Chapter Three: Stimulating Future Growth: Clean Energy

Abstract

Using natural gas as a bridge away from heavy fuel oil, followed by the Amaila Falls Hydropower Project by 2027, Guyana will see a massive expansion of renewable energy across the country. Energy use can increase five-fold with greenhouse gas emissions staying approximately flat – one of the world’s highest levels of decoupling of economic growth and fossil fuel use for energy.

The transition can be seen as three phases:

  • In the period 2022 to 2027, a near tripling of electricity demand will be met mainly through a combination of natural gas and the Amaila Falls Hydropower plant on the DBIS, coupled with a major expansion of solar power, with batteries, on the rural networks.
  • From 2027 to 2032, further increases in electricity demand will be met by continued replacement of HFO, expansion of wind and solar power and the commission of Guyana’s second hydro plant, the site of which will be identified before 2025.
  • From 2032 onwards, expansion will be determined by prevailing market conditions, but it is likely that battery technology will be sufficiently advanced to enable solar and wind plants to provide most new capacity increases while contributing to further downward pressure on electricity prices.

Introduction    

Guyana has some of the highest electricity rates in the Americas and is about 97% dependent on imported fossil fuels. Using natural gas as a bridge away from heavy fuel oil, followed by the Amaila Falls Hydropower Project by 2027, Guyana will see a massive expansion of renewable energy across the country. Energy use can increase five-fold with greenhouse gas emissions staying approximately flat – one of the world’s highest levels of decoupling of economic growth and fossil fuel use for energy.

The expenditure on imported Heavy Fuel Oil (HFO) and Diesel for the electricity generation in the 12 public grids (operated by GPL and HECI) was approximately US$ 100 million in 2020. The Demerara Berbice Interconnected System (DBIS) is the largest grid accounting for 78% of the total cost.

The power demand in Guyana’s public electricity grids is forecasted to triple over the next five years. The DBIS peak power was 126 Megawatts (MW) in 2020. It is estimated the peak load by 2025 will be 415MW. The DBIS has currently 202MW of firm capacity. However, some of that capacity is from aged generators with low reliability. It has been estimated that by 2025, new 300MW of firm capacity will be needed to cover the demand increase, the retirement of aged generators and to increase the grid reliability.

If the electricity supply mix stays as it is today, consumer costs will not reduce significantly, while greenhouse gas emissions will triple by 2027, and increase steadily thereafter. In the original LCDS, it was foreseen that the Amaila Falls Hydropower Project would have been complete by now, delivering cheaper, cleaner electricity. However, its development was not progressed by the 2015-2020 Government. This Government intends to return to a strategy of decoupling economic growth from using fossil fuels for electricity by developing low-carbon energy resources (Solar, Hydro, Wind, Biomass, and Natural Gas) to meet rapidly rising demand and keep greenhouse gas emissions low.

This can be seen as three phases:

  • In the period 2022 to 2027, a near tripling of electricity demand will be met mainly through a combination of natural gas and the Amaila Falls Hydropower plant on the DBIS, coupled with a major expansion of solar power, with batteries, on the rural networks.
  • From 2027 to 2032, further increases in electricity demand will be met by continued replacement of HFO, expansion of wind and solar power and the commission of Guyana’s second hydro plant, the site of which will be identified before 2025.
  • From 2032 onwards, expansion will be determined by prevailing market conditions, but it is likely that battery technology will be sufficiently advanced to enable solar and wind plants to provide most new capacity increases while contributing to further downward pressure on electricity prices.

The table in the overleaf summarises how the shift from almost total dependence on HFO will be eliminated, while the figure below illustrates how renewable energy will grow to dominate Guyana’s electricity supply. The figure on the overleaf shows how a tenfold increase in electricity demand will see greenhouse gas emissions essentially stay at 2018 levels.

This level of decoupling of economic growth and fossil fuel use for energy is among the highest in the world. More details are set out in the remainder of this section – showing the energy transition for:

  • Demerara-Berbice Integrated System (DBIS)
  • Isolated Grids (Linden, Essequibo Coast, Bartica, Lethem, Kwakwani, Mabaruma, Port Kaituma, Mahdia, Leguan, Wakenaam, Matthews Ridge) – with Essequibo Coast, Linden, Leguan and Wakenaam being integrated with DBIS by 2027
  • Unconnected Communities.

