CHALLENGES AND INVESTMENT OPPORUNITIES: THE CASE OF ZESA

By Mr Ikhupuleng Dube, System Development Manager – Zimbabwe Electricity and Transmission Company (ZETDC), a subsidiary of ZESA Holdings

(Pvt) LtdPresented at the Worldbank CCS Workshop

Johannesburg31st May– 1st June 2011

Presentation Content• Electricity Sector Policy, Governance Structure

and Players• Importance of Electricity in Promoting Economic

Growth • Current Challenges

Security of SuppliesReliability of Supplies

• Investment Opportunities Generation Grid Other

Electricity Sector Policies• Ensure availability and accessibility of

electricity to all consumers (current and future) at competitive prices; and

• Facilitate electricity investments and access by Independent Power Producers (IPPs), Public Private Partnerships (PPPs), Private Public Associations (PPAs) and other forms of joint ventures into the sector.

Electricity Subsector StructureOff-Grid

CustomersOther

Investors

ZPCOff-Grid

Renewables Small

ThermalsHPS KSPS IPP's

Small Grid Suppliers (Cogen + Small Hydros)

ZETDCFunctions:

System OperatorDistribution System OperationSupply

LEGENDFacilitation of Connections

ZERA oversight through licensing and regulations

Flow of electricity

Rural Electrification Fund

SAPP (Imports/ Exports)

Large Customers (Sables, Zimasco, Zimalloys, SMM,etc. )- Supplied directly from the Transmission

Grid

Transmission Grid Operation

ZERA

Other Customers (Urban + Rural) ( retail commercial, domestic,

agricultural and industrial customers)

ZESA Holdings

Holds shares of the successor companies on behalf of the Government

Have four subsidiariesZimbabwe Power Company (ZPC)Zimbabwe Electricity Transmission and

Distribution Company (ZETDC)PowertelZESA Enterprises

ZESA Main Mandate• To supply all sectors of the economy

with adequate, safe, reliable environmental friendly and least cost electrical energy.– Strong linkages between electricity

supply and economic growth.

Linkages between Electricity and Economic Growth

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

GDP Growth Rate (%) Electricity Grwoth Rate (%)

Linkages between Electricity Supplies and Productivity

Sector Unit

US$ per un-served unit of

electricity

Proposed Tariff

(US$/kWh)Agriculture [kWh/US$] 0.689 0.13Construction [kWh/US$] 0.070 0.12Mining [kWh/US$] 4.643 0.079

Manufacturing [kWh/US$] 0.656 0.084

- of basic materials [kWh/US$] 0.498 -- of machinery and

equipment. [kWh/US$] 1.371 -- non-durable goods [kWh/US$] 1.506 -

- of miscellaneous goods. [kWh/US$] 1.937 -

Main challenges

• Lack of investment in generation leading to demand outstripping supply

• Vandalism of infrastructure• Ageing equipment limited maintenance and refurbishment

challenges• Reliability of supply and customer connection challenges• Power wheeling challenges• Power quality challenges (need for compensation

equipment)• Low tariffs, revenue collection and financing challenges• Inefficient usage of electricity• Access to electricity challenges

Domestic Supply and Demand Challenges

(MW)2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Installed capacity Hwange 920 920 920 920 920 920 920 920 920 920 Kariba 694 722 736 750 750 750 750 750 750 750 Small thermal plants 290 290 290 290 290 290 290 290 290 290 Total 1,904 1,932 1,946 1,960 1,960 1,960 1,960 1,960 1,960 1,960 Dependable capacity Hwange 780 780 780 780 780 780 780 780 780 780 Kariba 694 722 736 750 750 750 750 750 750 750 Small thermal plants 245 245 245 245 245 245 245 245 245 245 Total 1,719 1,747 1,761 1,775 1,775 1,775 1,775 1,775 1,775 1,775 Available capacity Hwange 496 716 659 498 583 579 435 421 388 287 Kariba 511 531 588 701 723 725 711 727 747 746 Small thermal plants 133 105 101 43 110 42 26 26 34 13 Total 1,140 1,352 1,348 1,242 1,416 1,346 1,172 1,174 1,169 1,046 As % of installed capacity 59.9 70.0 69.3 63.4 72.2 68.7 59.8 59.9 59.6 53.4 Peak demand 1,986 2,013 2,028 2,007 2,069 2,066 1,904 1,758 1,743 1,800 Supply deficit (846) (661) (680) (765) (653) (720) (732) (584) (574) (754) Source: ZETDC

