southern african power pool powering africa – sapp strategies by eng. musara beta sapp chief...

SOUTHERN AFRICAN POWER POOL

www.sapp.co.zw

Powering Africa – SAPP Strategies

ByEng. Musara Beta

SAPP Chief Market Analyst

Zimbabwe Mining & Infrastructure Indaba 20149 October 2014

Meikles Hotel, Harare, ZIMBABWE


1. INTRODUCTION TO THE SAPP

2. POWER SUPPLY CHALLENGES IN THE SAPP

3. SAPP STRATEGIES TO MEET DEMAND

4. SAPP COMPETITIVE MARKET

5. CONCLUSIONS

CONTENTS


1. INTRODUCTION TO THE SAPP

1.1 Key Facts

DR CongoTanzania

Zambia

Angola Malawi

Zimbabwe

MozambiqueBotswanaNamibia

South AfricaLesotho

Swaziland

12 Countries 280 Million people Installed Generation

Capacity - 58 GW Available Generation

Capacity - 51 GW Peak Demand - 54 GW Consumption - 400TWh


No Full Name of National Power Utility Status Abbreviation Country

1 Botswana Power Corporation OP BPC Botswana

2 Electricidade de Mocambique OP EDM Mozambique

3 Electricity Supply Corporation of Malawi NP ESCOM Malawi

4 Empresa Nacional de Electricidade NP ENE Angola

5 ESKOM OP Eskom South Africa

6 Lesotho Electricity Corporation OP LEC Lesotho

7 NAMPOWER OP Nam Power Namibia

8 Societe Nationale d’Electricite OP SNEL DRC

9 Swaziland Electricity Board OP SEB Swaziland

10 Tanzania Electricity Supply Company Ltd NP TANESCO Tanzania

11 ZESCO Limited OP ZESCO Zambia

12 Zimbabwe Electricity Supply Authority OP ZESA ZimbabweNo Full Name of Private Utility Status Abbreviation Country13 Copperbelt Energy Corporation ITC CEC Zambia14 Lunsemfwa Hydro Power Company IPP LHPC Zambia15 Hidro Cahora Bassa OB HCB Mozambique16 Mozambique Transmission Compamy OB MOTRACO Mozambique

OP: Operating NP: Non-Operating ITC: Independent Transmission Company OB: Observer IPP: Independent Power Producer

1.2 SAPP Membership


2. POWER SUPPLY CHALLENGES IN SAPP

No Country Utility

Installed Capacity

[MW] As at Aug 2014

Available Capacity

[MW] Aug 2014

Forecast/ Peak

Demand

Capacity Shortfall including reserves,

MW

Calculated Reserve Margin, %

1 Angola ENE 2,195 1,772 1599

2 Botswana BPC 892 680 610

3 DRC SNEL 2,442 1,251 1342

4 Lesotho LEC 72 72 138

5 Malawi ESCOM 351 351 326

6 Mozambique EDM /HCB 2308 2,279 850

7 Namibia NamPower 501 392 635

8 South Africa Eskom 44,158 41,074 37661

9 Swaziland SEC 70 70 219

10 Tanzania TANESCO 1396 1,159 905

11 Zambia ZESCO / CEC/LHPC 2,128 2,029 2287

12 Zimbabwe ZESA 2,045 1,540 1961

58,558 52,669 48,533 (2,758) 7.9%

54,616 49,387 45,703 (1,253) 7.5%

TOTAL SAPP

Total Interconnected SAPP

As at Aug 2014, total SAPP installed capacity was 58.6 GW


Demand for power in Southern African has been increasing at an average rate of 3% per annum.

In 2007, demand growth for South Africa was

4.9% and for the whole region 4.6%.

In the last 10 years demand in the SAPP increased by more than 32% which is equivalent to 13,000 MW (from 41,000 MW in 2004 to 54,000MW in 2013).

Unfortunately, there has been no corresponding investments in generation and transmission infrastructure, (11,469MW generation added from 2004 to 2013) resulting in the current supply deficit that the region is experiencing.

2. POWER SUPPLY CHALLENGES IN SAPP


Why has the SAPP run into supply deficit ?

1. Economic Growth of more than 5% in most of the SADC member countries resulting in unprecedented growth in electricity consumption and demand.

2. Increase in demand for base metals resulting in high metal prices on the World Market with new mining companies being established in the SADC region in the last few years.

3. Inadequate Investments in generation and transmission infrastructure over the last 20-years.

4. Electrification Programmes have partly contributed to the increased consumption and demand.

5. The challenge was identified and communicated but not adequately mitigated.


3. SAPP STRATEGIES TO MEET DEMAND

The SAPP has proposed the following measures:

1. Demand Management based on others experiences: Power Conservation Programme (PCP)

Study and understand the concept of PCP Formulate and adopt PCP for SADC

Demand Side Management (DSM) Mechanism to provide financial support for

development and implementation of DSM in the SADC Develop local manufacturing capability to support DSM

initiatives. SADC Policy for efficient use of electrical energy

1.Incandescent versus CFLs 2.Minimum energy efficiency standards for new

connections


4,500 MW saving and Virtual Power Station established

0

1000

2000

3000

4000

5000

6000

7000

2012 2013 2014 2015 2016 2017 2018

Demand Reduction (MW)CFL SWH Commercial Lighting HWLC

DSM- SAPP VIRTUAL POWER STATION – WHERE IS THE SAPP?


