REPORT #149 Nov 1999
PRODUCING ELECTRICITY TO SELL IN BELIZE AS A BUSINESS!


Produced by the Belize Development Trust

With the privatization of BEL and rumors of legislation making it compulsory for the Belize Distribution Grid to purchase electricity from private producers. Is there a business for anyone in producing electricity?

The rumored price set by government regulation for anyone producing and selling electricity to the national grid is supposed to be 6.5 cents USA per kilo watt hour. That is .13 cents Bz. per kwh. Can you make electricity and sell if for that price?

There was a venture in the northern districts to produce electricity by bagasse. Not sure what that is, but something about burning sugar cane waste. The scuttlebutt said to make it profitable they needed 10.5 cents USA per kwh to make it worthwhile.

My own idea for some 40 years, was to start up a solar heated steam driven generator. There is an excellent solar furnace in France in the Pyrenees that produces spot heat of 6000 degrees Farenheight. That could easily be duplicated during most daylight hours in Belize. You could not produce electricity around the clock, but certainly while the sun was out. Several decades ago as a much younger man, in my mid 20's, I even explored around the country a bit, to find locations. I found some nice spots around Georgeville and off the Mountain Pine Ridge highway that would be ideal. The further north you go, the better, as the hours of sunlight become more consistant in Belize. Unfortunately, during those decades, I did manage to find some finance with investors, but BEL was a monopoly and the situation never developed to anything. No political party in government was doing much about developing the country, it was all political machinations rather than development. If you put your cards on the table, somebody in the political party was bound to steal your ideas and feasability studies from you and do it themselves, then force you out. So, it was better to keep quiet and wait for things to change politically. This hasn't really happened in Belize yet, but things are moving that way.

Let's look at some fundamentals. We have a guaranteed price for electricity - maybe! 6.5 cents USA per kwh. One horsepower equals 746 watts. Less than a kilowatt. A diesel engine of 250 horsepower can therefore produce 186 kilowatts. If we get paid 6.5 cents USA per kwh (.13 cents Bz), we can thus earn by sale of electricity, $24.18 Bz per hour for our electricity. Or $193 Bz per day. Not very much money for such an investment is it?

From this, we can surmise that if we ran a diesel engine generator for a village plant, we would earn back $193 Bz for the day. This does not cover depreciation, wear and tear, maintainance and the labor involved for a man on the spot running things. But the government does it. How? Well, they did it, because they got their diesel wholesale and customs tariff free. When we had such a generator system at Caye Caulker some 30 years ago, we had to pay for our diesel at retail prices, which included the customs duties, governments taxes of various kinds and so on. It was for these reasons, that forced the Northern Fisherman's Co-operative on the island to sell out the generating system for the community, to the government. The government could do it cheaper, because their diesel was cheaper. They didn't pay taxes on their own diesel fuel.

But there are several ways of producing electricity that are cheaper to produce. Windmill generation is one and solar heated steam turbines are another. No fuel costs at all, but you still have maintainance, on site personel and the initial investment, plus depreciation wear and tear.

So, we have to scale up, to make this a viable enterprise. Let's go to 1000 kwh. At .13 bz per kwh that =$130bz per hour. For an eight hour sunny day, we get 8 X $130 = $1040 per day. That number is looking a little better for a small start up electrical venture. For the month we would earn $31,200 Bz. Or around $15,000 USA. Now we have to find out what it would cost us to buy the generator, set up a steam driven turbine attachment and associated tunnelling and other apparaturus to create the steam and control the water flow.

I believe windmills also would be viable in Belize. Perhaps not all the time and certainly not close to the coast, because of the salt air. But a look at electrical windmill farms on the internet, or by driving along the Mexican USA border before you cross the last mountain range into California will see many windmill towers. The big problem here would be finding the capital for a small venture capitalist, to purchase and import one, with all the problems associated with duties and freight involved. I don't think they make them under a megawatt either. Which is a lot of initial capital and not really good for a small start up, experimental venture in Belize. The government being notorious about taxing the devil out of you, once you get installed. Changing the rules and prices of the game wouldn't be unheard of either.

From a local Belizean point of view, it would be best to start as cheap as possible and grow slowly. Political double dealing being what it is around these parts! Keep your initial investment low, swallow your labor and sweat for a year or two and see what happens? If it works out, then expand and grow. The beauty of being able to sell to a national grid excess power, is that the hours you sell it to the grid doesn't matter. This helps all kinds of smaller ventures produce electricity that may be seasonal, or climate controlled. There is always the backup steady flow of the Mexican electricity to take up the slack.

One big drawback, is the profit that government was making off Mexican electricity and now they are privatized ( hic?) perhaps this thing might work. Back before privatization, government would not endanger it's profits. It will depend a lot on the influence the new owners of BEL will have with individual political cabinet ministers under privatization.

Frankly, I think until there is a political re-orientation along the lines of what the Belize Reform Party want to do with their manifesto, I would just skip the whole venture. There is just too much years of experience with cozy deals with politicians in the current system and major business groups, capable of influencing them. Your more likely to find you get screwed in the process. That is the modern history of Belize anyway.

My advice. Play with a prototype, very small. But don't do anything financially serious until there is a re-structuring of the political system. This current system sucks! It was designed to rip off idealists and dreamers like you, once you proved a venture. The English designed it, to rape the colonials and pad the pockets of the aristocracy, who had the political controls.

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