Table of Contents
Abstract
This project provides an insight to Jamaica’s energy situation and its electrical sector regarding the proposed foreign investment of renewable energy source (solar energy) through the company ERS alongside JPSco. It also entails the evaluation and academic review of the need and the success of implementing starting up of solar energy system that already exist. The implementation of foreign investment will alleviate some financial burden and bring profit through generation of solar energy. Since Jamaica is known for its tropical climate it’s a perfect host to generate solar energy.
It is more apparent that oil prices are increasing which the solar energy would be a great substitute it is the future’s renewable source. The research analyses the status of renewable energy in Jamaica taking into consideration the benefits, challenges and recommendations that the implementation of solar energy make bring to Jamaica using source of foreign financial investment from the ERS company. It also highlights the aid or partnership of good policy and support system between the public and private sector can help to address the barriers of implementing renewable source.
Introduction
Renewable energy is the next step towards future efficiency in energy. It can be defined as energy from a source that is not depleted when used, such as wind and solar energy. This project entails an assessment of the potential costs and benefit of foreign investment (from company ERS-Energy Renewable Sources Company.) in the United States in association with the Jamaican electric company JPSco. in the production of solar energy in Jamaica from the JPSco (Jamaica Public Service Cooperation. This project analyses the renewable source of solar energy which will be invested in through electric company in Jamaica.
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According to seia.org (2020) solar energy can be defined as energy from the sun that is converted to thermal or electrical energy. Solar energy is one of the most eco-friendly and abundant renewable energy. It has many uses such as providing light or a comfortable interior environment, generate electricity and heating water for domestic industrial and commercial use. There are three ways to generate solar energy through photovoltaics(generate electricity directly from sunlight through electric process and can power almost anything), concentrating solar power and solar heating and cooling (these are applications of using both heat generated by the sun to provide space or water heating or to run traditional electric turbines in the case of CSP(concentrating solar power) power plants.
Since solar energy can be used in many ways and is flexible and is in abundance it is a great foreign investment into Caribbean country such as Jamaica since it has one of the best tropical climate all year round to generate solar energy. Therefore, this is a great beneficial investment for foreign investor company and the country of Jamaica towards the future.
Literature Review
Since we want to investigate to see if the proposed foreign investment by company ERS will be beneficial to Jamaica can be assessed from the diagrams above. As stated by Jamaica Sustainable Energy RoadMap (2013) there was an assessment of seven zones of Jamaica had very strong solar resources by the global standard. Even during the coldest months at the weakest sites, the country’s monthly average GHI exceeds Germany (see Figure 3.2). During the month of April to August the GHI remains high and remains relatively high in March and September.
We can assess and say from the data that making the renewable foreign to invest in working with JPSco to install solar energy and its uses in the country is at high successful rate for majority of the time Jamaica has a warm climate to generate solar energy. This success could be reflected the same as for Barbados experience of renewable energy. It can also be stated that apart from electricity, it is also used in heating water and spaces that can be replaced by electric or gas. However solar hot water system is widely cost competitive globally with payback periods under two years in many cases. As reported in 2011, globally more than half of China’s solar water and space heating capacity reached 232 Gwhs-thermal.
As stated by Fig 3.3 in 2010, Jamaica had 20,000 solar water heating system installed out of 525,000 households and it generally increased from 7,000 system in 2005. The demand for solar systems and its water heating (grew from 2.9%to 4.2%) are on the rise in Jamaica and this is positive financial sign that the proposed foreign sector will not lose out with this investment overtime. Due to solar systems according to Solar Dynamics estimated 3-4 m^2 of solar systems that were collected meet hot water needs in households and saved 75,000-100,00MVh annually, this is enough of incentive towards Jamaica citizens to make an investment as consumers of solar systems. Additionally, Jamaica’s DNI level (which is a critical measurement of solar energy) are well suited for spreading the adoption of technology. As an example, Barbados can be taken into considerations of its success in demonstrating the benefits of developing solar water heating market in Jamaica.
Furthermore, as stated in most of the Jamaica’s territory appears to have an average GHI was at least 5 kWh/m^2/day which signalled the solar PV could be an electrician solution for rural communities and decentralized generation. The candidate for utility scale was due to the site’s existing transmission was at low losses related to wind and temperature. The variability of solar resource yearly could affect the possibility of the utility-scale solar PV, but it should not pose an issue for residential or small commercial capacity. Lastly, this study also appeared suitable for commercial solar PV and solar water heating installations especially for the summer months, the solar potential peaks for all study sites. After assessment it can be analysed that the foreign investment into Jamaica light company JPSco is a high potential of success with the economy.
Analysis
The discussion and evaluation of the problem based on the info u collected.
