NILE BASIN INITIATIVE NILE EQUATORIAL LAKES SUBSIDIARY ACTION PROGRAM

Transcription

1 NILE BASIN INITIATIVE NILE EQUATORIAL LAKES SUBSIDIARY ACTION PROGRAM Strategic/Sectoral, Social and Environmental Assessment of Power Development Options in the Nile Equatorial Lakes Region Synopsis Report Stage I - Burundi, Rwanda and Western Tanzania February 2005 THE WORLD BANK In collaboration with

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3 Strategic/Sectoral, Social and Environmental Assessment of Power Development Options in the Nile Equatorial Lakes Region Stage I Burundi, Rwanda and Western Tanzania 1 INTRODUCTION POWER NEEDS OF THE BURUNDI, RWANDA, AND WESTERN TANZANIA SUB-REGION IN THE NEXT 15 YEARS Current Power Needs Power Needs in POWER OPTIONS Options Examined Short-term Options Medium and Long Term Options (beyond about 2010) 7 4 COMPARISON OF OPTIONS Approach and Criteria Comparison 10 5 BACKBONE TRANSMISSION NETWORK PROPOSED POWER DEVELOPMENT STRATEGY TO MEET DEMAND IN THE SUB-REGION FOR NEXT 20 YEARS Strategies Examined Strategy Selected by the Project Steering Committee 15 7 AN INDICATIVE POWER DEVELOPMENT PORTFOLIO FOR THE SUB- REGION Medium and Long term Development Cumulative Impacts Mitigation Measures 18 8 NEXT STEPS IN IMPLEMENTING THE POWER DEVELOPMENT STRATEGY Regional Actions Required Financing Needs to Support the Proposed Strategy Longer Term Actions Adjustments Needed to the Legal and Regulatory Framework National Energy Policies to Support Regional Power Trade SSEA Final Report: Synopsis i

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5 1 INTRODUCTION The Nile Basin Initiative (NBI) provides for an agreed basin-wide framework to fight poverty and promote socio-economic development in the ten Nile countries (Burundi, Rwanda, Uganda, Tanzania, Kenya, Sudan, Eritrea, the Democratic Republic of Congo (DRC), Ethiopia and Egypt). Under the NBI framework, two subsidiary action programs have been established: The Nile Equatorial Lakes Subsidiary Action Program (NELSAP) and the Eastern Nile Subsidiary Action Program (ENSAP). ENSAP includes Egypt, Ethiopia, and Sudan and focuses on integrated water resources management, flood management, power generation and interconnection, irrigation and drainage and watershed management. NELSAP includes Burundi, D.R. Congo, Egypt, Kenya, Rwanda, Sudan, Tanzania, and Uganda and targets investments in power development, transmission interconnection and trade, water resources management, management of lakes and fisheries, agricultural development, and water hyacinth control. Following a dialogue between the Nile Equatorial Lakes (NEL) countries and the World Bank, the need for a comprehensive strategic regional assessment of different power options was formulated for the Nile Equatorial Lakes region, building on the ranking study of hydropower projects identified by the Nile Equatorial Lakes Subsidiary Action Program (NELSAP) 1. The approach to undertake a broad based power options analysis including issues covering Strategic/Sectoral, Social and Environmental Assessment (SSEA) was agreed at the Nile Equatorial Lakes Power Experts Retreat that took place in May, 2002 in Kisumu, Kenya 2. According to IDA policies the World Bank also needs to undertake an assessment of the cumulative effects of the existing and potential hydropower developments in the NEL region as a part of its support to the strategic planning for NELSAP 3 4. The SSEA was split into two components; this first stage covering Burundi, Rwanda and Western Tanzania and a second stage to follow that add the remainder of Tanzania, Kenya, Uganda and the eastern provinces of the Democratic Republic of Congo. The assessment of Stage I is presented in three volumes; a main report, a report on stakeholder consultation and this Synopsis Report. The main report covers the following issues: Current situation in the sub-region; A review of energy policies and legal and administrative frameworks as they apply to the promotion of power development options; An assessment of the power needs; The identification and initial screening of power development options; A comparative analysis and ranking of power development options that were retained after the first screening; An overview of cumulative impacts on the sub-region of the development of such options; The Nile Basin Initiative (NBI) provides for an agreed basin-wide framework to fight poverty and promote socioeconomic development in the ten Nile countries The need for a comprehensive strategic regional assessment of different power options was identified for the NEL region Work included: - Review of existing situation - Review legal and administrative frameworks - Assessment of needs - Identification and comparison of options - Definition of portfolios of options, - Identification of cumulative impacts and mitigation measures 1 Nile Equatorial Lakes Subsidiary Action Program ICCON 1proposal for preparation phase, P 5 sub-region power development and trade sub-programme 1: hydropower development, Nile Equatorial Lakes Subsidiary Action Program (NELSAP): Proceedings from NEL Power Experts Retreat Next Steps in Preparing the NEL Power Development and Trade Program, May 29 30, 2002, Kisumu, Kenya. 3 The World Bank Group, The Inspection Panel: Investigation Report: UGANDA Bujagali Project (June 17, 2002) 4 The SSEA of Power Development Options is financed by the Canadian International Development Agency. SSEA Final Report: Synopsis 1

