Showcase Curaçao
A transition path towards the near 100 percent use of renewable power generation on the island of Curaçao, funded by private and institutional investors.
Executive summary
In many places worldwide, renewable energy is just about to become cost-effective. On most of the Caribbean islands, the use of wind and solar power is already substantially cheaper than oil fired generation techniques, for quite a while. A typical cost price for sustainable energy lies between $0,06 and $0,12 per kilowatt-hour (capital costs, maintenance, depreciation). For oil fired generation (steam turbine and diesel engine) the cost price ranges between $0,20 and $0,24 for fuel costs only (current pricing at 19 April 2008).
Oil prices are not expected to return to the levels of 5 years ago. There are many signs that indicate that oil prices will peak in such a way during the next decades, that it is loosing it’s significance as the world energy provider number one. The following describe some of these reasons.
- There is a growing demand from upcoming economical powers like India and China, putting a lot of pressure on the oil market.
- New oil discoveries are rare and if new oil fields are found, they are very hard to reach resulting in high costs.
- New found oilfields generally deliver low quality oil that is hard to refine, boosting the costs even more.
- Because the oil is harder to reach, the production can not keep up with the demand resulting in scarcity.
- Political instability makes the steady supply of oil uncertain.
An investment in renewable energy is therefore a firm investment with little or no risks. For the projects described hereafter an investment fund will be established. Bonds will be issued with a duration of twenty to thirty years. These bonds will have a fixed annual rate of seven to eight percent (the project's capital costs). Only renewable energy related projects on the island of Curaçao will be financed out of the fund. The installations will be owned and operated by a non profit foundation with its own technical staff. The fund will be supervised by the Bank of the Netherlands Antilles (BNA).
Besides a very profitable investment, the projects financed by the fund will be a direct boost for the island economy since the high energy prices today have a strong negative effect on all economic activity. Also indirect there are many benefits, like job creation for building and maintenance of the installations, less dependency on foreign supplies and a enormous cutback on capital exports, which now takes place by way of fuel purchases. An other indirect result will be the green signature the island will have by producing almost all its power from non-polluting resources, which will be very important for the tourist industry in the near future.
The estimated investment costs for the projects, that are financed out the fund, are as follows:
- Phase 1 (wind park) – 109 million US dollar
- Phase 2 (CSP plant 1) – 110 million US dollar
- Phase 3 (CSP plant 2) – 150 million US dollar
At the end of this document there is a paragraph that describes a possible solution for the island to lower price per kilometer for automotive transportation using renewable power and at the same time prevent the local power provision to be over capitalized.
Preface
This document describes a transition path from (HFO) diesel engine and steam turbine power generation to the use of renewable resources. Existing power plants are not being replaced, since they will be needed when there is a shortage of renewable power. The goal is to cut back on power costs. Although the environmental issues are a very important aspect in reducing the use of fossil fuels, this document focuses only on the economical perspective of the use of renewable resources. The situation of Curaçao, Netherlands Antilles is described; however on many islands that depend on oil products for power generation, the situation will be similar.
Current power generation methods
The two major power generation methods on Curaçao are oil fired steam turbines and diesel engines using HFO. All plants together have a capacity off 118MW peak load. The base load is about 80 MW. The total annually generated power amounts to 700GWh. The consumers electricity price is graduating to $0,35/KWh, for the access use of 300 KWh/month. Currently more than half the costs of the utility are fuel costs. The annual fuel purchases of the company are in excess of $150.000.000.
Desired power generation methods
In order to cover the base load as much as possible using renewable power generation, a mix of different methods is used. Wind and solar energy (both centralized and distributed). When bio diesel derived from algae becomes an economical option, this resource can also be used. This document will focus on the use of wind and solar power.
Both techniques are used because they both have their desired properties. Wind energy is cheap and can be used day and night. (Thermal) solar energy can also be used day and night because the energy can economically be stored in large tanks. In addition solar energy has the benefit that it follows the system load (which is the highest during the day, when all cooling equipment is fully utilized). Wind and solar are each others complementary; if there is a lot of wind, there is usually no sun and the other way around.
