Southern African Power Pool Report to SADC By The SAPP Executive Committee arare, ZIMBABWE 23-25 APRIL 2007 1
CONTENTS 1. Status of the SAPP 2. Market Price Determination 3. SAPP Tariff Study 4. Diminishing Generation Surplus Capacity 5. Western Power Corridor Project 2
1. STATUS OF TE SAPP 1.1 Update on the SAPP IGMOU The Revised IGMOU was signed by Ministers responsible for energy in the SADC region on 23 February 2006 in Gaborone, Botswana. The Revised document took into account the following: Restructuring of the SADC Power sector reforms in SAPP member countries The SAPP-Zaire (DRC) Agreement Participation of other stakeholders, such as IPPs Membership of the SAPP All Member Countries have signed the Revised IGMOU. 3
1.2 Update on the SAPP IUMOU The following documents were circulated to SAPP Members in January 2007 for comments and approval: i. The Final Draft of the Revised IUMOU ii. iii. Membership Guidelines Membership Application Forms The SAPP EC had requested incorporating a clause on dispute resolution, and this has been done including a clause on confidentiality. In terms of SAPP governance, differentiation between CC Board and Management Committee has been made. The Revised IUMOU is now ready for signing. 4
1.3 SAPP-RERA MOU The SAPP-RERA MOU has been approved by both SAPP and RERA and both are ready to sign the document. SAPP and RERA have both recognized the benefits of working together to: Achieve their respective goals Ensure capacity building Ensure cooperation and harmonization in the region, and Keeping each other informed of their respective projects and actions. 5
1.4 ost Country Agreement On 13 March 2006, the Government of Zimbabwe and SAPP signed a ost Country Agreement for the hosting of the SAPP Coordination Centre in arare, Zimbabwe. The Agreement has given the SAPP a Diplomatic Status in Zimbabwe and has helped the SAPP to: To be fully recognized as a SADC Institution in Zimbabwe Achieve its stated aims, goals and objectives Reduce its operating costs and tax burden on member states, and Receive support and donations from cooperating partners without difficulties. The SAPP is grateful to the assistance given by the Government of Zimbabwe. 6
1.5 Revision of the 2001 Pool Plan The results of the SAPP 2001 Pool Plan were that: The estimated cost of the SAPP Integrated projects was USD 8 billion. The total sum of the individual country project was estimated at USD 11 billion. A potential saving of USD 3 billion could have been achieved if the projects were implemented in a coordinated manner. Unfortunately, due to the difficulty of getting funding, the implementation has not been achieved as previously planned. 7
1.5 SAPP Pool Plan - CONTD The current revision of the SAPP Pool Plan of 2001 is funded by a World Bank grant to the tune of US$1 Million. The revision is in line with the SAPP requirement of revising the plan every after 5 years. Work on the Pool Plan is expected to be completed in November 2007. The completed Pool Plan will provide input into the SADC Regional Infrastructure Development Master Plan. 8
SAPP Pool Plan Objectives To develop an Integrated Generation and Transmission Plan in order to take full advantage of the available power pooling opportunities. To ighlight the benefits that can be derived for members from a co-ordination of their individual expansion plans. To develop electricity supply systems providing least-cost to consumers and minimizing negative environmental impacts. To take into account energy security and requirements of member countries. 9
2. MARKET PRICE DETERMINATION 2.1 STEM Operations 2.2 Progression from STEM to Competitive Market 10
2.1 STEM Operations 2.1.1 Supply and Demand 350,000 300,000 250,000 Supply Demand Demand far much outstrips the supply. For 2006: Demand 1,705-GWh [MWh] 200,000 150,000 100,000 50,000 - January March May July September November Supply 372-GWh Traded 217-GWh Data for 2005: Demand 3,857-GWh Supply 1,138-GWh Traded 291-GWh Month January-December 2006 Demand and supply reductions in 2006. 11
2.1.2 Actual Energy Prices 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Energy Traded [M Wh] M onetary Value [x10 US$] Energy & Prices, 2006: Traded 217-GWh Prices 1.3-1.5 USc/kWh Data for 2005: Traded 291-GWh Prices 0.4-1.4 USc/kWh - January March May July Month September November Energy trading peaked from May-July 2006, corresponding to winter months. Trading during off peak Energy Traded & Monetary Value 12
2.2 STEM Progression to Competitive Market The STEM was introduced in April 2001 as a precursor to a full competitive market. The following members are current STEM Participants: BPC EDM Eskom CB NamPower SEB ZESA 13 In January 2004, the SAPP started the development of a competitive market with funding from Government of Norway and Sida.
Measures introduced to achieve reliability and security of supply: STEM contracts are all firm Non delivery penalties apply Security deposit required before Participants trade Shorter financial settlement periods, within 5 days Energy prices in the STEM are achieved by matching offers and bids using pay-as-bid method. The competitive market has been designed to use a uniform pricing method. The market is a day-ahead market (DAM). DAM Market trials started on 10 April 2007 and will be on for the next three months. 14 Market opening to be considered when governance issues are resolved with the SAPP.
