By Louella Losinio
For renewable energy companies, the industry has grown exponentially on Guam throughout the years but remains sluggish on neighboring islands despite the adoption of Renewable Portfolio Standards of governments across the region.
Jeffrey Voacolo
Jeffrey Voacolo, vice president of Micronesia Renewable Energy Inc., says MRE has installed systems in the Northern Mariana Islands and Pohnpei, and the industry growth in these islands is not as exponentially impressive as Guam.
The government of the Federated States of Micronesia — which includes Pohnpei, Yap, Chuuk and Kosrae — adopted a National Energy Policy in 2012. The policy aims to reduce dependence on imported fuel by increasing generation from renewable energy sources and reducing consumption through more efficient energy use. The policy set a target of producing 30% of electricity from renewable energy sources by 2020.
According to the Energy Transition Initiative, the NMI also has a Renewable Portfolio Standard, which was adopted in 2006 though statute. The original legislation set renewable energy goals at 10% of net electricity sales by the end of 2008. Since then, the law has been amended to increase the RPS goal to 20% of net electricity sales by the end of 2016.
The RPS for Guam was enacted via statute in 2008 and established a goal of generating 25% of electricity from renewable energy sources by 2035, starting with a 5% target by Dec. 31, 2015.
“For Guam, I think the industry is doing well. It has grown exponentially, especially in the past four years,” Voacolo says. “I think in the other islands, it has been sluggish. In the CNMI, specifically in Saipan, we’ve only had about 40 installations there [in a little over a year], where we have over 700 on Guam. […] But with any new technology, you have this education process that you have to go through,” he says.
He adds, “Then you have the public factor — where everybody is relying on public assistance. So you have the World Bank and Asian Development Bank and [U.S. Agency for International Development], [Australian Aid], New Zealand Aid and all of these funds that everybody relies on to help them out with energy projects. Because we are entrepreneurs, we feel that until you make it into a private-public partnership, it’s never going to be mainstream. We need that private capital in there to make things move.”
He says Guam has been successful in the last four years due to the infusion in private capital. “I think that when that starts happening in the outer islands, that’s when you will start to see growth. That’s when you will really start to see change. That is desperately needed right now,” he says.
Voacolo says that MRE intends to continue its education campaign in the NMI and Pohnpei and hopes to start talks with the local government bodies or ministries overseeing energy and power production.
According to Voacolo, this broader plan to reach the region also prompted them to start an organization: the Micronesia Alliance of Solar and Energy Storage. “We have the Guam Renewable Energy Association and now MASES. It now encompasses the Marshalls, Palau, the Federated States of Micronesia and Guam. Because, really, we are one big entity, and Guam can be that pearl, that shining light that the other islands to try to catch up to. We are always trying to catch up to Hawaii,” he says.
Voacolo says when his company first came to Guam in 2012, the industry had around 50 net metering customers. “Now we are probably closer to 1,200 or 1,300, and it is just a matter of three years. The renewable energy industry on Guam has grown significantly through the net metering program and the legislature, who supported its growth,” he says.
Voacolo adds that the industry has grown at a tremendous rate worldwide as well. “Along with that technology becoming more efficient, becoming more cost-friendly — the cost of renewable energy now and the cost of the main products has been going down. That’s based on the economies of scale globally, and that is really helping the industry,” he says.
Supporting programs, such as the investment business tax credit, also facilitated the growth, he says. “This is a 30% offset on the cost if you do a direct purchase. But it also helps residential customers in Guam. That is why the industry has grown significantly because of the different programs that the renewable energy industry offers; you have direct purchases, you have the power-purchase agreement. So even with people who don’t have the cash to put out for these systems, you can still benefit from solar energy,” he adds.
Joseph A. Rosario, business development manager and marketing director for MRE, says that although the net metering program played a big factor in local industry growth, a more aware consumer market on Guam also contributed to the success. He says the consumer has become more educated over the past three years or so.
“Prior to 2012, we had less than 50 [customers] — nobody knew what it was,” he says. “We see that curve leading toward renewable energy, and we really feel that there is no end to that because we feel that homeowners and business owners alike want to control their utility cost because that would allow them to budget accordingly,” Rosario says, adding that consumers are a lot smarter now than they were in the past. “They know that there is an alternative. That is renewable energy.”
Rosario adds, “For the past 15 years, there was no other voice in energy on island except the utility. So there was a point where whatever they say, everybody agrees. In the U.S., throughout the world, you see otherwise. You see renewable energy growing and the need for fossil fuel or non-renewable power plants decrease [and] the renewable increase. That could be says here on Guam,” he adds, “We could bring that into fruition. For this, education is key.”
Scott Hagen
In a September interview with the Marianas Business Journal, sister publication to Guam Business Magazine, Scott Hagen, president and general manager of Pacific Solar & Photovoltaics Inc., offered his outlook for the industry, which, he says, still has room for growth and improvement.
