Energy Planning, Energy Planning, Methodology and Methodology and

Approaches:Approaches:Jamaica’s ExperienceJamaica’s Experience

““Latin American and Caribbean Latin American and Caribbean Energy Forecast – Energy Energy Forecast – Energy

Scenarios at 2032”Scenarios at 2032”OLADE Sub-regional WorkshopOLADE Sub-regional Workshop

February 19, 2009February 19, 2009

Conroy WatsonConroy WatsonSenior DirectorSenior Director

Ministry of Energy, JamaicaMinistry of Energy, Jamaica

February 2009 Ministry of Energy, Jamaica, W.I. 2

OutlineOutline

• Introduction• World Oil Market• Jamaica’s Energy Profile• Market Structure• Petroleum Market• Electricity Sector• Energy Modeling, Planning & Policy Guidelines• Energy Conservation and Efficiency• Way Forward• Concluding Remarks

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IntroductionIntroduction

• Jamaica is an oil importing developing country

• Petroleum imports satisfy more than 90% of the country’s energy needs

• Highly susceptible to global market conditions

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World Oil MarketWorld Oil Market

• Influences on global economy– Emerging markets (China, India)– Reserves

• Rate of new discoveries– Volatility of oil prices

• Market speculation• Geopolitical developments• Changes in production strategies• Uncertainty in supplies

• Crude and product prices– Crude prices traded at US$147/bls in 2008

• Averaged US$99.67/bls– Price decline started at the end of 2008– False sense of security

February 2009 Ministry of Energy, Jamaica, W.I. 5

SUPPLYSUPPLY REFINERYREFINERYSECTORALSECTORAL

CONSUMPTIONCONSUMPTIONEND-USEEND-USE

DEMANDDEMAND

VENEZUELA

MEXICO

ECUADOR

NIGERIA

T & T

OPEN MARKET

VENEZUELA

MEXICO

ECUADOR

NIGERIA

T & T

OPEN MARKET

JAMAICAJAMAICA

AGRIAGRI

BAUXITE / BAUXITE / ALUMINAALUMINA

ELECTRICITYELECTRICITY

MANUFACTUREMANUFACTURE

PUBLIC SERVICEPUBLIC SERVICE

RESIDENTIALRESIDENTIAL

TOURISMTOURISM

TRANSPORTTRANSPORT

DISTRIBUTEDISTRIBUTE

DIST.DIST.

LIGHTINGLIGHTING

HEATINGHEATING

COOKINGCOOKING

REFRIGERATEREFRIGERATE

A/CA/C

MOTOR / MOTOR / ENGINE ENGINE POWERPOWER

STEAMSTEAM

STORE&

REFINE

STORE&

REFINE

Jamaica’s Energy ProfileJamaica’s Energy Profile

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Market StructureMarket Structure• Petroleum

– Liberalized petroleum market– State owned refinery– 10 marketing companies

• 1 state owned marketing company• 3 multinationals• 6 Local marketing companies (private)

– Approx. 300 service stations island-wide

• Electricity– Largest supplier: JPS– Electricity generation is done competitively– Single distributor– Three Independent Power Producers– Other producers

• Bauxite/Alumina companies• Caribbean Cement Company Ltd• Sugar Factories

Petroleum MarketPetroleum MarketDrill & Process

Distribution

Bauxite & Mining

Electricity Generation

Transportation

February 2009 Ministry of Energy, Jamaica, W.I. 8

Imports and ConsumptionImports and Consumption

2006 2007 2008** 2010** 2020**

Oil import bill (US$ million)

1,838 2,0082,700…

2,9002,100 3,300

Oil imports (million bls)

31 30 28 to 29 30 33

Total Energy Consumption (million boe)

28 28 26 27 28 ...32

** Assumptions for projections: (1) conservation and efficiency efforts successful and continuous (2) alternative energy projects developed (ethanol, wind, bio-diesel, coal, CNG, Petcoke) (3) oil price 2010: US$70/bls (4) oil price 2020: US$100/bls

February 2009 Ministry of Energy, Jamaica, W.I. 9

Sectoral ConsumptionSectoral Consumption

Electricity SectorElectricity Sector

Transmission

Generation = JPS + IPPS

DistributionTransmission

Generation = JPS + IPPS

Distribution

February 2009 Ministry of Energy, Jamaica, W.I. 11

Net Generation TrendsNet Generation Trends

2006 2007 2008 2010** 2020**

Net Generation (‘000 MWh)

4,043 4,079 4,133 4,270 5,340

Losses (% of net) 23 22 24 20 18

IPP Grid Contribution (%)

33 31 30 30 30

Renewable Energy Grid Contribution (%)

5 5 5 ** 10 15

Note: ** Projections guided by trends and Acres ReportSource: JPS and Acres Management Consulting

February 2009 Ministry of Energy, Jamaica, W.I. 12

Electricity Sector PrioritiesElectricity Sector Priorities• Sector monitored by the regulator (O.U.R.)