Assessment of the potential investment of solar energy into Jamaica seems like it has a bright future towards its development. An estimate realistic pricing is that the tariff would be $0.90 per kilowatt per hour + $3.00 per kilowatt (kW) which makes a typical 6,000 watts would cost $18,000 before the federal solar credit and $13,511 after federal solar credit as of 2020.There will be other expenses prices towards solar energy depending on the system size which will span from basic 5kW as indicated above to 11-17kW. There’s a table that shows an estimation below:
System size Average cost per watt Average cost (after tax credit)
5kW $3.00 $18,000
6-7kW $2.90 $17,400-$20,300
8-9kW $3.50 $28,000-$31,500
11-17kW $3.90 $42,900-$66300
Fig.1.5 These are the initial start-up prices of installation.
There will be additional cost after installation in your electric bill for solar heating among other domestic uses. Factors affecting installation cost will fall under:
- your home’s average utility cost.
- The amount of radiation or sun your solar panel receives yearly.
- Local rebate and incentive you may receive.
If not included in the package there may be separate additionally costs such as:
- Installation of the mounting the racks that holds the solar panels.
- Installing solar inverter which will be needed to convert direct current (DC) from the panels to alternating current (AC) you can use in your home.
- There may also be cost for inspection fees, local permit fees, and taxes on the solar panels.
As the foreign investor there will be challenges and risks such as currency risk that may hinder the impact or the continuation of service such risks are: a) currency risk which is nearly always present. b) economic recession-If there is an economic recession it is more of a higher risk in foreign markets. c) difference in market transactions- in countries such as Jamaica will take time to settle the transactions made. d) the availability of data- Since the transactions of the business venture take place between Jamaica and United States is not readily available in real time. e) if the foreign investment in the shares of domestic companies of JPSco. leads; may lead to higher transaction cost.
The overall cost for a fully functioning solar system may be pricy but will be cheaper in the long run for there is less energy being burned or used unlike electric current. Also, it may be tedious in getting all permits and everything together in installing the solar systems for each individual which is noted by the World Bank IRBD.IDA (2019). Also the sun and the cloud cover can have a negative impact on photovoltaic energy for it depends on the time of the day and visibility of the clouds hence, extended cloud cover at nights can reduce the ability of photovoltaic systems to generate power at night there may be limited energy storage and affect power output and solar heating.
Furthermore, depending on the household size of solar panel may vary to fully store enough energy that can sustain batteries in use; this may limit households’ usage or its capabilities in using it at all. There may be issues with batteries overtime but doing maintenance from JPSco and our new latest improved solar panels will reduce the battery issues you may have in the long run. Overtime there may be water leakages depending on the solar geysers and this within itself can affect solar heaters, but this can be resolved by regular check-ups and maintenance on site which may be additional cost depending on the type of policy implemented for each individual household.
Even though there are a lot of start-up expense in a proper functioning of solar panels its greatest payback is in long run on saving electricity bills.
There are a lot of benefits that come from the possible foreign investment from interaction of ERS and JPSco. Some of the general benefits are:
- There will be a capital inflow of domestic savings- This is like the potential capital that will be received into the country in sector of JPSco from ERS.
- Inflows of capital can have positive effects on balance of payment -based on the assessment of installation of solar panels it seems that it will have a high success rate which will lead to a positive balance of payment in the foreign direct investment portfolio within the country of Jamaica and also this will bring profit to the foreign economy of the United States from the ERS company.
Category Criteria Explanations
These are the areas of benefits of solar energy.
- Heated/Hot Water Since Jamaica is a hot climate this generates solar energy well. Persons that will install solar energy will receive constant hot water especially when there are clear skies with bright sun otherwise it may not be constant heating for solar heater to heat up the water.
- Savings on your investment There are more people turning towards renewable energy such as solar energy for the high increase in tariffs of electricity rates. For example, for May’s bill due increase in currency rate there was for an increase in electric bill. Solar energy will bring some relief in savings being made in the long run for solar energy after installation than the use of electricity for households.
- Payback period is shorter (is not returned in long run) One of monetary benefits of installation of solar energy is payback period. This is where the systems (solar heating) pays back with a few years after installation expenses by saving on electric bills. This may vary within households.
- Lighting/Electricity One of the best benefits of solar energy is that if there is a power outage you will still have electricity within the households. This covers most or all of your appliances that needs energy within households or companies. Solar photovoltaic adopters are also essential because power cuts as it is a backup otherwise from batteries. This renewable source is used for electricity in household as well as generate hot water among other domestic uses.
According to Caribbean Association of Investment Promotion Agencies (2016) from fig. 1 out of all the Caribbean countries Jamaica had the highest solar potential measurement of 1,876 MW. An analysis can be drawn that the electric demand for electricity will double by 2027 as the population and market size will increase and renewable energy is key in meeting futuristic demands. Hence, the generating solar energy through the installation of solar system will be necessary aid in assistance of foreign investment from ERS company to JPSco. The Caribbean solar isolation kWh/m^2/day which ranges from 2-9 with 2 been the smallest and 9 been the largest. Jamaica indicated to be7.0-7.5 kWh/m^2/day and this gives a good indication for the country.