6 Mitigation measures that can be applied to reduce the social and environmental impacts of these options; The development of portfolios of power options; and The identification and involvement of stakeholders. The Stakeholders report covers, in some detail the interactions with stakeholders in carrying out the work described in the main report. This synopsis report focuses on and summarizes the main report. A Canadian consulting team provided support The Steering Committee was instrumental in guiding the Consultant Public consultation was an integral part of the work The work has been carried out by a consulting team led by SNC-Lavalin International Inc. Canada and in collaboration with Hydro-Quebec International, Canada. The Consultant reports to a Steering Committee 5. The Steering Committee was instrumental in guiding the Consultant in such areas as: The identification of power development options and the provision of guidance in the screening process; The proposal of comparison criteria; Ensuring that the assessment reflected the regional and political realities; and Contribution, along with the stakeholders, in the areas enumerated below. Two independent reviewers provided advice, expertise and strategic guidance throughout the process. The reviewers reported to the Steering Committee. A consultation plan was developed to promote the public participation in the region. The key contributions by the stakeholder included: Reviewing and adjusting the power needs assessment for the subregion; Reviewing and adjusting the identification of power options and the criteria selected for the preliminary screening of power options; Reviewing and adjusting the categories of evaluation criteria, the selection of criteria within each category and the corresponding indicators used for the comparison and ranking of selected power options; Assigning importance levels to each of the criteria for the purpose of comparing and ranking the selected power options; Reviewing and adjusting the methodology used for assessing potential impacts related to power options; and Reviewing the criteria that could be applied to the identification of alternative mid-term and long-term power development strategies for the sub-region and proposing a set of alternative strategies to allow for the development of investment portfolios to reflect each strategy. 5 The Steering Committee is composed of representatives from the World Bank, power experts and the Technical Advisory Committee of NEL members from Rwanda, Burundi and Tanzania, the coordinating unit of NELSAP, and a representative from the Canadian International Development Agency (CIDA) 2 SSEA Final Report: Synopsis

7 Final Recommendations from Assessment 370 MW additional capacity needed to meet load in region to 2020 Build following plants as quickly as possible to eliminate the current power deficit in the region: Rehabilitate Ruzizi I Add 40 MW of diesel units burning imported fuel First module of Lake Kivu methane-fuelled plant Commit to the construction of Kabu 16 and Rusumo Falls Hydropower Projects Build backbone transmission system to permit power transfers within region Revise the existing legal and regulatory frameworks in each country to facilitate regional electricity trades Carry out a strategy of using indigenous resources while diversifying technologies and plant locations Use methane produced in Lake Kivu to generate power from diesel-like engines Use hydro resources Rusumo Falls and Kabu 16, Kakono, and Ruzizi III Mule 34 and Nyabarongo Each group in the order shown; within each group, the order of their development to be determined through more detailed studies Consider imports when available Ensure legal and administrative framework is in place on all three countries to facilitate such transfers SSEA Final Report: Synopsis 3

8 2 POWER NEEDS OF THE BURUNDI, RWANDA, AND WESTERN TANZANIA SUB-REGION IN THE NEXT 15 YEARS 2.1 Current Power Needs The current needs in the region are about 105 MW. Much of the electricity produced in Rwanda and Burundi is generated through hydroelectricity. Hence, the highly variable climate in central and eastern Africa exposes the power systems of the two countries to great fluctuation in hydropower generation. This has resulted in power rationing of various degrees being introduced in recent years. Even in wet years, there is insufficient reliable energy for supplying new customers and rural electrification. Industrialization processes and, hence, their economic development are severely constrained by the lack of power. The Kigoma and Kagera Districts of Tanzania are isolated from the main grid. In the Kigoma District some electricity is provided to the District capital (the town of Kigoma) but most of the rest of the district is without formal power supply. There is thus a large unsupplied demand in the other population centres of the District. The Kagera District of Tanzania is supplied by Uganda, which is also facing shortages at the time of their system peak. This, in turn, also leads to load shedding 6 in the supply of power. It should be noted that, apart from the few small diesel plants now under construction, there have been no power plants built since about The current deficit in the region is about 25 MW. The location of the existing generation facilities in the region is presented in Figure 1. An estimate of the level of suppressed (or unmet) demand in the region suggests that there is an immediate need for at least 25 MW to meet the current demand for power, as shown below: 2002 figures Capacity Available (MW) Estimated Demand (MW) Estimated Deficit (MW) Rwanda Burundi Western Tanzania Total This does not include any allowance for reserve capacity in case of plant maintenance and unforeseen plant outages. 6 Load shedding is the deliberate cutting of power to a group of customers by the electric utility to the reduce load being supplied. This is usually for a relatively short period and is done to prevent the electrical collapse of the whole system. 4 SSEA Final Report: Synopsis