Demerara-Berbice Integrated System

Today, effectively 100 percent of the power supplied by GPL on the DBIS comes from Heavy Fuel Oil and diesel. The table and figure below illustrates how this percentage will shift in the years ahead while electricity prices are reduced. This is explained in the following pages.

YearPeak Load (MW)Back-up HFO or Diesel (MW)Natural Gas (MW)Solar (MW)Wind (MW)Hydro (MW)HFO share (%)Natural Gas share (%)RE Share (%)
202116120305009901
202221120305009901
2023283192250150047521
2024341182250202504942
20254141822502525011864
20264591572503025020764
2027506132250353516576231
20285611072504045165135730
2029620822504555165205229
2030685572505065165264727
20359894725030031558513267
20401,3264725055056578522474

Natural gas in DBIS

To use natural gas for power generation, the following investments are needed: a pipeline to bring the natural gas to shore, a processing plant to separate the Liquefied Petroleum Gas (LPG) and the natural gas, and a gas-fired power plant. The several studies have confirmed that the natural gas option would reduce the cost of generation. The Government is currently undertaking the detailed studies and the financing structuring of the project. It is anticipated that a 250MW gas-fired power plant will be constructed and in operation in 2024. Besides the natural gas-fired power plant, and in order to provide the necessary firm capacity, new reciprocating 46MW dual fuel (HFO/NG) engines have been added to the DBIS grid in 2021. Additional capacity will be installed as part of the Natural Gas Programme. GPL plans to convert 106MW of their existing HFO capacity to dual fuel engines (HFO/NG) by 2026.

By 2025, an additional 296MW of firm capacity will provide power to DBIS and the total capacity to generate electricity with natural gas will be 403MW. This will reduce, by half, the Green House Gas (GHG) emissions associated with the electricity generation in the DBIS.

As part of the Natural Gas Programme, the LPG consumed in the country would be provided by the new separation plant and LPG production facility, avoiding the current importation. The planned offshore pipeline is designed to provide larger amounts of gas. In case new discoveries are made, the natural gas could be used for other industrial activities.

In the short term, the natural gas will provide the needed firm capacity at a lower generation cost compared to the other indigenous renewable energy options in Guyana. But its availability is limited in time (20 years) and to the DBIS area. The development of the solar, wind, hydropower and biomass technologies is a key priority for the future energy sector in Guyana.

Renewable Energy in DBIS

Solar and wind are intermittent energy resources, which cannot provide firm capacity unless battery storage is added. Hydropower and biomass resources are variable throughout the year, but in both cases the resource can be stored; and with good planning, batteries are not needed to consider the output as firm.

In Guyana, solar energy, wind and hydropower are good complementary resources. Solar energy is available during daylight hours, peaking at noon, while wind is stronger during evening hours and at nights. Wind is lower during the wet seasons, while hydropower is fully available. Because of their suitability for both the DBIS and the isolated grids, they are discussed under the section on “Isolated Grids” below.

Utility-Scale Hydropower in DBIS

Hydropower has the potential to provide Guyana with both utility-scale and small-scale capacity. Small-scale is discussed under “Isolated Grids” below.

While natural gas provides a short to medium-term solution, over the medium and long term the most sustainable and resilient energy mix in Guyana would be formed by solar, wind, hydro and biomass power plants. Within the renewable energy resources available in Guyana, hydro will be important to provide firm capacity and short-term energy storage to compensate daily and weekly fluctuations form solar and wind. Hydro will provide, in the long-term, a cheaper solution than any other technology, due to its long lifespan.

Guyana has a potential for 8.5 Gigawatt (GW) of hydropower on 33 hydropower plants (including storage capacity and run-of-river). It is anticipated that Guyana will build two hydro plants over the next 20 years: Amaila Falls and another which is still to be identified. Of the potential 33 sites, many were assessed in the 70s and 80s, when environmental and social standards were lower. It is anticipated that the new site will be identified by 2025, with the goal of providing 370MW of capacity by 2035 and a further 150MW of capacity by 2040. In the meantime, Amaila Falls will be the focus of the hydropower programme.

Amaila Falls Hydropower Project (AFHP)

The Amaila Falls Hydropower Project (AFHP) was first identified in 1976 during an extensive survey of the hydroelectric power potential in Guyana, carried out by the Canadian company ‘Monenco’. A total of 67 sites were identified as technically feasible solutions with a total hydropower potential around 7GW. From 1974 to 1976, a pre-feasibility study was carried out to assess Amaila Falls, which suggested an installed capacity of 200MW. The Guyana Power Study done in 1982 included Amaila Falls as part of Guyana’s power generation systems development.

