Dear Editor,
Is hydropower the best solution for Guyana? Every Guyanese looks forward to cheaper and more reliable electricity. Many of us want the source of this cheaper and more reliable electricity to be hydropower.
With the Amaila Falls Hydroelectric Project (AFHEP) we would need to retain present diesel generation and further invest in generation as our demand increases. The run-of-the-river design proposed for the AFHEP with its less than one month of storage and recent low flow rates are the main reasons for this. Imagine not being able to supply electricity to the nation! With the AFHEP we will double our capacity immediately. If we aspire to meet our electricity needs with hydropower we would be unable to rapidly respond to increases in demand by developing other hydro sites. We would have to be close to paying off for the AFHEP.
We must be careful with the timing of the project. In order to reap the full benefit of the AFHEP (or any energy source) we must continue to minimize power company transmission and distribution losses. Reduced losses mean lower electricity prices and increased capacity. Look at it this way:
Suppose you are a middleman selling milk. You buy a 100 gallon tank of milk for $100. Your tank has a known leak (that you ignore) and during your journey to the marketplace, half of the milk is lost. How much do you charge the market for the half tank of milk? Any sensible businessman would charge $100 or more. Let’s say you were not interested in a profit or a loss. Then, you would charge $100 for 50 gallons of milk. So, you bought the milk for $1 per gallon and sold it for $2 per gallon in order for your business to remain viable. If you had patched the hole you could have sold at $1 per gallon. Moreover, you would be able to supply double the amount of milk per trip!
Fortunately, GPL’s Development and Expansion Plan 2013-2017 includes a US$50M investment in loss reduction. The company forecasts a reduction in losses from about 32% in 2012 to about 23% in 2017.
The AFHEP will come with its own transmission line losses. If these losses are 15% then total losses could be close to 50% if GPL’s 2012 losses are not reduced. We still do not know the end-user price for the AFHEP’s electricity.
Decision-making is complex at the government level. When choosing among energy sources leaders need to compare power density, energy density, cost and scale. The AFHEP and hydropower may be the right thing for Guyana some day, but diesel generation wins when we consider power density, energy density, scale and cost. Recently a new 26MW HFO fired plant cost GPL US$32M; compare this to Amaila’s cost of US$700M for 150MW.
It is recommended that:
In the short term we concentrate on reducing transmission and distribution losses to 20% or even 15%. By doing this we can increase our capacity without any further investment in generation, relax the price of electricity and increase the profitability of GPL. Capacity can then be added in response to demand increases.
In the medium term we concentrate on modernizing our grid (we can even aspire towards a smart grid). This will open the door to private investment in electricity production. It would even be possible for citizens to connect their buildings to GPL and to solar pv panels (fitted with micro-inverters) with any excess energy being sold to the grid. We can also look into the use of fibreglass and other materials for power line poles.
In the long term we can encourage private investment in power production via any source. We can consider small modular nuclear reactors. These reactors are being developed by a number of companies around the world. Power outputs will be below 300 MW. Facilities will be small and some of these reactors can work for 10 years without refuelling and will be extremely safe. They are competitive in terms of power density, energy density and scale.
We all have a Utopian dream of Guyana as an industrial powerhouse. Industrial powerhouses require Gigawatt scale electricity supplies. The state of Florida has more than 25 GW of installed electricity supply. Compare this to our supply. The AFHEP surely won’t take us to the Promised Land. We ought to approach our development like a chess grandmaster and not like a chess novice. The grandmaster can see up to 20 moves ahead and the novice only a few. There are many other hydropower sites in Guyana with larger capacities than the AFHEP.
Private investment in a variety of energy sources (nuclear, solar, diesel, etc) and private investment in transmission and distribution seem more realistic if sustainable development is our goal. We must ensure that future generations have equal or better opportunities.
Yours faithfully,
Marlon Chung
