You're listening to Redefining Energy. Your co hosts from Berlin Gerard Raid and from
London Lawrence Segalan. Today on Redefining Energy, Chard, we're going to talk
about electrifying islands. It's not so easy. Actually electrifying them as easy.
Doing it a green way, that's not easy. But first of all,
from our partner, PVKS is the ultimate design software for solar pv developers,
from the earlier stages of planning all the way to the procurement phase. PVKS
is the ideal choice for solar. We also do this epidote in partnership with
a friend and that's Bruce Douglass used to be one of the top guys as
you electric and he has created a new organization called the Global Renewables Alliance and
it's really supported by pretty much every organization and you might have seen it,
but he just launched a campaign for the tripling of global renewables by two or
thirty. Well done, Bruce, Good luck with everything. Back to our
islands, but probably something I want to share with you and our listeners our
shows. So the main one, this one and the minutes we passed one
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we thank you all. We are just the produce of our listeners, and
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Simple as that. So islands. So why we choose islands. I
think we choose islands because the smaller degree, the higher the price. That's
what you've seen everywhere if you look at the US sprice de fim is in
Hawaii. These are child and very difficult system to run with. For one
success, there are a lot of failures in Puerto Rico in the US is
unmitigated disasters, not their fault. They've been hit by a lot of hurricanes.
Electrifying islands. It's not that simple, no, and it tends to
be very expensive because I have two choices. One is you import electricity.
There was you put in a very expensive power cable. But if you're in
the middle of the Atlantic Ocean or the middle of the Pacific Ocean or whatever,
you can't do that, so then you're left with importing it. And
what do you import? You import fuels. That's what you've been doing in
islands are using diesel GM sets. I don't care if it's the Greek Islands
or Jamaica. That's what they're doing. They're important oil. Why did we
choose Jamaica. People only hear about Jamaica when sportmale or it's US and bolts,
or it's tourism. And by the way, it's absolute beautiful place.
It's a tiny island, were million inhabitants for those who don't know. So
Jamaica is west of it, south of Cuba, and they don't make yod
lines because it's a relatively well managed country and it does a privately integrated unity
company called jipps Jamaica a big service. And now it's managed by someone you
know very well. Job. Yeah, well, listen, I didn't know
we'd be talking about Jamaica six months ago. I know Steve Burbish very well.
He used to be the former head of California ISSO and otherwords, the
grid operator in California. Even went into early retirement, got fed up playing
golf, and then one day it just says, by the way, I
moved into Jamaica. You go, why would you move to Jamaica? Because
I'm going to become the CEO of the utility there, and the question is
why do you do it? It's a challenge and it is an incredible challenge,
and I think it's so great because if you can decarbonize that island,
then that's a role model for the rest of the world. And it's completely
different if you're on an Iceland or in Australia. They're also islands, but
they have their own resources. To Jamaica is if this world's don't I think
it's prettiant what he's doing right, really probably the best thing used to bring
Steve on the show. Steve, welcome to the show. Thank you.
Sure, it's a pleasure to be here with you. I really look forward
to this conversation. Let me just kick off straight away with You've had a
very successful career with a head of California isso for many years, you took
a little bit of time off after that, and then suddenly you've ended up
in Jamaica. You need to explain that one to me. That's a multilayered
question. It requires a bit of a multilayered response, but part of it
I think it connects well with what your audience is interested in, So you're
right. I was the CEO of the grid Operator market Operator in California,
and I left there after being the CEO about ten years because one is I
just feel that it's important for people to keep mentally sharp and for organizations,
I think also to have new, fresh ideas and faces. So after about
ten years, I think it's about time, and so I tried retirement,
but I still wanted to be involved in this transition discussion. And so someone
called me about Jamaica and I did some research on it, and I found
that Number one, their electric system is run almost entirely on either natural gas,
which is important or distalates that it is also important. They have a
high cost of power, they have a grid that's relatively unreliable, and they
want to transition to renewables. They want to get renewables by twenty thirty and
that sounds like a pretty cool thing to try to do. So that's really
what motivated me to do this. From a personal perspective, it sounds like
an interesting adventure. From professional perspective, what better microcosm of what needs to
happen than work on a Caribbean island to try to get this done. And
I suppose if you can do it in Jamaica, you can do it anywhere.
Exact point, So, Steve, you arrive on an island of three
million naman so gdppa capita, which is twelve time lower than the US.
