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Op-Ed: It Wouldn’t Pay to Build a New Coal-Fired Plant in Jamaica

October 17, 2016

Stephen G. Smith for the Jamaica Observer:

The cost of building and then maintaining a coal-fired plant in Jamaica would be cost prohibitive for any investor.

Several costs have to be looked at which include: cost of converting or building of a coal-fired plant. Some of the more recent coal-fired plants that are proposed, or are under construction in developing nations, have seen the projects balloon in costs by double the amount projected just a few short years ago. Examples of these cost increases can be seen in India to Africa and beyond. Many developing nations that have current projects underway are now questioning the costs of these new coal-fired plants construction as compared to a cleaner method and more cost-effective way of energy production.

Jamaica does not have a coal supply like that of other developing nations, which means that coal or coke would have to be imported. This also adds to the cost of energy production and means that a coal-fired plant would have a higher per kWh cost than that of natural gas. By comparison the amount of coal it takes to generate power per kilowatt hour (kWh) is far greater than even petro products, and is far less efficient than other energy sources according to the US Energy Information Administration.

A coal-fired electrical plant in Jamaica is not cost-effective due to:

  1. costs of construction and maintaining a coal-fired plant
  2. increased cost associated with the importation of coal
  3. the cost of bauxite production and coal as an energy source for that production prices the products out of the market
  4. the fees or levies imposed by the Government of Jamaica add to the costs and again price the product out of the market

A coal-fired plant in Jamaica does nothing to end energy poverty seen across the island.

In a report published by the Institute for Energy Economics and Financial Analysis, they had this to say:

“Even large economies are having trouble making the coal-as-economy-builder model work. In India, electricity tariffs from coal-fired generation are too high for most households. In China, the high financial price of coal-powered electricity has been spread through its economic system. The price, however, is increasingly apparent in the economic blowback from environmental damage. Russia has similar problems and the US coal-fired electricity market becomes less and less competitive with other sources of energy as each day goes by.”

They concluded by stating: “The challenge to the coal industry globally, and to local economies that are built on coal, is [that] the energy economy alternatives did not exist when coal was king. As the price of solar and wind come down, countries that have for years grappled with volatility in the pricing of fossil fuels now have another way to fuel growth and manage their energy economies.”

The environmental and health impacts of both coal and red mud (a by-product of bauxite processing) are widely known. On this front, Jamaica cannot afford any more damage to the environment nor put at risk the health and safety of the people. The total costs associated with a coal-fired energy plant for the bauxite industry in Jamaica are too high any way that they are looked at.

Full column: Enviro concerns aside… coal-fired plants not profitable

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