Apr 2015 Financial News

GraceKennedy to invest $215m in renewable energy

Apr 10, 2015

GRACEKENNEDY (GK) Group plans on investing roughly $215-million into the implementation of five renewable energy projects by the end of the year.

The announcement, which was made by Group CEO Don Wehby last month, follows concerns within the GraceKennedy factories about the high cost of some productive inputs including energy and other utilities. The planned projects are expected to save the company up to $28-million annually.

"Jamaica's electricity costs are too high and this adversely impacts our consumers and shareholders," Wehby told the Jamaica Observer in an e-mailed response. "The price of oil is projected to keep rising in the long-term and the reserves are not infinite. It makes good strategic sense to diversify our energy sources to be more sustainable as an enterprise and it's good for the health of the environment."

The project includes two 100 kW Solar PV plants to be installed at the GK Processors Canning and Meat factories, respectively, within the next six months, according to Wehby. Another 100 kW Solar PV plant which is scalable to 440 kW has also been designed for GK's Distribution Centre at Bernard Lodge for implementation in October.

"The projects will be financed by a mix of lease, debt financing and cash. A portion of the current savings from the global price of oil will be diverted to finance some of these initiatives," the CEO told the Caribbean Business Report.

According to Wehby, each facility with the 100KW solar installation will enjoy annual savings of up to $7 million on electricity depending on the assumed cost of electricity from the grid. He added that with the current fall in electricity rates in this year, savings will be on the lower end.

"However, oil prices will eventually rebound and GK wants to use this window of opportunity to get ready," he said.

World oil prices have collapsed by more than half since June last year on mounting US supplies, weak global economic growth and the decision by the Organization of the Petroleum Exporting Countries (OPEC) to keep output high despite falling prices. However, expectations are that oil prices will bounce back as demand continues to increase.

GK is also exploring the use of a hybrid solar and wind turbine set for its

Kingston-based headquarters which enjoys strong winds throughout the day. A proposal has been submitted and is currently being evaluated, according to Wehby.

"An engineering study has been done on self-generating plants for two of our factories using LPG/LNG and capturing waste heat for heating and cooling. The report is to be presented to management in April," he said.

"All facilities have been mandated to pursue energy reduction projects such as low-energy lighting, smart controls and sensors, cold air leaks, high-efficiency air conditioning units and solar PV panels, where applicable," Wehby added.

Additionally, the Group's supermarket chain Hi-Lo, which is currently being renovated includes the use of low-energy LED and electronic fluorescent fixtures as well as high-efficiency refrigerators and freezers.

"The Manor Park Store has been completed and the Barbican Store will be completed in a few weeks. An energy conservation programme with JPS will kick off shortly and will include store audits and staff training," the CEO stated.

Source:
BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com
Jamaica Observer
Friday April 10, 2015    

http://www.jamaicaobserver.com/business/GraceKennedy-to-invest--215m-in-renewable-energy_18725649