Wed. May 22nd, 2019

New PPA deal offers major price drop

Engie EPS exectives seated with Minister of Public Infrastructure, Industries, and Commerce Charles Obichang (rightmost) during the leadership meeting held at the Old Era Kelulau Building in Koror on December 20.

In response to Senate questioning, PPUC and the international renewable-energy producer Engie EPS have restructured their agreement with changes that they claim will save PPUC millions of dollars.

The Senate had expressed concerns about whether Palau would be able to capitalize on the falling price of solar energy equipment.

As a result, “we looked at that as a challenge,” explained Engie EPS CEO Carlalberto Guglielminotti. “The Senate comments were fair,” Engie EPS General Manager Stefano Terranova added, “especially about how can we benefit from the continued fall of prices for solar.” However, the PPA project to go 45% renewable all at once had no room for any price reduction. So PPUC and Engie EPS determined to restructure their entire PPA agreement.

The new agreement presented at Thursday’s 5:00 Leadership Meeting will change Engie EPS installation into two phases. This way, the cheaper future price of components will turn into a lower tariff to PPUC. The new PPA contract will reduce initial tariff rate, and guarantee a 10% reduction in tariff for the second “phase” of solar installation, while still achieving Palau’s goal of 45% renewable generation before 2025.

Engie EPS presentation to leadership involved further emphasis and explanation of the economic benefits of “Microgrid” installation in Palau. Engie EPS will not only install solar panels, but also batteries to help “stabilize” the energy from those solar panels and extend their function into the nighttime. Additionally, Engie EPS will install separate battery storage systems at diesel generator facilities in Malakal and Aimeliik, to stabilize those operations and replace wasteful “spinning reserves.”

Overall, Engie EPS presented, this microgrid project will replace diesel generation with lower-cost solar, but also upgrade existing diesel generation facilities and improve the PPUC electric grid.

PPUC has previously presented that the PPA will save millions of dollars compared to their current operations. These savings come from lower cost of power compared to diesel generation, reduced maintenance costs related to diesel generators, and elimination of costly grid upgrades which will now be done by Engie EPS. The new, cheaper tariff system proposed to Leadership will yield even greater savings.

With regards to recent news about the drastic drop in crude oil and gas market, Engie EPS expressed that indeed price of crude oil will fluctuate as market trend over the years have shown.  Those trends also show that crude oil price won’t stay low and will continue to rise.  PPUC with the PPA rates will save estimated millions throughout the 30-year term.

It is yet to be seen whether Senators will now join the Executive Branch, House of Delegates, State Governments, Council of Chiefs, international experts, and others in support of PPUC. (PR)

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