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Overview of Demand - Supply Situation and Projects Implementation in the SAPP by Eng. Musara Beta SAPP Chief Market Analyst ZIMASSET Parliamentary Workshop 13 March 2014, HICC, Harare, Zimbabwe 1 SOUTHERN AFRICAN POWER POOL Contents 1. Introduction to SAPP 2. SAPP Demand and Supply Situation 3. Update on Projects Implementation in SAPP 4. Conclusions 2 SOUTHERN AFRICAN POWER POOL 1. Introduction to SAPP Key Facts 12 Countries 280 Million people Installed Generation Capacity – 56 GW Available Generation Capacity – 52 GW Peak Demand – 54 GW DR Congo Angola Namibia Tanzania Malawi Zambia Zimbabwe Botswana Mozambique Swaziland South Africa Lesotho 3 SOUTHERN AFRICAN POWER POOL SAPP Vision The SAPP Vision is to: Facilitate the development of a competitive electricity market in the Southern African region. Give the end user a choice of electricity supply. Ensure that the Southern African Region is the region of choice for investment by energy intensive users. Ensure sustainable energy developments through sound economic, environmental & social practices. 4 SOUTHERN AFRICAN POWER POOL SAPP Membership -2013 No Full Name of Utility Abbreviation Country 1 Botswana Power Corporation OP BPC Botswana 2 Electricidade de Mocambique OP EDM Mozambique 3 Electricity Supply Corporation of Malawi NP ESCOM Malawi 4 Empresa Nacional de Electricidade NP ENE Angola 5 ESKOM OP Eskom South Africa 6 Lesotho Electricity Corporation OP LEC Lesotho 7 NAMPOWER OP Nam Power Namibia 8 Societe Nationale d’Electricite OP SNEL DRC 9 Swaziland Electricity Board OP SEC Swaziland 10 Tanzania Electricity Supply Company Ltd NP TANESCO Tanzania 11 ZESCO Limited OP ZESCO Zambia 12 13 14 15 16 Zimbabwe Electricity Supply Authority OP ZESA Zimbabwe Copperbelt Energy Corporation Lunsemfwa Hydro Power Station Hidro Cahora Bassa Mozambique Transmission Compamy ITC IPP OB OB CEC LHPS HCB MOTRACO Zambia Zambia Mozambique Mozambique OP: Operating OB: Observer 5 Status NP: Non-Operating ITC: Independent Transmission Company IPP: Independent Power Producer SOUTHERN AFRICAN POWER POOL SADC Potential Energy Sources KENYA GEO-THERMAL GABON DR CONGO TANZANIA ANGOLA ZAMBIA NAMIBIA BOTSWANA SUPER GRID SOLAR SWAZILAND 6 SOUTHERN AFRICAN POWER POOL Generation Mix & Contributions – Year 2013 74.3% Coal 20.1% Hydro 4.0% Nuclear 1.6% Gas/Diesel 7 80.4% South Africa 5.0% Mozambique 4.1% Zimbabwe 3.6% Zambia 2.6% DRC 4.4% Rest SOUTHERN AFRICAN POWER POOL 2. SAPP Demand and Supply Situation No. Country Utility 1 Angola ENE 2,028 2 Botswana BPC 352 3 DRC SNEL 2,442 4 Lesotho LEC 5 Malawi 6 Forecast Demand Capacity Shortfall Calculated including Reserve reserves, Margin, % MW 1,805 1333 322 580 1,268 1342 72 72 138 ESCOM 351 351 323 Mozambique EDM /HCB 2308 2,279 763 7 Namibia NamPower 501 392 635 8 South Africa Eskom 44,170 41,074 38775 9 Swaziland SEC 70 70 222 10 Tanzania TANESCO 1380 1,143 898 11 Zambia ZESCO / CEC/LHPC 2,128 2,029 2287 12 Zimbabwe ZESA 2,045 1,600 2267 57,847 52,405 49,563 (4,592) 5.4% 54,088 49,106 47,009 (2,787) 4.3% TOTAL SAPP Total Interconnected SAPP 8 Installed Available Capacity Capacity [MW] As at [MW] Feb 2014 Feb 2014 SOUTHERN AFRICAN POWER POOL SAPP Planned & Required Capacity MW Planned Capacity vs Forecast , MW All SAPP Members (As at Sept 2013) 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 Projects are facing delays 2012 2013 2014 GWh Forecast 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 2016 2017 2018 This is due to low load factor plants being commissioned. Capacity Planned Energy Planned vs Forecast , GWh All SAPP Members 2013 2014 2015 Energy Forecast 9 2015 2016 2017 2018 2019 Capacity balance by 2017 but energy balance by 2019 2020 Energy Planned (GWh) SOUTHERN AFRICAN POWER POOL SAPP Planned & Required Capacity All SAPP - Reserve Margin, % 27.0 23.8 24.0 21.0 Best practice reserve margin 18.0 17.2 15.0 12.6 12.0 6.6 9.0 6.0 3.0 3.2 1.8 2013 2014 2015 2016 2017 2018 Reserve Margin very tight in earlier years 10 SOUTHERN AFRICAN POWER POOL Power Supply Challenges in SAPP Demand for power in Southern African has been increasing at an average rate of 3% per annum. In 2007, demand growth for South Africa was 4.9% and for the whole region 4.6%. 