Windhoek-For a geographically large and low population density country like Namibia it is not practical to connect everyone through the national grid in a time-bound manner.
Therefore, the country needs to make serious efforts towards off-grid generation facilities, and renewable energy might offer an excellent solution for off-grid connectivity.
Namibia’s imports exceeded exports by close to N$26 billion in 2016, and electricity is one of the country’s major imports.
The inability to produce sufficient electricity within the country severely hampers domestic economic activity and value addition, while the energy imports expose Namibia to high electricity prices and currency rate fluctuations.
“In order to accelerate the electricity service to unserved areas we need to approach this issue from both the top-down (i.e. expansion of grid) and bottom-up (i.e. local off-grid solutions) directions.
“Apart from the obvious environmental positives, embracing renewable energy sources would be extremely healthy for us from a price stability point of view,” Minister of Finance Calle Schlettwein noted during a recent public dialogue on energy and energy efficiency.
Namibia’s peak electricity demand at present is close to 650 MW and the country relies heavily on energy imports from its neighbours from where, depending on the time of year, it imports between 40 percent and 80 percent of its energy requirements.
A recent assessment made by the African Development Bank shows that Namibia’s power demand is projected to grow at close to 9.5 percent a year between 2015 and 2020, on the back of already announced industrial projects.
On the other hand, energy surpluses in the southern African region have now shrunk to net deficit levels, and this puts importing countries in a precarious situation.
This also leaves the country extremely exposed to other countries’ assessment of how much electricity they can spare.
Recent estimates by the International Energy Agency show that over two thirds of the Namibian population does not have access to electricity, and rural areas suffer disproportionately from this exclusion.
While the electrification rate in Namibia is slightly above Sub-Saharan African averages it is still well below the average across developing countries and even Africa as a whole.
“I believe that when we think of the price that we pay for deficiencies with respect to provision of services, the social costs of the unserved population needs to be at the forefront.
“It is well understood that the coping costs of lack of basic infrastructure is often several times more than the commercial cost of providing such infrastructure. Absence of reliable and affordable electricity supply perpetuates a negative spiral of reduced economic opportunities and poverty,” Schlettwein said.
He noted that the availability and affordability of electricity was an important factor in attracting investments. However, Namibia exhibits electricity tariffs that are higher than most countries in the southern African region.
A study on electricity tariffs conducted by the Namibia Manufacturer Association in 2012 showed that national residential tariffs were on average 25 percent higher than in South Africa.
The study also showed that when compared to industrialised developed nations, Namibia’s average industrial tariff level is significantly above that of the European Union, Norway, and the United States.
Therefore, when considering power projects, the country needs to strike a careful balance between nature and scale of investments and affordability for both the consumers and the exchequer.
“Namibia has some of the best renewable energy resources: we have world beating solar resource locations for both PV (Photovoltaics) and CSP (Concentrated Solar Power) installations.
“We have very suitable locations and available space for wind energy generation, with locations where the power production profile closely matches the time of day electricity demand for Namibia.
“We have an excellent opportunity of turning the issue of bush encroachment into an opportunity, thereby achieving the twin benefits of enhancing electricity generation and at the same time gaining usable land that is free from bush encroachment,” Schlettwein added.
In his view, the country does do not need to think in terms of megawatt level generation facilities, but should rather focus on establishing household or community level solutions.
“Renewable Energy sources, especially PV along with some storage capacity is the most ready means of availing 16 to 18 hours per day of electricity supply to presently unserved areas,” Schlettwein said.
He also noted that Renewable Energy technology is rapidly evolving, which has led to substantial reductions in generation prices and increased reliability.
“We could draw a parallel between the technical improvements in the field of renewable energy generation with Moore’s Law as experienced in the field of information technology, given that we have seen exponential grown in the renewables-based generation capacity around the world while the price of each unit of electricity produced has fallen dramatically.
“Managers of electricity utilities in the present day not only favour renewable energy for environmental considerations but for its commercial merits as well,” he said.
Schlettwein cited multiple examples of falling cost of renewable energy generation in the region as well as globally, such as in South Africa which has demonstrated that a well thought out and programme based competitive procurement approach leads to rapid reductions in tariffs.
He cited another recent example of India, which experienced record smashing solar tariffs on 10 February 2017 of about US$0.05 in a 32 hour round of intensely competitive bidding for three PV installations of 250 MW each, which is close to N$0.65 at present exchange rates.
“The success of renewable energy installations in South Africa places Namibia within a conducive eco-system of investors. Thanks to this, we have experienced power sector developers that now have operations in Southern Africa, and several of these firms have shown a keen interest in investing in Namibia as well,” he said.
Schlettwein emphasised that investments in the energy sector needed to be scaled up while ensuring that solutions were affordable and were technically compatible with the country’s needs.
“We need to be cognizant of the fact that Namibia is a small economy. This is reflected both in terms of state finances and energy needs of our electricity system. The demand for electricity in Namibia is several times lower than the production capacities of single power generation projects that are routinely built around the world.
“This should intuitively tell us that we should stand behind the scale of projects that are manageable for an economy of our size. From a diversification of risk standpoint, it will be suitable for us to promote multiple mid-sized power projects. This approach will also enable us to incubate experience across alternative generation technologies,” Schlettwein stated.
However, he cautioned that when considering renewable energy solutions one should remember that these resources are ‘intermittent’, meaning that the production of electricity from renewable resources would not be at an even clip or throughout the day.
Given this, Namibia would need to adopt generation solutions that provide a suitable balance of dispatch control and cost efficiency.
“On this aspect, we note with interest that the projects proposed for the energy sector for the fifth National Development (NDP 5) period are all renewables based, and are a mix between intermittent PV and wind projects, as well as dispatch control solutions like solar CSP and biomass.
“It is therefore essential that we organise ourselves to rope in private investment and expertise in this domain. I am happy to note that the national Independent Power Producer (IPP) policy, which is in the process of being finalised, aims to create a pro-investment platform for energy generation initiatives.
“I also appreciate that under the leadership of the Ministry of Mines and Energy, there is a keen emphasis on private investments in power generation projects; for the NDP 5 period it is envisaged that all generation projects will be financed through the private sector,” Schlettwein noted.