…Tracking government efforts in view of the 750MW, 2022 target
By Hilary Mare
AMONG the numerous developmental challenges facing Namibia is the need for huge investments in power generation capacity, especially in view of strong economic and demographic growth in the SADC region over the last decade.
Indeed, the financing requirements of the power sector are far beyond the scope of most countries, hence leaving a large funding gap, which can only be filled by the private sector.
In essence, the National Independent Power Producer (IPP) Policy of Namibia in its draft form last year highlighted that projections for electricity demand in Namibia is expected to rise and by 2035 will be more than double its current electricity consumption, adding that “Independent Power Producers (IPPs) constitute the primary vehicle for privately developed, constructed, operated, and owned generation plants that sell electricity to public utilities, end-consumers; and as non-utility generators have long-term power purchase agreements (PPAs) with off-takers.”
With this in mind, it is worth noting that government has made significant strides to promote private sector participation in the energy sector considering its ‘ambitious’ target of 750MW of locally generated energy by the year 2022 confined in the 5th National Development Plan (NDP5).
Acknowledging that this target is ambitious and needs the support of private sector investment last week, Mines and Energy Minister, Tom Alweendo explained that this goal was necessary in order for Namibia to reduce over reliance on imports of electricity from its neighbours.
“It is therefore important that we continue to pro-actively plan, structure, manage and develop an energy sector that can optimally support and respond to our development aspirations today, and in the future.
“We are also cognizant of the fact that the Government alone cannot shoulder the huge investment that is required for the development of the country’s energy infrastructure. We need the private sector, and we explicitly welcome the active participation of private sector actors,” he said while inaugurating the B2Gold Otjiko 7MW Solar Farm.
Currently, the government through the Interim renewable energy feed-in tariff project (REFIT) has managed to connect nine of the 14 projects to the national electricity grid.
REFIT projects managed to feed a total of 93 MW of electricity into the national grid in 2017.
The 14 IPPs in 2016, signed Power Purchase Agreements with Namibian power utility, NamPower, to supply a total of 70 MW of renewable energy.
Thirteen of these opted to invest in solar photovoltaic projects, while one intends generating electricity using wind.
“We must continue to use local available resources for the benefit of all Namibians. In terms of energy, we have the world’s second best solar resource, a significant amount of biomass and an excellent wind regime. I would therefore like to use to this opportunity to motivate all our stakeholders more importantly our private sector partners to invest in this sector. On our side as the Ministry, we will make sure that we create an enabling environment. This we do through tools such as the National Integrated Resource Plan, the National Independent Power Producer (IPP) Policy and the Revised Market Framework Model. The idea here is to make sure that we are approaching the issue of renewable energy in accordance with some of the best practices in the world,” Alweendo added last week.
It is now common knowledge that Namibia boasts with a wealth of renewable energy resources that represents a valuable economic resource for the country and the avenue with which independent power producer will use to contribute significantly to the the power grid.
In 2017, the Ministry of Mines and Energy finalised the National Renewable Energy Policy which is intended to provide the necessary thrust to renewable energy development and to serve as a clear signal of the Government’s commitment to a clean energy future powered by renewable energy sources.
The overarching mission of this Renewable Energy Policy is to enable access to modern, clean, environmentally sustainable, and affordable energy for all Namibians. It aims to make renewable energy a powerful tool for the achievement of short-term and long-term national development goals.
“This will assist us to climb the development ladder, empowered by access to energy at levels that facilitate engagement in productive activity. Additionally, the Policy’s vision is for Namibia to become a regional leader in the development and deployment of renewable energy within Southern Africa.
“This facility that we are inaugurating today is yet another demonstration that private sector is responding to our call to participate in the energy generation. The facility will add another 5MW of electricity generation, a welcome contribution towards a sustainable energy generation.
“This solar plant will deliver positive economic, environmental and social impacts that are likely to outlive the life of mine. I am also informed that this solar plant will be one of the largest installations of its kind in Namibia. It will serve as a sustainable power solution as B2Gold works to improve economic returns, reduce impacts on the environment, and could potentially be a funding source for community development,” Alweendo also said further substantiating rallying calls for the private sector to invest in the sector.
Namibia as a stable country with macro prudential policies and a legal system which allows contracts to be enforced and respected are critical factors attracting IPP investments. Namibia’s legal framework specifying market structures, roles and terms for investments based on the Electricity Supply Market Model is in place. A transparent and predictable licensing and tariff framework including cost-reflective tariffs all forms part of our regulatory environment.
The lack of electricity access remains one of the biggest barriers to development and prosperity and continues to trap Namibians in poverty. Namibia has an energy paradox in which the country had abundant natural power resources to meet surging demand for power. The country’s rich gas, solar, wind, biomass and hydro resources had to be harnessed and added to the generation mix in a sustainable way, and that greater private sector participation in the sector be encouraged. The National IPP Policy envisages that.
In 2016, then mines and energy minister, Obeth Kandjoze also said it is crucial that the private sector play an active role in addressing the future energy needs of the country.
“We realise that the private sector has a definite role to play not only for the sake of investments, but also to introduce new expertise and technology and very importantly, to contribute to the government’s development efforts,” he said.
Conclusively and based on recent developments in the IPP regime, it is fair to say that the Government of Namibia has recognized the need for promulgating a clear, fair, and transparent National IPP Policy in order to streamline the IPP regime in the country and open the Namibian power market to domestic and international investors.
This National IPP Policy has outlined the key provisions of the Government’s commitment to encourage private investment in Namibia’s power sector and provides hope for the national energy sector together with the national developmental aspirations.
Confidente. Lifting the Lid. Copyright © 2015