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PostPosted: Sat May 28, 2011 6:20 pm 
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Joined: Tue Jan 01, 2008 6:01 pm
Posts: 127
There's an article in this week's NewsLink newspaper, also available online at http://www.newslinksite.com/index.php?option=com_k2&view=item&id=1568:ccc-group-awarded-contract-for-nevis-geothermal-development-plant&Itemid=2

If the link expires, you might be able to search for it on the main site...

http://www.newslinksite.com/

Sounds positive...

NN


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PostPosted: Sun Jun 05, 2011 1:57 pm 

Joined: Sun Jan 31, 2010 1:15 pm
Posts: 97
Nevis Nice wrote:
his phase will yield a 10 MW plant, and trigger the US$55MM drawdown of the guaranteed loan. US$15MM will go toward the electrical interconnection of the geothermal plant with the Nevlec system at Prospect. US$40MM will go toward drilling two more production wells and an injection well.


That's an interesting setup. If I understand correctly, WIP only invests $8M to get all the benefits of a $60M project. I'm not saying $8M is nothing but somehow the figures don't seem to be right. Even if everything goes just fine, NIA doesn't seem to be compensated for the huge risk it's taking. I've read somewhere that NIA gets 5% royalty from WIP for all sold electricity. When taking the majority of the risk, that number sounds low.
Of course, overall it's a project what the whole island benefits from and that should be put into the equation too.
If the unthinkable happen and say the drills cause earthquakes (like they did in Switzerland) and can't be used at all, NIA and Nevisians will hold the bill, WIP's loss would be limited to it's $8M investment.
I really want this project to happen, but probably months before election is not the right time to negotiate such complex and long lasting transaction.


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PostPosted: Mon Jun 06, 2011 7:54 am 

Joined: Tue Jan 29, 2008 6:03 pm
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Phase 1 is to include the build of an 8.5 MG plant. From what little we've all read about the project, the NIA does not start receiving it's 5% royalties until at least 10 MG of power is being produced. How does an 8.5 MG plant do that? Read again through Nevis' Nice attachment. The first paragraph indicates a 10 MG plant. Midway down the doc, the 8.5 MG plant is noted. So again, there are far too many unanswered questions. And our NIA is not and has not at any point provided real facts on this potential project. Want to win over the population? Have a public forum and answer these questions. That is if you have real answers......


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PostPosted: Mon Jun 06, 2011 7:58 am 

Joined: Sun Jan 31, 2010 1:15 pm
Posts: 97
uncleknuckle wrote:
Phase 1 is to include the build of an 8.5 MG plant. From what little we've all read about the project, the NIA does not start receiving it's 5% royalties until at least 10 MG of power is being produced. How does an 8.5 MG plant do that? Read again through Nevis' Nice attachment. The first paragraph indicates a 10 MG plant. Midway down the doc, the 8.5 MG plant is noted. So again, there are far too many unanswered questions. And our NIA is not and has not at any point provided real facts on this potential project. Want to win over the population? Have a public forum and answer these questions. That is if you have real answers......


Probably best is to wait until election is over, it's too politicized now. Just look at the new billboards. Hopefully nothing irrevocable gets signed until than.


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PostPosted: Mon Jun 06, 2011 2:06 pm 
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I was doing a little idle "figgerin'" the other day. My April Nevlec bill worked out to EC$0.92/kWh. EC$0.44 of that was for the Fuel Adjustment Charge. I've heard it's higher this month, but I haven't seem my bill yet. The FAC doesn't contain all fuel costs, because some are included in the base cost of electricity. I don't know how much, so let's assume that the total cost of fuel represents 50% of the total cost of electricity, and assume EC$1.00/kWh total.

The geothermal plant is expected to reduce fuel costs. It won't reduce distribution costs, or admin and general costs at all. In fact they will likely go up a bit due to the project. It might reduce costs at the Prospect power plant a bit, but I imagine that Nevlec is planning to keep staff on there and keep the units in operational standby in case of need. So we should assume that savings will only come from reducing the amount of diesel fuel purchased, i.e., a reduction of the FAC.

The NRP erected a new billboard the other day, stating that the geothermal project "will reduce Nevisians' electric bills by 40%." The 40% figure was also mentioned in the article I referenced in an earlier post. If that 40% comes out of the FAC, the FAC would have to be reduced by 80%, leaving only 20% of the FAC to pay WIP for the geothermal energy. 20% of EC$0.50 is EC$0.10 for WIP.

Continuing to "figger", assuming a 90% capacity factor for the 8.5 MW plant, a 6% cost of capital, and geo-plant O&M costs at 20% of capital costs (all conservative estimates), plus a modest 10% profit for WIP, I come up with EC$0.20/kWh to cover the bare minimums, twice the $0.10/kWh left after the promised cost reductions.

Maybe I'm off base, but it appears that an overall 40% reduction in energy costs isn't possible.

It sure would be nice to see some REAL numbers from the NIA and WIP!!!

NN


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