Transcript Document 7253170

Jamaica’s Energy Sector:
Present Status and Future
Perspective
Raymond M. Wright
Petroleum Corporation of Jamaica
June 28, 2005
CHINA CONSUMES
In 2004 China had 20% of the world’s population. In 2004 China’s oil
demand increased by 16.9%. Product imports increased by 33%.
1998
16.2%
10.4%
11.9%
27.2%
5.5%
8.0%
22.2%
22.1%
14.1%
7.5%
Steel
Copper
Aluminum
Coal
Petroleum
Electricity
Cotton
Fish
Ice Cream
Cell Phone Users
2004 (estimated)
27.0%
19.7%
18.8%
31.8%
8.0%
10.3%
32.9%
32.3%
19.3%
20.8%
Prices
Oil Price Volatility, 2001-2005
West Texas Intermediate, US$ per barrel
65
60
55
50
45
40
35
30
25
20
15
2001
2002
2003
Years
2004
2005
Predicting Oil Prices
• In 1999 many predicted that oil prices would
remain around $10/barrel for the foreseeable
future.
• However, demand and supply are catching up with
an oil-hungry world.
• OPEC has little margin to spare, perhaps only
another 1.5 million bpd above its present quota of
27.5 million bpd.
• IEA forecasts demand growing by 1.8 million bpd
in 2005; hence there is a demand and supply
problem.
Global Oil Demand, MMbbl
Global Oil Demand 1995-2005
83
78
73
68
'95
'97
'99
'01
'03
'05
(expected)
Oil Demand – The Real Story
• Demand is strong because prosperous
countries, led by the USA and Europe, are
enjoying solid economic growth in spite of
high oil prices.
• Almost all developing global economies led
by China, India & Brazil, are growing.
• Demand in 2006 is likely to continue to grow.
Oil Supply – The Real Story
• Last year’s myth was that higher oil prices will
create an increase in supply.
• Many key oil producers are at or past their peak
oil output.
• As with surging demand, the flattening oil supply
situation is not unique. A high percentage of the
world’s oil still comes from discoveries that were
made more than a decade ago.
• Lack of spare capacity exists at every step of the
supply chain – from drilling and producing, to
transportation and processing.
• Any spare wellhead capacity is for heavy and sour
crude.
Countries Past Peak Oil Output
• Australia
• Oman
• Colombia
• Syria
• Egypt
• UK
• Indonesia
• USA
• Iran
• Yemen
• Kuwait
• Norway
Countries with Ability to Expand
Oil & Gas Capacity
• Algeria
• Malaysia
• Angola
• Qatar
• Brazil
• Russia
• Chad
• Saudi Arabia
• Ecuador
• Sudan
• Equatorial Guinea
• UAE
• Libya
• Venezuela
Selected Global Gasoline Prices
Typical price per gallon (US$)
Norway
Netherlands
U.K.
Germany
Italy
France
Singapore
Brazil
Mexico
Jamaica
USA
Russia
China
Venezuela
Iran
Sources: Reuters, EIA & Others
$6.66
$6.55
$6.17
$5.98
$5.94
$5.68
$ 3.50
$ 3.35
$ 3.20
$ 2.79
$ 2.26
$ 2.05
$ 1.78
$ 0.49
$0.47
Caribbean Economies and Energy:
Global economy’s effects on electricity demand
GDP Growth vs. Electricity Demand Growth
WEB - Aruba
Trinidad
St. Vincent
St. Lucia
GDP Average
Annual Growth
Rate 1995-2003
Puerto Rico
Jamaica
Electricity
Demand Average
Annual Growth
Rate 1995-2000
Grand Bahamas
Bahama
Curacao
CUC - Grand Cayman
Bermuda
Barbados
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
Generalized Daily Demand Curves
– Japan & Jamaica
JAPAN
7
8
9
10 11
12 1
NOON
2
3 4
JAMAICA
5
6
7
8
9
10
We have to make decisions as to which
“ball to play” and what action to take.
THE RIGHT MOVES
Diversification
• Diversification of energy supplies will reduce
demand for petroleum.
• Natural gas and coal will remain important for the
remainder of this century.
