Understanding Energy: Government exploring hydro to complement gas-to-energy project
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AS the gas-to-energy project continues to progress, the government has now announced that it will not be the only major new project to contribute to the electrical grid. The government is also planning to move forward with the long-postponed Amaila Falls Hydropower Project. Although the project was initially proposed over a decade ago, it was stalled after the 2015 elections. But now the government appears to be moving forward in a concrete way and has extended a request for proposals from interested companies.

A major investment into renewable energy like this could be a strong signal that the government is serious about its promises to diversify Guyana’s energy mix and pursue both natural gas and renewable energy.

Guyana’s electricity needs are rapidly growing and are expected to grow even more due to the rapid economic expansion accelerated by the country’s oil discoveries. The electricity grid will need multiple sources of generation and greater supply to keep up with this growing demand.

However, according to a report by Norwegian consultancy Norconsult, Guyana will need to expand further to incorporate solar, wind, and thermal power sources to further diversify its energy mix, as many developed countries have done. Pursuing both gas and hydropower simultaneously could be a good first step down that road to meeting emission goals and securing a more reliable power supply.

As of 2017, Guyana had enough power- generation assets to produce about 172.2 megawatts (MW). This comes primarily from heavy fuel oil – a relatively expensive and highly polluting source. However, as the country develops and its industries grow, demand is expected to grow to 465 MW by 2025, according to the Guyana Power and Light (GPL) Inc. Current facilities will not be enough to provide reliable power.

The new hydropower project will include a 165-megawatt (MW) hydro dam and plant located at the Amaila Falls, which would connect to a 270-kilometre transmission line to Georgetown; electrical substations would store and transmit power from there. This additional energy generation is already part of GPL’s current development and expansion plan to increase supply for the country. The project also includes upgrades to roads and bridges to the site, which should benefit local communities in the hinterland.

While hydropower is an attractive, clean energy source, gas will likely be an essential complement. As discussed in the last two columns, the gas-to-energy project will not only increase the overall supply of energy to Guyana’s electricity grid, but will also ensure that electricity is cheaper and more reliable. Gas is an essential complement to renewable energy sources such as hydro, which may be disrupted by weather patterns such as droughts, since it can come online and power back down quickly and easily.

With multiple energy sources, Guyana will be able to diversify its energy mix and ensure that it can meet growing demand with the gas plant set to come online in 2024 and the Amaila Falls a year later. Cheaper energy will add to Guyana’s already attractive investment climate and will enable businesses to operate more easily and provide electricity for new companies moving to Guyana.

Construction for the hydropower project is slated to begin as early as 2022. According to remarks from the government, there are two options for development under consideration. In a Build-Own-Operate-Transfer option, the developer would cover all construction costs up to the commission date, then control the project for a 20-year period. The company would then transfer the project to government control.

In a Design-Build-Finance option, the developer would finance the project, but the government would take over at the commissioning date and complete financing repayment according to contract terms. In each situation, a strong set of bidders for the contract would be a positive signal that oil-and-gas development has helped position Guyana as an attractive destination for investors. If done correctly, Guyana is setting itself up for long-term success by growing and diversifying its electricity supply.

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