4 April 2017

Southern Africa: SADC Needs Comprehensive Power Strategy

Southern African requires a comprehensive energy strategy covering development of new generation plants and transmission projects to evacuate electricity from sources to ensure sustainable supply to cover the 6 000MW operational power deficit the bloc is facing.

The operational deficit comes at a time when the region has adopted an industrialisation strategy that is likely to result in an increase in demand for power.

While a number of power generation projects are on the cards or at different stages of development, the slow pace of commissioning these projects is putting more pressure on generation capacity.

The current installed generation capacity in Sadc is 58 000MW out of which about 47 000MW is operating against a demand of around 53 000MW giving an operational deficit of around 6 000MW.

The pace of commissioning new projects is still slow although the electricity deficit is expected to be overcome.

This is despite that Sadc countries are endowed with different sources of energy which they not capitalised on through cross- border electricity trading.

In light of this, Government officials from both Zimbabwe and Zambia, potential financiers and contractors and development finance institutions gathered in Livingstone, Zambia last week to engage on Batoka Hydro-Electric Scheme financing, one of the projects expected to improve generation capacity in the region.

"There has been a shortage of power in the region since 2007 and we are trying to build power generation projects in order to ensure that we close that gap," Energy and Power Development Minister Dr Samuel Undenge said in an interview.

The Batoka hydro electric project will generate 2 400MW of power to be shared equally between Zimbabwe and Zambia.

The BGHES is critical to the region as well as the continent as it can help to turn around Sub-Saharan Africa from having the lowest electrification rate as well as per capita electricity consumption in the world.

A recent World Bank report states that only 35 percent of households in this region have access to electricity. It is said that the combined generation capacity of the region is less than that of Spain.

"How many of our people are we depriving of electricity and what impact does this have? The Sadc region has adopted an Industrialisation Strategy which was recently endorsed by its Head of States and Governments at a recent Sadc summit.

"The Summit acknowledged that the goals set in the Industrialisation Strategy cannot be met without adequate energy supply.

"It is therefore incumbent upon us as the ministers responsible for Energy to see that the required energy is available," said Minister Undenge.

Batoka has been on the cards well before the Kariba Dam was built.

Engineers scouting for a site to build a power plant along the Zambezi River identified among others, the Batoka Gorge as a possible suitable site. However, because of economic considerations at that time, the Kariba Hydro Electric Scheme was built first.

Financiers and investors last week gave thumbs up for the development of Batoka a move that is expected to see major works on site.

"This conference comes at an opportune time as both Zimbabwe and Zambia; the Sadc region and Africa as a whole is embarking on a massive generation expansion programme. The Batoka Gorge Hydro Electric Scheme is one of the regional priority projects as espoused by the AfDB Light Africa Programme and NEPAD's Priority Infrastructure Development programme," said Minister Undenge.

Generation is expected to commence in 2019 with the project earmarked to be completed by 2024.

Zimbabwe is also undertaking other major power projects to increase the country's electrical capacity.

Some of the projects include the Kariba South Extension project which will add two more generators at Kariba South Power Station to give a total of 300MW additional capacity. The first unit is planned to be commissioned in December 2017 with the second unit planned for March 2018.

The country has also set up a 200MW emergency diesel power plant which enabled the maintenance of power supply without load shedding in 2016.

Furthermore, Government is expecting financial closure on the Hwange Expansion Project by the end of May.

"We are vigorously pursuing construction of Hwange Unit 7 & 8 and very soon we will reach financial closure hopefully by the end of May. We have planned the ground breaking ceremony in July whereby President Mugabe will do the ground breaking. We are excited about that project and we are happy that it will finally be consummated," the Minister said.

Hwange will cost about $1,2 billion and when you factor in interest it will come to about $1,4 billion.

Another area that Sub-Saharan Africa should invest in is in the evacuation of power generated to capitalise through cross-border electricity trading.

This comes as 66 percent of the energy that was matched and available for trading on the competitive market could not be traded due to transmission constraints in 2016.

"We should therefore note the importance of strengthening our transmission systems. Transmission projects are critical to evacuate the power from generation sources to various load centres within the region.

"There are still a lot of transmission constraints that are affecting electricity trading among the Sadc Member States," said Minister Undenge.

In this endeavour, a coordinating unit, the Southern African Power Pool was formed and mandated with coordinating electricity trade in the region. Despite facing some challenges on the regional supply and demand, SAPP has made significant strides on the electricity trading side.

The Competitive Market it launched in late 2009 in the form of the Day Ahead Market is progressing well. SAPP is now operating four products on their competitive market platform that include month ahead, week ahead, day ahead and hour ahead markets. Such a market structure provides for flexibility among its members.

Traded volumes on the competitive markets have been going up since inception and over $70 million was exchanged on this market among the SAPP members in 2016.

Trading, however, could have been higher if there were no transmission constraints.

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