One of the most important inputs for economic growth is an abundance of reliable, affordable energy and Namibia is increasingly coming under pressure to deliver a power supply that matches its ambitions. Presently 61% of Namibia’s energy is imported due to local generation producing 39% of electricity. Namibia’s total electricity demand is currently estimated at 600 MW per annum. This demand is expected to grow at about 5% per annum. The country’s generation capacity currently stands at approximately 486.5 MW. Total generation capacity delivers approximately 400MW, thereby rendering a deficit of about 200MW.
The Namibian market currently operates on a Single Buyer Model whereby NamPower is the generator as well as the single buyer of electricity. The power utility Nampower is seeking alternative power generation sources. Nampower has therefore embarked upon various projects aimed at ensuring that the country has a reliable supply of electricity.
Current generation facilities and their generation capacity;
- Ruacana Hydropower Station – 332 MW
- Van Eck Coal Power Station – 108 MW
- Paratus Diesel Power Station – 24 MW
- Anixas Power Station – 22.5 MW
The Namibian Government, remains committed towards providing electricity to all educational and health facilities, and to all household, especially rural households. Thus, the Harambee Prosperity Plan Goal desires outcome/s with regard to electricity supply during the Harambee period is anticipated as follow:
Increase in local electricity generating capacity from 400 MW to 600 MW; Provision of electricity to all schools and health facilities by 2020; and
Increase in the rural electrification rate from 34% in 2015 to 50% by 2020.
Rising domestic consumption, dependency on electricity imports, peak power challenges, transmission congestion on import corridor, decline of surplus generation capacity in the SADC, securing power supply and projected electricity demand by Namibia, has led to the identification of gas as a power source.
The oil and gas industry is still at a very early stage of development, with the discovery of non-commercial volumes of oil in 2013. Geological data further suggests that there are considerable reserves in the offshore basins of Walvis Bay, Luderitz and the Orange River as well as the onshore basins of Namib in northern Namibia.
Renewable energies, especially wind energy along the southern coast, have great potential in Namibia while solar radiation maps indicate that the country has proven solar resources and are particularly suited for solar energy projects such as concentrated solar power (CSP). There are also opportunities for passive solar water desalination plants for the mining and agriculture sectors. With Namibia currently importing 61% of its energy from its neighbours which is then distributed through a central national grid, the use of solar energy offers investors an opportunity to decentralize the electricity distribution network.
Options of renewable energy procurement
The REFIT scheme is formulated to permit private investors (IPPs) and it covers renewable energy based projects with capacities between 500 kW and 5 MW. The REFIT is targeted on investors in the business of electricity generation who want to procure, own and operate medium-scale electricity generation facilities. An interim 70 MW REFIT programme is running whereby Twenty-seven participants are pursuing fourteen 14 IPPs (solar PV, wind, and biomass) 5 MW generation licenses under the current program.
The net metering programme is designed on a private ownership model through which small-scale renewable projects can feed excess generated energy into the national grid. The programme is limited to residential and commercial users with renewable energy technologies (solar, wind, water, geothermal, biomass, biogas, biofuel, or fuel cell) systems of equal or less than 500kVA installed capacity. The Net Metering Rules are yet to be gazette.
The system is based on national energy projects determined by the government’s long term renewable targets. Projects that fall under this scheme are more than 5 MW and are procured through a fair and free competitive bidding system initiated by an invite to IPPs to submit bids for a renewable energy project with a pre-determine capacity. The least cost bidder that also fulfills the technical requirements is awarded and signs a PPA and TCA with the national utility‒NamPower. The PPA guarantees a fix price over a certain period of time to be indexed and revised annually.
Investment opportunities exists in the following areas:
Debt financing and equity participation in upstream and downstream operations
- Power generation as Independent Power Producers (IPP’s)
Financing of transmission lines
- Engineering, procurement and construction as well as drilling and production
Renewable energy such as wind, solar energy