Wind turbine farm (phase 1)
Wind power is one of the most economical types of renewable energy today. Curaçao has experience using wind power on a small scale. The first wind park is located at “Tera Korá”, 3MW peak power in total. A second wind park is located at “Playa Kanoa” and is rated 9MW peak output. These wind parks prove that Curaçao has excellent properties for the use of wind energy. The average wind speed at 50m altitude is 9m/sec.
The park at Tera Korá is obsolete and can be replaced by a new generation of wind turbines. The rule of thumb in wind power is, the bigger the better. Large wind turbines have a better land occupation to capacity ratio. Since these generators are also higher, they catch more wind, also with unfavorable wind conditions. There might be some aesthetic issues, putting these giants (150m hub height and 200m height at the top of the rotor) near the shoreline. Wildlife Endangerment is kept to a minimum, because birds do not tend to fly into such a big structure.
- 13 wind turbines rated at 6+MW peak capacity deliver a total of 78MW peak capacity.
- Land occupation (in a straight line near the shore) is 4284 meters.
- The nominal (average) production amounts to 23.4MW.
- The annual power production of this wind park is estimated at 260 GWh. (33 precent of the island’s energy demand).
- Extra high voltage cable capacity to the grid must be supplied.
- Price per kilowatt-hour $0,07 (2008)
- Estimated investment $110 million US dollars.
- Jobs during: construction - 215, Operating years - 25.
For details on the windpark financials click here
CSP plant 1 (phase 2)
When speaking about solar power, most people think of solar panels (or PV). These panels are a good technique to use in a distributed environment. However, for utility scale energy production, they are not really cost effective. Another problem is that PV only produces electricity during daytime, while methods of storing the energy are very limited. A technique that is gaining international interest is Concentrated Solar Power (CSP). Although not yet very well known, it is a method for producing power in a cost effective way. Storage of energy is possible in a simple and cheap way, as well. CSP has a track record of more than 20 years, what proves that this technique is a long term solution. CSP only works in areas where there is enough direct solar flux. Curaçao qualifies as such an area.
There are currently four different types of CSP: Parabolic through, Parabolic dish, Power Tower (heliostat) and fresnel design. Although the latter is a fairly new design, its properties are similar to the parabolic through design with the proven track record. In this paper the use of fresnel reflectors is assumed.
As a first site, the location locally known as the asphalt lake will be used. The lake is located on the right side of the harbor. Before there was any useful purpose of high grade fuel, the residue of the adjacent refinery was dumped in this lake. At the moment the lake is dug out, to be used as fuel for the BOO power plant. After this process, a very polluted hole in the ground remains. It is not economically feasible to clean up this lake in such a way that it would be usable for building. The area of about 800.000 m2 is very suitable to accommodate a CSP collector array. The utility diesel plant is located very near by.
- The lake has room for a 50 MWe fresnel array (30 MWe 8 hour storage).
- At a insolation level of 5.1/KWth/day/m2 (direct sunlight) an average of 255 MWh/day can be harvested.
- 90 GWh/year (13% of the total islands demand).
- Price per Kilowatt-hour $0,12
- Total investment 110 million US dollars.
CSP Plant 2 (phase 3)
It is expected that the price per kilowatt-hour for CSP will be falling significantly within 10 years. Therefore the second CSP plant is projected after this period of time. With phase 1 and 2 in operation, 50% of the islands energy demand will be met by renewable resources. Based on the current end user price, phase 1 and 2 will result in a consumer price reduction of $0,06/KWh After the implementation of phase 3, this will be approximately 90% ($0,09 reduction/KWh for the end user). Except for indexing to the inflation level, there is no need for making changes to the electricity prices, making the island utility prices insensitive to fluctuations in the international oil market.
- 350 GWh/year (50% of the total islands demand).
- Price per Kilowatt-hour $0,07
- Total investment 150 million US dollars.
References
A report in the New Scientist (2007-05-05) says the current price is about 15 cents per kilowatt hour but suggests that it is likely to fall in the coming years. A report from BBC News (2007-05-02) says "Is it true that this power is three times more expensive than power from conventional sources? Yes, but prices will fall, as they have with wind power, as the technologies develop." However, power from fossil-fuelled conventional sources is, at the present time, artificially cheap because it is using the atmosphere as a free dumping ground for CO2. And the real cost of nuclear power is disguised by overt and hidden subsidies (see "Mirage and oasis", PDF, 1.2 MB, New Economics Foundation).