What's your first assessment of the situation. The first assessment I found here,
or that I did here in the island was, let's look at the big
picture of things. Number one. I think for a developing country, they
should have every expectation to have the same level of reliability that a developed country
has. And my first observation is, not only is a grid not as
reliable generally, there's an expectation of unreliability, and I think that inhibits quality
alive. I think it also inhibits economic development. So having a good quality,
reliable system I think is important. I also saw firsthand in my time
in California that I think renewables can contribute to that resiliency across many fronts,
and but having good reliable power I think is the most important. First thing
I did, this island needs and I observe that they don't have. The
second thing too, is they have very ambitious goals to get to fifty percent
renewables by twenty thirty, as I mentioned, and they don't have a lot
of money to do that. However, they spend a lot of money barding
the fuel needed to produce electricity. So there's a good put in take for
renewables that can offset the cost of generation. Because the marginal cost of generation
here reaches almost three hundred dollars a megawatt hour, which is way higher than
you see in other parts of the world. In California, as an example,
would probably be around forty dollars. So the marginal costs to generate here
is very high, and the marginal cost for renewables is very low. So
I think there's a way to thread this needle to get this done. And
I think those are probably my first observations. How do you thread the needle?
And how do we make this system reliable? And so can I ask
then, just converting that into a plan of action, what comes next?
You've gone done your assessment, what do you do now? I believe the
strategy has to rest on culture, and this is a hundred year old company
that was formally government owned, and I think there's a lot of embedded culture
here that is a bit slower to change then I think is necessary, particularly
when you're starting to think about an energy transition, and when they take a
step back, they look at rooftop solar as an example, as a threat.
They see these other things or the renewables on the grid as a challenge.
And what I need to do first and formist is change that cultural platform
form so that you can later on a strategy. And the cultural platform that
I'm talking about is making sure they understand this transition is something that's healthy,
that can be good for the organization. And they also have to understand as
a monopoly that they do have competition. They have competition and forms of consumer
choice, and as consumers decide to make those decisions, we have to adapt
to them. So I want to build a cultural platform that embraces and adapts
to this transition that it's going to happen, and fighting technology is all losing
cost. So that's the first thing I have to do, and that will
take some time in some doing, however, I don't have time to do
things in Cereal. I'll have to do things a parallel. The second thing
we have to do is up our game on reliability because I can't have a
good conversation about a transition. Tell we have a good reliable system. Now
that means we need more crews, we need more equipment, we need to
get out there. But I think that also is a paradigm shift because we
need to shift from reactive to proactive. We need to do proactive maintenance and
tree trimming and the necessary things that keep trucks from rolling in the first place.
We spend a lot of time just responding to vegetation that got into lines
because it's a heavily vegetated area and those kind of challenges. The other big
issue that I have to get after that you have to have a multifaceted strategy
around, is how to reduce theft on the system. In Jamaica, approximately
twenty five percent of the power is stolen, and that's a problem for lots
of reasons. Number one, it increases the rates for those who are paying.
Number two, it's dangerous. Number three three, it's not conducive to
energy efficiency and other kinds of things you want to try to do, because
if you're stealing power, there's certainly no incentive to try to be efficient about
that. So we have to reduce theft too, and we need to bring
everybody into the entire tapestry of the energy system. I firmly believe that everyone
should have access to power, and we have to start this anti theft program
with the premise that everyone should have power. Now we know some people are
stealing because I can't afford it, and so how are we going to help
them and make sure they're not disenfranchised. We saw with COVID firsthand that people
have to have power to educate their kids and to stay connected in all those
things. So it's become more improyant now that everyone needs to have access.
So I think it's one of the major things that I have to get after
for all kinds of reasons. It also causes reliability, is just because people
blow transformers and when they go and connect illegal connections under the system. Those
are the big rocks. But as I said, it needs to fundamentally rest
on a solid change at change, abled agile culture, healthy organization. We've
seen in the past two years in South Africa failing public own utility as common
and you know the reaction of the public has just been wild solar deployment,
even on balcones on roof totally anarchic, but they manage to put four gigat
on rooftops, you know, without any plan. And of course now it's
going to create problems of integration, but that's that's people a reaction because the
technology is there. So and I know it's a very academic question, but
do you foresee a centralized development or a decentralized development or a mix of both.
