programmes that do not utilise a FIT, adding, “CUC does not set the rates for renewable energy programmes, and any renewable energy purchased by CUC from a customer or an Independent Power Producer (like the Bodden Town Solar Farm) is purchased at its prescribed rate and passed through to all customers with zero markup.”
It continued, “Well-designed, low-cost solar power plants offer a compelling solution for the Grand Cayman energy market. Modelling shows that three utility-scale solar projects combined with storage could reduce annual fuel costs by $25 million, which will directly benefit all consumers.”