• Hydrogen fuel cells and other ways of storing and
distributing energy are a foreseeable reality and will
replace the Oil Age.
• Renewables will grow to make a supporting
contribution to the energy mix.
Natural Gas
• A combustible gaseous mixture of simple
hydrocarbon compounds, mainly methane
(CH4).
• Found by itself or with crude oil and
hydrocarbon condensates.
• The cleanest burning fossil fuel.
• Available for transport by pipeline or as
LNG and CNG.
Natural Gas
The present move to natural gas will see an
increase in its share of global energy from 22%
today to about 33% by 2030. Effective in
combined cycle and cogeneration technologies,
natural gas may also become a favourable fuel
for the transport sector. As LNG, it is the natural
fuel for diversifying the energy mix of many
Caribbean countries. The Dominican Republic
established an LNG import terminal in 2003 and
Jamaica plans one for 2008/9.
LNG Growth
• LNG demand is expected to grow by over 8%
annually from 2005 through 2015. This compares
with the projected 2.5% annual growth rate for
overall global gas demand.
• Thus the LNG market will double within the next
decade.
• Presently 14 countries are importing LNG. By
2015 an additional 16 countries will import LNG.
• Demand driven by economic growth and power
consumption.
• Environmental factors play a key role in driving
the market.
Existing LNG Importers (2005)
Atlantic Basin
Belgium
Dominican Republic
France
Greece
Italy
Portugal
Puerto Rico
Turkey
USA
Pacific Basin
Japan
South Korea
Taiwan
India
Expected LNG Importers
Atlantic Basin
Bahamas
Brazil
Canada
Cyprus
Honduras
Jamaica
Lebanon
Mexico
United Kingdom
Pacific Basin
Chile
Java
New Zealand
Thailand
Singapore
CNG in Vehicles
• CNG generally used in vehicles at
3000-3600 p.s.i.
• Equivalent energy content
– 1 gallon gasoline = 125 scf CNG
– 1 gallon diesel = 130 scf CNG
Natural Gas Engine Manufacturers
•
•
•
•
•
Cummins-Westport, Inc.
Caterpillar
Detroit Diesel, Corp.
John Deere Powers Systems
Mack Trucks, Inc.
Natural Gas Engine Manufacturers
North America
More than 50 manufacturers produce 150
vehicle models.
•
•
•
•
•
•
•
•
•
•
•
Blue Bird Corp.
Elgin Sweeper Company
Ford Motor Company
Freightliner Trucks
Mack Trucks
Neoplan
New Flyer of America
Peterbilt
Thomas Built Buses
Volvo Trucks North
America
Advantages of Natural Gas
• Air Quality – Most studies indicate a reduction in
NOX of approximately 50% and PM of more than
75%
• Potential Fuel Cost Savings – Viking Freight
Study showed average fuel costs per mile of $0.11
for CNG and $0.16 for diesel when natural gas
and Diesel fueling were on site (31% fuel cost
savings)
• Political Benefits – Most fleets switch to natural
gas because of political benefits
- Meet government requirements
- Promote energy security
- Enhance public image
Paving the Way for Fuel Cell Vehicles
• Natural gas and hydrogen are both gaseous fuels
• Lessons learned from developing natural gas
technologies may aid transition to hydrogen
• Shared issues include:
– Fuel storage
– Fueling
– Station siting
– Training
– Facilities
– Public acceptability
Nuclear Energy
• Once deemed as expensive and dangerous, nuclear is
making an unlikely comeback against fears about the
consequence of fossil fuel use.
• The potential for nuclear to take on a more central role
in the energy mix is apparent – mainly because
nuclear reactors do not produce greenhouse gases.
• Nuclear power accounts for 16% of globally produced
energy. This saves around 0.6bn tonnes of CO2
emission per year, nearly twice the amount that the
Kyoto Protocol is designed to save.
• The IAEA clams that the nuclear power chain emits
some 2-6 grams of CO2 per kilowatt hour; about the
same as wind and solar power.
Nuclear power as % of net electricity generation
2001
0
France
Belgium
Sweden
Slovakia
South Korea
Hungary
Switzerland
Finland
Japan
Germany
Spain
Britain
Czech Republic
United States
Canada
Mexico
Netherlands
Source: International Energy Agency
20
40
60
80
Nuclear Power
PROS
CONS
• Nuclear Power is well suited • Difficult
to supply baseload
economics,
electricity.
because of high
capital investment
costs.