How do you see the shot term deployment R And I think it has
to be all the above because I firmly believe that we're moving abroad perspective in
the energy sector to away from central to decentral But part and parcel of that
and other pinnings, whether it's decentralize or centralized, you still have to have
wires and I think you have to have a good solid system of transmission and
distribution in any scenario, so that has to be part of it. But
from a decentralized perspective, I saw it firsthand in California. I saw where
people wanted to get their own power and self supply and the utilities fought it,
and it was a losing battle, and now the utilities have very good,
efficient approaches to how you know where it's going to be and how they're
permitted and how they're connected to the system. And I want to do that
here in Jamaica as well, so that if people want to make that choice
that they can. We have to decarbonize the central grid too, and we'll
do that through solar and wind and storage and all the things we all know
of out So I think it has to be an and approach, and I
think the utility has to be prepared for both. That's what I'm trying to
do here in Jamaica. Can I ask you there, because it's one of
the things you have to do is you also have to keep the price of
power low. And if you're going to go and invest in all this renewables,
what you've got as upfront calls which are pretty expensive, which means you
need to come in with some form of financing solution and around that. So
how does that work and how do you see that work? And going forward?
Let me just harken back to some of the previous conversation about South Africa.
The good news about Jamaica Public service is it is a financially solid and
stable company. It is a properly regulated company by the Office of Utility Regulations
here in Jamaica. So we start from a position of strength. So JPS
is able to finance and be the counterparty for this transition when you need central
renewables and you need a counterparty purchase power agreement. So I think we start
from a position of strength. We shouldn't have a problem financing it. The
key thing will be making sure that we think through this in a way that
reduces costs as much as possible. The good news or bad news in Jamaica
is that the price of power here is very expensive. Now that's bad,
but it's also good in that when you look at the economics of renewables and
the upfront costs, you actually come out with an offseted cost that is at
least equal or or we may be able to save money by transition to renewables
themselves. So in this case, renewables actually will help reduce costs. And
then let me turn to the longer term. This island is highly dependent on
imported oil and gas, and we have all seen through the invasion of Ukraine
and the other upheavals in the global economic system that the price of import if
fuel can turn very very fast. So not only is it going to save
money, but it's going to be a hedge for the future. So they're
not exposed to these major swings and commodities. Because the people here the average
income in this island is five thousand US dollars. They cannot afford big swings
and power prices here. Can I also ask you about the residential solar because
I would have thought you could see that as a threat or you could see
that as an opportunity. And the opportunity is that actually you go and help
the customer to build solar and you build that let's say resilience into the system
because maybe you're putting batteries in and stuff like that. Is that the way
you look at it or how do you see it? Well? I look
at it in two ways. First, I think our strategic assets are our
wires, as I mentioned earlier, and we need to properly finance those wires.
And I think there are contribute to the reliability issues too, So there
you have to have a proper tariff so that it's benign to the utility.
Whether somebody wants to self produce or not, as long as they're paying their
fair share of the wires, and we don't create a socially unjust system here
where the poor people pay for the wires and the ridge people get to ride
for free, then we'll be fine. We just need to create an agnostic
tariff that properly funds the wires associated with it. Then I think what we
have to do is we have to be out front about whether we want to
be in this business, whether we want to help people and facilitate it and
finance it and provide leases and those kind of things. And we're currently exploring
that as a strategic opportunity for us. Can I ask if you look in
the future right, what I can imagine is you're an incredibly sunny part of
the world, So that's going to be it's the lowest cost of way of
generating electricity there. But it's not hows its challenge is going forward? So
how do you deal And I know you dealt with these challenges already in California,
but I can imagine those challenges are even greater in an island situation.
So how do you look at that? From a technical point of view?
I suppose the good news is this is a microcosm of what I saw in
California. The only difference is, obviously, is we don't have connectivity to
the rest of the world. We have to provide everything here on the island.
We can't assume we can get power from Cuba or some other or South
America or Central America. It all comes from here. So we will see
those issues of renewable integration. For instance, we know there's a major ramp
a solar in in the morning and a ramp out at night, so you
have to have something to contend with that ramp, and we know that's there.
