IN just over a year since Guyana started to produce oil, the country has made strides in tackling its historic dependence on energy imports. Not only is Guyana now producing its own oil, about 120,000 barrels per day, but the government is pursuing longer-term opportunities to reduce the country’s energy dependence and promote economic diversification.

Guyana’s Low Carbon Development Strategy (LCDS) outlines the country’s intended transition to greater economic and social development by following a low carbon development path and addressing climate change concerns. Vice President Bharrat Jagdeo recently stated that there are plans to “expand the LCDS… to keep our green credentials intact and still produce oil and gas.” The strategy highlights the need for Guyana to reduce its reliance on heavy fuel oil for electricity by transitioning to solar, hydropower and wind, while also acknowledging the importance of using natural gas as the most viable short-term option. The government also hopes to use these sources to tackle historic and pervasive cost and reliability issues across the electrical grid.

The government is already working to set up mini hydro schemes and solar systems in hinterland communities to make electricity more accessible. But the main focus is meeting growing demand and fixing long-term problems with reliability and cost in population centres. For that, the natural gas found in the new oil fields will be critical. Natural gas also fits within the broader scheme for the LCDS since it is widely regarded as a “bridge fuel” that has much lower emissions than coal or oil but still has important attributes like consistent readiness and dispatchability that most renewable energy sources currently lack.

In addition to an emphasis on sustainable electricity generation, the plan focuses on making the residential, agriculture, transport, mining, commerce, and tourism industries more energy efficient. Guyana is historically the most fuel import-reliant economy in the Caribbean, importing more than 90 percent of its energy needs. For Guyana to become self-sufficient, significant change will be needed.

Continued development of offshore oil blocks is giving Guyana the opportunity to do just this. Government revenues from oil development have already added nearly US $300 million to Guyana’s Natural Resources Fund, with tens of billions more expected in the coming years, opening up an array of new opportunities for infrastructure development. Vice President Jagdeo recently emphasised that resources from the petroleum sector must be used to raise the standard of living for all Guyanese by reinvesting in other sectors.

Earlier this year, the government announced that it would take the first step and build a gas to power plant that could produce up to 250 megawatts of energy with gas produced offshore. According to Joel Bhagwandin, a local analyst at JB Consultancy and Associates, the gas to power project would not only reduce the cost of energy but also make Guyana more competitive in industries like food processing and manufacturing that depend on inexpensive electricity.

A gas to power plant is consistent with plans to develop renewable energy sources and further diversifying Guyana’s energy matrix in the longer term, while giving the country a more reliable, cleaner and cheaper power source today. Many developed countries, like the United States and Germany, use gas to power as both a major contributor to the grid and as a back-up energy source to support renewables during times of high demand or severe weather.

As Guyana continues to diversify its energy portfolio and transition to renewables in keeping with the LCDS, the gas to power plant will also provide the country with opportunities for development in other industries. As solar, wind or hydropower eventually replace some of the gas used to generate power, more of that gas can be used in a wide spectrum of industrial applications, like fertilizers, plastics and chemical production.

The government recently stated that it hopes to have the gas-to-power plant up and running by the end of 2023. While some analysts have clarified that that may be overambitious, it is a clear signal that the government is keen on taking advantage of Guyana’s oil opportunity to remake the power system. It could not come a moment too soon for Guyanese businesses and households that need less expensive and more reliable power.