– JPS compliance– Recommendations from All Island Black-out Studies– Established standards and directives from the regulator.– Implementation of National Integrated Electricity

Expansion Plan and Efficiency Study for Jamaica (Acres Report)

– Least Cost Expansion Plan– Tariff reviews for electricity rates– Electricity License

• Electricity Supply Strategy & Planning including renewable energy

• Examine impact of energy efficiency and conservation

February 2009 Ministry of Energy, Jamaica, W.I. 13

Electricity Sector Priorities cont’dElectricity Sector Priorities cont’d

• Generation– Establish and implement a programme to

monitor the efficiency of power generating units

– Fuel use and power generation

• Transmission• Distribution• Assess Infrastructure Performance• Merit Order Dispatch• Shifts in peak demand

Energy Modeling,Energy Modeling, Planning Planning

and and Policy Guidelines Policy Guidelines

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MODELING

MODELING

LEGISLATIVE FRAMEWORK

LEGISLATIVE FRAMEWORK

POLICYPOLICY

Supporting Structures

ENERGY

E = MC2

February 2009 Ministry of Energy, Jamaica, W.I. 16

Energy Policy (Green Paper)Energy Policy (Green Paper)• Elements of Energy Green Paper 2006 – 2020

– Energy supply and security – Petroleum Industry– Electricity Sector– Rural Electrification Programme– Transportation Sector– Development of Renewable Energy Resources– Energy Conservation and Efficiency– Energy Fund– Institutional Arrangement

• Green Paper addenda– Energy Conservation and Efficiency Policy: 2008-2022– Bio-fuels Policy

• Ethanol Policy– Electricity Policy– Net Metering Policy– Carbon Trading Policy

February 2009 Ministry of Energy, Jamaica, W.I. 17

ModelingModeling• ENPEP (Energy and Power Evaluation Programme)

– Utilizing the BALANCE Module of ENPEP– Training & workshop– Stakeholder consultations/collaboration

• JPS, NEPA, PCJ, JBI, Petrojam, SIRI…– Petroleum market biased– Energy Sector Strategy and Development Plan Report

• WASP-IV (Wien Automatic System Planning Package)

– Training– Electricity sector biased– Generation planning

• T21 Model (Threshold 21)

– Training and workshop– Integrated development model– Examines the economy, society and environment

February 2009 Ministry of Energy, Jamaica, W.I. 18

What is ENPEP-Balance?What is ENPEP-Balance?

• One of approximately 8-10 other models by Argonne

• ENPEP-BALANCE is a nonlinear equilibrium model

• Simulation approach allows ENPEP-Balance to determine the response of various segments of the energy system

• Relies on a decentralized decision-making process• Creates an equilibrium model represented by the energy

network.

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ENPEP Energy System EquilibriumENPEP Energy System Equilibrium

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To simulate the energy market and determine the energy supply and

demand balance over a long-term period of up to 75 years.

For Jamaica’s case, the period

2005 – 2030 is used.

Main Objective of ENPEP ModuleMain Objective of ENPEP Module

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Major CharacteristicsMajor Characteristics• Applications

– Energy policy analysis– Energy market projections– Natural gas market analysis– Carbon emissions projections– Projections of criteria pollutants (SO2, NOX, etc.)– Carbon mitigation studies

• ENPEP features– price-elastic demands– fully integrated economic cost calculations– enhanced error reporting– visible structure created

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Jamaica Energy NetworkJamaica Energy Network

A complete energy network for a country or region may consist of a large number of sectoral energy networks. Jamaica’s network topology includes various sectors*:

*The Ministry established an “ENPEP Working Committee” to modify the existing network and present a network topology that is highly reflective of existing energy systems.

• Refinery • Oil Distribution• Electricity Generation• Distribution• Imports• Sugar Industry

• Bauxite Industry• Domestic Energy Market• Residential Consumers

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Electricity NetworkElectricity Network

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Sugar Industry NetworkSugar Industry Network

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Refinery NetworkRefinery Network

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Limitations of the ModelLimitations of the Model• Solution generated year-by-year and is said to be

“myopic”, which for short term oriented energy market may actually be an advantage.

• Demand-driven

• Not set up with sufficient detail

• Can be insensitive to price

• Ease of use in the Windows interface conceals the sub-models.

