Shell North America has submitted an application to Utilities Regulation and Competition Authority (URCA) for an independent power provider (IPP) license in preparation to produce baseload power for New Providence from Bahamas Power and Light’s (BPL) Clifton Pier power plant.
A press statement released by Shell on the matter said the submission was made to URCA on Friday. This comes as Shell continues to finalize contracts with BPL for the purchase of the Clifton power plant and BPL’s eventual move to then purchase power from Shell.
While there have yet to be any announcements on signed contracts or finalized agreements, Shell noted that the submission of the IPP application reveals that Shell, BPL and the government have reached “a joint understanding” about the future of liquefied natural gas (LNG) power production, expected to come on stream by 2022; and how it can “bring economic and environmental benefits to The Bahamas”.
“This application to The Bahamas’ Utilities Regulation and Competition Authority (URCA) for an IPP license is key for Shell to become an operator for base power generation in New Providence,” Shell’s statement noted.
“This follows months of negotiation of definitive agreements, including the structure of the deal, the power purchase agreement, the asset purchase agreement and the heads of agreement with the government.
“This is the first time a company has submitted an application for an IPP license for baseload power generation in The Bahamas. This application has been submitted under the Electricity Act and other permitting applications are well underway (e.g. environmental impact assessment).”
Shell’s General Manager of Market Development Markus Hector said the application is another step in finalizing the partnership with BPL.
“We’re pleased and excited to reach this milestone, another key step towards solidifying the Shell-BPL partnership as we move forward with our world-class LNG-to-power project,” said Hector.
“Shell is ready and willing to work with the Bahamas’ Utilities Regulation and Competition Authority (URCA) to advance this application, so we can continue to move this project forward as quickly as possible.
“Now that we have submitted our application, we look forward to working further with the government on the heads of agreement, with an eye on finalizing this and other agreements.”
Hector told media recently that Shell and BPL will have completed deals in a matter of weeks, adding that the coronavirus (COVID-19) pandemic had caused a delay in signing timelines.
The deal is expected to formalize with Shell purchasing a majority stake in Power Co. – which will include BPL’s stations A and D at its Clifton power station – and owning a majority share of Terminal Co., the LNG terminal that will be built at Clifton Pier near BPL’s power plant.
Shell and BPL expect that new power production technology and the new LNG fuel will eventually mean lower electricity costs for consumers.