Analysis and News

Guyana's Optimal Renewable Energy Generation and Flexibility

BY ARMCORE VPI's Analyst: Nirav Chetty

The electricity sector supply chain has four components: generation, transmission, distribution and supply. Electricity is produced from generation units and transported over high voltage cables before being stepped down to lower voltages for supply to end consumers. Transmission and distribution systems involve large sunk capital costs, equipment and environmental optics that generally lead to their natural monopoly status.

Guyana’s electricity market can be classified under the Single Buyer Model where the State controls transmission, distribution and supply. Many developing countries, circa 40%, have a Single Buyer Model and in half of these the State retains some interest in generation (Rudnick and Velasquez, 2018). As Guyana increases its emphasis on independent generation, particularly in hinterland electrification, and aims for large-scale renewable energy generation, it must mitigate the potential issues and strike the appropriate balance in its negotiations on Power Purchase Agreements.

GPL’s role encompasses the responsibilities of Transmission System Operator in ensuring security of electricity supply by maintaining and optimising the transmission grid and conducting the operational planning and implementation to ensure system balance and technical quality. Shifting from transmission connected and dominated fossil fuel generation to utility-scale and distribution connected renewable technologies will increase GPL’s challenge of balancing demand and supply.

Renewable energy sources, such as solar and wind, are known for their intermittent supply and their large-scale introduction into the grid requires careful planning, forecasting and sufficient flexibility in generation. The level of generation from renewable energy can be high during bright and breezy days but coincide with a period of low demand. Presently the technology does not exist for the electricity generated to be stored effectively and the surplus enters the system since an independent power producer is unlikely to shut down generation. If the electricity mix is comprised of significant inflexible generation, an imbalance can be created.

The IEA (2018a) identifies six phases of integrating renewables. Guyana’s massive hydropower potential and the possibility of indigenous natural gas generation suggests that the country’s future electricity mix may be dominated by hydropower with the remainder split between solar and wind intermittent renewables and natural gas. The country is unlikely to experience IEA’s phase four scenario where variable renewable generation makes up near 100% of generation given the potential for flexible hydro and natural gas generation. The UK and Germany are in phase three, where the issue of flexibility and adequate capacity becomes a front burner topic as variable generation determines the operation pattern of the system.

The determination of the optimal medium and long term electricity mix to 2040 against the aim to achieve near 100% clean and renewable generation is critical to the performance of the electricity market. The planners must ensure adequate supply-side flexibility.

IEA’s Phases of Variable Renewable Energy Transition | Source: IEA World Energy Outlook (2018)

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