Towards a Good Life in a Green Economy – The Amaila Falls Report (Part 2)

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Solar Farms as an additional option

IN Part I, we looked at whether there was a deliberate intention, on the part of Norconsult,

Rear Admiral (Rtd.) Gary A. R. Best

the consultant firm hired to do the report on the Amaila Falls Hydropower Project (AFHP), to resuscitate the AFHP. We concluded that, based on the terms of reference of the consultancy, the consultant firm had no other choice but to recommend the feasibility of the AFHP, but subject to technical and other upgrades due to inherent uncertainties. In this part, we will look at solar farms as an additional option to the AFHP, given these uncertainties. But first, let us examine some of the significant uncertainties within the report.

Risks and Uncertainties of the Amaila Falls Hydropower Project
A good place to start would be the terms of reference (TOR) of the Norconsult consultancy. The TOR required that Norconsult delivered to the Governments of Guyana and Norway, “A report presenting possible gaps in the present project reports regarding technical, geological, hydrological and financial risks.” This is a clear indication that risks were inherent. In addition, the TOR mandated Norconsult to “… provide advice on the need for additional studies, including safeguards assessment related to IDB fiscal, transparency, fiduciary, social and environmental safeguards.” Clearly, uncertainties were anticipated. Further, the TOR required Norconsult to present an “…alternative, restructured project design regarding financing options and ownership… [with] a list of possible candidates or procedures to attract appropriate sponsors to partner with the GoG.

Against this backdrop, let us examine the main risks and uncertainties to the AFHP. According to the Norconsult Report, there is uncertainty surrounding the energy production for the AFHP, because of the absence of water-flow records “…since continuous series of direct flow measurements in the Kuribrong river at the project site do not exist.” Instead, water-flow records for the Kaieteur Falls on the Potaro River are used as opposed to water-flow records for the Amaila Falls, which is located on the Kuribrong River. We will call this uncertainty, the hydrological risk.

There is also uncertainty about the amount of sedimentation (siltation) of the required 23 km2 reservoir since “…only a limited number of spot measurements of sediment transport exist and the project design does not include any facilities for future sediment handling.” This means that by the time [ a period of 20 yrs] the AFHP would have been handed over the Government of Guyana (GoG), the entire reservoir could be silted beyond economic use. We will call this uncertainty, the sedimentation risk.

The construction of the Amaila Falls access road, given the amount of uncertainty surrounding the execution of AFHP, now pose a [sic] significant ecological and environmental risks “…due to potential secondary impacts from non-Project related activities exacerbated particularly by…” uncontrolled mining and forestry operations. The Norconsult Report indicates that there was a high political risk to the main sponsor of the AFHP, because of non-support from the main opposition party in Parliament. However, the absence of joint parliamentary support for the AFHP is in itself an uncertainty to the project.

There are uncertainties surrounding the capacity of the generating units and whether the entire 1540-metre long water tunnel should be lined with steel or only a 960 metres of it should be steel-lined, since this “…can only be confirmed by in situ rock stress measurements from inside the tunnel during excavation.” We will call these uncertainties, technical and geological risks.

According to the Norconsult Report, there is a political risk insurance of USD34.0 million in case GPL does not meet its obligations under the terms of the AFHP. There is also a credit-risk imbalance in favour of the GoG, instead of the building contractor and main financier of the AFHP. Further, Sithe Global, a U.S.-based investor in the energy market, the main financial sponsor, pulled out of the AFHP, triggering the search for a new financial sponsor.

China Rail First Group (CRFG), the building contractor for the AFHP, applied to replace Sithe Global as the main financial sponsor, in addition to being the building contractor. Despite obvious conflict-of -interest possibilities, the IDB entertained CRFG’s application to be sponsor. However, the application was never approved. The Norconsult Report is also very specific in recommending that, in any new, reworked version of the AFHP, it is doubtful that the Government of Norway will agree to CRFG participating as building contractor or main financial sponsor, due to corruption charges. Sithe Global continues to own the intellectual property of the AFHP and a purchase of it is required to continue this project.

It important to note that addressing various types of risks identified above will require substantial additional funding to meet these additional costs. Importantly also is that the Norconsult Report is very silent on these costs. Who will pay for the technical upgrades in order to avoid technical and geological risks is a fair question that requires an answer. These additional costs may well run into hundreds of\ millions of U.S. dollars. We will call these uncertainties, financial risks.

Solar Farms as an Option
Against the backdrop of these uncertainties, it is necessary that we examine some options for the AFHP. Firstly, as pointed out in Part 1 of this series, we would disagree that a commitment to go 100% renewable should be based only on a single hydro project, such as the AFHP, and rather suggest an energy mix that takes into consideration Guyana’s physical and demographic peculiarities. In fact, the Demerara- Berbice Interconnected System (DBIS), which the AFHP was expected to power, does not connect the entire Guyana to one grid.

The DBIS excludes our island and isolated communities (IAIC) such as Leguan, Wakenaam, Hogg Island, the Essequibo Coast, Lethem, Mabaruma, Mahdia, Bartica, Kwakwani and other independent grid- operated communities. Therefore, the AFHP is no silver bullet, neither is hydropower. A well planned alternative and clean energy mix comprising hydro, solar, wind, natural gas, tidal and even geothermal sources should be pursued.

It is incumbent that while the GoG finalises studies on hydropower, options such as solar farms should be considered for island communities and some coastal interconnected villages, as test cases, for solar-generated power to the grid. However, the issue of base-load power requires some attention, which we will address later in this article.

