This is a best prospect industry sector for this country. Includes a market overview and trade data.
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Namibia’s domestic electricity supply has failed to keep pace with rising demand, and Namibia generates less than half of the energy it consumes. NamPower, the government-owned power utility, operates generation facilities including the Ruacana Hydroelectric Power Station (330MW capacity), the Van Eck Power Station (coal; 120 MW capacity), the Paratus Power Station (diesel; 24 MW capacity), and the ANIXAS Power Station (diesel; 22.5 MW capacity). The generation facilities rarely if ever produce at full capacity. Peak demand is over 600 MW.
Namibia has long relied on imported power from South Africa (Eskom), but South Africa’s own economy has put strains on its domestic electricity generation capability and thus its ability to export. Namibia has a five-year agreement with Eskom, however NamPower has also diversified its sources of imported power over the short term by signing power purchase agreements with utilities in Botswana, Zambia, Zimbabwe, the Democratic Republic of Congo (DRC), and Mozambique.
Over the long-term, the government and NamPower have committed to making Namibia energy self-sufficient (and eventually a net exporter of power) by building new domestic generation capacity. NamPower has made some progress in efforts to increase its generation capacity. NamPower commissioned a fourth turbine at the Ruacana hydro plant in 2012 which now generates an extra 90 MW of power. A U.S. Trade and Development Agency (USTDA)-financed study of the Van Eck Power plant provided the GRN with several options for extending the life of this plant. Nampower is considering proposals for a number of other new power stations, including renewables (solar and wind).
NamPower also completed the N$ 3.2 billion TransCaprivi Interconnector which connects central Namibia directly with Zambia and Zimbabawe’s power grids, thereby making Namibia less reliant on South Africa’s transmission network.
The Electricity Control Board (ECB), Namibia’s electricity regulator, accepts unsolicited power generation projects through its IPP framework. The Minister of Mines and Energy has final authority to approve or refuse IPP licenses, but the ECB makes recommendations on license applications, which the Minister has historically followed. To date a number of IPPs have received licenses, and some power purchasing agreements (PPAs) have been concluded with electricity producers.
Parties interested in developing small power generation facilities may also look to some of Namibia’s Regional Energy Distributors (REDs). Some REDs are looking to develop their own - albeit limited - generation capacity. Partnering with a RED familiar with the ECB’s IPP framework might result in faster project implementation. The ECB’s rules for net-metering went into effect on May 15, 2017, allowing non-generators with solar arrays to receive electricity tariff credits or discounts for excess power fed back into the grid.
Wholesale and consumer energy rates have slowly risen as the ECB approved measures that were intended to permit NamPower to reach “cost reflectivity” on its tariffs. Historically, energy tariffs were capped, limiting NamPower’s income and preventing adequate investment in new infrastructure. To date, tariffs have not yet reached cost reflectivity, but Namibia is closer to reaching cost-reflective tariffs than the rest of the southern African region.
In September 2019, Namibia adopted the “Modified Single Buyer Framework,” which allows independent power producers to directly sell electricity to large power users locally and internationally across the national transmission grid. Namibia is evolving from a centralized model dominated by one large utility, NamPower, to a hybrid decentralized model with multiple actors generating and supplying electricity. This represents a significant shift in the generating mix. Transmission customers are now able to buy a portion (up to 30 percent) of their energy requirements directly from a private power generator. The new framework provides for the deployment of new generation technologies such as battery storage, and has the potential to attract significant national and foreign direct investments.
With ample sunshine and wind resources (on the coast), Namibia has the capability to generate significant energy from renewable sources. The government, the ECB, and NamPower have all expressed interest in grid-connected solar and eolith renewable solutions, and in May 2015, Namibia inaugurated its first-ever solar power plant – a 4.5 MW plant – which represents one percent of the country’s current production of energy. The plant was built by InnoSun, a French-Namibian company which specializes in renewable energy. It was also the first local IPP with which NamPower signed a power purchasing agreement.
Efforts to establish larger renewable capability remain a challenge and are ongoing, with perceptions by some that they could undermine the profitability of other large planned generation projects. While there has been foreign interest in the renewable energy sector, the rigidity of the government’s pricing policies makes many projects unprofitable in the short term. NamPower and the ECB continue to explore a number of options to resolve this issue, such as feed-in tariffs, or use of the tender process to obtain additional capacity.
Estimates are that fewer than 10 percent of rural households have access to electricity (either from the electrical grid) or through local power generation; in addition, up to 60 percent of Namibians are “off grid.” As a result, the government launched its Off-grid Energization Master Plan (OGEMP), an initiative that promotes the use of renewable energy for households not connected to the grid. The OGEMP recognizes that connecting remote rural communities to the electrical grid is expensive (in some cases prohibitively so), thus it was logical to promote off-grid (frequently renewable) solutions. Donors and government have worked with financial institutions to create low cost financing options so that rural communities and households can afford to purchase and maintain photovoltaic (solar) energy.
Power Africa Support: The U.S. Government worked with the ECB to establish the Renewable Energy Feed-In Tariff (REFIT) program along with accompanying regulations in order to create an environment beneficial to organizing IPPs into Namibia’s electricity sector. As a result of the REFIT, ECB granted 14 licenses to IPP developers for 5 MW projects for a total of 70 MWs of renewable energy. Power Africa is currently working to provide technical assistance support to various public and private stakeholders, including ECB, the Ministry of Mines and Energy (MME), and the Regional Electricity Regulators Association (RERA) through the Southern Africa Energy Program (SAEP). In addition, in 2017 NamPower completed the rehabilitation of the 120 MW Van Eck coal-fired power plant located in Windhoek, resulting in reduced air emissions and extending the plant’s life by ten years. The rehabilitation was the result of NamPower’s partnership with the USTDA, which provided a US$ 400,000 grant for a feasibility study to determine the technical, economic, financial, and environmental benefits of the rehabilitation. The project also resulted in over US$ 3.6 million in U.S. exports related to the purchase of equipment from various U.S. equipment suppliers.
Products and services with immediate need or potential in Namibia include:
• Construction of new power stations
• Electricity network upgrades
• Refurbishment of turbines and related equipment
• Transmission and distribution equipment
• New plant equipment and related systems
• Demand-side management solutions
• Systems control equipment
• Renewable (primarily wind, photovoltaic, concentrated solar, biomass) energy products
NamPower has conducted feasibility studies on a number of new power generation and transmission projects indicated below. The lack of investors, concerns over exchange rates and pricing, and cross-border disputes are hampering implementation in some cases:
• Zizabona Connector Project – Additional transmission links to Zambia and Zimbabwe
• Orange River Hydro – 10 mini hydro stations to be implemented in phases
• Slop (Bunker fuel) Project – Slop fuel from ships for a 80 MW thermal power station
• Baynes Hydroelectric plant
NamPower plans to bring additional power projects online in the coming few years to generate 150 MW of new energy. NamPower’s strategy includes a 20 MW PV solar power project; a 40 MW wind power project; a 40 MW biomass power project; and a 50 MW firm power project.
Companies interested in projects independent of NamPower may submit proposals directly to the ECB under its IPP framework.
Companies interested in large-scale renewable energy projects can engage NamPower and/or the ECB. There is specific interest in the following grid-connected renewable energy solutions:
• Wind farms – primarily around Luderitz.
• Concentrated Solar Power (CSP) – primarily in the southern (desert) regions of Namibia.