A report in Guardian Unlimited (2007-04-03) suggests that CSP electricity costs twice as much as electricity from fossil fuels. The same remarks apply as for the BBC report.
The US Department of Energy (in Big solutions for big problems (2007?)) says:
existing CSP plants produce power now for as low as 12¢ per kilowatt hour (12¢/kWh) (including both capital and operating costs), with costs dropping to as low as 5¢/kWh within 10 years as technology refinements and economies of scale are implemented. Independent assessments by the World Bank, ADLittle, the Electric Power Research Institute, and others have confirmed these cost projections.
A report from Newswire Today (2007-11-05) says:
These facilities [hybridised CSP plants] are to be developed at a levelized cost of about 6 cents per kilowatt-hour (kWh), which is about the same as that of coal plants, when taken into consideration that coal plants have to pay for their heavy emissions, construed as their additional levelized costs.
A report from CNET News.com (2007-09-09) says:
Ausra executives said that the [Ausra Fresnel mirror] system can now deliver electricity at 10 cents per kilowatt hour, more than the 9 cents per kilowatt hour that natural gas power plants cost.
Once Ausra's manufacturing operations are working on a large scale, its production costs and cost of capital will go down below the price of coal-fired plants which are 6 cents per kilowatt hour, he said.
In a report from Business Week (2006-02-14), the CEO of Solel is quoted as saying "Our [CSP] technology is already competitive with electricity produced at natural-gas power plants in California". At that time, the price of producing a kilowatt hour of electricity in California using Solel's parabolic trough CSP technology was quoted as approximately 10 cents, close to the cost of electricity from a newly-constructed gas plant.
Speaking about CSP at Solar Power 2006, legendary venture capitalist Vinod Khosla said "... we are poised for breakaway growth—for explosive growth—not because we are cleaner [than coal-fired electricity] but because we are cheaper. We happen to be cleaner incidentally." From remarks he has made elsewhere it seems that the comparison he had in mind was with so-called 'clean coal' that includes carbon capture and storage. There is also an interesting interview with him on ABC TV (Australia). There are further details on another page.
In February 2006, Professor David Mills of Solar Heat and Power (he is now at Ausra) said: "Our costs look to be about 10 times cheaper than photovoltaics and we believe now we are rapidly approaching cost-competitiveness with fossil fuels—advanced fossil fuel systems such as natural gas combined cycle and advanced coal technology. And we hope to be in that place probably about 2009 or 2010." This quote is from a short WWF film called "Renewable energy in Spain". The technology he was referring to is a version of the Fresnel mirror system.
John S. O’Donnell, President of Tsugino Co., speaking before the Public Utilities Commission of the State of Colorado on the 29th of September, 2006, said "Concentrating Solar Power can be provided as firm dispatchable power using thermal storage at a cost per kWh under $0.10 for deployments over 50MW in plant size, and under $0.09 for deployments over 200MW in size. I have just returned from meetings in Australia with Solar Heat and Power which confirm these costs."
The Solar Power Group says that, with the relative simplicity and cheapness of their Fresnel mirror CSP system: "... for big power plants (e.g. 200 MW) placed in remote locations with high solar irradiation, the cost of electricity will be highly competitive with that of conventional fossil fuel power plants". In a paper entitled The Solarmundo line focussing Fresnel collector. Optical and thermal performance and cost calculations, the cost of electricity from the Fresnel mirror system is calculated as 0.0750 €/kWh, a little lower than the cost which they calculate for electricity from a parabolic trough system: 0.0845 €/kWh.
In a press release issued on 2007-06-01, SCHOTT AG say "Parabolic trough power plants have the lowest electricity production costs of all types of solar technologies. That combined with the extremely high efficiency gained through technological advancements from companies like SCHOTT, will soon give parabolic trough power plants the potential to generate electricity in regions inside the Earth’s Sunbelt at costs comparable to those of power plants that run on fossil energy sources."
The TRANS-CSP report calculates that CSP electricity is likely to become one of the cheapest sources of electricity in Europe, including the cost of transmission.
