General Manager (Wigton Windfarm)

Could you give us an overview of Jamaica’s energy sector?

The energy sector in Jamaica is vital to any form of economic progress. It is right now in a state of limbo but we are now seeking to bring clarity to it because the government has set up a new entity called the Electricity Sector Enterprise Team (ESET), which is an attempt to focus on the fossil fuel side of it. JPS (Jamaica Public Sector Company), which is the main electrical power provider, has been suffering for years with old and inefficient generators and they have sought for at least the past five years to change and modernise their system. It is projected that if that modernisation is done, just from the JPS perspective, the cost to consumer could be reduced anywhere from 20% to 30%. The fact that we have still been at it after five years, my perspective is that it is going much too slowly.

Do you think Jamaica will ever be able to rely solely on renewable energy sources?

The energy sector in Jamaica will always have to look to having a mix of renewables and fossil fuel. I am not of the opinion that we could, like some other countries have done, go to a percentage of more than 30%. If you look at the main sources of renewables, which are wind and photovoltaic, there are limitations.

Photovoltaic takes up about five acres of land, a little over two and half hectares of land per megawatt, and Jamaica does not have that land space. If we were to try to put photovoltaic panels there, we would be robbing the agriculture sector, which is another vital area that we need to focus on, so fossil fuel has always been a part of it. Where I think photovoltaic will have a great impact is being distributed, that is the Earl Barretts of this country putting it up on their homes. If you have a single-family home, an apartment complex, car parks or factories with large roof space, we could begin to do that. The government needs to sort out what kind of incentives we could give to people to go there, for example, low interest rates, loans and the removal of all duties consistently.

Wind as you know is site specific. The Wigton Wind Farm is presently located on one of the sweet spots on the island. We have just carried out a study on 22 sites across the island, looking at what the wind regime is like and whether it is enough to support wind farms, not just a single turbine but a number of turbines. Outside of the Wigton property, we have found about four more areas that have wind regime at the level that we think would be economically viable for wind farms. One of those areas happens to be in an area that is protected by both the Land Agency and the National Environmental Planning Agency (NEPA). They initially said no, but it is my belief that it is possible that we could go into that area.

We have spoken to people like the former German Ambassador, who has said that if we seriously wanted to go there, he would take us and a team to Germany to have a look at how they were able to go into similar type lands and convince the environmental folks before going in that with a turbine 300 feet up in the air, all that you are really disturbing in the initial phase is the path way to put up the turbines. Once the turbines are up, you are not troubling the flora or fauna. A lot of people say we could do it, look at Costa Rica, which has quite a bit of land that is under the protection of the Land Agency and the Environmental Agency.

It is a beautiful time for both government investors, whether individuals or companies, to focus their attention on maximizing the use of renewables in all its facets; let’s look at   waste to energy. I don’t know if you were in Jamaica when we had the last fire at our landfill but there are plans down to the detailed engineering design to put in waste to energy power generation in that system, but it has not caught up. The managers of the landfill say we will sell you the waste and I say give it away and you will have a smaller landfill to manage. Tell the people to come and take it right away and you won’t have to be looking for additional space to put up the next landfill because it will be incinerated and used to create energy. So we are not getting everything lined up.

What about bio fuels?

There is a possibility for bio fuels. We have talked about them, done the studies and partnered with the ones who are champions in that field. 40% of the fuel used to drive motorcars in the streets of Brazil is from biofuel. We don’t have the land space to match Brazil at all, but could we make it 10% or 5%? Because it will all add up in that 100%. There are great opportunities but I think that we are still stuck in the old economic paradigm. We are looking to make this massive return on investment and if your money for loans can get you 10-20% why would you take 3-4% from energy. So the longevity and cleaning up of the environment, as well as leaving a better world for generations to come, I don’t think has sunk in to enough people and I don’t think we are yet at a critical mass. When you try to get change, I think you realise that you always have to get the buy in of a number of people and I don’t think we have that yet. We still need to match a lot of our talk of renewable with action. Having said that we have a vision 2030 and that’s a start. Kennedy said that he would put a man on the moon in ten years and whilst he had no clue how he was going to do it, he was going to do it and together it was done, so, together we can do it. Wigton plays a strategic part in that respect, we have a small plant and team but one of our mantras is that we will do everything at a first class level.