11 In the last 10 years demand in the SAPP increased by more than 32% which is equivalent to 13,000 MW (from 41,000 MW in 2004 to 54,000MW in 2013). Unfortunately, there has been no corresponding investments in generation and transmission infrastructure, (11,202MW generation added from 2004 to 2013) resulting in the current supply deficit that the region is experiencing. SOUTHERN AFRICAN POWER POOL Why has the SAPP run into supply deficit ? 12 1. Economic Growth of more than 5% in most of the SADC member countries resulting in unprecedented growth in electricity consumption and demand. 2. Increase in demand for base metals resulting in high metal prices on the World Market with new mining companies being established in the SADC region in the last few years. 3. Inadequate Investments in generation and transmission infrastructure over the last 20-years. 4. Electrification Programmes have partly contributed to the increased consumption and demand. 5. The challenge was identified and communicated but not adequately mitigated. SOUTHERN AFRICAN POWER POOL Short Term Measures to Meet Demand The SAPP has proposed the following measures: a) Demand Management based on others experiences: Power Conservation Programme (PCP) Study and understand the concept of PCP Formulate and adopt PCP for SADC Demand Side Management (DSM) Mechanism to provide financial support for 13 development and implementation of DSM in the SADC Develop local manufacturing capability to support DSM initiatives. SADC Policy for efficient use of electrical energy • Incandescent versus CFLs • Minimum energy efficiency standards for new connections SOUTHERN AFRICAN POWER POOL IMPACT OF LOAD MANAGEMENT [2009 – 2015] ALL SAPP MEMBERS All SAPP Members Capacity Required Peak Demand If no load management options implemented, the deficit could have been worse 2009 Plan 2015 2014 2013 2012 2011 2010 2009 MW 90000 85000 80000 75000 70000 65000 60000 55000 50000 45000 40000 Year Capacity Planned Peak Demand after load reduction Situation improves and is better after load management. 2015 2014 2013 2012 2011 2010 85000 80000 75000 70000 65000 60000 55000 50000 45000 40000 35000 30000 2009 MW Capacity Required Year 14 SOUTHERN AFRICAN POWER POOL Short Term Measures to Meet Demand b) c) 15 Create an enabling environment for power sector investment: Policy and Legal framework Regulatory framework SAPP Governance documents revised from 2006 to accommodate other players such as IPPs in the structures of SAPP Implement cost reflective and time of use tariffs in SADC member countries. SOUTHERN AFRICAN POWER POOL Short Term Measures to Meet Demand d) e) Supply Side Measures Maximize utilization of all installed supply option Re-capitalization of power utilities Short and Medium-term generation projects Ensure projects are properly prepared for financing Governments to prioritize funding of power projects Create an enabling environment for renewable energy Develop a structure for the implementation of a least-cost SAPP generating facility Provide Investment incentives to all Investors in the power sector, both local and foreign. 16 Address policy issues relating to legal & regulatory frameworks, i.e. enabling environment. Allow for VAT and tax exemptions for import of power equipment and machinery for a defined period. SOUTHERN AFRICAN POWER POOL 3. UPDATE ON PROJECTS IMPLEMENTATION 17 SOUTHERN AFRICAN POWER POOL Projects Commissioned in 2013 GENERATION PROJECTS COMMISSIONED 2013 Capacity No Utility Country Name Type [MW] 1 BPC Botswana Morupule B Coal 450 2 IPP Zambia Ndola Energy HFO 50 3 SNEL DRC Inga 1 Hydro 55 4 IPP Tanzania Mwanza HFO Gas 60 5 Eskom South Africa Komati Coal 202 6 Eskom South Africa Grotvlei Coal 40 7 Eskom South Africa Koeberg