Energy Incentives

Apr 02, 2010 Editorial

A reliable supply of electricity to consumers – both private and business – has been the Achilles heel of both this and the previous administration. In the days of yore (in Guyanese terms, this means more than one generation) “blackout” became” a part and parcel of the local vernacular because of the prolonged periods of every day that Guyanese had to go through without electricity. This administration criticised its predecessor very trenchantly and made the supply of power to every home a prime criterion of an effective administration.
In line with the dogma and prescriptions of the “Washington Consensus” the blame for the abysmal electricity supply was placed squarely at the feet of the “public” – read “governmental” – ownership of the electrical generation and distribution. In short order, the Guyana Electricity Corporation was privatised and became the “Guyana Power and Light”. But very little, apart from the name, changed. In fact, from the customers’ standpoint – which, unavoidably is all about getting the electricity into homes – matters became worse. The corporation was returned into the hands of the government, where it remains to this day.
A very comprehensive five-year plan that involved replacing many of their outdated meters – some with pre-paid ones, rehabilitation of transmission lines, network expansion, a new power plant at Kingston, integrating the co-generation plant affiliated with the new Skeldon sugar factory was unveiled some time ago. The government, as can be discerned, has focused on improving the supply side of the equation – including dealing with line transmission inefficiencies.
There is no question that the situation with blackouts has improved significantly since the “bad old days” but we have quite a way to go. The Amaila Falls project has been diligently pushed by President Jagdeo over the past decade and we are beginning to see some light at the end of the tunnel (pun intended). However, at the very best we are still probably some five years away from receiving power from this source. What do we do in the meantime to address consumer dissatisfaction?
We believe that there are complementary strategies that can be employed to improve the electricity supply without stretching the Government’s resources beyond its capacity. One would be to offer incentives to customers to install electricity-generating capacity by utilising local resources. In this way we will save on scarce foreign reserves and at the same time provide relief to the beleaguered consumer.
Take, for instance, solar power. In addition to being blessed with water falling down gradients, which can be harnessed to supply hydro-power (as with Amaila Falls and Moco Moco), we have a surfeit of sunshine. Some might say that under the present El Nino conditions this might not be such a good thing – but we have to look at the bright side and make some hay since it would appear that with climate change, the sun may be shining for much longer periods here in the years to come.
Solar power is no longer a novelty. With private suppliers pushing the product and especially the foreign community assisting the hinterland communities with the necessary equipment, most Guyanese – including business owners – are familiar with the ease and reliability of this source of electricity. The obstacle to its more widespread (and potentially ubiquitous) usage is the initial cost of installation. Even though, as the promoters of the product emphasise, the solar power equipment quickly amortises its cost through savings in electricity costs, most consumers cannot afford the high start-up costs.
We believe that the government can resolve the dilemma by making the installation of solar generating power totally tax refundable. This mechanism is very common in the developed economies that are working to shift to “greener” power. While our incentive is different, our necessity is no less urgent. Some may argue that the government would be shrinking its tax base with this scheme, but we must emphasise that the overall benefits to the government far outweigh the one-time tax write-off that will be incurred. And then, of course, there would be the benefit of satisfied electricity consumers – who just so happen to be voters.

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