The wind that sweeps across southern Guam and light from 92 million miles away soon will be used to provide some of the power to Guam’s homes.
The Public Utilities Commission last Tuesday approved the Guam Power Authority’s plan to bring on another private company to build and operate a solar energy facility and a wind turbine facility in Talofofo.
The utility agency’s goal is to have about 80 megawatts of renewable energy as part of the island power system. The two contracts approved so far would provide 34.3 megawatts, through solar and wind.
Both contractors — Quantum Guam Power and Pacific Green Resources — are building in the same area of Talofofo.
The contracted companies will build and operate the facilities at their own expense and charge the power agency for each megawatt-hour of power they generate for the islandwide system.
A new system of feeder lines would connect those facilities to the power grid at the Talofofo substation.
Fred Horecky, the commission’s legal counsel, said the PUC reviewed the contracts and found them to be in the best interest of ratepayers.
“All in all I think it is a positive thing,” Horecky said.
Power agency officials have said renewable energy generally makes up only a small percentage of a power system because it’s an inconsistent power provider. It’s an attractive basket, but it’s unwise to put all of your eggs in it.
The wind can stop blowing and clouds can block the sun, which means something else has to make up the power gap.
Renewable energy sources are expected to bring at least some cost relief to ratepayers, according to the commission.
Quantum Guam Power is the company responsible for building 20 megawatts of solar energy under its 25-year contract which begins this year. Its contract was approved last summer.
Pacific Green Resources will provide 5.04 megawatts of solar energy and 9.34 megawatts of wind energy under it’s 20-year contract, which starts in 2015.
Its contract was approved Tuesday.
Combined, the two companies will provide less energy than a single one of the oil-burning baseload generators at Cabras Island, which are rated at 60 megawatts.
Once the renewable energy is in place it will save about $6.3 million a year in fuel costs, Joaquin Flores, general manager for GPA, said.
The power agency last fiscal year spent $293.45 million on fuel oil for its power plants, which means the solar and wind farms would save only 2 percent of the agency’s annual fuel costs.
Power officials have said switching the baseload generators to natural gas instead of fuel oil will have the biggest impact and provide the most savings for customers.
The fuel surcharge makes up 70 percent of monthly power bills, and skyrocketing fuel prices are the main reason for the high price of power.
Both renewable energy companies will be responsible to pay for the building and maintenance of their sites, as mandated by the PUC.
“GPA will not incur any cost for these projects,” Horecky said.
Before the projects can begin, both companies will have to receive land permits from private landowners in the area and the Department of Land Management, according to Horecky.
“I believe they have already begun that process,” he said.
Quantum Guam Power has applied for tax breaks under the island’s qualifying certificate program, according to company officials.
Under Guam law, companies that provide renewable energy can apply for tax breaks, and the law gives them the highest priority for receiving those tax breaks, ahead of all other businesses and industries.
They can apply for a 75 percent rebate of income taxes for 20 years and a 100 percent abatement of property taxes for 10 years.
Dirk Straussfeld, chief technical officer for Quantum Utility Generation, said Quantum Guam applied for tax breaks because of the unexpected high cost of connecting its solar facility to the islandwide power system.
It will cost $8.7 million to install high-voltage underground transmission lines and to build a new substation in the Dandan area of Inarajan, he said.
The company’s application to the Guam Economic Development Authority, which processes and monitors qualifying certificates, asks for the full tax breaks allowed by law.
“Our goal is to ask for QC support in order to help us pay the additional cost of the transmission infrastructure we will build and assign to GPA when the line is energized, at no cost (to the power agency),” Straussfeld said.
He said the company’s agreement requires the power agency to pay $196 for every megawatt-hour of power it produces. That cost will increase by half of a percent each year, he said.
The contracting of the two power providers is the first phase of the power agency’s plan to have about 80 megawatts of renewable energy on Guam.
The power agency in May will solicit requests for proposals for another 45 megawatts of renewable energy.
GPA officials said they are considering the use of cold seawater to cool buildings and dramatically reduce their power consumption.
Makai Ocean Engineering was hired by GPA to study the viability of this system on Guam, and the company found the tourism district in Tumon Bay was a prime candidate.