In 1997, a review of the pre-feasibility study and Guyana’s electricity demand was done, and it reduced the size to 165MW. Subsequently, in 1998, the Government of Guyana (GoG) signed a Memorandum of Understanding (MoU) with Synergy/Harza for the development of the Amaila Falls Hydropower Project. A feasibility study was submitted to the Government in 2001. In 2007, Sithe Global entered as a potential investor in the Project. The Government of Guyana and Sithe Global established a special purpose company, Amaila Falls Hydro Incorporated (AFHI), for developing the AFHP. The AFHI, after a competitive bidding in 2008, selected China Railway as the Engineering, Procurement and Construction (EPC) Contractor. In 2009, Synergy/Harza, the original holder of an Interim Development Licence and a subsidiary of Synergy Holdings (Guyana) and Harza International, transferred all rights and interests, obligations, and liabilities under its licence to AFHI. The Environmental and Social Impact Assessment (ESIA) was completed in 2011. A draft Power Purchase Agreement (PPA) with GPL was negotiated in 2011. Agreements with China Development Bank and the Inter-American Development Bank (IDB) for debt financing were negotiated and the project was structured as Build Own Operate and Transfer (BOOT), in which the asset will be transferred to GPL at zero cost after 20 years of operation.

In 2013, Opposition APNU/AFC Parliamentarians did not support the project and it did not advance.

The Engineering, Procurement, and Construction (EPC) contractor negotiated with Sithe Global and the Government of Guyana to take the role as sponsor and to purchase the shares, assets and rights in AFHI from Sithe Global. However, negotiations were interrupted after the then Government took office following elections in 2015.

In 2016, the APNU/AFC Government, with support from Norway, hired an independent consultant (Norconsult) to review the project. The report, published in December 2016, recommended the development of AFHP as the best option for Guyana to achieve affordable, low-carbon electricity.

Solar Photovoltaic (PV)– DBIS and Isolated Grids

Solar photovoltaic (PV) is close to being established as a mature technology in the country. Local prices are in-line with developed countries and local technology providers have the capacity to supply, install and operate on-grid and off-grid.

Self-generation is allowed as per Guyana’s legislation. Any consumer who wishes to interconnect their solar PV system into the public grids to eliminate the need for battery storage (solar PV on-grid) must submit an interconnection request and comply with the Interim Interconnection Requirements set by GPL . As part of the roof-top solar PV for Government buildings programme, about five megawatts was installed at 291 buildings across the ten Administrative Regions during the period 2012-2020.

By 2023, GPL will have its first solar on-grid PV farm in Berbice with a total capacity of 10 megawatts-peak (MWp) financed by the Guyana-Norway Partnership. This solar PV farm will generate one percent of the total energy demand in DBIS.

The Government has secured US$75 million funding – including US$63 million from the Guyana-Norway partnership – to implement 27.8MWp capacity of solar PV farms in eight different grids to convert those grids in hybrid systems. Those systems will be in operation by 2023 and by then Essequibo coast, Linden, Bartica, Lethem, Mabaruma, Mahdia, Leguan and Wakenaam grids will have an average of 30 percent of their electricity consumed generated by solar PV.

In a second phase of the programme for the Hinterland grids, there is a planned increase of the Renewable Energy share to an average of 50 percent. Solar PV with battery storage will be the main renewable energy resource on the regional grids.

Wind – DBIS

Guyana’s coast is exposed to the steady Northeast trade winds. A private developer has installed a tower with a wind speed data logger to measure the potential to install large wind turbines. The project is expected to provide 25MW of power.

Plans are in place to conduct wind measurements along the coast and at Leguan. The measures taken in the other locations together with the practical experience from the 25MW wind farm installation will inform the design of the future wind programme.

Biomass – DBIS

There is some practical experience on the use of biomass as an energy resource for self-consumption like rice husk on the rice mills, the use of the distillate waste to produce bio-methane at Demerara Distillers Limited (DDL) or the use of bagasse for co-generation at the Skeldon Sugar Estate.

The Skeldon co-generation plan—for 30MW of electricity generation using bagasse from the sugar process—was designed to produce excess power that would be exported to the grid. The plant is no longer working as a co-generation system due to the closure of the sugar factory. An assessment report on the co-generation possibilities at Albion and Uitvlugt Sugar Estates concluded that it is feasible to install at least a total power capacity of 23MW.