The Environment
“It isn’t pollution
that is harming
the environment;
it is the impurities
in our air and
water that is doing
it”
Dan Quayle, former
US Vice President
Climate Change
A national inventory of greenhouse gases in
Jamaica shows that energy use caused more
than 75% of emissions. This is in keeping
with a global average of 70%.The strategy,
therefore, is to reduce the adverse
environmental impact of energy use by
using cleaner technologies and improving
energy efficiency.
Sea Level Rise
1 metre
2 metres
4 metres
8 metres
CHANGE IN HOLE IN OZONE LAYER
RENEWABLE ENERGY
(A fuel source that is not used up when power is generated.)
•
•
•
•
•
•
Solar Energy
Wind Energy
Tidal/Wave/Ocean Thermal Energy
Biomass Energy
Hydroelectric Energy
Geothermal Energy
How to Foster Growth of Renewables
• Fiscal Measures
– Tax relief; low interest credit.
• Investment Support
– Local, national and regional support; energy supplies; ecobonus for sustainable building; local banking and private
sector to participate project financing.
• Regulations
– Energy and building standards; obligations.
• Other
– Information and awareness campaigns.
The Value of Renewables
• Caribbean energy policy supports the continuing
diversification of our energy systems – both by energy
type and by source. In this scenario renewable energy
should play an increasing role.
• The value of renewables lies in their ability to respond
simultaneously to the three main challenges confronting
the energy sector: energy security, economic growth,
and sustainable development.
Value of Renewables (Cont’d)
• Development of renewables is not too risky
because it reduces the overall variability of
national expenditure and, therefore, reduces
risk. It has the characteristics of insurance.
• Renewables are an insurance “hedge” against
volatility and risk. Perhaps this concept of
insurance is a reasonable basis for encouraging
support for renewables.
A number of market-oriented points apply to
renewables.
• Market opportunities lead to increased
production
• Increased production reduces costs
• Lower costs stimulate sales
• Increased sales expand production
Some Renewable Energy Production Goals
China
12% of the country’s electricity from
renewables by 2020.
Brazil
3,000 MW of renewable energy capacity.
Germany
Solar panels on 100,000 rooftops.
Jamaica
15% of the country’s electricity from
renewables by 2020.
Some Factors Boosting Renewables
• Worldwide effects of Kyoto Protocol,
especially on multinational corporations.
• EU Emissions Trading Scheme.
• High oil prices.
• USA production tax credit.
Opposition to Renewables
 Many people do not want to look at renewable energy
installations and will use any financial, legal, or political
power to block projects.
 Several acronyms have emerged:
–
–
–
–
–
NIMBY – Not in my backyard
NOTE – Not over there either
CAVE – Citizens against virtually everything
GOOMBY – Get out of my backyard
BANANA – Build absolutely nothing anywhere near
anything.
All of this NIMBYISM is conducted out of self-interest, but
uses methods pioneered by environmental groups.
COST DISTRIBUTION OF SOME POWER SOURCES
Nuclear (0.06 c/kWh)
Natural Gas (0.046 c/kWh)
15%
14%
15%
70%
Coal (0.05 c/kWh)
52%
Wind (0.059 c/kWh)
17%
37%
44%
83%
19%
Capital Costs
34%
Fuel Costs
O&M
Wind Energy
• Competitive with fossil fuels (oil,
gas and coal)
• Is a hedge against volatility in oil
prices. The wind resource is free.
Two of twenty-three
900 kW wind
turbines in a
20.7MW Windfarm
at Wigton,
Manchester, which
was commissioned
end April 2004
Comparative Costs for Wind Power and
Conventional Energy Sources, 2005
Price (US cents per Kwh)
18
12
6
0
Gas
Coal
Nuclear Energy
Production cost range
Source: Windpower Monthly, January 2005
6
7
8
Land-based
9
10
Wind speed m/s
Offshore
Biomass - Jamaica
• Intention to pursue cogeneration in the sugar
industry from bagasse, supply grid electricity.
