The power crisis in the Northern Mariana Islands may have a bright side. The situation could result in a thriving new industry. The industry could spark interest in alternative energy sources generate employment and help put the local economy back on track according to a leading authority in the field.

Ven Medabalmi a lawyer with expertise in international corporate transactions involving energy and infrastructure projects said that with the NMI having the highest retail energy price in the U.S. at 31c a kilowatt hour the private sector can move in. He said opportunities exist for the installation of alternative energy sources such as solar or wind farms to sell the power back to the government through a public-private sector arrangement or directly to consumers.

“The price of power here is so high so incredibly high that practically financially almost anything is viable. The bright side is … people here will always be paying a higher price for power and that opens a new market a new industry a new economy ” Medabalmi told the Journal.

Medabalmi was among participants of the Saipan Chamber of Commerce’s Marianas Roundtable discussion that brought together six specialists who made presentations on the global and local energy situations. The event was held at Fiesta Resort & Spa on Aug. 31 and was attended by more than 100 people.

Medabalmi’s remarks were echoed by David A. Schaller climate change coordinator for the U.S. Environmental Protection Agency who was also among key speakers during the event and who noted that with increased utility bills consumers are most likely to go beyond conservation and seek alternative energy sources.

“The NMI has made a great deal of progress ever since the full-cost pricing has taken effect because it has awakened people to the true cost of dependence on oil. Now I think we will see the NMI making a great leap ahead as people react to the high prices and start to look for the alternatives ” Schaller said. “People will want to find a smarter way to get hot water and not just turn off their water heater because they couldn’t pay the electricity bill. And there are alternatives besides just turning off the water heater; there are alternatives to turning off the lights and the air conditioner ” he said.

Medabalmi said the NMI has “potentially abundant” sources of alternative energy among them wind solar and ocean wave. He said alternative energy sources are more expensive to put in place but are cheaper and more environmentally friendly in the long run.
According to Medabalmi “Financial investors … look at the long run. After 10 years how much money am I going to make?  Private investors are willing to invest a lot more money in the beginning to get their returns slowly over time.”

Medabalmi however cautioned that the NMI’s low aggregate capacity to absorb variations in power production from alternative sources the quality of the existing power distribution infrastructure and capacity of existing grids unstable macroeconomic conditions and the quality of credit worthy purchasers could hamper the development of a sustainable alternative energy source in the NMI. He also said that there are risk factors involved in private sector financing like a change in public policies brought about by a change in the administration credit-worthiness of the utilities agency; and enforceability of various contracts.

Medabalmi said those risk factors can be mitigated by controlling cash flow to ensure that money generated is not co-mingled by the government with other obligations so that the private sector is paid accordingly and in a timely manner. MBJ