Small Hydro – Isolated Grids

Guyana is currently implementing three small hydropower projects: a 150kW in Kato, the rehabilitation of Moco-Moco hydropower site, which would increase the capacity up to 0.7MW and a new 1.5MW hydropower plant in Kumu. Moco-Moco and Kumu hydropower projects will provide energy to Lethem grid. It is expected those two projects, in combination with an ongoing solar PV project, will provide the Lethem grid with 100% renewable energy in 2023. Other small hydro projects will be pursued to provide energy to the regional grids as well as Hinterland villages.

Rural Electrification

Guyana has approximately 200 Hinterland villages—with a total population of 98,500 people—which are off-grid (outside of the 12 public grids). Most of those villages are located in remote areas, difficult to reach by road and in many cases only accessible by boat. The main occupation is subsistence farming, small wood-processing workshops and handicraft or trade shops, while a few villages are benefiting from tourism working in eco-lodges. The cost of diesel in off-grid villages can be up to three times the cost in Georgetown. Since 2012, though different programmes, the Government has provided Solar Home System for households and small solar PV systems for schools, public buildings and water pumps. More recently in 2020, the Guyana Energy Agency (GEA) installed a 72KW micro-grid at Moraikabai. Also, a combined five kilowatts of solar PV was installed under the Rural Energy Project in Moraikobai, Powaikoru and Shulinab. Under the planned Solar Home System Project, with support from the Government of India, thirty thousand (30,000) 150-watt systems are expected to be completed in 2022.

The Guyana REDD+ Investment Fund (GRIF) funded project “ICT Access and E-Services For Hinterland, Poor and Remote Communities”, target is to install ICT Hubs in all 200 Hinterland Villages between 2021 and 2022. The project includes the installation of an average of four-kWp solar PV system to power each ICT Hub.

As part of the 2021 public budget, the Government approved the installation of 10 more solar PV mini-grid systems in Sebai, Waramadong, Paruima, Kurukabaru, Whyaka, Mission Capoey, Lake Top Capoey, Annai, St. Monica and Karaburi, totalling 1.472 MWp (an average of 147kWp/village). Those systems are expected to be in operation by 2022.

In 2021, Guyana signed a grant agreement with the International Solar Alliance for a solar demonstration project in Orealla, Region Six. This will see the installation of a 9kWp grid-tie solar photovoltaic system in Orealla and will be accompanied by a battery energy storage system of 37kWh.

The learnings during implementation of those solar PV projects in the Hinterland will support the development of a larger programme to electrify all Hinterland villages. The electrification will be with the most technical and economically feasible solution (interconnection to larger grid, solar PV and/or mini-hydro). The programme will include the enhancement of the productive usages of the energy to increase the long-term sustainability of the minigrids. It is estimated such a programme would cost US$80 million and could be implemented between 2023-2026.

Modernisation of T&D network (Smart Grid)

The Transmission and Distribution (T&D) network plays a critical role in power evacuation from power plants and delivery of electricity to customers across Guyana. The electricity service provided to Guyana Power and Light (GPL) customers does not meet the reliability and quality requirements of utilities in developed countries. The low reliability is due to the low capacity of generation, the lack of redundancy in key lines and the low remote supervision and control of the T&D network.

The utilities have been increasing their generation capacity at the same pace as the demand has been growing, keeping a low reserve and excess capacity that is inadequate to cater for downtime in their generators. A rapid growth in the electricity demand is expected over the next decade. Even with a conservative forecast, the demand in 2025 would be three times more the electricity demanded in 2020. The expansion on the firm capacity that is planned in the next decade with new power plants using natural gas and renewable energy will increase the reliability and resilience to generate the electricity demanded at a much lower cost than currently; but besides that, all the public grids will need important improvements in their T&D which have been developed in a radial way and built with single lines, meaning that a failure in any of those single lines will disconnect customers connected downstream of the faulty line.

To increase reliability in the transmission network to world-class utility requirements, the new transmission lines and substations will be designed to comply with ‘N+1 redundancy criteria’ (with at least one back-up component). The transmission network will also be expanded to form a real network, avoiding radial configurations where possible. As part of the T&D improvement programme, the existing lines and substations will be progressively upgraded to meet the new redundancy requirements. GPL’s Development and Expansion Programme estimates the need for an investment of US$686 million over next five years to upgrade, expand and equip the power system to take off and manage the forecasted electricity demand, and to provide services and operate at the required reliability levels of a modern power utility company.

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