Distributed power generation
After opening the grid for distributed power generation, a significant part of the (ever growing) energy demand can be generated by solar panels, small scale wind turbines and CSP equipment adapted for distributed power generation http://www.csposi.org/achimedes.html Distributed power generation is especially usefull for shaving of peak loads of the net (during the day). Public participation can be stimulated by the government by offering incentives to these small scale contributors.
Diesel plants
Since there will be situations where the renewable plants will generate little or no electricity, there must be enough capacity available from the original steam turbines and diesel plants. Existing jobs at the utility are not endangered.
Parallel generation
One of the drawbacks of renewable energy is that there must be enough capacity from traditional energy sources to overcome periods when there is not enough sun and wind to cover the base load of the energy system. This means that the utility company needs to invest in sufficient capacity to overcome these periods. The total capital costs and depreciation will be double (100 percent of the base load for both the renewable and tradition approach). Furthermore there must be enough generation units to cover the system peak loads.
In Curacao there is a way around these problems. Most large companies have a backup power unit installed for the moments that the net blacks out. The total installed backup power on the island amounts to more than 50MW. Most of the capacity is formed by larger units (200 KVA and more). With off the shelf equipment, these generators can be centrally controlled by a computer located at the utility company. If there is not enough power from renewable source and the diesel generators can not cover the total load, the auxiliary units will start up, reducing the demand from the company where it is located and pumping the remaining capacity into the net.
Using normal diesel (price in July 2008 $1,03/Liter) for generating electricity is of course much more expensive than the heavy fuel oil (price May 2008 $480/metric ton) that the utility is using; however, the price must be compared to the end user price of electricity (price $0,41/KWh July 2008). One liter of normal diesel generates 2,5KWh, so the price is almost the same. For the O&M on the generators a agreement can be made between the utility and the equipment owner as a compensation for the services rendered. This solution is beneficial both for the utility and for the generator owner.
SWRO installations used as buffer
In some rare occasions, the renewable plant may produce some surplus capacity. When the SWRO (seawater desalination) plants step in to these moments, they can use up some of the extra capacity in a useful way. In full operation the SWRO installations use 4MW+.
Dynamic Demand
Dynamic demand control is a technology that can be incorporated into electrical appliances which enables them to provide important services to the power grid such as peak load management and second-to-second balancing of supply and demand.
Any electrical appliance that is time-flexible (in other words, is not too sensitive to when its energy is delivered) could be used. These could include industrial or commercial air conditioners, water heaters and refrigeration. Thousands (and eventually millions) of such loads acting in aggregation to could provide an extremely simple and cost-effective way of helping to manage the power grid. To date, Dynamic Demand has focused its attention on the potential for such services in relation to domestic and industrial refrigeration. See the Dynamic Demand website.
Job generation
Planning, building and maintenance of the renewable plants, will generate many jobs. Some of the jobs require highly technical skills, most of the jobs can be fulfilled with a modest level of education.
Knowledge
Being the first in the region on using CSP, the island can become a knowledge center for the region. CSP technique can become a discipline on the local university.
Environment
As mentioned before, this paper is about the economical aspects of using renewable energy on Curaçao. However, the environmental impact is considerable. After full implementation of phase one, two and three, the air would be freed of an annual amount of
- 714000 pounds of Sulphur Dioxide - Associated with visible pollution (haze) and acid rain.
This number is an average based on relatively clean fuel, however the fuel that is used in Curacao is of considerable less quality, therefore this number will be much higher.
- 882000 pounds of Oxides of Nitrogen - Created when nitrogen is burned as part of the combustion process, one of the main causes of ozone (smog), also associated with acid rain.
- 28000 pounds of Particulate matter smaller then 10 microns - associated with lung ailments.
- 1176000000 pounds of CO2, Carbon Dioxide, is a normal atmospheric component. However, increased levels are likely to cause future climate changes.
- 42000 pounds of Volatile Organic Compounds - One of the primary causes of ozone (smog), also some of the individual compounds are toxic.
Electric vehicle (EV)
The use of electric vehicles for mobility can contribute to the decrease of oil dependence on the island in two ways. First off cause, the direct effect using electricity (from a renewable source) and secondly by leveling off excessive renewable power production.
