Govt.’s plans for energy can cost in excess of US$2B

Apr 17, 2021 News

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Kaieteur News – The People’s Progressive Party/ Civic (PPP/C) Government is insistent that it will enter Guyana into an energy mix, which simultaneously pulls from gas and renewable sources.

This newspaper recently highlighted that while much has been said about the proposed mix and its benefits, the public is starved of information crucial to the building of confidence in these projects especially as it relates to the gas-to-shore endeavour. (See that article here, https://kaieteurnewsonline.com/2021/04/11/are-guyanese-politicians-feeling-in-the-dark-for-electricity-solutions/.)

Another aspect of this energy mix that the PPP is yet to make clear is the cost.

In the proposed mix, the PPP intends to focus on gas, hydro, solar and wind. A modest projection of the cost for this mix runs in excess of US$2B.

While the PPP is yet to have a feasibility study for the gas-to-shore project, which should include the price, estimates for the undertaking hover around US$1B. That by itself is already a heavy investment. Some Guyanese have previously expressed concerns about pursuing such a project when it is not even guaranteed to be the solution to the nation’s electricity crisis. But the reality is that this might just be half the cost for the proposed mix.

Last year, Jagdeo revealed that the government is already looking to revive the controversial Amaila Falls Project. He was quoted by one online media outlet as saying, “We have started reviewing the documents etc., to chart a pathway to hydropower development back again, because hydro power is crucial, given our capability and capacity of the country; our abundant water resources.”

In 2011, Stabroek News quoted Jagdeo, the then President, saying the Amaila Falls project would cost US$835M. This price tag can now turn out to be considerably more.

Therefore, Guyana is likely to simultaneously pursue an over US$835M project and an almost US$1B both for electrical purposes.

But there is more in this “matrix”. Prime Minister, Mark Phillips had said that the government will also be pursuing solar and wind.

How much will these cost? It depends on the magnitude of these projects. The government is yet to say what percent of the country’s energy supply will be pulled from these sources. But just to give an idea, Guyana already uses a solar farm at Mabaruma to generate power to nearby Region One communities. That farm which is servicing the comparatively small population costs $227M. It was constructed in 2017 under the APNNU+AFC administration but only became operable last year. Be that as it may, this gives us an idea of how costly solar farms could be. Then there is the cost for wind.

The government might say that it will propose various models of financing for these projects like public-private partnerships, etc. However, with those come different kinds of problems.

In reality, the dilemma is not only with the price for the projects. The concern is that Guyana may end up spending all this money, most, if not all, of which may have to be borrowed, only to still come up short with a real solution to high electricity cost and power outages.

Gas-to-shore projects, while successful for some countries, is not always the answer. That is why relevant studies are needed. The government’s decision to pursue an energy mix is not without merit as there are several factors that can affect the supply of electricity from various sources of energy. It is true that technical problems offshore can cause problems that may hamper the electricity supply. If there is a problem with a Floating Production Storage and Offloading (FPSO) vessel, Guyana can go without electricity; even the water levels and tides can pose problems.

Furthermore, there are problems that are likely to occur due to vandalism and those cannot be ignored. With solar, a simple cloud can stand in the way of the source of power, the sun. And, as is well known, dry season or drought can affect any hydro project.

Therefore, having a diversity of power supplies may prove to be very useful. Nevertheless, such diversity must be proven technically and economically sound before a nation spends such huge sums.

Take Ghana for example. Ghana’s power supply crisis continues to torment the people of that nation. Ghana tried turning to gas for help. First buying it from Nigeria then sourcing gas from its own Jubilee field.

But, according to the Natural Resource Governance Institute (NRGI), “…what promised to be an energy solution came with enormous hidden costs while also failing to improve Ghana’s power supply significantly.”

Pic saved as energy mix

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