• Use of bioethanol in transport fuels, reaching
approximately 10% of gasoline, replacing MTBE
as the octane enhancer.
• Annual demand for ethanol locally is presently 68
million litres and could reach 91 million litres by
2010.
• A new ethanol plant of 40 million gallons will
be commissioned in July, 2005, as a joint
venture with Coimex of Brazil.
Ethanol
• Ethanol will become the major product
of a renewed Jamaican sugar cane
industry.
• The sugar industry would then produce
sugar, molasses, rum, ethanol and
electricity from bagasse.
Ethanol - Brazil
• Ethanol use expanding at about 8 % per year.
• 60 billion litres per year of ethanol needed by 2010.
• Greatest export market for Brazilian ethanol is India,
followed by the USA, Korea and Japan.
• Gasoline in Brazil has at least 25% ethanol.
• Nearly 30% of cars in Brazil can use 100% ethanol.
• Ethanol (US 55 cents per litre) is cheaper than gasoline
(US 85 cents per litre)partly because of a 34 % tax on
ethanol and a (higher) 45% tax on gasoline.
Annual Investment (US$
billion)
Annual Investment in renewable energy,
1995-2004
30
25
20
15
10
5
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
SMALL SCALE HYDROPOWER
• Usually defined as less than 10MW
• Renewed interest because of strategic
concerns about energy supplies.
• Advances in electronics which have
greatly reduced the cost of controlling
the output of small turbo generators.
• Some 23 MW installed in Jamaica.
Potential for another 30 MW or more.
Solar
There are four major solar energy processes:
(1) Photovoltaics which converts sunlight
into electricity through solar cells in a plate
or concentrator.
(2) Low temperature solar thermal systems
used to heat water or air, are an important
part of Caribbean energy systems. Solar
drying and distillation, as well as solar water
heaters, fall into this category.
Solar
(3) High temperature solar thermal systems
that produce heat that is converted into
electricity in a conventional cycle, through a
concentrator system. There are no systems
now producing electricity by this method in
the Caribbean.
(4) Passive solar systems, that seek by design
to reduce space cooling and lighting. This is
exemplified in the design of many energyefficient buildings in the Caribbean.
Solar Water Heaters
• Significant increases in use as demonstrated by
Cyprus and Barbados.
• In Cyprus 0.86m2 of solar water heaters per
capita have been installed, avoiding nearly 4%
of total CO2 emissions.
• More than 35% of households have SWH’s in
Barbados, with approximately 37,000 installed
in a population of 260,000.
Solar Drying
• The potential for solar crop drying has not been
fully realized in Jamaica although it is a means of
preventing spoilage which affects as much as
30% of crop production.
• Crops such as bananas, papaya, sorrel, sweet
potato, yam, ginger, nutmeg, pimento, grasses
and leaves can be dried by solar dryers which
range from the simple wire basket dryer to
approximately two square metres of roof solar
collectors.
OTEC
• Ocean Thermal Energy Conversion
(OTEC), an energy source using the
difference in temperature between surface
ocean waters and deep water (at least 200C).
• Jamaica, and a number of Caribbean
islands, have OTEC potential.
FUEL CELLS
• Quiet and have more efficient production
of energy from hydrogen and oxygen than
an internal combustion engine
• Only emission is benign water vapour
• Works like a battery but does not run
down
• Creates electricity for as long as it receives
hydrogen
FUEL CELLS
1. A future energy solution for homes, vehicles and
electric utility systems, fuel cells are a highly
efficient power source that emits only water and
heat. Using hydrogen as a fuel they are virtually
pollution-free. However, the hydrogen may come
from the conversion of hydrocarbon fuel such as
natural gas or methanol, and that process creates
some emissions.
2. At present hydrogen is not available as a commodity
fuel, and even if it were, there is no infrastructure to
deliver it.
FUEL CELLS
3. Niche opportunities will develop in the
next five years, in transport and distributed
electricity, giving this technology a base
for launching into mass transport and the
power industry by 2025.
Emissions Trading
• There is now a strong European CO2 emissions market.
• In February 2005 2.4 million metric tonnes were traded.
• Prices are as follows:
Delivery Date Price/Euro/mt
Dec 2005
8.20-8.40
Dec 2006
8.30-8.40
Dec 2007
8.35-8.60
• Spot trading also takes place.
