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Solar Agreements Signed at Government House on Monday

(Tuesday, June 05, 2012)


The Virgin Islands Water and Power Authority signed solar power purchase and interconnection agreements today at a ceremony hosted by Gov. John P. de Jongh Jr. at Government House on St. Thomas. The three companies: Toshiba International Corporation; Lanco Virgin Islands I, LLC; and Sun Edison, LLC will provide approximately 9 MW (megawatts) of solar energy, per district, into WAPA’s electrical grid.

“There’s no doubt that for many of us, the issue of cost of energy is something that each of us is extremely sensitive to,” said Gov. John P. de Jongh Jr. “Today with the signing of these agreements, with the negotiations that have taken place – this is but one step in the process WAPA is taking to diversify its generation portfolio.”  Executive Director Hugo V. Hodge Jr. referred to the signing ceremony as a “significant occasion” and the addition of solar energy as a multi-tiered process that will result in lowering of energy costs in the territory.

With the addition of solar energy, the Authority will be less dependent on more expensive fossil fuel. Hodge said, “The 18 MW of solar power represents approximately 15% of the territory’s peak load demand and will help to reduce customer rates once fully installed. This securing of a certain portion of our generation portfolio, which has no tie to a commodity that can fluctuate in the market, is a significant step.”  Hodge said that to his knowledge, there has been no other region in the world that has 15% of their peak in solar energy.

There will be three St. Croix solar array sites strategically placed throughout the island to maximize on sun availability and limit the impact of cloud cover. Arrays will be situated on the eastern and western ends of St. Croix and mid-island next to the Home Depot site. On St. Thomas, they will be constructed on the roof and on the canopy covered parking at Tutu Park Mall, as well as in the vicinity of the Home Depot. While no solar arrays will be placed on St. John or Water Island at this time, all customers throughout the territory will equally benefit from the lower energy costs to be realized from these installations.

Construction of the solar sites will begin upon approval by the Public Services Commission of the rates to support the power purchases from the three companies.

The project will require no cash outlay by the Authority or the V.I. Government. The cost will be between 14 and 24 cents per kilowatt hour, with a weighted average of between 16 and 17 cents per kilowatt hour. These rates represent the average terms for the 20-year life of the power purchase agreements. These rates will be below WAPA’s avoided cost, which is the amount it would cost to produce the same amount of energy in its power plants. The power purchase agreement with Sun Edison is for 25 years and Lanco Virgin Islands and Toshiba have signed on for 20 years each, after which options for the Authority include purchase of the solar systems or renegotiation of purchase agreements. As for the permitting processes, because of the technology, only earth change and building permits are required. There are no expected obstacles anticipated in pursuit and approval of these permits. The implementation of solar energy will be safe for Virgin Islands residents and for the environment.

Gov. de Jongh said that the selection of these companies was based on their experience, reputations and particularly their financial and credit strengths. Each company has erected similar solar sites in environments very similar to the Virgin Islands. “This is probably our seventh at least that we’ve installed globally,” said Mark Lonkevych, Sr. Vice President and General Manager at Toshiba International Corporation. “These systems are not new to the islands, the key is going to be managing them properly and how they interrelate with the grid themselves.” 

“Similarly, Sun Edison has also deployed solar energy projects in island environments in Puerto Rico and Hawaii,” said Frances Yuhas, Authorized Representative for Sun Edison, LLC. Technical experiences have proven that challenges can be successfully overcome said Yuhas, adding that “Subsoil surface conditions also have to be considered in the island environment from coral as opposed to different bedrock.  We are very adept and experienced in installing solar projects in this type of environment,” she said. “The most important part is from the actual installation. It’s just a beautiful environment to work in so the workers are always happy,” said Yuhas. Sun Edison will be the only company erecting arrays on both St. Croix and St. Thomas.

Bill Morrow, General Manager for North America of Lanco Group and Vice President of Lanco Solar International (US), Inc. said, “Particular challenges in these types of environments relate to deploying in an environment with sea-salt air, the geotechnical and wind conditions. You don’t get hurricanes in Kansas, but here you better make sure your project can withstand that and be able to deliver the energy with the sort of dependability that WAPA is looking for.” Morrow, in echoing the gratitude of Yuhas and Lonkevych to Hodge and his team, said that it took a lot of dedication and foresight to bring renewable energy to the Caribbean. “There’s been a lot of speculation and talk in the market about bringing renewable energy to the Caribbean. To see it happen and to be a part of it is really something exciting,” said Morrow.

The evaluation committee responsible for the final selections comprised of WAPA technical, management and legal teams, and energy experts from the National Renewal Energy Laboratory through the Energy Development in Island Nations (EDIN) initiative of the U.S. Department of Energy and the law firm of Skadden, Arps, Slate, Meagher & Flom.  WAPA’s Internal Audit Division monitored the process in order to maintain its integrity. Apart from any unforeseen circumstances, construction of the solar projects is scheduled to begin during the first quarter of 2013 and be completed by the end of that year.