Feature Address – Trinidad & Tobago Energy Conference 2018
Good morning. It is my pleasure to stand among such an esteemed group of persons who have, in one way or another, made their mark in the energy sector, and to share with you some of my thoughts on the way forward, specifically from the perspective of the Electricity Sector.
Putting Things into Context
There can be no doubt that Renewable Sources of Energy are the way forward, not just for the world, but for the region and for Trinidad and Tobago. As a Small Island State located just below the Hurricane Belt, we are well aware of the impact of global warming and the resultant climate change. Several studies have shown evidence of recent changes in our climate, including an upward trend in temperatures. And the past year has made us all painfully aware of our vulnerability as a region and as a country to extreme weather conditions.
The fact that we are experiencing rain every day in the middle of January, is a clear indication that seasonal patterns are now in flux.
Our recognition of these and other factors, led to the signing of the Paris Agreement of 2016, which involves a commitment to achieve a reduction of 103 metric tons in our Carbon Dioxide emission by the year 2030.
Subsequent to the signing of the Paris Agreement, Trinidad and Tobago completed its Nationally Determined Contribution (NDC) implementation plan, which will serve as a roadmap as we move towards the aforementioned reduction in greenhouse gas emissions. That document is completed and with Cabinet approval, will soon be made into policy.
Government’s vision therefore, as outlined not just in the NDC implementation plan, but also in our Vision 2030 document, includes placing the environment at the center of socio-economic development in Trinidad and Tobago. This of course, must be achieved through the eventual and strategic transition to sustainable energy.
The term ‘Sustainable Energy’ has been defined as (and I quote):
“The provision of energy such that it meets the needs of the present without compromising the ability of future generations to meet their own needs. As such, it has two key components: renewable energy and energy efficiency.” (End of quote).
As I said before, there is no doubt that this is the way to go. And the Government remains committed to securing a sustainable energy future for the people of Trinidad and Tobago. It must be noted, however, that as the leading Caribbean producer of oil and gas, with an economy that is mainly based upon these resources, a balancing act of sorts must be carried out.
And so, I will outline for you, some of the factors that must be taken into consideration even as we work towards adding renewable energy to our energy mix and fulfilling our international commitments under the Paris Accord.
These factors and the various ways in which they intersect with our current socio-economic position, will impact the rate at which we adopt renewable energy sources and the means by which we choose to do so.
The first and most causative of these factors, is of course, climate change and our commitment as previously stated under the Paris Accord. The second is the state of the economy. You would have heard by now, I am sure, that the Trinidad and Tobago economy is currently experiencing challenging times. We simply do not have the financial wherewithal to undertake capital-intensive projects of a national scope. And there can be no doubt that including renewable energy sources in our energy mix will involve infrastructural projects of that kind.
The estimated cost of meeting our stated goal in greenhouse gas reductions amounts to 2 Billion US dollars, which is expected to be met partly through domestic funding and conditional on international climate financing through the Green Climate Fund.
The third factor involves the gas shortages that have plagued us over the past few years. Government continues to bring new gas reserves into production so that NGC can meet its contractual obligations and minimise any deficiency. But the optimal use of our current gas supply is also of great importance. And since 8% of the gas produced by NGC goes to power generation, it follows that any gains in this area would have a significant impact on the bigger picture.
And so, like the President of NGC, Mark Loquan, said yesterday, the opportunity cost associated with gas optimisation in the area of power generation must be placed squarely on the table.
The fourth factor is the projected development of the country and the resultant increase in the demand for power.
It is a well-known fact that we currently possess more generation capacity than we actually need, as is evident in slide 3. And we will not approach the optimal Generation Reserve Margin of 20% until somewhere around 2025.
Based on this reality alone, new sources of energy, be they renewable or otherwise, will not be needed until that time.
As such, all we should be doing at this time, is developing the infrastructural framework that will facilitate renewable energy sources coming online, while at the same time maximising our efforts at efficiency and conservation.
Back to Slide 2
As I said before, these four factors, form the contextual framework that surrounds our goal of reducing our Greenhous gas emissions by 103 metric tons over the next 12 years. And I will discuss them further from the perspective of the public utility which falls directly under my purview, the Trinidad and Tobago Electricity Commission.
The Government of Trinidad and Tobago is actively pursuing all channels of improving productivity and efficiency at all levels of operations and this is known to T&TEC as they plan, operate and maintain the electricity grid.
As such, T&TEC consistently monitors and seeks to achieve optimal efficiency in its operations. Currently, the two most efficient plants are Trinidad Generation Unlimited (TGU) and PowerGen’s Plant in Penal – both of which utilise the relatively new, high-efficiency combined cycle.
Over the past two years, we have been actively working at increasing TGU’s dispatch. And we have been able to increase that dispatch from just over 40% to 80%.
To complete full high voltage power transmission from that plant onto the national grid, however, requires compulsory acquisition of lands to construct power lines from TGU to Union Estate. And we at the MPU and T&TEC are currently working towards resolving that situation.
Once that is done, and TGU is fully online, our two most efficient plants will be shouldering the majority of the country’s energy demands.
This will result in a jump in efficiency in the Commission’s Operations. with direct results in monetary gain to the country.
TGU aside, the Commission continues to take steps to improve its system efficiency. The commissioning of new substations and electrical equipment and the implementation of a reduced system spinning reserve, in conjunction with the increased utilisation of power from TGU, resulted in an increase in system efficiency from 25.7% in 2005 to 33.3% in 2017.
