Damning Int’l Report finds solar is cheaper alternative to Gas-to-Energy Project

Oct 08, 2023 ExxonMobil, News, Oil & Gas

---

Kaieteur News – A damning international report by the Institute for Energy Economics and Financial Analysis (IEEFA), a US think tank has pointedly underscored that going solar is a less costly alternative to the gas-to-energy project which carries an almost US$2B price tag.

In the report co-authored by Tom Sanzillo, Director of financial analysis for IEEFA and Cathy Kunkel, an Energy Consultant at IEEFA, it was explained that distributed (rooftop) solar power provides an alternative to the gas-to-energy project that can be built out in small increments to avoid overbuilding the generation system.

IEEFA experts explained that for residential customers of the Guyana Power and Light (GPL), the current average monthly electricity consumption is 171 kilowatt hours (kWh), projected to grow to 320 kWh by 2027.

The experts stated that a rooftop solar and storage system consisting of 2.8 kilowatts (kW) of solar panels and 10 kWh of battery storage would be more than sufficient to meet this level of current and projected consumption, producing approximately 368 kWh per month.

“We estimate that such a system would cost approximately US$7,800,87 and would generate power at approximately 15 cents/kWh less than the cost of GPL’s current rates (20 cents/kWh for residential customers) or of a diesel generator,” the IEEFA experts said.

For thousands of households outside of GPL’s grid, some of whom today have no access to this electricity, the IEEFA analysts said this would represent significant progress. For those connected to GPL’s grid, they proffered that it would represent a substantial improvement in reliability and resiliency.

Expounding on the cost to power the entire nation with solar, IEEFA said its estimate covered approximately 230,000 households in Guyana. “Providing each with a 2.8kW solar system with 10 kWh of battery storage would cost approximately US$1.8 billion, less than the total investment for the Gas-to-Energy project,” IEEFA experts said. They noted that this plan presumes that oil profits derived from the Liza and Payara fields and any other oil and gas producing assets in the Stabroek block offshore Guyana are used directly to pay for the planning and installation of solar panels in Guyanese homes and businesses.

On GPL’s grid, IEEFA said providing a rooftop solar and storage system to every household would eliminate slightly more than 50% of the current system-wide sales. They said this would preclude the need to make the massive investments in centralized generation that GPL has planned, even acknowledging the time that would be required for this transition to occur.

“If we consider a scenario in which the installations of residential rooftop solar and storage systems are deployed over a period of 14 years, it is likely that GPL would be able to meet its remaining load for the next decade through existing resources plus the new oil-fired units that GPL plans to install in 2023, assuming load growth of 7% per year (or less), consistent with or higher than the recent past,” the experts said.

They were also keen to note that one of the other important economic benefits is that investments in rooftop solar keeps money made in Guyana circulating in Guyana.

“Over time, with thousands of families getting rooftop panels, new businesses that buy and sell panels and perform local installation services can grow. It takes labor to install solar panels, which would result in more jobs,” they said. The IEEFA analysts further noted that the cash that is invested in rooftop solar tends to stay in communities and is spent locally. They said this is in stark contrast to the dollars that would be borrowed and paid using international lenders, and large centralized fossil fuel plants built by engineers and experts usually not from Guyana.

Overall, the IEEFA experts said providing a solar and battery storage system to every household in Guyana would put Guyana on track to meet its renewable energy goals. They added that electricity outside the GPL grid system would be 100% renewable by 2032, and a process for all residential users Guyana-wide would be established.

BACKGROUND ON GAS PROJECT

The People’s Progressive Party Civic (PPP/C) plan for a gas-to-energy project entails partnering with ExxonMobil Guyana Limited to construct a massive 218 km offshore pipeline structure that would bring gas from the Stabroek Block’s Liza field onshore and feed into two facilities, a Natural Gas Plant and a 300MW Power Plant, both to be situated at the Wales Development Zone.

The 12-inch pipeline being constructed by Exxon will have the capacity to transport 50 million cubic feet per day (MMcf/d) from the offshore Liza field, and will be able to deliver a minimum volume of no less than 10 MMcf/d. The Government of Guyana and US consortium, LINDSAYCA/CH4 on December 13, 2022 signed the contract for the construction of the integrated Natural Gas Liquids Plant and the 300-megawatt (MW) combined-cycle gas turbine (CCGT) power plant at Wales, West Coast Demerara (WCD), Region Three. The historical signing of the contract for the US$759 million project took place at the Office of the President, Shiv Chanderpaul Drive.

In January 2023, President Irfaan Ali witnessed the signing of a contract between the Guyana Power and Gas Inc. and Engineers India Limited (EIL) for the provision of Consultancy Services for the Wales Natural Gas Liquids (NGL) facility as well as the 300-megawatt (MW) power plant. That contract is pegged at US$22,143,190.

The consultancy is for the Consultant to assist the Government of Guyana through the Gas to Energy Task Force in the design review, construction, supervision and general project management of the development of the integrated plants, and contract administration throughout the project implementation process and thereafter during the defects liability period. Government has said project generation costs, taking account of payment for the pipeline, operations and maintenance, and capital cost recovery will total less than five US cents per kilowatt-hour.

---

• an Energy Consultant at IEEFA, Cathy Kunkel, Director of financial analysis for IEEFA, Institute for Energy Economics and Financial Analysi, Tom Sanzillo

---