Independent Power Producers at risk
A proposed cabinet submission yet to be made by the Electricity Control Board and the Minister of Mines and Energy explicitly states the risk in allocating Independent Power Producer (IPP) licenses as not a single off-taker agreements between Nampower and the power producers has so far been finalised.
“The lack of IPPs coming into operation has perpetuated the country’s reliance on electricity imports of up to 60% at times. This is a serious risk and an impediment to the achievement of the country’s developmental goals,” the draft submission dated 2 November reads.
The ECB, NamPower and the Ministry of Mines and Energy, last year began with the interim Renewal Energy Feed-In Tariff (REFIT) plan which will allow for 27 IPPs, comprising solar PV; Concentrated Solar Power CSP; biomass and wind, to be invited to tender for a combined 70MW renewal energy to be added to the national grid.
The capacity of each IPP under the programme is limited to 5MW and NamPower will be the off-taker under the power purchase agreement. But this is only according to the ECB and not supported by NamPower actions.
According to the ECB’s Electricity Supply Industry Statistical Bulletin domestic electricity customers in Central Namibia and the Erongo Region have the highest average monthly bill consistently, followed by customers supplied by Oshakati Premier Electric. This is seen as an indication that the IPP’s with the highest chance of success will be located in these areas to reduce transmission deminishment over long distances.
The deadline for financial close for the REFIT programme is 15 June 2016. NamPower, the Namibia Energy Institute, the Ministry of Mines and Energy and the ECB also completed bid documents for a 3x10MW solar PV tender. The successful implementation of these programmes would substantially increase the uptake of renewable energy into the generation mix, as well as the involvement of the private sector in generation. But essentially, the viability of all these projects depend on enforceable off-taker agreements with NamPower who controls the distribution channels.
Local energy generation by NamPower varied in a range below 1700 GWh in 2014 against a growing demand for electricity, in turn leading to greater import dependence.
According to the ECB submission, energy availability is influenced more by the load profile per consumer than by tariff levels, with CENORED customers facing the lowest bills and Erongo RED customers bearing the brunt of electricity costs. CENORED distributes at 186 cents per kWh while Erongo RED tops the list with 193 cents per kWh for the 2014/15 period. Southern Namibia slots in between the two bigger distributors at 180 cents per kWh. The 2014/15 average tariff for domestic customers is about 175 cents per kWh.
The ECB together with the Ministry of Mines and Energy developed a National Electricity Support Mechanism for more affordable power for households.
The execution of this is supposed to complement current rural electrification efforts and deals specifically with urban areas without access to electricity.
The ECB said it is preparing for its transformation into a multi sectoral energy regulatory body. This transformation will be facilitated by the Namibia Energy Regulatory Authority Bill developed by the ECB, which will be tabled to the Namibian Parliament for approval. The bill is intended to regulate downstream gas, petroleum pipelines and renewable energy, in addition to electricity.
The Draft Mechanism will be submitted to the Cabinet Committee on Trade and Economic Development for endorsement before submission to Cabinet for approval.