Emissions Trading
• Projects must be independently validated and
baseline measurement methodology and on-going
monitoring methodology are approved.
• Emissions must be verified and certified before
CER certificates are issued.
ADVICE
Any energy project relying on CERs to
make it cost effective is probably too
marginal to be a good investment.
Energy Efficiency
Driving Forces
Three factors propel energy efficiency:
1. Electricity Costs
2. Environmental pollution, particularly as
it affects the tourist sector.
3. Globalisation, and the competition it
generates, require overall economic
efficiency.
$AVING$
• As an example, a current programme in
Jamaica, should sell some 150,000 CFL’s by
August 2005.
• This will result in savings of 112,500 barrels
of imported oil, and a reduction of 375 tonnes
of CO2 emission over a possible 8-year life of
each bulb.
Measures
Among the measures that have been
successfully applied are:
• Codes and standards for buildings;
• Efficiency labels for appliances and
lighting;
• Improved efficiency of boilers and
furnaces, as well as heating, cooling,
ventilation and air conditioning.
Transport Sector
In the transport sector consumers seem
willing to trade fuel economy for
power, comfort, convenience and
safety.
Higher taxation on larger
engined vehicles that are less fuelefficient is to be encouraged, as is the
improvement of public transport
systems and new traffic management
schemes .
Transport Sector
• Stimulate use of diesel-engined vehicles.
• Promote electric/gasoline hybrid
vehicles.
• Consider CNG for mass transport such as
urban buses.
• Tax vehicles based on fuel efficiency and
pollution factors (CO2).
Some Matters for Active Consideration
in Energy Policy
1.
2.
3.
4.
5.
6.
7.
Growing demand for energy services.
Energy supply and trade patterns.
Energy prices and taxation.
Energy and poverty alleviation.
Public versus private investment in energy.
Environmental and health issues.
Use of cleaner technologies, including
renewables.
8. Efficiency in energy use.
The Role of Stakeholders
• Education and public awareness is
cardinal.
• Jamaicans must begin to think about
energy in the same way they would
think about national security, education
and health care – as an essential
enabler of the quality of life.
Utility Electricity Generation
(June 2005)
Installed Capacity
Owned by JPSCo
Owned by IPPs
Required increase by 2010
Number of customers on the grid
Peak demand in 2005
Reserve margin
780 MW
621 MW
159 MW
250 MW
517,500
642 MW
19%
Oil Consumption - Jamaica
Aviation
and Ship
Fuels
7%
Grid
Electricity
25%
Other
7%
Land
Transport
28%
Bauxite/
Alumina
33%
A POSSIBLE (REACHABLE) 2015
ELECTRICITY SCENARIO
Utility Company Installed Capacity
Fuel Sources
• Heavy fuel oil and diesel
• Natural Gas (& Coal)
• Wind
• Hydropower
• Solid Waste
• Bagasse and fuelwood
• Ocean energy
• Solar Photovoltaics
• Fuel cells
Renewables would supply 12.8% of electricity
1250 MW
380 MW
700 MW
70 MW
35 MW
10 MW
35MW
10 MW
0.2 MW
9.8 MW
1250 MW
Summary
1. There will still be dependence on conventional
fuels for at least another four decades.
2. Biomass will continue as a critical component
of an appropriate energy mix.
3. Natural gas, for environmental reasons, is the
most obvious conventional energy source for
many countries.
4. Hydropower has yet untapped potential.
5. Coal will continue to be important, and the
ultimate stimulant for clean coal use is carbon
sequestration.
Summary (cont’d)
6. Nuclear power may be too high in capital cost
and large in scale, to have Caribbean
relevance; small reactors need to be developed.
7. Competitive renewables, such as wind, will
continue to grow rapidly.
8. The optimal energy mix calls for regional and
cross-border integration of energy supply
systems and markets.
9. There is no simple recipe. The tasks ahead call
for collaboration and careful implementation.
10. In the meantime – use energy rationally!
Only a fool tests the depth of
the water with both feet.
-African Proverb
We have to look beyond the horizon for cleaner energy
technologies
Thanks For Listening
THE END