Wigton Wind Farm’s objectives include owning, constructing and operating wind farms and similar renewable energy solutions for commercial production. Wigton 38.7MW’s wind farm in Manchester has been operating for 10 years and is the largest wind energy facility in the English-speaking Caribbean. Tell me about the success you’ve experienced with this operation.

In the first four and a half to five years, operationally it was good but it struggled financially. The economic model was deficient. The rate per kilowatt-hour that was agreed in the contract made it unprofitable but operationally it ran well. Since 2010 when the rate was renegotiated and approved, and following the expansion with phase two and a higher rate/KWh, it has been a positive plant.

In January of this year, Wigton Windfarm signed a US$45 million contact with Spanish wind energy company, Gamesa, for the construction of Wigton III. How did this expansion come about and can you explain to our readers what makes this new 24MW plant so significant?

It will reduce national oil consumption by over 37,100 barrels per year, which should generate savings of approximately JA$214 million annually. Additionally we will be saving foreign exchange (as a result of the oil importation avoidance). The third component of that as well is that we will be able to sell carbon credits. The carbon credit market just about crashed in 2013 and I think in 2012 the protocol (first commitment period) came to an end, nothing has replaced it and so what we find is that where we were selling carbon credits for about 5 euros per ton, and we had signed a contract in 2004 for that, the market had ramped up to about as high as 18 euros per ton. So we were excited when we were putting in the new plant that we would have been able to pick up 12 maybe 15 euros per ton, then the market fell out. So right now we are not selling any carbon credits, but if and when the market returns we could sell and possibly earn maybe about US$400,000 per year.

You said that in your most recent survey that you identified four areas that are viable for windfarms, do you have plans at the moment to expand into these areas?

We will put in a bid. Again it is subject to where we could connect to the grid. Although the sites are there, for at least two of them the transmission line is not there and we are not 100% sure about the land ownership around the site. We were able to identify one of the landowners and as you know we need about two acres per turbine between building the roads and other factors. When we put it up it is much less, but for the working area, like using the 600-ton crane, we need to have that space around. So this is work that we are going to have to do to put in a bid in six months after the call is made.

Is Wigton involved in any private public partnerships?

We have discussed with Development Bank of Jamaica (DBJ) the possibilities of Wigton seeking joint venture partnerships. In the six years I have been here, Wigton has had at least 16 suitors that have wanted to have some level of partnership with us. They wanted to bring in capital, buy shares and have a joint venture in new projects. But governments change and there has been some vacillation with Wigton since 2007 when it was put on the market for sale. I think part of what the IMF has been guiding the government to do, is to get out of none core business.  So different ministers of energy have been saying we are going to sell and some say we are not going to sell. Right now we are told that Wigton is not for sale.

PCJ, the parent company, is also in a state of re-branding/restructuring. There are five companies that make up the PCJ Group and one of them now is on the market for divestment and the talk is that there are enough suitors so it could be sold by the end of the year. As you know Petrojam is owned 49% by Venezuela, the PCJ being 51%.  So all of those dynamics have been balled up and bouncing around for maybe too long and so taking a direction and moving it forward for maybe a 10-year period has not happened. I think we need to do that now, and I think we are about to do it.

Out of the 16 suitors seeking to do business with you, how many were international?

All of them because Jamaicans have not developed the appetite as yet. Again if you look at the history of business in Jamaica, we have been traders, bringing in a couple of 40 feet containers of goods, which you sell off in a short time and then go back to market. Getting into renewables is long term and again if you bring in internationals like BMR who won that bid, they come in with cheaper money. We spent almost a year in negotiation with IDB and we could have gotten money from IDB at 1 ½ to 2% but it needed a government guarantee and the government cannot give a guarantee because of the IMF restrictions. A team out of Washington and Norway did the due diligence on the plant and they were considering taking over all of the loans that we have with PetroCaribe.