Secondly, we need to be very good at prediction. The weather changes
here actually pretty quickly. For instance, in the afternoons you often have rain
showers that will come in and clouds will come in in the afternoons. It'll
be sunny all day until four o'clock, which is your peak. So we
will have to model that much like my experienced in California. And what we'll
do is we'll then assess what kind of backup fleet we need. Now,
how much can batteries help with that? Because you're right, most of the
time it's pretty sunny. We don't usually have unless there's a hurricane or something
coming through. We don't have extended periods where it's not sunny for days on
end. So batteries actually will work here, I think better than a lot
of areas, because we know that we'll have ample solar to charge them during
the day and be able to use them in the evening. And then we'll
also have to assess what residual thermal fleet we need to have during this transition
and can it ramp and do all the things that we need that I saw
firsthand in California. There's a centive island which have decabonized, But of course
it's inside the US, it's Hawaii, and of course I'm looking about the
dramatic recent fires. But what can you learn from they experience. The thing
I've learned most about the why experience is the price of power is very high
end. Why this island cannot afford a high price of power, So we
have to do it, I think differently, and that means we have to
be very thoughtful about what residual feet you need, what the renewable mix is,
and how storage will play a role on the system. You're right,
I think It's a good lesson there about how you operate the system. What
I'm most interested is learning about how you plan the system because we can't really
afford planning mistakes here. We can't afford to have extra generation just laying around
that doesn't have a high capacity factor. We have to be thoughtful about wind
versus solar, storage versus solar and exactly how that goes in. So what
I'm really focused on now is making sure we do proper planning. I'm engaged
with the government policymakers here about these issues and to make sure they understand the
behavior of solar, of the behavior of wind, and what you all need
to net the system together. Can I ask you a bit about wind,
because earlier on you did talk about hurricane risk. Just talk about how you
see it. We do have wind on the island, and it's not very
much. I believe it's somewhere on the order of forty megawatts or so,
just to give you some perspective, out of an eight hundred megawatt peaking system.
So it's not very much. It's in the mountains as relatively safe from
hurricanes, and hurricanes have come through while this wind was here, So properly
constructing the wind and operating it and feathering the blades as an example, in
high winds and facing it into the wind, we found it will be plenty
of resilient, so I'm not too concerned about that. We also have to
make sure the same thing happens when we play deploy solar. Oftentimes the major
destructive force on hurricane is water and making sure that we don't have storm surges
to go into the solar fields or they get damaged by flooding or other kinds
of things. So as an example, we can't afford to have flooding in
the inverters or other things. So we'll have to think through that. But
resiliency in the face of a category for hurricane that will inevitably happen here at
some point has got to be part of our planning. Steve, that question
seems a bit awkward, But as far as I can see, you're running
a laboratory here, and if you succeed here, whatever success your a chief
can be replicated not only on other islands, but you know in parts of
Africa or Soustasia or let America. So how do you see the success of
the future success of Jamaica in relation to the bigger world, Lauren, I
think that is an excellent question, a good way to kind of summarize what
I'm trying to do here. And this is exactly why I came here,
because if you can do it here, if you can do it in a
developing country with relatively low per capita income, I think you can do it
anywhere. And the ambition I have for both for Jamaica and Jamaica Public Service
is to actually be a beacon and an example for the world for how it
can be done. Because if it can be done on an island nation like
this, I think it can be done anywhere. There are parts of the
world such as India in Africa, and obviously there are other islands, and
I think we can be a very good example. I would love to have
people come and visit here and find out how we did it, and I
think if we do it right, we can be that example. And that's
frankly, that's why I'm here, so that I can set the standard for
what not me, but my entire organization can set the standard for what is
possible. And Steve and I would expect that there's a whole pot of very
interesting technology partners across the world who need to learn because they see this a
huge opportunity that you can partner up with. Absolutely right. I think the
economic opportunities here are tremendous, and I think the economic opportunity for this investment
that's going to be made for this transition will be very stimulative to the economy
here. And because I think lots of outside capital will have to flow in.
We don't manufacture panels or wind turbines or batteries or any of these things
on the island, so we will have to have them come in from elsewhere.
So there will be ample opportunity for people to come here, both with
advanced technologies. Because the other thing we have to try to accomplish, or
what I want to try to accomplish, is get as many of the vital
grid services as we can offer renewables so we don't have to run expensive power
plants, so that we can lower the overall costs of the system. So
I think, but the technology tapestry, the renewables and how it all knits
together, I think will be an excellent opportunity for anyone who's interested in investing
here, in providing services here and providing hardware here. We will need all
those things. It's an incredible exciting opportunity. I just want to say us
I'm really excited by the conversation and I wish you all the best really going
forward. Thanks to you both. Wish me well. There's it's a target
rich environment of things to do here. For sure. I'm glad I'm here.
