Solar power can cost US$200M less than Amaila hydro project – Economist

May 03, 2022 News

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Kaieteur News – Citing an overall reduction in the cost to develop solar power generation across the globe today, Economist Elson Low estimates that Guyana can save at least US$200 million if it pursues this renewable option, rather than the hydropower project at Amaila, Region Eight.

He presented this argument during a weekly commentary aired on the social media platform, Facebook.
Low, who holds a Bachelor’s Degree in political Science and Economics from a United States College, Amherst, explained that government will be pursuing 38 megawatts (MW) of electricity through a solar power project that is estimated to cost US$83.5 million. Using these figures, the Economist calculated that a 165MW solar power facility could cost around US$500 million, saving Guyana US$200 million when compared to the US$700 million Amaila hydro project. This US$500 million, according to him, would be the overall expenditure factoring in the land and cost to distribute the electricity.
He said that not only could Guyana save on cost, but also avoid some of the financial risks involved in the proposed hydropower project.
A prefeasibility study for the Amaila Falls project was conducted between 1974 and 1976. The Economist argued, therefore, that solar costs have reduced by over 80 percent in some cases since Amaila was conceived.
The Economist reasoned, “The cost of hydro versus solar, Amaila is supposed to be at seven cents per kilowatt hour that the government will purchase power from the Amaila at, however solar should be at two cents per kilowatt hour, maybe three cents, but around there, so even in that situation, solar is twice as cheap, twice as cheap, in some cases, three times cheaper rather than having hydro.”
He explained that the advancement of technological development has resulted in the massive reduction in costs to generate solar power. Low referenced a statement by the Head of the Guyana Energy Agency (GEA), Dr. Mahender Sharma, who told the International Energy Conference back in February that two hours of sunshine in Guyana can power the country for an entire year.
To this end, he said, “So clearly, the sun is shining, clearly, there is opportunity here, the question is why we are not making use of this glaring opportunity, rather we are going to go all the way across the country to Region Eight…and bring that electricity all the way back across to Georgetown. It truly boggles the mind.”
Low said that the government can set up a solar plant at the Wales Estate, West Bank Demerara where the Gas-to-Energy project is expected to be constructed.
According to him, “You can have a solar plant right there on the coast. You have all the land available to you, you don’t have to worry about the mountains and the rivers and the heavy rainfall and the forest; you have all of the infrastructure there already. You can produce the same amount of electric power and you don’t have to run all of these risks and it is in fact cheaper.”
After analysing the project, the Economist concluded that the Amaila Falls hydropower project is one of the worst he has ever come across.
He argued, “I am not using numbers from another country. I am not using numbers from another project in the past. I am not using estimates from some expert, I am using the government’s number from another project to show what this cost.”
The 165MW Amaila Falls project is pegged at US$700 million. It is being pursued under a Build Own Operate Transfer (BOOT) model, in which Guyana would be buying electricity from the hydro project at an estimated cost of about 7.7 cents per MW.
Although the government will not be investing in the project with upfront costs, Guyanese will have to carry the burden of that project, and after 20 years, the ownership would be transferred to Guyana from the Chinese contractor, China Railway First Group.
At the Energy Conference, Winston Brassington, the project head, while providing an update on the project said that, “like any large project, there is a lot of risks in these projects but most of these risks have been put to the developer.”
He, however, glided over the burdens Guyana will bear as a result of the project, even though the country is bracing to face six of the most dangerous risks associated with the project.
These include hydrological, which means if the falls run dry due to climate change, or if the 23 square kilometres reservoir is unable to feed the hydro plant, the Guyana Power and Light (GPL) would bear the incurred liability. Secondly, Guyana will be responsible for political force majeure, that is, if the government changes its mind about the project, it would still have to pay the Chinese contractor for its investment.
The third risk Guyana will stand, along with China Railway, is ‘other force majeure’. This relates to damage to the plant, by unforeseen circumstances.
Two other risks will be borne by GPL if the Amaila Falls project fails to meet the electricity demand.

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