Guyana’s Energy Transition
Balancing Short-Term Stabilization and Long-Term Strategy
Guyana faces a critical inflection point in its energy journey. Despite abundant natural resources, the nation struggles with persistent electricity challenges that have prompted authorities to deploy powerships—floating power plants—as an immediate remedy for recurring blackouts and supply shortfalls.
Currently, Guyana’s powership arrangement involves two vessels—one generating 36 megawatts (MW), the other 75 MW—leased to supplement the country’s existing infrastructure. Delivered by UCC Holdings and operated by Karpowership, these floating power plants are designed to meet the country’s rising electricity demand while it awaits the completion of its landmark Gas-to-Energy (GTE) Program. The GTE project, one of the most ambitious infrastructure undertakings in Guyana’s history, aims to channel natural gas from ExxonMobil-operated offshore fields to an onshore processing facility at Wales, West Bank Demerara. There, the gas will fuel a new power plant capable of generating approximately 300 MW of electricity, more than doubling Guyana’s current generation capacity.
The convergence of these initiatives—powership deployment and GTE construction—reflects both the urgency and complexity of Guyana’s energy transition. It also underscores the tension between immediate stabilization needs and longer-term development goals. A financial analysis of the powership arrangement, based on publicly available data, reveals the magnitude of this temporary investment. The projected two-year cost exceeds US$631 million, covering fuel, leasing, transportation, administrative overhead, and transmission losses. Rental fees alone total approximately US$165.9 million, with daily payments around US$227,197. Fuel costs, benchmarked at US$2.40 per gallon in September 2024, are estimated at US$246.4 million, while administrative, transmission, and distribution inefficiencies—driven by a 30% line loss rate—add roughly US$205.4 million. Altogether, the delivered electricity cost approaches US$0.32 per kilowatt-hour (kWh), or G$68.51/kWh, well above regional averages and sustainable benchmarks.
To cushion the financial impact, the 2025 national budget allocates a G$18 billion subsidy. Yet this provision appears insufficient, with Guyana Power and Light (GPL) reportedly responsible for up to 30% of monthly operational costs. This structure raises serious concerns about GPL’s financial health and its ability to invest in critical infrastructure upgrades. Even with significant public support, the current system remains under fiscal strain and risks operating at a sustained loss, conditions that are neither scalable nor sustainable.
The opacity surrounding the powership arrangement and limited public engagement have fueled growing disquiet. Observers question whether alternative solutions—such as accelerated investment in domestic renewables—were rigorously pursued. At the core of the debate lies a pivotal question: Are powerships a necessary bridge to a cleaner, more reliable future, or a costly detour from a sustainable trajectory? The opportunity costs are steep. Funds channeled toward powerships could have been deployed to fast-track solar, hydropower, battery storage, or grid modernization initiatives.
By contrast, the Gas-to-Energy Program is envisioned as a transformational catalyst for economic diversification and energy security. Projected to deliver electricity at a significantly lower cost—targeting US$0.08 to US$0.10 per kWh—the GTE project promises to reduce dependence on imported fuels, stabilize the national grid, and stimulate industrialization. Lower energy costs could expand household welfare, strengthen manufacturing, and attract foreign investment, while transitioning to natural gas offers an important, albeit interim, step toward reducing carbon emissions compared to heavy fuel oil. Crucially, GTE could establish a platform for the gradual integration of renewable energy into the national grid, supporting Guyana’s aspiration to build a green economy.
Still, the GTE project carries its risks. Concerns about cost overruns, transparency, environmental management, and the potential for “lock-in” to fossil fuels persist. Recent reports indicate that offshore pipeline construction is advancing, with ExxonMobil expected to complete its segment by mid-2025. Meanwhile, the government is finalizing financing and operational structures for the onshore facilities, aiming for commissioning by late 2025 or early 2026.
The critical challenge now is to ensure that short-term reliance on powerships does not undermine the strategic intent of the Gas-to-Energy initiative. Temporary fixes must remain precisely that—temporary—and must not shape Guyana’s long-term energy architecture. A comprehensive, independent review of the powership contracts and their impacts is essential. The GTE project, meanwhile, must be governed by the highest standards of transparency, environmental stewardship, and public accountability. An articulated transition plan—from powership dependency to grid modernization and GTE integration—is urgent. Energy planning must remain flexible enough to support an accelerated shift to renewables over the next two decades. Without these safeguards, Guyana risks entrenching high-cost, suboptimal energy infrastructure.
The power ships moored off Guyana’s coast symbolize more than temporary stabilization—they highlight deeper questions about governance, strategic vision, and national priorities. Likewise, the Gas-to-Energy Program is more than just an infrastructure project; it is a test of Guyana’s ability to leverage its newfound wealth to build a resilient and inclusive economy. Managed wisely, this transition can propel Guyana into an era of energy security, economic opportunity, and environmental responsibility. Mismanaged, it could entrench dependency, inefficiency, and inequity. Guyana now stands at a critical crossroads. The decisions made today—on power, policy, and public trust—will shape the country’s future for generations to come.
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Dr. Terrence Richard Blackman
Guyana Business Journal