Supply and Demand Challenges – Summer DayItem 1 Kariba 750 MW

Item 2 Hwange 500 MWItem 3 STP 60 MWItem 4 Imports 150 MWItem 5 Total 1 to 4 Total Generation Available 1460 MW

Item 6National Average Unsuppressed Summer Demand 1860 MW

Item 7 Capacity Committed to Essential Services 750 MW

Item 8Available Capacity after commitment to Essential Services 710 MW

Item 9 Nampower Exports 150 MW

Item 10Available Capacity after Nampower Commitments 560 MW

Item 11Item 6-Item 7-Item 9

Public Demand Excluding after Exports and Essential Services 960 MW

Item 12 Item 10 -Item 11 Deficit -400

Supply and Demand Challenges – Winter Day

Item 1 Kariba 750Item 2 Hwange 500Item 3 STP 60Item 4 Imports 150Item 5 Total 1 to 4 Total Generation Available 1460Item 6 National Unsuppressed Winter Demand 22100

Item 7 Capacity Committed to Essential Services 750

Item 8Available Capacity after Commitment to Essential Services 710

Item 9 Nampower Exports 150

Item 10Available Capacity after Nampower Commitments 560

Item 11Item 6-Item 7-Item 9

Pubilc Demand After Exports and Committed Services 1200

Item 12 Item 10 -Item 11 Deficit -640

Reduced availability of Imports Challenges

Historical Trends of Electricity Import by ZESA (MW)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Factors Affecting Load Growth

• Suppressed demand due to load shedding (2591GWh in 2008)• Investment due to large mining customers (almost 800MW in

the medium term)• Resuscitation of production levels by large users (currently

suppressed demand of 340MW)• Access to electricity by urban households (estimated at 60MW

yearly for the next 15 years starting in the medium term)• Rural electrification (total load of 420MW)• General economic growth (linkages between productivity and

energy consumption)• Demand due to services such as public lighting, water pumping

etc.• Resuscitation of production levels in the agricultural sector.• Increase in demand due to improved consumer lifestyles

Future Demand and Supply Balance

Availability Energy Resources to Meet Demand - Coal

Coal Reserves

Coal Field Mineable In situ (MT)

Run of Mine (MT)

Wankie - Entuba 2 100 1 400

Lubimbi – Sengwa- Sessami

23 800 9 400

Tuli 120 60Bubye 60 30Sabi 570 300

Total 26 650 11 190

Position of Coal Fields

Coal Policy Issues

• To ensure adequate and reliable supplies of coal in a cost effective and sustainable manner;

• To ensure environmentally friendly exploitation methods;

• To explore the techno-economic feasibility of new coal technologies such as coal gasification, carbon capture and coal-to-liquid conversion;

Availability of Energy Resources to Meet Demand - Hydro

Site Capacity (MW)

Batoka Gorge 1600

Devil's Gorge 1240

Mupata Gorge 1000

Small Hydro 300

Other Available Energy Sources• Coal bed Methane - estimated at more than

600 billion cubic metres (further exploration to confirm amount of gas).

• Forest residues - almost entirely based on plantation timber;70,000 tons of this biomass waste is produced annually.

• Energy Crops - in the next four years 150MW to be generated from energy crops.

Security of Supplies InvestmentsProject Name Capacity MW Estimated

Investments Costs (US$ Million)

Indicative timing

Short Term SolutionsHwange Improvements

200 US$125 2012

Repowering of Small Thermals

200 US$120

DSM Projects 300 US$9 – US$ 25 2011-2013Renewable Energy Sources

200 TBA 2011- 2015

Bridging Imports 400Medium Term SolutionsKariba South Extension

300 US$300 2016

Hwange Extension 600 US$1000 2016Long Term SolutionsGokwe North Project

1400 US$2240 2017

Batoka Project 800 US$2200 2021

Transmission and Sub-transmission Investment Requirements

$million

1. 1. Transmission Network (330/420 kV)1. Power Plant Related Network2. Wheeling Related Network3. Substation Upgrade

Sub-total

170258.582.9

510.5

2. Sub-transmission Network (88/132 kV)2.1 REA Related Network2.2 Network Up-rate2.3 Substation Upgrade2.4 Control and Communication System2.5 Spare and ToolsSub-totalTotal

106.897.117.459.279.4

359.9870.4

Distribution Refurbishment and Extension

• Cables and conductors – US$25 mil• Transformers – US$169 mil• Prepaid meters and MCBs – US$64 mil• Tools and Equipment – US$4 mil• Operational Vehicles – US$46 mil