Authors of Times article ignored the complementarity of wind energy and hydropower

Dear Editor,

I write in response to an article carried in the Guyana Times on Monday, December 4, 2017, titled, ‘US$50M Windfarm – PPP demands answers on controversial project’.

The article is blatantly duplicitous and misrepresents the facts of the transaction, while imputing corrupt motives on the part of this government in supporting the project.  It should be known that the said project originated in 2000 and was supported by the PPP administration up to the time of that party’s exit from office.  In 2014, the then government approved the entering into a Memorandum of Understanding (MOU) with the project (Mr Lloyd Singh being a major partner) to pursue power purchase agreement (PPA) negotiations for the sale of power to GPL at an approved price of US$18 cents kW.

The specific claims in the article attributed to Mr Juan Edghill and the Leader of the Opposition are as follows:That the Granger administration, on coming into office “announced that it would facilitate a US$50M, 25 MW windfarm project at Hope Beach … but, with intense criticism about a party-affiliated investor behind the project, such talk eventually died down.”

That the PPP “remained concerned about the transparency and accountability of the project. The issue with the windfarm is that they must be able to come clean and show what price GPL will be buying. Is it cheaper than hydro?…Or would it be a cash cow for an AFC financier…Because with hydro we are bringing down the cost of electricity to 10 to 12 US cents per kilowatt. If we are buying from the windfarm for higher than that, [then they are using it] to pass off money to an AFC financier as against bringing cheaper, renewable energy to the Guyanese consumer.”

“…that if the Government persisted with it, the [PPP] would vigorously challenge it in court if needs be. Imagine a man who built the AFC Headquarters is now negotiating with … [Minister David Patterson] for a PPA that was never tendered and announced long before the power mix study….This smacks of corruption.”

The article continues with a number of other falsehoods and the determination of the PPP not to support the project, to do everything within its power to challenge it in court and otherwise if it does not meet the party’s satisfaction.

While it is not the ministry’s policy to publicly disclose details of transactions that are engaging the government in the interest of confidentiality and the sensitivity of investors’ interests, I am forced to clarify the misrepresentations and hypocrisy in the article which can have a significant adverse impact on investors’ confidence in Guyana.

The following are the facts in reference to the particular claims of Mr Edghill and the Leader of the Opposition:

The Hope Beach Windfarm project saw its origins in 2000 as a private sector initiative to introduce wind energy in Guyana, and complement government’s policy for renewable energy becoming the main source of electricity supply, with wind becoming part of Guyana’s energy mix.

In 2001 and 2007, the government entered into an MOU and Heads of Agreement respectively with the developer, granting the developer exclusive rights, for a limited period, to develop the project. There was no public tender of the project. In 2007, the developer was granted a 50 year lease of state lands at Hope Beach for the development of the project to supply power to GPL.

Notwithstanding much effort, the project failed to get off the ground due primarily to lack of financing. Mr Lloyd Singh became a major partner of the project in 2014 and has since been engaged with the government in advancing the project.

Also in 2014, after Mr Singh’s partnering, the government renewed its support of the project by approving the execution of a new MOU as a preliminary step to negotiations and conclusion of a full PPA and all other related agreements. The terms of the MOU and the negotiated PPA included, inter alia, the development of the 25 MW Hope Beach Windfarm Project under a 5 year BOOT arrangement and power generated from the project being sold to GPL at a price of US$0.18 per kW.

The other major investor (foreign) pulled out of the project due, inter alia, to the government not agreeing to provide a sovereign guarantee deemed necessary to secure a particular source of financing for the project.

On assuming office in 2015, the new administration was introduced to the project. The coalition government agreed to continue the support of the project due to the project’s history; the fact that the developer already had a lease of the property, in effect limiting the options of the government with respect to the project; the complementarity of the project with government’s policy for renewable energy development towards a ‘Green Economy’; and the sustainable development of the electricity sector.

In this regard, through the support of the German government (REETA-GIZ), a wind energy expert was contracted to build capacity within the MPI and other agencies associated with the project, advise the government on the project’s feasibility, and to support the government in any resulting PPA negotiations. This engagement has been fruitful and the developer advised on the necessity of meeting international standards as they complete their full feasibility study. PPA negotiation has not yet commenced.

The authors of the article question the justification of a windfarm – relative to hydro – serving the national grid, deliberately ignoring the fact of the PPP’s previous support of the project, and the complementarity of wind energy with hydropower. Further, it gives no recognition that wind energy is recommended in the recent GPL Power Generation Expansion Study conducted by the Inter-American Development Bank (IDB).

Without going into the technical and economic fit of the various renewable energy sources for power generation for the national grid – which in any case have to be satisfied before any credible project – it should be noted that the abovementioned GPL/IDB study does recommend hydro, wind, solar and bio-fuels being part of Guyana’s energy mix for power generation. The study is currently being reviewed to update the energy mix, considering natural gas, a valuable indigenous and clean energy resource now available, and the timing of each development.

10.The prevailing view is not a question of choosing either hydro or wind energy for Guyana future power requirements, but what combination of the abovementioned resources, and the timing, and appropriate financing for each coming on stream should be.  While these and other issues are being resolved, the government is moving forward with the development of projects that are feasible and supported with financing.

11.The updated draft National Energy Policy has been shared with stakeholders, including the PPP. This policy, along with the draft Energy Transition Roadmap, is awaiting the outcome of the updated IDB Power Generation Expansion Study for the role natural gas is to play for their finalization.

12.The government is also pursuing the development of the legal and technical framework to support renewable energy development with private sector participation, including distributed generation in which residential and business owners can supply their excess power to the grid.

Yours faithfully,

David Patterson, MP

Minister of Public Infrastructure

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