Dear Editor,
Prime Minister could not agree more with CDB President:
We must turn to renewable energies.
As Minister, with responsibility for energy and electricity, I have been asked by a number of persons about my reaction to the address of Dr William Warren Smith, President (CEO) of the Caribbean Development Bank (CDB), at the opening, last Wednesday (May 28), of the Annual Board of Governors Meeting of the CDB.
Dr Smith advocated with great zeal that, on account of the steadily rising costs of petroleum fuel, the steady improvements in technology and falling prices of alternative energy sources, all Caricom and Caribbean countries must turn away from our traditional and accustomed reliance on petroleum fuels as our primary source of energy, particularly for generating electricity for the grid. Electricity generation, based on petroleum fuels at today’s prices, leads to tariffs charged to customers in the range of 30 US cents to 40 US cents per kWh, which is the prevailing range across the region and which negatively impacts the costs of our goods and services. The region must turn to the abundantly available alternatives – hydro, geo-thermal, photo-voltaic and wind – which can now provide lower generation costs and reduce the generation of the greenhouse gases which are causing climate change.
I could not agree more with the CDB President, “Let us make Amaila happen, and let us get Hope Beach Wind-Farm in place, quickly.” We Guyanese must do all we can, at such times that we can, to clear the way in the National Assembly for Amaila Falls hydro-electrical power to happen.
In Guyana, we Guyanese, since the 1960s, have been looking to find economically attractive and less costly ways to generate electricity, by developing one or more of our many waterfalls. The Amaila Falls was identified already, by the 1980s, as one of the falls which presented the best possibilities to meet our local needs. Focused and progressive studies of the Amaila Falls, from the late 1990s, reached the stage of a more or less complete proposal in 2003-04. At that time, however, with crude oil prices in the range of US$ 20 to US$ 30 per barrel, and electricity generation costs utilizing Heavy Fuel Oil (HFO) at about 8 US cents per kWh, it – that proposal – was not an improvement. Indeed, for the first five to ten years, the cash outflow to the developer to pay for the electricity (and hence the development) would have been greater than the outflows to purchase fuel and spares, and so, that proposal was rejected.
Today, however, with crude oil prices above US$100 per bbl, the ‘all-up’ costs of generating electricity in HFO-fuelled sets sized for our network, is about US 21 cents per kWh, whilst, with the current proposal, the initial costs of generating electricity at Amaila Falls and transmitting it to Sophia, should not exceed US 12 cents per kWh. This price could fall to about US 9 cents within the first nine years, then fall to just the ‘running costs’ of about US 3 cents per kWh, at the end of the BOOT (Build, Own, Operate, Transfer) period of 20 to 25 years. With this projected reduction in generation costs to about half the costs of generation based on HFO, the development of Amaila Falls is clearly very advantageous, and we must proceed quickly to project closure and construction. Each day of delay is costly in delayed savings of about US$0.2 million (G$40 million) per day.
It is projected, now, that electricity generated from Amaila Falls could be available commercially in about five years’ time, including about four years for construction and a year for closing and breaking ground. Every day earlier in attaining commercial operation would be worth so much to us that every Guyanese should put his/her full weight behind the earliest completion of the Amaila Falls Hydro-electric Project, if needed, with their votes at the next election.
In the meantime, we should all pay heed to the programmes on improving energy efficiency, on energy conservation and energy reduction, and on accompanying changes in procedure and lifestyles, being offered by the Guyana Energy Agency (GEA), the Inter-American Development Bank (IDB), the Guyana Manufacturing & Services Association (GMSA), and others. Also, whilst our business executives quite properly and validly focus on, and call attention to, the high costs of electricity locally, there are few businesses where electricity costs are more than 10% of their total costs. Our business executives, whilst doing all they can in demanding sustainable, lower electricity costs in Guyana, should not be unmindful in ignoring the other 90% of their total costs. We have to learn to be good in many things, in everything, as quickly as we can.
With respect to wind energy, there have been, from decades ago, small wind-driven electricity-generating sets along the coast, and water pumps on the savannahs in the hinterland. In 2000, the CDB financed an engineering survey of the potential of wind along the coast for the large-scale production of electricity. The prospects were judged to be not fantastic but, still possibly, economically attractive, and Delta Caribbean of Curaçao which had established a wind farm in Curaçao – the wind regime was very favourable there – was invited to study the possibilities of wind farms along Guyana’s coast. Delta Caribbean began their appraisal with a year-long study of wind speeds at Hope Beach, and also studied various generators available then to see how they would perform in our wind regime. Up to about 2006, a project could not be put together which would be financially attractive to all parties, and Delta Caribbean withdrew, passing on all its rights and obligations to a new local company, Guyana Wind-Farms Inc.
The search to put together a ‘closed’ project was maintained. One may recall, at one time, that an artist’s impression was presented of a wind farm along the Georgetown seawall, from the head of Camp Street to the head of Vlissingen Road – the apparent public response was to stay at Hope Beach.
During the years since 2000, wind-generating technology has improved and prices have fallen, whilst oil prices have risen. Guyana Wind-Farm Inc has recently put forward a very attractive project which could see GoldWind of China, rated at least third in the world in the establishment of wind farms, establishing a 10×2.5 MW wind farm at Hope Beach for a total cost of about US$42 million. Gold Wind would provide 75% of total financing and take 51% of the equity shares. Republic Bank has offered to support the project, with a US$2 million loan. Some ground studies have already been done, and the wind farm could be built and be in operation within a year of a ‘go-ahead.’
Renewable energy, particularly wind and solar, are not available 24 hours x 7 days a week, throughout a year. There would be times when no power would be available.
One has to discount their installed capacity, and they are paid with prices no more than that of the net savings in the cost of petroleum fuel and maintenance which would have been incurred in the course of traditional generation with HFO – the ‘avoided’ costs. This Hope Beach Wind Farm Project, too, is cast in the nature of a BOOT, with write-off and transfer projected to occur at the end of five years, and with a useful life of about 20 years.
Let us get Hope Beach Wind Farm in place quickly!
Let us turn our electricity generation away from petroleum fuels, thereby saving ourselves a good quantity of money and doing our bit to reduce climate change.
Yours faithfully,
Samuel A A Hinds
Prime Minister