Impact of DSM On Load Management[2009 – 2015]

If no load management options implemented, the deficit could have been worse

Situation improves and is better after load management.

All SAPP Members

4000045000500005500060000650007000075000800008500090000

2009

2010

2011

2012

2013

2014

2015

Year

MW

Capacity Required Peak Demand 2009 Plan

30000

3500040000

4500050000

5500060000

6500070000

7500080000

85000

2009

2010

2011

2012

2013

2014

2015

Year

MW

Capacity Required Capacity Planned Peak Demand after load reduction


2. Create an enabling environment for power sector investment: Policy and Legal framework Regulatory framework

SAPP Governance documents revised from 2006 to accommodate other players such as IPPs, Large Users etc in the structures of SAPP

3. Implement cost reflective and time of use tariffs in SADC member countries.

Creating an Enabling Environment


4. Supply Side Measures Maximize utilization of all installed supply option

Re-capitalization of power utilities Short and Medium-term generation projects

Ensure projects are properly prepared for financing Governments to prioritize funding of power projects

Create an enabling environment for renewable energy Develop a structure for the implementation of a least-cost

SAPP generating facility

• Provide Investment incentives to all Investors in the power sector, both local and foreign. Address policy issues relating to legal & regulatory

frameworks, i.e. enabling environment. Allow for VAT and tax exemptions for import of power

equipment and machinery for a defined period.

Supply Side Measures


Commissioned Generation CapacityPlanned Generation Capacity versus Actual Commissioned for period 2004-2013

Planned Gen. Capacity Actual Commissioned Difference: Planned minusYear (MW) Capacity (MW) Commissioned (MW)

2004 260 320 60 2005 520 490 (30) 2006 1,041 375 (666) 2007 2,441 1,696 (745) 2008 2,014 1,747 (267) 2009 2,400 2,187 (213) 2010 908 848 (60) 2011 1,751 1,230 (521) 2012 3,552 1,099 (2,453) 2013 1,992 1,477 (515)

Total 16,879 11,469 (5,410)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Planned Gen. Capacity (MW)

Actual Commissioned Capacity (MW)


Generation Projects Planned for 2014 - 2018

No Country

2014 2015 2016 2017 2018 TOTAL1 Angola 150 0 1280 2271 0 3,701 2 Botswana - - - - 600 600 3 DRC - 430 150 240 1,620 2,440 4 Lesotho - - 35 - - 35 5 Malawi - - - - 74 74 6 Mozambique 175 - 40 - 600 815 7 Namibia - - 15 - 1,050 1,065 8 RSA 2,376 2,811 3,464 1,918 2,866 13,435 9 Swaziland - - - - - - 10 Tanzania - 150 500 460 700 1,810 11 Zambia 195 435 15 426 - 1,071 12 Zimbabwe - 15 - 420 2,400 2,835

2,896 3,841 5,499 5,735 9,910 27,881

COMMITTED GENERATION CAPACITY, MW

TOTAL


Demand and Supply Situation 2013-2018

Planned Capacity will exceed peak demand by 2016.

0100002000030000400005000060000700008000090000

2013 2014 2015 2016 2017 2018

Peak Demand Capacity Planned


Transmission Integration Projects

2018: Mozambique Malawi

2018:DRC - Angola – 400 kV

2018: Zambia - Tanzania - 400 kV

DRCDRC

TanzaniaTanzania

AngolaAngola

ZambiaZambiaMalawiMalawi

MozambiqueMozambique

ZimbabweZimbabwe

BotswanaBotswana

NamibiaNamibia

South AfricaSouth Africa

SwazilandSwaziland

LesothoLesotho

2015 -2018: ZIZABONA -220/330 kV

2020: MOZAMBIQUE BACKBONE -RSA

2015-2025: 765 kV Strengthening

2017: RSA Strengthening

2018: Botswana Strengthening


4. SAPP COMPETITIVE MARKET

SAPP Developed and started operating the Day Ahead Market (DAM) IN December 2009

SAPP is currently developing following markets for operation mid 2015

a) Month Ahead Market (MAM) Trading will be done for a month ahead (for delivery in

the next month)

b) Week Ahead Market (WAM) Trading will be done a week ahead (for delivery the

following week)

c) Intra Day Market (IDM) Trading will be done an hour ahead (for delivery in the

next hour in a day)


Trading in the various timeframes after NTP

24 hours

Own production

Monthly Forward trading

Bilateral contracts

Weekly forward trading

DAM TRADINGM

W

IDM trading


Market Performance Highlights – Market Share

Average Competitive Market share was almost 16%

Market share increased significantly from April 2014 through to August 2014.

0

50000

100000

150000

200000

250000

300000

350000

Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

DAM & PDAM Trades (MWhr)

Non Investment Bilateral Trades (MWhr)


5. CONCLUSIONS

Projects Packaging is critical for projects to attract funding and be implemented

SAPP CC plays a critical role in mobilising grant funding and project coordination

A Master Plan for the regional power market is vital as it:

Helps to reduce capital costs by implementing least-cost projects for the benefit of the region.

Reduces excess capacity from the pool.

In the SAPP, SAPP Pool Plan noted that a saving of over US$48 billion could be realized if projects are implemented in a coordinated fashion.


Thank you for your attention

southern african power pool powering africa – sapp strategies by eng. musara beta sapp chief...

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