New $70m St Kitts solar plant is partnership, not takeover!

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By: Staff Writer

December 25, 2020

A new solar energy project for the St. Kitts and Nevis energy company, SKELEC, will not be a foreign takeover but rather is just a long term partnership with the provider and the government.

Anil Srivastava, chief executive officer of Leclanché- the company tasked with transforming the St Kitts energy company into a solar powered entity- told Caribbean Magazine Plus: “The long-term agreement between Leclanché, SKELEC and the government of St. Kitts and Nevis is a positive arrangement between the three parties that demonstrates the benefits of a public-private partnership. Each organization’s role is clearly defined, and all parties have much to gain through this collaboration.”

Anil Srivastava, chief executive officer of Leclanché

“The benefit to SKELEC is that it allows the government owned utility to increase capacity of renewable energy without significant upfront capital. For Leclanché, the agreement allows its investment to be amortized over a 20-25 year period (from construction through ongoing operation of the power project). Leclanché is incentivized to build and manage the project at peak capacity.”

“This novel arrangement of solar plus storage- or providing battery storage as a service- presents a cost-effective alternative to diesel generation as well as being environmentally sound. Over the life of the agreement, the project will generate considerable cost savings to SKELEC, the government and the people of St. Kitts and Nevis.”

The Government of St. Kitts and Nevis along with the state-owned St. Kitts Electric Company (SKELEC) and Leclanché, broke ground on a landmark solar generation and storage project that will provide between 30 percent to 35 percent of St. Kitts baseload energy needs for the next 20 to 25 years while reducing carbon dioxide emissions by more than 740,000 metric tons.

Mr Srivastava said that this project provides a “strong example” for other Caribbean and Central American countries to follow along their solar energy ambitions. He said: “This project provides a strong example for other Caribbean and Central American nations on how to create a public-private partnership which is a win-win for all parties. Clearly, the cost of a new energy plant may be prohibitive for some island and regional governments. So, focusing on the desired outcome – reliable and renewable energy production – should be the main consideration. As an important side note, Leclanché’s green power plant will allow for future additional sources of clean energy to be added into the mix to support St. Kitts’ goal of 100 percent renewable energy.”

This $70m microgrid project is being built by Leclanché, a world leading energy storage company, which will serve as the prime engineering, procurement and construction (EPC) contractor for this project.   Leclanché will provide a turnkey solar plus storage solution together with its main subcontractor Grupotec, headquartered in Valencia, Spain, an experienced engineering and construction firm and leader in the photovoltaic energy sector. Leclanché will own and operate the facility under its strategic build, own and operate model through its SOLEC Power Ltd subsidiary with partner Solrid Ltd.

Construction and start-up will take approximately 18 months. The project consists of a fully integrated 35.7 MW solar photovoltaic system (solar field) and a 14.8 MW / 45.7 MWh lithium-ion battery energy storage system (BESS) utilizing Leclanché’s proprietary energy management system software. Upon completion, the St. Kitts project will be the largest solar generation and energy storage system in the Caribbean and a model for other island nations worldwide. In its first year of operation, the system will generate approximately 61,300 MWh of electricity with a 41,500 metric ton reduction of CO2 emissions.

Dr Timothy Harris, prime minister of St. Kitts and Nevis, said about the project at the groundbreaking that it, “marks a significant milestone for our citizens, tourist economy, our broader business community and indeed the entire Caribbean region, despite the delays caused by COVID-19. This visionary project will help secure our energy independence, provide long-term price stability and reduce our reliance on diesel fuel.”

Dr Harris added: “The amount of carbon dioxide emissions we will reduce – nearly three quarters of a million metric tons over 20 years – is a significant demonstration of our strong policy for clean, renewable energy. We invite our Caribbean neighbors – and island communities around the world – to consider joining us in a commitment to a sustainable energy future for our children and generations to come,”

Mr Srivastava also said when asked about the returns his company is looking for: “SKELEC is investing its resources in full support of the contract, but as you point out, it is getting the benefit of a start-of-the-art, green power plant being built adjacent to its generating facility without spending significant upfront capital. The full capitalization of the project, a combination of debt and equity, is being provided by Leclanché and will cover the project’s capital costs and financing. Leclanché, not unlike most engineering, procurement and construction companies, does not disclose its costs or operating margins.”

He added: “We set out to create a model solar energy production and storage system here for SKELEC that generates long-term financial and environmental benefits for the utility and its customers without SKELEC having to make a costly up-front investment.”Together, we have designed a system whose construction and ongoing energy production will be paid for over time from the sale of clean and reliable solar energy. We are pleased to have accomplished both objectives while developing a project financeable by well-established institutional investors.”

The project is being built in St. Kitts’ Basseterre Valley on a 102-acre plot of government-owned land adjacent to the current SKELEC power station and next to the thriving capital city of Basseterre, the heart of the country’s economic region.

The land, which was once used for sugar cane production but has been idle for years, was leased to Leclanché by the Government of St. Kitts and Nevis under a 20-year agreement with an automatic five-year renewal. Environmental Impact Assessment and geotechnical analysis were successfully completed in 2019, demonstrating the renewable energy project will bring a positive impact to the Basseterre Valley. 

“SKELEC has been working closely with Leclanché for nearly two years now developing a state-of-the-art and highly sustainable energy production and storage system to serve our citizens,” said Honorable Shawn Richards, Deputy Prime Minister Public Infrastructure, Post and Urban Development. He added: “St. Kitts residents will enjoy energy price stability for a generation while benefitting from cleaner air and water.”

Clean, renewable energy produced from the solar + storage project will be sold to SKELEC under a 20-year power purchase agreement at flat rate over that entire period which is designed to provide a significant long-term savings to the projected diesel generation costs. 

How the Solar Generation and Storage System Works
Currently, tankers deliver diesel fuel to St. Kitts on a weekly basis, and the fuel is then burned in generators to produce all the nation’s electricity. This expensive process contributes to local pollution and global warming (each gallon of diesel generates 22 pounds of CO2 when burned). The solar and storage project should reduce diesel use by 30 percent to 35 percent, saving money and the environment.

Leclanché’s fully integrated system consists of three core components: the solar field, battery storage system and energy management system software.

The solar panels collect sunlight that is converted into electricity. The solar project on St. Kitts will be oversized, allowing a portion of that electricity to meet current electric demand on the island, and the remainder to charge the large-scale battery storage system to meet island demand after the sun sets. The battery system will also improve grid stability and serve as a back-up in case one of the diesel generators fails.

The batteries will be housed in 14 custom-designed enclosures near the main SKELEC power station and adjacent to the solar field. Additional equipment such as inverters, transformers and protection devices will ensure that the electricity from the new project is reliable and safe.

Leclanché’s energy management system software integrates all the different components of the system and coordinates the delivery of electricity to the grid according to SKELEC’s requirements. Once completed in the first half of 2022, the solar and storage system will replace over four million gallons of diesel per year, and the battery system will enable the remaining diesel generators to operate more efficiently.

Skelec/Lelanche site plan.

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