Int’l Advisory Group says… Guyana risks overreliance on Gas plant as primary source of electricity

Jul 24, 2021 News

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…Disruption in supply would substantially increase GPL costs

Kaieteur News – Guyana runs the risk of being overly reliant on the proposed gas-to-energy initiative which is being pursued by the PPP/C administration in cohorts with Stabroek Block Operator—Esso Exploration and Production Guyana Limited (EEPGL) for its electricity supply. This is according to K&M Advisors, an international consultancy group that was commissioned to conduct a study on this matter by the Inter-American Development Bank (IDB) back in 2019.
In fact, should the proposed gas fired power generation plant be faced with a supply challenge, K&M said it will require burning significantly more expensive backup fuel, which would substantially increase the cost of electricity generation to the Guyana Power and Light (GPL).

With regards the level of risk, it was noted that with the gas plant, the country would be utilising up to 77 percent of generated electricity from Natural gas.
The advisor group said, “This risk could be significantly reduced in case of implementation of the Arco Norte transmission interconnection project connecting Guyana, Northern Brazil, Suriname and French Guiana.”
Furthermore, it was noted in the report that based on an Expansion Study that was done, in a 50 million cubic feet per day scenario, the country’s generation capacity should be bumped up to 317 megawatts (MW) in 2023 when the gas plant is projected to come online.
By 2035 however, generating capacity, according to the study, will be revved up to 459MW.
The report projects, that of this, GPL would still be generating some 116MW using Heavy Fuel Oil, Solar power would be contributing 24MW, Wind 40MW and Biomass 24MW with the additional 255MW coming from the proposed gas plant lending to the overreliance on that source of power.
The report had indicated that despite GPL’s reduced generating capacity from the time the gas plant comes online in 2023, the utility company would have to still install additional capacity in 14 years’ time in 2035 at which time, the country’s generation capacity would be fully utilised.
This is in addition to the initial expenditure of installing two high powered distribution cables ahead of any such project.
The report done by K&M Advisors had outlined that utilising the committed amounts of 50 million cubic feet of gas daily from the Liza Destiny in the Stabroek Block, the project could see a new plant being constructed initially at a capacity of 102MW including two dual fuel engines with a total capacity of 34MW installed prior to 2023.
According to the report, the capacity will then gradually increase to 255MW and while adding that “there is sufficient firm generation capacity till 2035 to cover the peak load.”
It was noted, that even though the firm capacity in 2035 is below the peak load plus 15 percent reserve margin by 9MW, at 41MW the reserve margin is still above 34MW (two times the capacity of the largest unit) and, therefore considered to be adequate. The scenario outlined by the consultants, is predicated on the use of dual fuel Wartsila reciprocating internal combustion engines (RICE) each at 17MW generating capacity.
Importantly however, the report noted that it is likely that GPL will be required to start adding new firm capacity in 2035 to cover increasing peak loads beyond 2035. According to the consultants, the demand growth data and generation capacity additions presented in its analysis are based on the “Delayed Base Case” Scenario in the Expansion Study. The Delayed Base Case Scenario assumes that the electricity demand growth in Guyana would lag behind the expected growth in GDP resulting from the recent oil discoveries off Guyana’s coast and the associated investments.
The report said too, that generation capacity analysis is based on the data provided by GPL on the existing generators, firm, and renewable capacity additions forecast by the Expansion Study. The additional Natural gas capacity, according to K&M’s analysis, is modified based on technology options, and the maximum capacity that can be supported by the proposed 50 million cubic per day Natural gas supply scenarios, “based on heat and material balance calculations.”
The additional generation capacity to be installed would represent additional spending by the utility company in order to support the success of the gas-to-energy initiative.
This publication has reported that much like the case of the Amaila Falls Hydro Electric Project, the publicly touted price tag had always excluded—prior to being exposed by this publication—that GPL would have had to incur its own spending to complement the project.

 

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