college of business and hospitality management · 2015. 3. 16. · college of business and...

- Theme -

"Wholistic Synergy: Transformational Solutions through Research"

Presenter: Earl Green, Ph.D; PMP

Associate Professor

Contact: 876 505-9656

[email protected]

College of Business and Hospitality

Management

Exploiting Entrepreneurial Prospects in Energy Efficiency in Jamaica

mailto:[email protected]

Abstract

2

Prevailing market configurations and dynamics within the energy sector in Jamaica

suggest a disconnect between the current market construct and potential opportunities for

energy efficiency, which in many respects appears to be inhibiting entrepreneurial

proclivity within the sector. This is somewhat confounding as it means that business

opportunities are not being exploited which impairs the growth of the sector, but more

importantly, the longer term sustainable development of the economy. To better understand

this disconcerting phenomenon, the author investigates the influence of the prevailing

institutional and structural build out of the sector, and the extent to which market

orientation and awareness impact the uptake of business opportunities. The author

postulates an industry energy efficiency value chain, an enabler to better understanding the

value and immediacy of business opportunities within the sub-sector. The results suggest

that business opportunities in the energy sector in Jamaica may be better exploited if

foundational support is prioritized by way of policy modifications, culture shift, and

awareness. The author also provides a platform for additional discussion on future

implementation and research options.

STRUCTURE OF PRESENTATION

Copyright© 2015 College of Business & Hospitality Management, NCU 3

1. SECTORAL ANALYSIS OF ENERGY END USE

2. ANALYSIS OF FISCAL INCENTIVES

3. REVIEW OF REGULATORY AND INSTITUTIONAL FRAMEWORKS

4. THE FUTURE OF ENERGY IN JAMAICA

4

28%

31%

18%

9%

9%5%

Petroleum Consumption by Sector

Road & Rail Transport Electricity Generation Bauxite/Alumina Processing Aviation Shipping Residential

LARGE SERVICE PROVIDERS

5

Electricity Generation Sources in Jamaica as at February 2015

95%

3%

2%

Sources of Electricity Generation

Oil Hydro Wind

Source: MSTEM 2015

SECTORAL ANALYSIS OF ENERGY END USE


Public SectorYear

2011 2013 2014

Total Electricity Consumption (GWh) 411 477 475

% of Total National Electricity Consumption in

mentioned year10% 15% 16%

Source: MSTEM 2015

TOTAL ENERGY CONSUMPTION FOR PUBLIC SECTOR

THE INDUSTRIAL SECTOR


Sector Energy Cost as % of total manufacturing cost

Aluminium 60-70

Cement 35-40

Paper 22-25

Glass and Ceramics 20-25

Foundry 15-20

Textile 12-15

Chemicals 10-15

Engineering 8-10

ENERGY SHARE IN MANUFACTURING COST

Source: Manufacturers Association of Jamaica 2014

THE INDUSTRIAL SECTOR


0

5

10

15

20

25

30

35

40

Ele

ctri

city

Pri

ce (

US

$/k

Wh

)

Electricity Prices - Residential Consumers

REGIONAL AND EXTRA-REGIONAL ENERGY PRICES FOR RESIDENTIAL CUSTOMERS IN 2014

Source: US DOE 2015

Energy Efficiency Targets, Indicators, Rewards and

Penalties


Creating a Conducive Policy Environment for the

ESCO Industry


Key Factors Influencing the Development of En-business


Technical Capabilities

Pre-requisites

Ability to identify, develop, implement andsustain a cost effective energy efficiencyprogramme with participation from key andinfluential stakeholders.


Credit Worthiness

The ability to raise or arrange project based

financing from local commercial banks in a

structured and efficient manner.



Strategic Market Focus

Definition and presentation of a market.The public sector is normally given up tothe market.



Regulatory Aspect

An enabling legal framework that would

recognize clearly the status and specificities of

an energy performance contract, supported by a

justice system that can efficiently enforce

contractual agreements.



Standards Specifications

The presence of a neutral third-partyinstitution that certifies ESCO productsand/or services as an importantcommercial imperative.



Consumer Awareness

An appropriate institutional framework

with supporting programmes to facilitate a

good understanding of the energy

performance contracting concept.



The following represent three (3) additional challenges that could derail an ESCO development initiative if not strategically and effectively addressed.

False Reliance Provision of an alternate technical support mechanism.

Inadequate Institutional Support Use of Government facilities to anchor ESCO industry.

Structural and Political Barriers Government commitment to system that precludes unnecessary and inappropriate intervention.




Determination of Adequacyof Existing Legal andRegulatory Framework

20

# Acts & Regulations (Laws) Suitability of existing

Laws

Gap Recommended Treatment

1 Law of Contract Yes Currently there are no Model energy type Contracts

available or in use.

Preparation of Model energy type Contracts based on public

sector procurement policy.

2 Standards Act Yes Limited energy efficiency standards for equipment and

systems.

Bureau of Standards to develop, adopt, and/or adapt supporting

standards specifications.

3 Energy Efficiency Building Code

Yes Pending implementation for extended period. Key to

sector development.

Government to determine ownership and swiftly promulgate the Energy

Efficiency Building Code.

4 Energy Efficiency Building Code

Yes Pending implementation for extended period. Key to

energy sector development.

Government to determine ownership and swiftly promulgate the Energy

Efficiency Building Code.

5 Net Billing Regulation Yes None None

21

# Acts & Regulations (Laws) Suitability of existing Laws Gap Recommended Treatment

6 Custom Act Yes None None

7 GCT Act Yes None None

8 Petroleum Quality Act Yes None None

9 All Island Electric Licence 2001 Yes None None

10 Petroleum Quality Act Yes None None

11 Net Billing Regulations Yes None None

12 Natural Resources Conservation Authority (Air Quality)

Regulations

Yes None None

13 Bank of Jamaica Act Yes None None

THE FUTURE OF ENERGY IN JAMAICA - SOLUTIONS


Entrepreneurial Prospects – Energy EE Value

Chain for Jamaica

US$2.4 B

# 1

Entrepreneurial Prospects.docx

23


# 2

Energy performance contracting (EPC)

24


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