Time for Virgin Islands to Transfer Power, to Renewables

This blog was written by Simon Mahan, former Energy Policy Manager at the Southern Alliance for Clean Energy.

Guest Blog | March 30, 2017 | Energy Policy, Solar, Wind

March 31st marks the Virgin Island’s “Transfer Day”. One hundred years ago, the Virgin Islands transferred from Danish power to the United States of America. Now it’s time for another power transition: to renewable energy.

Recently, I visited St. Croix, the largest of the three U.S. Virgin Islands. Amidst the backdrop of pristine beaches, coral reefs and palm trees, the Virgin Islands still relies heavily on expensive fossil fuels to generate electricity. According to the National Renewable Energy Lab, “Like many island nations, the USVI is heavily reliant on fossil fuels for electricity generation, leaving it vulnerable to global oil price fluctuations that directly impact the cost of electricity.” NREL’s assessment is a bit of an understatement. For decades, St. Croix hosted the Hovensa oil refinery on its southern coast. At the time, it was the third largest U.S. oil refinery, and the largest private employer in the territory. In 2012, the refinery abruptly shut down.  The refinery had been providing below-market priced fuel oil for the islands’ electric generation. Electric rates on the islands are exceptionally high, thanks to the high cost of the imported fossil fuels that have replaced the refinery’s fuel.

The current electric rate for USVI residential customers is about $0.33 per kilowatt hour (kWh) in the islands, compared to an average $0.13 per kWh on the mainland. Virgin Islanders are taking note of the high cost of electricity. Dan Boyd from Lovango Cay recently penned an article about how his off-grid solar/wind/battery system has saved him about $9,000, compared to what his electric bills would have been without the clean energy system. In 2014, the Virgin Island Water and Power Authority (WAPA) spent over $230 million on fuel costs alone, something Mr. Boyd doesn’t have to worry about.

St. Croix has a long history with renewable energy. Dotted all around the island are remnants of Dutch windmills that were used for sugar milling centuries ago, the primary suppliers for Cruzan rum. And trade winds filled the sails of Christopher Columbus’ landing party in 1493. Now, a number of solar power installations and a few small wind turbines generate local electricity. The Virgin Islands has a goal of generating 30% of peak capacity from renewable energy by 2025. But the technological advancements and plummeting prices of renewables could allow the islands to more rapidly incorporate substantial quantities of clean power.

Research from NREL shows exceptionally good wind speeds for utility-scale wind turbines along the southern coast of St. Croix – including near the old oil refinery. At 80 meter hub heights, new wind speed maps suggest 7.5 meter-per-second wind speeds and newer wind turbines could potentially achieve annual capacity factors in excess of 45% in those wind regimes. Average winds tend to pick up mid-day, and tend to be quite strong throughout the summertime – essential times to serve peak loads. The trade winds are strong enough and predictable enough that many of the homes, churches, schools and businesses don’t even have (or need) air conditioning. According to NREL, wind power prices on St. Croix could be roughly $0.08/kWh or less. In other words, St. Croix wind power could be cheaper than even the current fuel cost alone. That’s why other islands like Puerto Rico and Hawaii already incorporate significant quantities of wind power.

WAPA signed contracts for 18 megawatts (MW) of solar power, including 8 MW on St. Thomas and 10 MW on St. Croix. For St. Croix, the solar facilities can provide approximately 20% of the island’s peak load of 55 MW. The contracts have a weighted average cost of approximately $0.17/kWh. The contracts were executed in 2012 – and since that time, solar power prices have plummeted by at least 50%. In Hawaii (another island power grid), Maui Electric just signed a deal for a solar plus battery storage system at $0.11/kWh. The 28 MW solar system with a 20 MW, 100 MWh battery highlights the lower solar power prices as well as the decreasing prices of batteries.

There’s already a high level of self-sufficiency in St. Croix – many homes rely almost entirely on rainwater cisterns for their freshwater supply. As batteries and residential renewable energy become cheaper, many residents may willfully follow Mr. Boyd’s footsteps, and begin to fully opt-out of the Virgin Island electric system by going off grid. But for economies of scale, utility-scale renewables and large batteries can pack a big economic punch. Lower systemwide power prices can help reduce electric bills, but also attract new companies seeking paradise on a dime. Meanwhile, brandishing ecological credentials could improve the islands’ largest industry: tourism. In the Netherlands, tourists readily pay for windmill and wind farm excursions.

As the Virgin Islands celebrate the 100th anniversary of Transfer Day, let’s hope it won’t take another 100 years for renewable energy.

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