Analysis and News

New Hinterland Electrification Funding and its Place in the Evolution of Guyana's Electricity Mix

ARMCORE VPI

On Wednesday night, during a reception held at the Indian Cultural Centre in Georgetown, a 7.2 million USD Line-of-credit agreement was signed by the Senior Minister within the Office of the President with responsibility for Finance Dr Ashni Singh and High Commissioner of India to Guyana Dr K. J. Srinivasa. The agreement entails a project geared at powering 30,000 households in the hinterland regions with solar power. Each household is expected to have its own solar panel, an inverter, and basic fittings.

Evolution of Guyana’s Electricity Mix

In 1988 Guyana’s electricity mix was almost exclusively comprised of fossil fuels (National Energy Policy Committee, 1994). Several policy documents established the intent to transition away from imported petroleum products to indigenous energy sources, and newer policy documents have magnified the call specifically towards the uptake of renewable energy sources. However, the high level of dependence on imported petroleum products remains one of the most pressing issues of Guyana’s energy market. Fossil fuels constituted 91.8% of the 2014 electricity mix (GEA, 2015). Electricity in 2016 accounted for 34% of petroleum imports, mainly fuel oil (GoG, 2019). As of 2018, installed solar capacity is under 5 MW while there is less than 1 MW of installed wind capacity and a lack of utility-scale hydropower. Bagasse is the leading indigenous source of electricity by earmarked capacity.

The National Energy Policy of 1994 issued the call for indigenous generation and utilisation. The step away from imported petroleum products was again echoed in the original and revised National Development Strategy of 1996 and 2000, the Hinterland Electrification Strategy 2007 and the Power Sector Policy and Investment Strategy with the reasoning that a secure supply of electricity for future economic development requires a significant reduction in imported petroleum products and the expansion of new and renewable domestic energy sources. The Low Carbon Development Strategy 2009, Draft National Energy Policy 2016 and the Green State Development Strategy 2019 magnified the decades-old call to shift away from fossil fuels, particularly in light of the urgent need to address climate change.

The early push for indigenous energy sources was centred around hydro, biomass, biogas, solar and wind. The National Energy Policy of 1994 firmly labelled hydro generation as the “solution to the country’s long-term power needs.” Several studies were conducted before 1994 on hydropower that indicated its potential, and thus there was a narrower information gap with this technology as opposed to solar and wind. Noteworthy studies are the Upper-Mazaruni Hydro-Electric Project of 1974, the Hydro-Electric Power Survey of 1976 and the Guyana Power Study of 1982. The 1976 study conducted with the assistance of the United Nations Development Programme served as a hydro resource reconnaissance activity that identified several viable sites and conducted pre-feasibility studies on the most attractive options of the consideration set, namely: Amaila, Tumatumari and Kaieteur. A key outcome of the study is the assessment that Guyana has roughly 7,200 to 7,600 MW of hydro potential based on the basins and regions examined. The 1982 Guyana Power Study also considered the hydro potential of the select three, among others.

The Upper-Mazaruni River potential led to a 2012 Memorandum of Understanding with Brazil to conduct feasibility studies for the development of a generation facility (Kaieteur News, 2012). The corroborated potential of the Amaila Falls resulted in the 165 MW hydropower Amaila project. The project was expected to finally deliver on a substantial move away from imported petroleum products to a clean electricity mix and baseload generation. An estimated 92% reduction in energy-related emissions was expected (C-SERMS, 2015). The circa 860 million USD hydro project was cancelled in 2017 over cost and feasibility considerations (Stabroek News, 2017). The Inter-American Development Bank (2017) states that “the project structure allocated significant financial risks to the public sector.” Key lenders to the hydro-project were the IADB and the China Development Bank, while Norway agreed to fund 80 million USD under the Guyana Reducing Emissions from Deforestation and Forest Degradation Investment Fund under the LCDS (GRIFF, 2011).

In the pre-2000 period, wind energy developments were limited by a lack of local data while the presence of solar radiation data was countered by Solar PV systems being costly. The 1994 policy states that “solar and wind play a very minimal role in Guyana’s energy spectrum, but their potential contributions cannot be disregarded in the long-term.” Solar PV systems gradually played an important role in rural electrification efforts, firstly in its usage at healthcare centres for lighting and refrigeration (GoG, 2007).

The cost reductions in Solar PV technologies led to an enhanced use case as indicated by the 2004 to 2010 Unserved Areas Electrification Programme, financed by an IDB loan of 34.4 million USD. Solar PV systems were installed in homes, schools, and other community buildings across 21 hinterland villages (GEA, 2015). The maturity of wind generation technologies and availability of wind data can be gleaned by the planned 16 MW Hope Wind Farm Project, an independent power producer play, which will add its capacity to the grid in 2020 (Kaieteur News, 2019).

In the 1990s and early 2000s, biomass received special emphasis over solar and wind renewable energy sources. Industries were encouraged to utilise their by-products or waste generated to create electricity such as bagasse from the sugar industry, wood waste from the timber industry, and rice husk from the rice industry (Guyana’s Energy Policy, 1994). Projects on the ground by the mid-1990s included two lumber enterprises producing 3MW from wood waste and two rice millers producing 1 MW. There was evidence that the sugar estates of Albion and La Bonne Intention (LBI) could support generation projects that would produce an aggregate 30 MW (Guyana’s Energy Policy, 1994). The rural and remote electrification challenge was met with an effort to develop an organised fuelwood market with the intention for it to be tempered by environmental considerations.

The pinnacle of biomass generation to date is the Skeldon Bagasse Cogeneration Project. The 40 MW plant was added to the modernisation of the Skeldon Sugar Factory, commissioned in 2009. The plant was intended to satisfy internal needs and deliver surplus generation to the grid, demonstrating the commercialisation of grid-connected renewable energy. It was estimated that roughly 77 GWh per year would be added to the grid and 58.8 GWh would be generated for internal use (World Bank, 2007). The cogeneration plant was designed with 10 MW of diesel generation capacity to account for the low bagasse stocks in the off-crop periods. The project suffered implementation issues and has not performed in accordance with expectations.

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