“ENPEP-Balance is a tool – and a tool should be used wisely”

February 2009 Ministry of Energy, Jamaica, W.I. 27

ENPEP SummaryENPEP Summary• Framework for developing institutional capacity

– government and non-government organizations– agencies

• Model is adaptable and can be viewed as a planning tool– developing the country’s long-run energy strategy– generating scenarios according to user specifications– necessary to informing policy decisions.

• Jamaica’s case study created an appropriate energy network– Analyses both energy and environmental systems

Energy ConservationEnergy Conservation and Efficiency and Efficiency

Projects and Activities

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HotelsHotels

• Energy audits

• Lighting efficiency improvement

• A/C efficiency improvement • Steam system efficiency

improvement• Power factor correction• Solar water heater installation

IndustryIndustry

• Use of cogeneration systems• Use of high efficiency electric

motors and variable speed drives

• Power factor correction• Use of high efficiency industrial

lamps• Steam system efficiency

improvement

Public SectorPublic Sector

• Energy audits• Implementation of energy

efficiency measures in hospitals and schools

• NWC (approx. 50% of the public sector consumption)– Installation of energy

efficient pumps– Power factor correction

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Projects and Activities cont’dProjects and Activities cont’d

• Energy conservation programmes

• Public education programmes– Turning off lights when not in

use

– Water saving measures

– Proper use of refrigerators and freezers

• Energy saving cookware and cooking tips

• Compact fluorescent bulbs

• Use of solar water heaters

ResidentialResidential TransportationTransportation

• Promotion of car pooling where applicable

• Public education programmes– Driving to achieve maximum

fuel efficiency

• Rehabilitation of the railway system

• Introduction of bio-fuels

WayWayForwardForward

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IncentivesIncentives• Collaboration with other Ministries and agencies

– Ministry of Finance and the Public Service– Ministry of Transport and Works– Bureau of Standards– NEPA

• Expansion in tax exempted items– Renewable energy systems

• Solar water heaters, biogas plants and generators…– Energy efficient equipment and devices

• CFL bulbs, energy management and control systems…– Transport Sector initiatives

• Flexi-fuel vehicles• Hydrogen powered vehicles• Bio-diesel vehicles

February 2009 Ministry of Energy, Jamaica, W.I. 33

Energy Sector InvestmentEnergy Sector Investment

• Renewable energy equipment manufacturing– Solar panels

• Hydro stations• Wind farms• Bio-fuels production & distribution• Sustainable energy programs

• Nuclear Energy?– Small Nuclear Plants existing– Waste Disposal (an issue)

February 2009 Ministry of Energy, Jamaica, W.I. 34

Energy Sector Investment cont’dEnergy Sector Investment cont’d

Refinery Upgrade ProgramRefinery Upgrade Program

Oil and Gas ExplorationOil and Gas Exploration

• Expansion of the plant capacity/throughput from 35,000 to 50,000 barrels per day

• Upgrade to address some challenges facing the refinery– Old Technology: Hydro-

skimming– New product specification – Inability to supply all local

market demand

Facilitation of Natural Gas Supplies

Facilitation of Natural Gas Supplies

• LNG

• CNG

• Blocks to be explored

• Companies involved

• Existing agreements (production sharing)

February 2009 Ministry of Energy, Jamaica, W.I. 35

Legislative and Regulatory FrameworkLegislative and Regulatory Framework

• The Office of Utilities Regulation Act

• Electricity– All-island Electricity Licence– Electricity Lighting Act

• Petroleum acts and regulation– Petroleum Quality Control– Petroleum and Oil Fuel (Landing & Storage)– Weight and Measures

February 2009 Ministry of Energy, Jamaica, W.I. 36

Environmental ConsiderationsEnvironmental Considerations• Waste disposal

– Conversion of waste to energy

• Promotion of renewable energy– Less toxic– Reduced threat of water

quality– Decline in emission

levels (C02, NOX…)– Carbon credits

• Carbon tax• Emission levies

February 2009 Ministry of Energy, Jamaica, W.I. 37

Concluding RemarksConcluding Remarks

• Energy security crucial

• Conservation and efficiency initiatives are key

• Goals can be met with timely and requisite investment

February 2009 Ministry of Energy, Jamaica, W.I. 38

Ministry of Energywww.men.gov.jm

Petroleum Corporation of Jamaicawww.pcj.com

OLADEwww.olade.org.ec

Argonne National Laboratorywww.dis.anl.gov

International Atomic Energy Agencywww.iaea.org

For Further InformationFor Further Information

Package

Contact Info:Contact Info:

The Ministry of Energy36 Trafalgar Road,Kingston 5, Jamaica, W.I.Tel. #: (876) 929-8990-9Fax #: (876) 968-2082

Email: cwatson@mct.gov.jm

Thank You… The EndThank You… The End