Lastly, a representation of station in the parishes which showed the daily global radiation for the twelve stations, throughout the entire year from Jan-Dec all had high numbers apart from Alcan which had none in May, Aug and Sept. Overall Jamaica had a high average solar radiation of 5kWh/m^2/day and about 1,800 kWh yearly. This is also another positive indicator of the successful impact it will have on the country of Jamaica and the profitable business it will be for the ERS company in United States. This is one of the least amounts of renewable energy that emits no or less pollution into the atmosphere. So, having solar energy has environmental benefit.
Recommendations
Within the assessment of the project there are several recommendations or thing that can be improved for the outmost functionality of the solar energy systems operation between the foreign investor and Jamaica. In regards to developing marketing strategies for enhancing the use of Solar energy and their products. In regards to Chavan, A. (2013) Here are highlight areas of recommendations within the project:
- The solar panels products in which the provision of changing the power factor with the ability to conform the customer.
- With the consideration of renewable sector should account for any variations or disturbances there should be a standard modification of solar energy measurements that are set in the policy agreement between Jamaica and US and if there is breech there should be some sort of modification or maintenance to hold the policy.
- There should be a research and development department been helped funded to help in the growth and development of renewable energy such as solar energy. This can also be done through commercial banks. Emphasis on research can help to create cost effective technology for using solar energy panels. Awareness must be spread through these agencies of research and development.
- There should be more financial assistance such as grants are loans r instalment plan been given to individual household who are interested in purchasing solar panels. This can also be done through commercial banks and credit and loan facilities. These subsidies and incentive should be made aware to private residential owners and public by the government and the manufactures from the company.
- Since solar energy is a renewable energy that is eco-friendly there must be aim by the company to educate households on the uses of solar energy and there should be an informative forum and customer care from the company that can keep track of new product data or to help assist them on their daily usage with solar panel systems. Since the initial start up to set up solar panels may be discouraging, they should be informed on payback period and there should be sales and promotions on the products and their benefits.
- Since they may be tariffs issued due to shipment and since the products will come from US company ERS the government can help to subsidize or incentive the solar panels as best as possible.
- There must be contracted policy between companies that their must be regular maintenance and repairs for installation of these products. There must be specifications and standards there must also be warranties given to customers at least 3-5 years.
- Since it generated by radiation manufacturer from the company of ERS and JPSco should thoroughly investigate and analyse solar radiation of respective areas since it differs from place to place. There are examples in methodology that portrays that.
Conclusion
At the end of this research we can analyse and conclude that this potential project will have a great success rate and functionality within Jamaica for solar energy firstly, due to the tropical climate that Jamaica has. Secondly, the partnership between Jamaica (JPSco) and foreign investor (ERS company) has benefits and challenges but the overall there is more benefit towards both parties in this investment.
Thirdly, even though there are difficulties and recommendations this beneficial investment will serve towards the future since renewable energy is the way towards the future and solar energy is one of the top renewable sources especially towards tropical countries. This potential investment if places into motion will be reaping benefits even within the future.
There was an analysis on literature review and methodology that was done similar to the project to have some sort of statistical background to back up our aim to initialize solar energy within Jamaica. Based off the results there is a high success rate on the installment and generation of solar energy in Jamaica will be generated among all the parishes of at least an average rate. The overall assessment of this potential project is that this potential project would have a high rate in benefit towards partnership of ERS company and JPSco towards the individual households in Jamaica and also in public and private sectors.
Bibliography
- Caribbean Association of Investment Promotion Agencies (2016). Investing in the Renewable Energy Sector in the Caribbean. Retrieved from http://caipainvest.org/wp-content/uploads/2012/06/Renewable-Energy-Booklet-Caribbean-Website.pdf
- Chavan, A. (2013) Developing Marketing Strategies for Enhancing the Use of Solar Energy Products. 16_conclusion.pdf. Ch.8. (pp. 205-215). Retrieved from http://shodhganga.inflibnet.ac.in:8080/jspui/handle/10603/77658
- Jamaica Sustainable Energy Roadmap (2013). Pathways to an Affordable, Reliable, Low-Emission Electricity System. Retrieved from http://www.oas.org/en/sedi/dsd/Biodiversity/Sustainable_Cities/Sustainable_Communities/Events/SC%20Course%20Jamaica%202016/Module%20IV/Jamaica-Sustainable-Energy-Roadmap-InclAppendices-112013.pdf
- Solar Energy Industries Association (2020). Solar Energy. Retrieved from https://www.seia.org/initiatives/about-solar-energy
- World Bank IRBD.IDA (2019). Improving Energy Efficiency and Security in Jamaica. Retrieved from https://www.worldbank.org/en/results/2019/04/26/improving-energy-efficiency-and-security-in-jamaica