When thinking of electric cars the image of dull, small and low power lawn mower type of vehicle comes to mind. However the high oil prices of the passed years caused the rapid development of a line of electric powered cars, very similar to their gas oil and gasoline counterparts with regard to appearance and performance. An example of this is the 248hp (185KW) Tesla Motors roadster with an acceleration from 0 to 95KMH in less than 4 seconds. Many other traditional cars makers are preparing to mass produce an electric model based on an existing chassis. These cars are expected to become available at price levels comparable to their fueled versions in a few years (2010).
Due to new battery storage techniques these cars have a typical full charged driving range of 300 to 500KM. These li-ion/Polimer batteries have a live expectancy of over 160.000KM and the weight/storage capacity is about 160WH/KG. The best news however is the low kilometer price achievable by these vehicles as a result of very high efficiency. The Lightning showed on the left is a electric vehicle in development with four 120KW electric motors and a 36KWH battery pack. The mini on the right is a converted gasoline 
mini with also four electric motors and a 21KWH battery pack. Using a small generator in the back of the car, the driving range of the mini is about 1500KM.
Following is a comparison between a gasoline car, a diesel car and a similar electric car at the different rates used for fuel and electricity on Curacao
Prices as of 1 July 2008 on Curacao,
Gasoline $1,28/Liter
Gas oil $1,13/Liter
Efficiency Gasoline engine 20%
Efficiency Diesel (gas oil) engine 25%
Efficiency battery pack 81%
Energetic value gasoline 8,86KWH/Liter
Energetic value gas oil 9,9KWH/Liter
Driving range electric car 300KM
Electricity costs net rate $0,40/KWH
Electricity costs industry rate $0,31/KWH
Electricity costs from renewable source at large scale $0,14/KWH
Gasoline car 10KM/Liter = 8,86 / 10 = 0,886 * 0,2 = 0,1772KWH/KM
Battery capacity 25KWH
Gasoline costs/KM = $0,128/KM
Electric car costs/KM net rate (0,1772 / 0,81) * $0,40 = $0,09/KM
Electric car costs/KM industry rate (0,1772 / 0,81) * $0,31 = $0,07/KM
Electric car costs/KM renewable (0,1772 / 0,81) * $0,14 = $0,03/KM
Diesel (gas oil) car 10KM/Liter = 9,9 / 10 = 0,99 * 0,25 = 0,247KWh/KM
Battery capacity 35KWH
Gas oil costs/KM = $0,13/KM
Electric car costs/KM net rate (0,247 / 0,81) * $0,40 = $0,12/KM
Electric car costs/KM industry rate (0,247 / 0,81) * $0,31 = $0,09/KM
Electric car costs/KM renewable (0,247 / 0,81) * $0,14 = $0,04/KM
Not included in these calculations are some additional benefits that a electric typically has such as:
- Regenerative brakes. The car uses the electric motor to slow down. In this process the motor becomes a generator, refilling the battery.
- No energy consumption when standing still as opposed to fuel based engines keep on running when standing for traffic lights.
- Less maintenance, less wearable parts, less specific engine knowledge required, less explosion hazard in case of an accident.
- The positive (zero emissions) environmental impact of the electric car can not be left unnoticed.
Electric vehicles are (just as their fueled counterparts) very flexible in their charging intervals. The car can be charged at a lower rate when sufficient renewable power is available. Modern batteries can handle very high charging currents, resulting in a full charge within 30 minutes. This can be done using charging stations near, for example, a supermarket. By topping off peak renewable power availability the electric car can greatly contribute to net stability and an efficient use of renewable power. Smart charging devices can be programmed to charge the car in the most economical way.
Ideally the electric car will be charged using renewable power. When not available, one can chose to (partly) load the car at home or at a station that generates power using a heavy fuel oil (HFO) generator, like the utility company does. By doing so the car runs effectively on the much cheaper HFO (currently costing $525/Ton = $0,10/KWH@July 2008) than automotive fuels. Off cause depreciation, operation and maintenance of the diesel generator must be added to this price, which makes electricity from renewable source the most economic choice.