Jagdeo admits climate change poses challenge to Amaila hydro project

Feb 04, 2025 News

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—claims govt, investor will share risks

Kaieteur News- While the Amaila Falls Hydropower Project (AFHP) remains on the government’s agenda, Vice President Bharrat Jagdeo last week admitted that climate change does pose challenges to hydro projects but noted that the risks will be shared with the investor.

However, despite Jagdeo said the risks will be shared, under the most recent iteration of the project as presented, Guyana was to stand the majority of the major risks involved in the project.
These include those related to political force majeure, payments risks in the event that electricity sold is not sufficient to meet the PPA demands, and hydrology where Guyana stands the risk associated with the likelihood of there being insufficient water supply, meaning if the Amaila Falls runs dry, among other risks.

At his press conference last Thursday, the Vice President was asked if the government plans to update its hydrology studies, including climatic predictions, before investing in any large-scale hydro project, given the impact of droughts on hydropower projects in South America, with the most recent case in Suriname.

In his response, Jagdeo noted that while climate change presents challenges for hydropower projects, he noted that hydropower projects are cost-effective and viable option. “Okay, so climate change has posed challenges for hydro power but I don’t think you can beat hydropower, at this stage as in terms of cost and being base load at the same time,” the Vice President said.

He noted that while solar might be a cheaper option, when it comes to being a baseload energy option – hydro is the better option at this time. “It’s not base load and what I mean it doesn’t run 24 hours a day continuously. If you put in the batteries, then the cost go up significantly. So if you do a grid tie in system, you might get it fairly around the same price that the hydro, but that means you can only get it in sunlight when there is sunlight,” he noted.

As such, Jagdeo stated that at this point in time hydropower projects will out compete wind energy and solar as base load, and still be competitive in terms of price of energy. Further, the Vice President acknowledged that changing weather patterns could impact water availability for hydropower plants globally. However, he noted that he does not think hydropower projects can be put aside. He added that with climate change posing challenges he stated that he believes that necessitate careful planning, adequate reservoirs and backup power.

“So, it does present challenges but I don’t see it as fatal to the development of hydropower but of course when you develop it you have to ensure that your studies are done and updated,” he noted. The Vice President elaborated that in Guyana’s case government plans to mitigate hydrological risks by structuring the project in such a way that the investors bear part of the burden. “Yes, I said that you have to, of necessity, look again at hydrology risk, but the model also that we have pursued in the past, and we intend to pursue, place the risk to some extent on the investor, because they will not be paid for a period, like for energy. They may be paid for capacity, but not energy for the period when they don’t supply power,” he explained.

He further stated that the project would not be owned by the government and that the government will be purchasing power. However, he stated that the state will share the risk. “You share the hydrology risk here…but clearly an investor, if they’re coming in to invest and needs a sort of return to justify the investment, they would have to examine that themselves to see because it’s their money that they’ll be using,” he said. Notably, it was reported by this publication that the previous model pursued by the government revealed that the Guyana Power and Light Incorporated (GPL) in addition to agreeing to purchase all of the power to be delivered to Georgetown from the Amaila Falls hydro project, has also agreed to assume the hydrological risks involved in the project. As such, it would mean that GPL would bear the incurred liability whenever the Amaila Falls runs dry or if the 23 square kilometres reservoir is unable to feed the hydro plant. This is according to Project Head, Winston Brassington, when he provided an update on the project for stakeholders at the 2022 Energy Conference and Expo, venued at the Marriott Hotel in Kingston.

The Amaila Falls hydro project had been shelved on several occasions. Since returning to office in 2020, the PPP vowed to revive the project, though it remains stalled. In 2023, the government attempted to revive the Amaila Falls hydro project after talks with a previous contractor fell through. A revised Request for Proposals (RFP) was issued under a Build-Own-Operate-Transfer (BOOT) model. Four companies had submitted bids in December 2023 – however the project remains stalled. Vice President Jagdeo indicated last September that the government may either negotiate with the top-ranked prequalified bidders or restart the procurement process. Earlier this month, it was revealed that the government is still reviewing proposals from the last tender. The Amaila Falls Hydropower Project, projected to supply 165 megawatts (MW) of electricity to Guyana’s national grid, was shelved multiple times due to financial and political hurdles.

(Jagdeo admits climate change poses challenge to Amaila hydro project)

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• Amaila Falls, Bharrat Jagdeo, climate change, hydro

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