Nuclear 30 8 IPP South Africa Solar Solar 130 9 IPP Malawi Kapichira Hydro 64 10 ZESCO Zambia Kariba North Hydro 180 11 IPP Mozambique Ressano Gassia Gas 100 TOTAL 18 1361 SOUTHERN AFRICAN POWER POOL Projects Planned to be Commissioned in 2014 GENERATION PROJECTS -2014 TARGET No Utility Country Name Type Capacity [MW] 1 2 3 4 5 ENE ENE ENE ENE IPP Angola Angola Angola Angola Tanzania Lomaum CFL New Kinyeredzi Hydro Coal Coal Coal Gas 65 70 50 50 150 6 7 IPP IPP Tanzania Tanzania Sao Hill Somanga Gas Gas 10 290 8 Eskom RSA OCGT Gas 800 9 Eskom RSA Medupi Coal 722 10 Eskom RSA Ingula Hydro 1332 11 IPP RSA Cogen Gas 100 12 IPP RSA Sere Wind 100 13 IPP RSA RE - Round 1 PV, CSP, Solar 1328 14 IPP RSA RE - Round 2 PV, CSP, Solar 554 15 IPP Gas 175 16 BPC Botswana Morupule Coal 150 17 ZESCO Zambia Kariba North Hydro 180 18 ZESCO Zambia Lunzua Hydro 15 BIOCOM BOM- JESUS Mozambique Ressano Garcia TOTAL 19 685 MW Not Interconnected 1982 MW Renewable Energy 6141 SOUTHERN AFRICAN POWER POOL SAPP Committed Generation Projects No Country COMMITTED GENERATION CAPACITY, MW 2014 2016 2017 TOTAL 1 Angola 235 0 1280 2271 3,721 2 Botswana 150 - - - 150 3 DRC - 580 - 240 820 4 Lesotho - - 35 - 35 5 Malawi - - - 34 34 6 Mozambique 175 - 40 300 515 7 Namibia - - 15 - 15 8 RSA 4,936 2,527 3,717 1,918 13,098 9 Swaziland - - - - 10 Tanzania 450 240 660 250 1,600 11 Zambia 195 735 40 126 1,096 12 Zimbabwe - 15 - 1,140 1,155 6,141 4,097 5,787 6,279 TOTAL 20 2015 - 22,304 SOUTHERN AFRICAN POWER POOL SAPP Priority Transmission Projects Priority transmission projects are defined as follows: 1. 21 Outstanding transmission interconnectors whose aim is to interconnect non-operating members of the SAPP: Mozambique-Malawi Zambia-Tanzania-Kenya and Interconnection of Angola 2. Transmission interconnectors aimed at relieving congestion on the SAPP grid, and 3. New transmission interconnectors aimed at evacuate power from generating stations to the load centres. SOUTHERN AFRICAN POWER POOL Transmission Projects USD 5.6 billion DRC 2016 -2017: ZIZABONA -220/330 kV Tanzania 2016: Mozambique Malawi 2017: Zambia - Tanzania - 400 kV Malawi Angola Zambia 2018:DRC - Angola – 400 kV Zimbabwe 2017: MOZAMBIQUE BACKBONE -RSA 2015-2025: 765 kV Strengthening Namibia Mozambique Botswana Swaziland 2016: RSA Strengthening South Africa Lesotho 2017: Botswana Strengthening 22 SOUTHERN AFRICAN POWER POOL ZIMBABWE POWER SYSTEM TRANSFER LIMITS Limited by Line Loading between KRN & KRS Under Contingencies 23 Limited by Voltage at Bindura 740M W 500MW Kariba ZAMBIA Mutorashanga Bindura Alaska Norton 330MW MOZAMBIQUE Harare Warren Dema Hwange Sherwood Haven Orange Grove Chertsey Insukamini Marvel Tokwe BOTSWANA Plumtree Triangle Maximum Transfer From ZESA to the South 320MW Beitbridge SOUTH AFRICA 23 Limited by WarrenNorton Line Loading Under Contingencies SOUTHERN AFRICAN POWER POOL Project Implementation Challenges 24 i. Projects Preparation and Packaging – Projects good on paper but lacks development to bankability levels i. Tariffs levels – most utility tariffs are not favorable for new projects development ii. Weak Utility Balance Sheets – not favorable to anchor projects SAPP plans to strengthen Project Management capabilities in order to prepare projects to bankability levels SOUTHERN AFRICAN POWER POOL 4. CONCLUSIONS Electricity is critical for economic development Projects Packaging is critical for projects to attract funding and be implemented SAPP CC plays a critical role in mobilising grant funding and project coordination A Master Plan for the regional power market is vital as it: Helps to reduce capital costs by implementing leastcost projects for the benefit of the region. Reduces excess capacity from the pool. In the SAPP, a saving of over US$48 billion could be realized if projects are implemented in a coordinated fashion. 25 SOUTHERN AFRICAN POWER POOL Thank you for your attention 26 SOUTHERN AFRICAN POWER POOL Thank you very much for your attention 27 SOUTHERN AFRICAN POWER POOL