3. TE SAPP TARIFF STUDY Following the Ad oc meeting held in Namibia in July 2004, it was resolved to: Implement cost reflective tariffs Adopt regulatory principles to enhance the tariffs The SAPP has initiated a Tariff Study and has appointed a Consultant. Key stakeholders such as RERA would be consulted 15 DBSA is funding the study which shall be completed in Aug 2007.
SAPP Tariff Study - CONTD The outcome of the Study will be to highlight: Cost reflectiveness of tariffs in Member countries Competitiveness regionally & internationally Implications of capacity expansion projects on tariffs Energy efficiency implications on tariffs Analyse and recommend best practices 16
3. DIMINISING GENERATION SURPLUS CAPACITY 3.1 Status of Power Supply Situation 3.2 Commissioned Generation Projects 3.3 Future Short & Long Term Generation Projects 3.4 Priority Transmission Projects 17
3.1 Power Supply and Demand No. Country Utility Installed Capacity [MW] Available Capacity [MW] 2006 Peak Demand [MW] 1 Angola ENE 742 590 432 2 Botswana BPC 132 120 473 3 DRC SNEL 2,442 1,170 993 4 Lesotho LEC 72 70 101 5 Malawi ESCOM 305 261 251 6 Mozambique EDM 307 320 CB 2,250 2,075 7 Namibia NamPower 393 390 408 8 South Africa Eskom 42,011 36,208 34,807 9 Swaziland SEB 51 50 188 10 Tanzania TANESCO 897 680 567 11 Zambia ZESCO 1,752 1,302 1,302 12 Zimbabwe ZESA 1,990 1,825 1,904 TOTAL 53,124 44,741 41,744 Non-coincidental 2006 peak demand for interconnected grid: 40,554 MW Available hydro capacity varies depending on season 18
60,000 SAPP Generation Vs SAPP Load Forecast Net Capacity Peak Demand 50,000 Capacity [MW} 40,000 30,000 20,000 10,000-2003 2005 2007 2009 2011 2013 Year The SAPP Planning Data is indicating that SAPP runs out of generation surplus capacity after the year 2007. 19
Load shedding in ZESA, ZESCO and NamPower in 2006 at peak periods Interruptible Load Contracts, Demand Market Participation and DSM utilised in ESKOM. (Experience in 2006) This demonstrated that supply was not adequate The forecast for 2007 indicates that actual generation reserve capacity would be lower than normally planned. Demand Side Management Initiatives have been initiated and supported 20
3.2 Commissioned Generation Projects [2004-2006] Total Capacity Country Plant Capacity [MW] (MW) Commissioning Date Comment Angola Capanda 1 2 x 130 260 2004 New Tanzania Ubongo 2 x 40 80 2005 New Zambia Kariba North 1 x 30 30 2004 Uprating South AfricaCamden 2 x190 380 2005 De-mothballed Zambia Kariba North 30 30 2005 Uprating South AfricaCamden 190 190 2006 De-mothballed South AfricaArnot 6 x 20 120 2005-2006 Upgrade Swaziland Maguga 20 20 2006 New Zambia Kafue Gorge 2x15 30 2006 Uprating Total 1140 Type Percentage ydro 35% Gas 7% Coal 58% 21
New Generation Projects in 2007 ESKOM commissioned 2 x 190 MW at Camden in 1 st quarter of 2007. ESKOM to commission 1050 MW Commercial Operation by May 2007 (OCGT). SEB to commission 20 MW at Maguga by July 2007. 22
Priority Projects The SAPP priority projects have been agreed as follows: 1. Rehabilitation & associated transmission projects. 2. Short-term generation projects Expected to be commissioned before 2010 Completed feasibility studies Approved Environmental Impact Assessment 3. Transmission projects 4. Medium to Long-term generation projects Expected to be commissioned after 2010 Most have no feasibility studies and EIA 23
3.3 Classification of Generation Projects No. Generation Project Category Capacity [MW] Estimated Cost [US$ Million] 1 Projects with secured funding 5,031 2,500 2 Rehabilitation 1,790 952 3 Short-term projects 11,206 7,880 4 Long-term projects 32,223 31,800 Total 50,250 43,132 24
Planned Rehabilitation & Short Term Generation Projects 2007 to 2010 Country Generation Capacity MW Angola 343 Botswana 600 DRC 1136 Lesotho 28 Malawi 104 Mozambique 912 Namibia 800 RSA 6639 Swaziland 20 Tanzania 260 Zambia 1350 Zimbabwe 1315 TOTAL 13507 Annual Average Planned New Generation Capacity = 3,327 MW Most Projects are on track to be commissioned before 2010 25
Country Capacity Contribution GENERATION PROJECTS IN PROGRESS Country Capacity, MW Percentage Angola 343 6.8% South Africa 4,098 81.5% Swaziland 20 0.4% Zambia 170 3.4% Zimbabwe 400 8.0% TOTAL 5,031 100 ydro 40% Gas 27% Coal 33% The above projects have secured funding and are currently in progress. They are expected to be commissioned before 2010. 26
