Power Africa in Namibia

 

ENERGY SECTOR OVERVIEW

The power sector in Namibia has undertaken several reforms aimed at attracting IPPs by providing a stable investment environment. Such reforms include the horizontal consolidation of more than 70 distributors into five regional electricity distribution companies (REDs) and the establishment of transparent tariff setting procedures, all overseen by the sector regulator, the Electricity Control Board (ECB). While the country’s generation mix is comprised primarily of hydropower, the majority of electricity is imported (about 60% of the total electrical energy requirement), primarily through bilateral contracts from South Africa’s Eskom and to a lesser extent, the Southern Africa Power Pool (SAPP).

The Government of Namibia has taken steps to increase generation from other sources, including through a renewable energy feed-in-tariff (REFIT) for a total of 70 MW. The REFIT was adopted by ECB to grant 14 licenses to IPP developers for 5 MW projects by establishing a predictable enabling environment for renewable energy integration (at the end of September 2017, 4 x 5 MW solar PV plants & 1 x 5 MW wind plant were operational). In addition to the REFIT projects, there is a 4.5 MW solar photovoltaic (PV) plant operational (the first IPP of Namibia) and NamPower (the national power company utility of Namibia) recently awarded a contract to build a 37 MW solar PV power plant in the southern part of the country, and has signed Power Purchase Agreements (PPAs) for a 20 MW solar PV plant and a 44 MW wind plant. Namibia’s REDs are also procuring embedded generation plants, the first of which is the operational 5 MW solar PV plant by the Central Northern RED (CENORED) and the second a 3 MW solar PV plant under construction by Erongo RED. Recently, ECB and the Ministry of

Mines and Energy (MME) commissioned and reviewed the National Integrated Resource Plan (NIRP), which provides a twenty year development plan for electricity supply. Implementation of the NIRP will be critical to Namibia’s energy security as demand currently outstrips supply, therefore paving the way for Namibia to secure future generation assets through a mix of renewable and baseload power as well as regional power trade through SAPP. To that end, ECB and NamPower are undertaking grid studies to determine the grid’s capacity to handle intermittent renewable resources.

GENERATION CAPACITY

  • Installed Capacity: 550 MW
    • Thermal: 168.5 MW
    • Hydro: 347 MW
  • Power Africa New MW to Date Reached Financial Close: 61 MW

CONNECTIONS

  • Current Access Rate: 45%
    • Rural: 19% Urban: 70%
  • Households without Power: 253,640
  • Target: Namibia Vision 2030: Basic social services and infrastructural facilities available in both urban & rural areas.
  • Power Africa New Off-Grid Connections: 3,800

INVESTMENT AND ENABLING ENVIRONMENT

Biggest Issues

  1. Macroeconomic forces
  2. Lack of creditworthy utilities
  3. Lack of strong, transparent regulator

Power Africa Interventions

  1. Loss reduction with utilities
  2. Partnership with National Association of Regulatory Utilities to support regulator

POWER AFRICA’S ENGAGEMENT IN NAMIBIA

MW GENERATION

USAID/Southern Africa, through the Africa Infrastructure Program, provided capacity-building and transaction support to ECB in establishing the framework and enabling environment to attract private capital. To that end, USAID worked with ECB to establish the 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 MW of renewable energy. All 14 of those projects have reached financial close, and five of them are operational, resulting in 25 MW of new generation being delivered. The last of the projects are expected to achieve commercial operation by February 2018.

In March 2017, USAID/Southern Africa launched the Southern Africa Energy Program (SAEP), which provides technical assistance support to various public and private stakeholders, including ECB, NamPower, and the Ministry of Mines and Energy (MEMMME) related to five outcomes: Improved Regulation, Planning, and Procurement for Energy; Improved Commercial Viability of Utilities; Improved Regional Harmonization and Cross-Border Trade; Scaled Renewable Energy and Energy Efficiency; and Increased Human and Institutional Expertise.

Power Africa, through USAID and the U.S. Department of Treasury, has recently approved an energy advisor who is expected to be deployed in early 2018. This advisor will work within the Namibian Ministry of Finance’s Public-Private Partnership (PPP) Unit to support developing policies and creating an enabling investment environment that will increase private sector participation in the energy sector.

FACT SHEET

Last updated: March 28, 2018

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