Guyana’s energy generation is almost completely based on fossil fuels, coming from electricity plants that use heavy fuel oil. The cost of electricity is $0.32 per KWH, which is among the highest in the region. Power is not stable in many areas and rolling brown outs are common. The high cost of electricity continues to affect businesses’ operating performance and has historically limited the country’s ability to provide value added processing. Renewable energy is viewed as a potential solution by the GoG, and they are working to reduce the cost of power and provide reliable electricity. Guyana has significant potential for hydropower, like its neighbor Suriname which has successfully developed hydropower programs. Companies seeking to invest in Guyana’s renewable energy sector should contact the Ministry of Tourism Industry and Commerce and the Guyana Office for Investment (GO-INVEST) for information on tax concessions and other investment incentives for the adoption of renewable energy programs. The Guyana Energy Agency oversees feasibility studies for the integration of renewable energy programs in Guyana and has regulatory oversight over certain aspects of the energy industry, in addition to the Ministry of Public Works. The GoG adopted changes to the wear and tear schedule of the Income Tax Act in 2019 for capital investments in renewable and alternative energy and further tax exemptions for hybrid or electric cars and electric motorcycles.
The challenge for potential investors evaluating renewable energy opportunities in Guyana is the current energy legislation, which allows the state-owned company Guyana Power and Light Inc (GPL), to have a monopoly over power generation. The absence of grid tie-in legislation to allow for the resale of power to the state-owned entity may affect feasibility studies unless a public private partnership is brokered, which GPL has done with private energy firms using fossil fuel-based power generators.
Leading Sub-Sectors
Development of Microgrids for Outlying Regions
Economic development in Guyana’s outlying regions is stymied by a lack of reliable electricity. These areas often have small populations, however their locations and/or natural resources make them attractive sites for investment. GPL loses approximately 26 percent of the power it generates due to inefficiencies in the power grid and transmission lines. The GoG is rolling out microgrids as a potential low cost, clean energy solution to address outlying regions’ energy demands while reducing the grid congestion and peak loads on the main grid. In 2023, the GoG requested bids for solar PV projects and this trend is likely to continue into 2024 as the government expands its renewable energy transition.
Development of Hydropower
A key project for the GoG is the development of the 165 MW Amalia Falls hydropower project which is located in the interior of the country. Originally, the project was awarded to the China Railway Group Limited in January 2022, however, it ran into financing issues, causing the government of Guyana and China Railways to part ways in July 2022. Due to its extensive river networks the GoG is exploring other hydropower developments to meet the growing energy demands of the country.
Development of Wind and Solar Farms
Guyana has tax concessions and capital write-offs available for wind and solar farm investments. While Guyana’s geographic location makes offshore wind a viable alternative, current regulatory hurdles are likely to stymie investment in this technology. Solar power generation units are attractive options for companies that wish to avoid the unreliable and expensive central electricity grid. For example, two major banks have installed solar panels on their buildings and have reported significantly reducing their energy costs. The GoG plans to construct several solar farm projects by 2025.
Energy-efficient technologies
The GoG seeks to increase energy efficiency across the economy and spur private sector investment by offering incentives like an accelerated capital depreciation for deployment of technologies which reduce operational costs and increase profitability for many companies.
Installation, extension, and upgrading of distribution networks
Guyana’s electricity transmission lines and power grid are in a severe state of disrepair and need to be modernized. GPL loses approximately 26 percent of its power through inefficiencies in the grid. The GoG is drafting tenders for the rehabilitation of its existing power infrastructure, the supply of additional power, and improving the transmission lines. U.S. firms are encouraged to monitor the National Procurement and Tender Administration (NPTA) website or tender opportunities and contact the U.S. Embassy for more information.
Opportunities
According to the 2023 annual budget, the GoG will prioritize investments in updating and expanding its energy infrastructure using funds from the country’s sovereign wealth fund. U.S. firms are encouraged to track the GoG’s announcements regarding the marketing of oil, integration of the grid, future hydropower, microgrids, solar and wind project opportunities.