Risks in renewable energy projects are routinely covered – energy consultant

Guyana has a history of regime change impacting renewable energy projects— as happened with the Amaila Falls Hydro Project (AFHP). On Thursday, an energy consultant from the Global Green Growth Institute (GGGI) alluded to such risks in noting the importance of her group’s work.

During an open forum organised by GGGI at the Pegasus Hotel on Thursday, one of its consultants, Catherine Allinson, made this point in her presentation. At the time, a number of members from the private sector were in attendance as they were encouraged to get involved in renewable energy.
Allinson explained that when it comes to renewable energy, particularly in Guyana, there are a number of risks such as political risks, which drive up the cost of accessing capital and can discourage investment. Notwithstanding these risks, she emphasised that GGGI, with its access to the Green Climate Fund (GCF), can help mitigate those risks.

“There are political risks, economic risks, currency risks. What happens in construction (may not) be of standard. There’s a lot of risk and they all add a premium price to raising capital. So, the TCF says, now hang on a minute.”
“You have all those risks; we will cover them for you. We will guarantee that if there is a regime change or policy change and a project cannot go ahead, we will cover that. That’s very important. They also cover for climate risk,” she assured.
The event saw Environment Department Head Ndibi Schwiers also emphasising the importance of the private sector’s involvement. She also spoke to the steps the Government is taking to collaborate with the private sector.
Meanwhile, Director of Future Earth, Catherine Allinson, during her presentation to the business persons, said the GCF guarantees coverage of political and other risks involved and that the investment is a safe one.
“The GCF guarantees that if there is a regime change or a policy change, which means suddenly your project cannot go ahead, they will cover that…they also cover the risk of having climatic inconveniences… Frankly, I think that renewable energy, these days, is a safe bet… Renewable energy used to be a nice thing to have in your portfolio but now it’s a must-have if you’re a serious investor,” she said.
A major project that the parliamentary opposition has long said is the victim of regime and policy change was the AFHP. Such was the risk associated with the project after the Government changed and seemingly discarded it, that even the present Government has admitted difficulties in finding investors for it.
The Amaila Falls Hydropower Project, which was initiated under the People’s Progressive Party/Civic (PPP/C) Administration, could have been generating about 50 per cent more electricity than the entire Guyana Power and Light (GPL) supply. But the project was scrapped by the coalition administration who had controlled the National Assembly by a one-seat majority after the 2011 elections.
Amaila was expected to deliver a steady source of clean, renewable energy that would have been affordable and reliable and was envisioned to meet approximately 90 per cent of Guyana’s domestic energy needs while removing dependency on fossil fuels.
The Electric Plant was proposed to be a 165 MW (installed capacity) hydropower generation facility, located in west-central Guyana, approximately 250 kilometres south-west of Georgetown.
The hydroelectric plant, if completed, would have shifted Guyana’s reliance on thermal generation to renewable energy, eliminate over 90 per cent of the country’s energy-related greenhouse gas emissions, providing energy production for approximately 90 per cent of Guyana’s population.
In addition, it would have improved Guyana’s balance of payments by significantly reducing the importation of fuel and end-user costs for electricity, and improve the reliability of energy supply and generation of clean energy, which would help to encourage economic growth and development by improving regional competitiveness, private sector investment, and foreign direct investment.
An assessment done by Norconsult— an independent engineering and design consultancy firm from Norway— had also concluded and recommended that “the only realistic path” for Guyana moving towards an emission-free electricity sector and achieving its 2025 Green Agenda commitment was to develop its hydropower potential in general, and maintain the Amaila Falls Hydropower Project in particular.