This is doing everything I personally and professionally wanted to do. And let's
check in again in a year or two and see how we're progressing. Very
good, very good, very good. Again, Thanks a lot well,
Steve, thank you very much, and definitely investors should come to Jamaica not
just for the culture and the tourism, but also to the energy transition.
Thank you, Stephen. Yes, come here, experience the culture, experience
the people. They are a wonderful, wonderful culture with a wonderful food,
and they are happy, happy people, so everybody will appreciate that. Well
job, there were a lot of things I learned along the way. Can
you imagine that the theft or the losses are twenty eight percent of the power.
That's insane. You're absolutely right. I didn't think about that at all,
right, but yeah. Of course that means that a lot of people
simply contact for electricity and inside the mission of Steve you have great a reliability,
but they need to get the price lower because the price of power is
probably three times higher, so most a luxury to have power. It's really
into an energy poverty. Of course, we have to do the energy transition
here. The good news is we aligned the energy transition by the rediction of
the cost. We need to have lower cost Well, I think the thing
I took out about around was that we're living in a different era and the
era that we're living in is you do have low cost solar and batteries that
you can integrate with the diesel jan sash and you couldn't do this ten years
ago. Now. The only issue, and it's a big issue, is
if you don't have low cost capital in terms of the dast and equity,
then it's going to be very, very difficult. And that's the challenge.
How do you do that? But my god, there's a big opportunity there
to do that. And then what you're doing is you're decarbonizing, you're lowering
the cost of electricity to people, and as I said, you're becoming a
role model for other islands. That's what I took out of it. Well,
the very important feature of Jamaica Public Service is that it's owned by Marubini
and the Koreans. It's almost investment grade and they can sign PPAs, which
is probably not the case in the majority of other islands. They have a
good balance sheets so well to managed company, which means you can bring a
lot of people as counter parties, and that's the most important thing. Then
the second most important thing is the attitude of Steve, and his attitude is
to say, okay, wind developers, Okay, it's not going to be
a great market, but they are win resources. Provided you can manage the
hurricanes. You know, we'll give you a great PPA microgrid. It's the
same solar hooftops. It is the same. But also if you go a
bit beyond what we do on a regular basis, I'm talking about read enhancing
technologies, you can use Jamaica as a laboratory to test all your innovations and
all those startups in the Silicon Valley where despread, we have a pilot where
they can run and test the technology while guys go to Jamaica. Number one
was very pleasant. And number two, you have people they're willing to experiment
with you all your new technologies, and then you can build a track record
in Jamaica and then you can literally export all over the world. I like
that one. Thank you. Right now, I'm gotta add one other thing,
which I hope we have another cup event taking nature in this here,
and what I'm hoping that comes out of that is that the Western world agrees
to actually put money into the developing world. I said, it's very important
because that's how you decarbonize this type of island is again low cost money that's
coming in from the KfW in Germany or whoever it is. That's what's also
needed in and around, as you said, the Marabonis of this world,
who are already invested, and then that's the role model to go and scale
it with other technologies into other islands. That's pretty exciting, right. I
know why Steve Dinner, it's the reality of it, right, he can
really have an impact. I really encourage all the innovators of the world to
go to Jamaica and see if their innovation works. Very good. I like
that, and I do want to say started this off about why islands.
I think islands are if you want to look at the future of your power
markets, you have to look at islands because islands are naturally firstly stressed.
Jamaica has great solar resources, but you know, how do you actually go
and integrate That's it's much more difficult for them to do that than France or
Germany or even California. That's why I think islands are really interested, and
not just them, I mean even sort of listen to the island you're living
on Britain the same thing, or Ireland. You know you've got lots of
renewables, integrating it. That's a really tough job, much harder to do
that than it is if you're as I said, on the continent way you
can roll lie on your neighbors sometimes sometimes okay, job. We'd like to
thank see for coming on the show. We support Bruce and it's the Global
Houlnewable Alliance, and we put the links in the show notes. And of
course we think our wonderful sponsor, PVKAS the best solot design software. Oh
absolutely, and you met them in as big as I did. Yeah,
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Because usually you see a software solution that comes in it takes a long
while. But founder came originally from the consultancy area and had a very good
idea and being able to almost have a plug in into the card systems,
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like what I do, excellent and we're very happy to have them as partner.
Job took to you into its time, look forward to my friend.
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