REABILITATION & SORT TERM PROJECTS Country Capacity, MW Percentage Botswana 600 4.6% DRC 1,136 13.1% Lesotho 28 0.3% Malawi 104 1.2% Mozambique 912 10.5% Namibia 800 9.2% South Africa 2,541 29.3% Tanzania 260 3.0% Zambia 1,170 13.5% Zimbabwe 935 15.2% TOTAL 8,486 100 The above projects are ready but have not reached financial closure. If funding was available, the should be commissioned by 2010. 27
SAPP Operating Members Only 75000 70000 65000 60000 MW 55000 50000 45000 40000 35000 30000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year Capacity Planned Capacity Required Peak Demand forecast 28 Assumptions: Demand Growth = 3.6% Reserve Margin = 10.2 %
SAPP Members (All) Improved reserve margin if all members are interconnected 75000 70000 65000 60000 MW 55000 50000 45000 40000 35000 30000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Available & Planned Capacity Year Capacity Required Peak Demand forecast 29 Assumptions: Demand Growth = 3.6% Reserve Margin = 10.2 %
Priority Transmission Projects Transmission projects are divided as follows: i. Outstanding transmission interconnectors whose aim is to interconnect non-operating members of the SAPP: Malawi-Mozambique interconnector, Zambia-Tanzania-Kenya Interconnector, and Angolan interconnection to SAPP. ii. Transmission interconnectors aimed at relieving congestion on the SAPP grid, and iii. New transmission interconnectors aimed to evacuate power from generating stations to the load centres. 30
Gabon Congo Dem Rep of Congo Brazzaville Kinshasa Rwanda Burundi Tanzania Kenya Nairobi Luanda Dar es Salaam A total of USD 4.7 billion is required to develop the identified transmission projects Angola Namibia Botswana Zambia Lusaka T arare Malawi Lilongwe T Zimbabwe Mozambique SOUTERN AFRICAN GRID 31 Windhoek Cape Town T South Africa N P Gaborone Pretoria Johannesburg T T T T P Lesotho T T TT T T T T T T Maputo Mbabane Swaziland P T ydro station Pumped storage scheme Thermal Station
4. WESTERN POWER CORRIDOR PROJECT BACKGROUND WESTCOR consist of a renewable hydro power generation at Inga 3 comprising of VAC and VDC power transmission and broad band telecommunication. The five participating member utilities have each paid US$ 100 000 for establishment of the project office in Gaborone. A procurement policy, code of ethics and General Conditions of Service have been approved. The Board of Directors is in the process of reviewing the draft Business Plan for approval. 32
4. WESTCOR (2) CONDUCTING TE STUDIES The first part has been completed and conclusion of the study is acceptable at this stage. The independent consultants to be sourced to conduct the studies for pre-feasibility, feasibility and solicitation phase. The estimated time to conduct these studies is 3-years. A management to be established under the leadership of the Chief Operating Offices, to coordinate and monitor the study. 33
4. WESTCOR (3) STUDY BUDGET, TIMELINE AND COST Pre-feasibility study US$4.5 Million (6 Months) Feasibility US$38 Million (12 months) Solicitation Phase US$2.4 Million (12 Months) Evaluation to be done after each stage. 34
5. ACIEVEMENTS [2005-2006] i. DOCUMENTATION REVIEW The revised IGMOU was signed in February 2006 The IUMOU will be signed on 25 April 2007. ii. COMMISSIONED GENERATION PROJECTS The SAPP has commissioned a total of 1,140MW of power generation projects in various countries. iii. SAPP POOL PLAN REVIEW SAPP received a World bank grant to review the SAPP Pool Plan of 2001. Work shall be completed in Nov 2007. 35
iv. COMPETITIVE MARKET DEVELOPMENT Market specifications completed and approved. The market type is a day-ahead market (DAM). DAM Trading Platform delivered in Feb 2007. Traders training conducted in RSA, 6-10 Nov 2006. Market trials commenced from 10 April 2007. v. TRANSMISSION PRICING AND ANCILLARY SERVICES A method of loss compensation developed by a Consultant is under consideration by SAPP. The SAPP is also reviewing the wheeling charge methodology. 36
vi. REGIONAL ELECTRICITY INVESTMENT CONFERENCE (REIC) SAPP co-hosted with RERA the REIC in Namibia, Sept 2005. Over 250 delegates attended the conference. Aim was to attract investors into the SADC power sector iii. SAPP TARIFF STUDY SAPP has secured funding from DBSA to do the study. The study is from 10 April to 10 August 2007. vii. ENVIRONMENTAL GUIDELINES The SAPP approved the following guidelines: Guidelines on EIA for Thermal Power Plants EIA Guidelines for Transmission Lines within SAPP Guidelines on the Management of Oil Spills SAPP Position on Climate Change 37
TANK YOU 38