We believe that establishing solar farms present an opportunity for the GoG, whether through public/ private partnerships or independent power producers, to apply and test new solar-power technology, particularly, flexible generation, demand management and energy- efficiency systems. Secondly, the literature seems to suggest that it may well be cheaper to source power from independent solar-grid connections, due to the high cost of transmitting power over long distances to isolated communities. Finally, we assert that solar farms, with storage, are suitable for Guyana’s IAIC.

In fact, most of our IAICs, in terms of electricity consumption, fall within the range of 1-5 megawatts (MW) of power, which includes GPL’s “…forecast power demand (base case) for 2025.”In addition, the population of these communities is close to 200,000 persons with a GoG annual subvention in support of their power generation totalling in excess of G$500 million.

Some Facts about Solar Farms
According to recent literature (Solar Trade Association and others), Solar farms can generate electricity locally and feed into the local electricity grid using the sun, a free source of energy, to generate electricity on bright cloudy days as well as in direct sunlight. For every 5 x MW of installed solar power, a solar farm could power approximately 1,515 homes for a year, based on an average annual consumption of 3,300 kWh of electricity for a house. These ratios fit well within the solar energy needs for Guyana. Generally, approximately 25 x acres of land are required for every 5 x MW of installation. This also redounds well, in the case of Guyana, since land is available for solar- farm construction. Though apparently small, every 5 x MW solar power installation will save approximately 2,150 tonnes of CO2 from being emitted into the atmosphere.

Solar farms can also “…represent time-limited, reversible land use…” while providing an increased, diversified and stable source of income for landowners. In many instances, they may serve dual purposes, where small- animal grazing can be allowed between rows along with biodiversity support through the maintenance and establishing of ecosystems. Farmed-out lands in our communities are excellent choices for solar farms. Interestingly, in solar farms installation, there are no moving parts. Maintenance is minimal and there are no by-products or waste generated, except during manufacturing or dismantling. Finally, solar farms have lower visual and environmental impacts than other forms of power generation.

Imagine if 100 x MW of solar power were installed in Guyana, that would utilise only 0.000009% of Guyana’s territory; but the solar farms would be able to power approximately 30,300 Guyanese homes.

So how does the concept of base-load power relate to solar power?

The Concept of Base-Load Power
The Norconsult Report makes the assertion that “…from a system point of view, solar power is not sufficiently stable and can therefore not be recommended as the main source of power in the main grid. Solar may be used in off-grid areas with battery back-up and or in the main grid for generation during day-time, but it cannot function as [a] source for base-load power.” We respectfully disagree with this aspect of the report and suggest that the concept of base-load power is attracting new international attention.

Therefore, what is base-load power?
According to the energy dictionary @www.EnergyVortex.com, base load is “…the minimum amount of power that a utility or distribution company must make available to its customers, or the amount of power required to meet minimum demands, based on reasonable expectations of customer requirements.” This is, in essence, a system of minimum, constant power. Others see base-load as a concept that acts against the integration of alternative energy sources into power generation, because those sources are not stable.

Let us now look a little closer
Firstly, according to Tim Buckley, from the Institute of Energy Economics and Financial Analysis, the idea of “base-load” generation, as an essential part of the energy mix, is becoming redundant, and turning into a myth dreamed up by the fossil fuel industry to protect its interests. While it means that supply is dependent on other factors, including a connection to the main grid, culture, not technology, is the biggest challenge here. In fact, one of the biggest network owners, China State Grid Corp, operating in the biggest energy market in the world (China), believes that base-load power is a myth used to defend the fossil-fuel industry.

Further, Ed Smeloff, writing for GTM Research, acknowledges that the removal of a large base-load unit during periods of peak solar production will lessen the need for the intermittent curtailment of renewable resources and encourage regulators to give serious consideration to the development of large-scale energy storage projects, including pumped hydro storage.

Secondly, “base-load is not a technical concept, it is an economic concept and a business concept of the coal industry that is no longer feasible,” says Sven Teske, an analyst with the Institute for Sustainable Futures in Sydney. And thirdly, according to Giles Parkinson of RE neweconomy, base-load is a myth and it will take a number of years to change that perception. It is a different way of operating the system, more like going from analogue to digital. The focus is now on renewable energy, flexible generation, demand management, and energy efficiency.

Finally, the high cost of transporting that centralised power to consumers is a key reason for this recent uptake of solar and storage. In addition, a major study conducted by the CSIRO suggested that up to half of all generation could be supplied locally and current high tariff costs make solar and solar storage very attractive. It is now possible to envision an energy future, whereby the grid will be balanced moment to moment by a combination of energy storage, responsive load and fast-ramping technologies like fuel cells.

The literature seems to suggest that as we go forward in developing alternative energy, such as solar power and solar power storage, more and more technical support is for its integration into existing grid is available. Further, solar can operate alongside hydro as a major source of power, given the right technical parameters. The AFHP presents too many uncertainties! It is not a silver bullet neither is hydropower. Against this backdrop, we recommend that the GoG proceed with solar power and solar-storage development, particularity for its island and isolated communities.

Next week I will look at who really owns the US$ 80 million equity.

Mr Gary A R Best is a retired Rear Admiral and former Chief of Staff of the Guyana Defence Force. He is an Attorney at Law and the Presidential Advisor on the Environment. He is a PhD candidate at the University of the West Indies. He holds a BSc in Nautical Science (Brazil) and Masters Degrees from the University of the West Indies and the University of London. He is also an alumnus of the National Defence University and Harvard Kennedy School. His research areas include, climate change governance, climate change finance, international relations and environmental law.

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