This resulted in a continual decrease in the amount of natural gas needed to generate 1megawatt/hour of energy, as you can see in slide 5.
It should be noted that if T&TEC continues to optimise its gas usage, thus using less gas to generate electricity, the excess gas can be sold to the downstream petrochemical industries. The benefits of that type of scenario would be the decreased use of foreign exchange to pay for the gas and the increased earnings of foreign exchange when it is sold.
In spite of these gains, as Minister of Public Utilities, I continue to push T&TEC to leverage its contractual and partnership arrangements with its Power Providers to encourage improved efficiency and optimization at their end.
In this regard, efficiency is a journey, not a destination. And so, the Commission has earmarked certain Energy-efficient initiatives for implementation in the not so distant future. These are listed in Slide 6.
We must be aware, however, if we are to be successful at the development of a more sustainable energy and electricity sector, that the efficient use of energy is not just the remit of Government or T&TEC.
The people of Trinidad and Tobago currently benefit from an electricity rate that, at 5.2 US cents per kilowatt before tax, is one-sixth of what is paid in neighbouring countries. Unfortunately, the heavy subsidization of our electricity, while encouraging development, has also led us to develop habits and lifestyles that are not energy efficient.
(It is now fashionable for our employees to wear coats because of the low temperatures maintained by our air conditioning.)
In an effort to change this existing mindset, the MPU, alongside T&TEC, will be instituting an aggressive Public Awareness Campaign centered around the conservation and efficient use of electricity.
In keeping with the maxim, “Charity begins at home,” the MPU is also in the process of preparing a policy outlining the ways in which Government Ministries can efficiently and effectively conserve electricity. That policy will soon be presented for implementation.
Slides 8 – 10
But even as we consider and implement ways of increasing efficiency both in power generation and in our utilization of that power, T&TEC has also made inroads in the field of renewable energy. These projects include:
1. The completion of a pilot Solar Project and a small-scale wind resource survey in Tobago;
2. The development of a manual titled “Wiring for Renewables” in anticipation of RE implementation at the domestic level;
3. Collaboration with the Trinidad and Tobago Bureau of Standards and the Government Electrical Inspectorate to establish standards for certifying equipment and building wiring; and
4. The provision of assistance to the Ministry of Energy and Energy Industries in the development of a National Renewable Energy Policy, and the Feed-In Tariff Policy for Trinidad and Tobago.
That Feed-In Tariff policy will facilitate access to the national grid for renewable energy projects. And in so doing, will encourage interested parties to develop these projects. The MPU is scheduled to amend the T&TEC and MPU Acts, which will support the policy, once established.
Let us turn our attention back to the initiatives being undertaken by T&TEC. Due to the pilot projects done by the Commission and the data collected, T&TEC is currently discussing with the Airports Authority of Trinidad and Tobago, the feasibility of constructing a solar farm in the vicinity of the Piarco International Airport.
The MPU is also expecting that work on a Wind Resource Assessment Programme would yield positive results that could lead to investments in new sources of power.
But the point must be made that T&TEC already has four PPAs with contractual payment obligations which guarantee them sufficient power until sometime around 2027. The introduction of RE at the utility scale before that time will see the country paying a higher price for power. We will also, however, be saving gas, which could be monetized.
The tipping point in this scenario, therefore, depends on the cost at which renewable energy sources will be brought onto the grid.
Within recent times, we have noticed that renewable energy sources can cost utility providers in the vicinity of 8.5 US cents per kilowatt hour, that being a conservative estimate.
Many of us can remember when that figure was in the vicinity of 16 US cents per kilowatt hour. And so, there is evidence that the price gap between renewable and non-renewable energy sources is closing, more quickly than expected.
This fact, coupled with the challenges faced by the NGC in meeting its contractual obligations, means that the calculations around the adoption of renewable energy sources, and the ensuing discussion and implementation must now be a matter of national priority.
What all of this means, ladies and gentlemen, is that securing a sustainable energy future requires focused deliberation, strategic action and collaboration on all fronts. Individuals and households, businesses and the private sector, Government, and regional and international bodies – we must all put our hand to the wheel to ensure that Trinidad and Tobago benefits in the long-term.
Some of these benefits, as listed in slide 11, will take longer to materialise than others. But they will all lead to a better quality of life for the people of Trinidad and Tobago, a more resilient and sustainable energy sector, and a brighter future for those will come after.
In conclusion, I would like to make the point that in spite of our oversupply of power, the Government of Trinidad and Tobago stands by the commitment that it would have made as a signatory to the Paris Accord.
And we are working assiduously to keep our promise to the population that we would source 10% of our energy needs from renewable energy sources by the year 2021.
That amounts to 283 megawatts of renewable energy and energy generation – an ambitious figure but one that we will continue to work towards over the next three years.
As such, we are working on the legislation that would facilitate the addition of renewable energy sources to our energy mix.
We do, however, expect that our primary collaborators will be the private sector. The Ministry of Energy and Energy Industries has, for example, advertised for Expressions of Interest for Utility Scale Renewable Energy Projects with a minimum generating capacity of 3 megawatts.
And so, even as we lay the legislative and regulatory framework, and bring the relevant discussions on efficiency and conservation to the fore, it is our hope that you, the citizens of Trinidad and Tobago will partner with us at every level.
In your households, in your businesses and institutions, through your investments and projects. All hands must be on deck as we build a better and brighter future for our beloved Trinidad and Tobago.
I thank you all for your time and attention and wish you a good day.