“Even though we’ve been at this now for about eight years, I can say with confidence that the solar industry on Guam is still pretty much in its infancy stage — well, maybe toddler stage by now,” he says. “As installers we are still learning what materials and techniques are best suited for Guam’s environment. Not everything is out-of-the-box or found on some shelf somewhere. We basically have to modify or fabricate pieces and parts best suited for Guam’s wind load requirements, salt spray, seismic zone and very wet environment.”
He adds that the industry is still learning what works best for the people of Guam and what is compatible with Guam’s evolving utility grid.
As for the sales and financing side of the solar industry, there is still much room for growth and improvement. “In the past three years or so, we’ve seen the introduction of commercial and residential power-purchase agreements, which allow building and homeowners to install solar on their roofs without any capital expense and get a discounted solar power bill. The power-purchase agreements are basically funded through thirdparty private financing,” he says.
He also mentioned the exponential growth of the industry, which has introduced new jobs and revenue. The Guam Contractors License Board listing includes about 20 licensees with a solar classification. Moreover, about 200 individuals work directly and indirectly with the solar industry.
“An estimated $300,000 or more in Gross Receipts Tax per year is deposited into GovGuam’s account from the solar industry. Add to that the GRT from all the stores and vendors, as well as the taxes the employee’s pay and then add to that the local spending they do every pay week. Let’s not forget to mention the cash that homeowners will be saving in their monthly power bills and what they will do with that cash,” he says.
Joseph T. Duenas
Joseph T. Duenas, chairman of the Consolidated Commission on Utilities, says that the Guam Power Authority’s plan involves “repowering generation, incorporating renewables in the mix, providing reliable service to customers at no increase in base rates.”
He says that there is a limit as to how much renewable energy sources can be hooked up to the grid. Islands and their isolated energy grids pose a challenge for communities to go 100% renewable energy.
“In some communities in the states, they are reaching 50% of renewable power, 70%, even 100%. These systems are hooked up to an interconnected large power grid. They are not isolated. Guam is an isolated system,” he says, adding that islands do not have the luxury of drawing power from a large stable grid.
With exponential growth comes challenges to the grid, according to GPA.
John J. Cruz
Noting the increase in numbers of net metering customers, John J. Cruz Jr., the strategic planning and operations research manager for GPA, says that GPA’s other customers are subsidizing more than 1,000 net metering customers by about $2.1 million a year.
He says that Guam’s net metering program has a 1,000-system cap wherein GPA and the Public Utilities Commission must deliberate on the program. “The power authority has petitioned PUC to change the net metering tariff to avoid cross-subsidies and charge net metering customers the costs for their use of the system,” he adds.
“GPA, the CCU, the Guam PUC, and the solar industry are discussing these issues at the moment,” Cruz says.
In terms of short-term and long-term energy outlook for Guam, Cruz says that over the next five years, GPA is committed to increasing utility-scale renewable energy from 26.75 MW of solar and wind energy to 120 MW.
The power authority is in the bid process for 60 MW of renewable energy for its next phase, he says.
“We are evaluating the Phase II bid on cost of the energy and system impact,” he says, adding other renewable energy initiatives, such as the partnership with the Department of the Navy and the power authority for the supply of eight parcels of Navy property for 40 MW of solar power.
“GPA will lease the land from Navy. The lease is considered paid when renewable energy is produced on those properties,” he says.
Cruz also says that GPA will release the Phase III Renewable Acquisition Bid this fiscal 2017, noting that Phase II and Phase III of the plan must be accompanied with energy storage systems to avoid the large power production swings observed by the NRG plant and net metering systems. “These systems must also provide reactive power support to the grid,” he says.
According to Cruz, energy storage systems will play a big part in renewable energy integration. “GPA is currently bidding out for up to 40 MW of energy storage to handle contingency and frequency regulating reserve. The Phase I ESS requires 24 MW of ESS nominally at Agana substation and 16 MW at the Talofofo substation. Additionally, GPA and Navy are conducting a $1.14 million renewable integration study,” he says.
According to Cruz, the Phase II Energy Storage System Bid “will likely be the result of this study including a system for energy shifting. He explained that “energy shifting will store renewable energy during the day for use during GPA’s peak at night.”
“GPA will rely on conventional generation to be there when the wind does not blow or the sunlight does not shine at night or is diminished by passing clouds or rain,” Cruz says.
GPA has plans to install 180 MW of new generation at Harmon near the Northern Wastewater Treatment Plant, he says.
“This generation will have the latest technologies to better support high penetrations of renewable energy. It will also be considerably more efficient than GPA’s existing generation. The new plants will have dual-fire capability using ultralow sulfur diesel or natural gas,” he says.
The proposed plant will be in compliance with U.S. EPA emission regulations.
