The Electricity Control Board (ECB) has issued export licenses totalling 1.2 gigawatts (GW) of electricity to Independent Power Producers (IPPs) using the Modified Single Buyer (MSB) market model for export to the Southern African Power Pool (SAPP).
However, the allowed export quota exceeds the country’s transmission capacity of 780 megawatts (MW) through the national utility NamPower grid.
Despite this, the ECB is banking on the idea that IPPs will find opportunities to develop their own offtake grids to supplement existing structures.
“This is an opportunity that we see as the country aspires to be a net exporter of electricity and leverage the high demand for power in SAPP,” said ECB Chief Executive Officer Robert Kahimise while providing an update on the MSB market model.
“So if IPPs can produce more than enough and it is proven to be viable, it will create a platform for them to establish an independent transmission interconnected line, which can be utilized to evacuate the excess electricity that can’t be channelled through NamPower. We have opened the door for Namibia to play its role as a net exporter of electricity, and IPPs are free to explore. However, there will be no public funds used to expand the current existing infrastructure; any additions to meet the high demand will be borne by the concerned IPPs.”
In 2019, Namibia introduced the Modified Single Buyer Market Model, a framework that allows contestable customers and licensed eligible sellers to transact directly for the supply of electricity up to 30% of the customer’s energy requirement.
“This framework aims to facilitate competitive trading, allowing for greater participation of IPPs in the market. Currently, out of 26 eligible contestable customers, 20 are already registered, and three of the remaining six have applied to the ECB for registration, a process which will be finalized by the end of this month (September),” said Kahimise.
He added that the MSB implementation is making progress in terms of market liberalization, increased competition, and expanded customer choice.
Currently, three IPPs are operating under the MSB market model, including Rosh Pinah Solar Park (5.7MW), Skeleton Coast Trawling (2.6MW), and Namibia Poultry Industries (3.1MW).
“Though the implementation and ongoing operation of the framework are going well, it is not without challenges, including ensuring a level playing field for all market participants, balancing supply and demand dynamics, adapting to evolving market conditions, and addressing the limited evacuation capacity on the transmission network, especially for export purposes,” he said.
When asked how ordinary Namibians would benefit from power exported by IPPs, Kahimise said a clause would be included in the agreements compelling IPPs to supply power locally in case of shortages.
“This clause will require IPPs to aid the country in case we run short of sufficient supply because we cannot suffer while we solve other people’s problems. Also, the electricity will be purchased at a market-related price,” he added.
Most IPPs are opting for exports due to the lucrative market, which averages around two dollars per kilowatt, as opposed to the local rate of 70 cents per kilowatt.
Meanwhile, ECB General Manager for Economic Regulations, Pinehas Mutota, said, “many Namibians may benefit in terms of reduced electricity tariffs because the more IPPs use NamPower transmission lines, the more funds boost its coffers, resulting in over-recoveries which eventually reduce the bulk distribution tariffs passed on to consumers.”
In the same vein, Kahimise announced changes and approvals of licensees.
The ECB Board recommended to the Mines and Energy Minister not to grant approval to four IPP offtakers who requested a power generation license with the intention to export to the SAPP region, citing capacity constraints to evacuate power.
Among them is Windnam Energy, which applied for a generation capacity of 150MW, Ino Investment 12MW, including two proposals from TerraWatt Africa of 50MW.
Kahimise said about seven licenses were approved, including the 25.733MW ANIREP Solar, Inceptus 0.9036MW, Paratus Telecom 0.9 MW, including two SCA trading companies which intend to export and trade locally.
The former is set to supply Dundee Precious Metals Tsumeb, Unam Campus, while Paratus will be for its own use.
Additionally, the CEO said they approved the license adjustment of CENORED to be able to supply power to Okahandja for the next 12 months.
SAPP needs at least 10GW of electricity to meet its electricity demands, and it presents a lucrative market. SAPP consists of 12 countries, covering a population of approximately 300 million people. As of 2023, the SAPP has 20 active members engaged in cross-border power trade. There are ongoing applications from new members in the market participant category, currently being assessed.
The approximate consumption in the SAPP area is 400 terawatt-hours (TWh), although traded volumes are significantly lower at 8.2 TWh, with 81.74% traded bilaterally and 18.24% traded in the competitive market, a reduction of 12.7% from the previous year due to Covid-19, as reported in the SAPP Annual Report of 2021.