Wigton is expanding into education. Tell us more about this.

Yes, we are more than a wind farm. One of our mantras regards the transfer of knowledge. So when we did the phase two expansion, we built a resource center and it is set up to do training in all facets of renewable energy. We will be training in hydro, photovoltaic and thermal, concentrated solar, fuel cells as well as bio fuels. Right now Jamaican engineers are running our plants. We train them at our site and send them abroad for training and we also bring in trainers. So at this resource center, we will be running training courses via webinars and bringing in guest lecturers. We have a partnership with two of the universities in Jamaica. We have MOUs with the University of Technology and University of the West Indies to run some of their practical training at our training center, which will be fully equipped by September. If you go there now, the entire roof covering of that building is done with PV panels. The roof itself is made of PV cells and we did that to show that the architects in Jamaica could change their thinking. It is not leaking and will not leak, when you look up, you are looking at PV cells and they are providing power for your house or building, and we deliberately did that. It is located in Manchester at the wind farm. So we are very excited about what that will mean. There was a gentleman at a conference in Suriname who works in renewables in the Caribbean out of CARICOM. We talked about the training possibilities in Jamaica and wanted us to look at it for Caribbean training. Earlier this year we had a workshop put on by the Bureau of Standards and there were some people there talking about renewable energy of course and the people from Barbados, when they heard about Wigton’s training center they said they would really love to come on board. They were training their people and they could send their people to be trained here so it could become a Caribbean training center. Wigton is the only wind farm in the region that has a training center and so in that sense it is unique. If you go to the University of Technology, they run renewable energy programs but in terms of having the facility that we are setting up I don’t think anybody else has it. We went to a University in Costa Rica that had a similar set up. So the vision is to work with the university as well, not as competition. Initially we had done all training through the university so we brought down guest lecturers and invited people from outside because we are a government agency. It was not set up as a cash flow center, now if it becomes bigger where we have to bring in a full time person to run the center we would want to at least recoup our cost, but the intent was not as a financial center so to speak it is really to train.

Where would you like to see Wigton in five years from now?

Having completed the 24 megawatts, my vision is that we have another 20-25 megawatts. I would want to see that on the existing wind farms as there is the possibility to do this without taking up farmland. I would also like for us to be considered not just a wind farm in the public’s eye as we are doing training in renewables so our engineers can continue to run the plant. Also I want to reduce migration because if you talk to the graduates out of university, most of them have to seek employment somewhere else. That is not all bad but it would be nice if some of them could stay here to help to build the country.

The readers of Harvard Business Review include many of the world’s most influential business and political leaders. What message would you like to send them about Jamaica?

There are opportunities certainly in developing energy and particularly in the renewable energy sector. Without a doubt we are one of the jewels of the Caribbean. If we spend the next three to four years getting the energy right, the other things will fit into place. If you get the energy right, you get the economy right and I can see crime - which is one of our albatross - going down almost exponentially. People who have work and a house to protect don’t necessarily go out and commit crimes. You cannot get rid of white-collar crimes wherever you go but certainly you will see an exponential reduction.

I think certainly for our English-speaking neighbors, they will find a ready workforce. I have lived and worked across the Caribbean and also in North America and I compare people there to Jamaican workers. In terms of their productivity, once you put them into the right organization, their standard will challenge the rest of the world.

And a final message about Wigton Wind farm?

Wigton is a jewel in the energy sector and we will continue to operate at a world-class level in everything that we do. We are on time with all of our performances and we have a workforce that I think is excellent. We have brought in engineers to do the 10-year assessment of our plant and they wrote in their report that they were amazed at the very good condition of our plant compared to a lot of other windfarms that they have gone into. We also have an excellent safety record with almost 11 years of operation. So we have a good business, with 16 staff members. Wigton’s turnover is over J$1.5 billion annually. If you take out our foreign exchange adjustments for last year we made about $J726 million in profit before taxation. With the depreciation of our dollar, a net book entry cost us about $J1600 million so we have a net of about $J566 million, so for a company with 16 people we are doing well.