9 2.2 Power Needs in 2020 The table below illustrates the additional capacity that must be installed in the region in order or imported to satisfy the needs of the region under three scenarios: A low forecast with moderate rural electrification and no mining loads; 7 A base case with significant rural electrification (five times the current level) and currently identified potential mining loads in Western Tanzania being connected to the system; and A high forecast where the level of electrification in the region is increased by a factor of eight times and the amount of mining loads is doubled over the next fifteen years. Low and high sensitivity analyses illustrate level of uncertainty in region Incremental Capacity Requirements (MW) Low Base High Rounded ( ) It should be noted that there is a significant amount of diesel generation installed currently which uses expensive imported fuel. However, as additional hydroelectric plants are installed, the use of these diesels will be reduced, thereby reducing the fuel expenses of the utility. Eventually, these plants may only be used for short periods to cover daily peak requirements or only when the other units are out of service for maintenance or unscheduled outages. It should be noted that when these units are retired or are moved to serve isolated loads, the amount of that capacity would need to be replaced. The analysis that follows is based on the base case energy needs assessment, which acknowledges the accelerated pace of rural electrification as well as the intention to interconnect the mining loads in Western Tanzania to the grid. Because of the size of the mining loads being considered, their connection to the system would need to be coordinated with the implementation of major new generation in the region. The expected needs by 2020 are about 370 MW including - Burundi: 140 MW - Rwanda: 150 MW - Tanzania: 80 MW Assessment includes about 75 MW of reserve margin 7 It is understood that there are two mining companies currently planning to open mines in the Kagera district of Western Tanzania and they are negotiating with TANESCO for electricity service. SSEA Final Report: Synopsis 5

10 3 POWER OPTIONS 3.1 Options Examined 17 hydro options examined ranging in size from 8 MW to 207 MW Thermal using conventional petroleum-based fuels are too expensive, except to satisfy urgent needs Only thermal at competitive costs are modified diesel units fueled with methane gas extracted from Lake Kivu; however, this technology still needs to be proven at the large scale being considered. The following is a list of power development options identified. These were then screened to remove those that did not meet the following criteria: availability of sufficient data to permit analysis; reasonable unit cost; and not likely to have severe environmental or socioeconomic risks that could not be mitigated. Type Name Location Installed Capacity - MW (MW) Hydro Igamba Falls FSL = 865 m (Stage 2)* Western Tanzania 8 Hydro Igamba Falls FSL = 980 m * Western Tanzania 80 Hydro Jiji 03 Burundi 15.5 Hydro Kabu 16 Burundi 20 Hydro Kagunuzi Complex Burundi 34 Hydro Kakono Western Tanzania 40 Hydro Kishanda Western Tanzania 207 Hydro Luiche Western Tanzania 15.3 Hydro Mpanda Burundi 10.4 Hydro Mule 34 Burundi 16.5 Hydro Nyabarongo Rwanda 27.8 Hydro Malagarasi Phase II Western Tanzania 11.4 Hydro Malagarasi Cascade Western Tanzania 40 Hydro Rusumo Falls Border of Rwanda and Tanzania 61.5 Hydro Ruzizi III Border of Rwanda and RDC 82 Hydro Ruzizi I rehab Border of Rwanda and RDC 8.7 Hydro Siguvyaye Burundi 90 Thermal Methane-fueled Engines at Lake Kivu - I Rwanda 30 Thermal Methane-fueled Engines at Lake Kivu - II Rwanda 30 Thermal Methane-fueled Combined cycle plants at Lake Kivu Rwanda 100 Thermal New Diesel (imported fuel) Generic 50 Thermal New Diesel (local fuel) Generic 50 Thermal New Combined Cycle using No. 2 Fuel Generic 100 Thermal Geothermal Rwanda Unknown Thermal Biomass Unknown Unknown Interconn.Mbarara - Gikondo Uganda - Rwanda MW Interconn.Goma - Mukungwa DRC - Rwanda MW Demand-side Management Generic Unknown Retained for further analysis Retained as project to be implemented; no further analysis required Rejected (too small, too expensive or severe environmental risks) 6 SSEA Final Report: Synopsis

11 Descriptions of the retained options are provided in text boxes at the end of this synopsis report. Their locations are shown in Figure 1 in Section Short-term Options A review of the projects identified and the power needs indicates that there is a severe shortage of power in the region and that there are only the following three options available to overcome the deficit in the short term (i.e. installation before November 2008): Generator sets powered by diesel engines using normal diesel fuel oil in unit sizes of 4 to 6 MW to a total of about 40 MW. The most urgent needs for these plants are: Rwanda (particularly Kigali) - 12 MW (in addition to the 12 MW currently under construction); Burundi (particularly Bujumbura) 20 MW; Western Tanzania (particularly Kigoma) 6 MW (in addition to the 1.7 MW currently under construction). The rehabilitation of Ruzizi I plant will add 8 MW but no additional energy 8 ; The installation of modified diesel engines using methane gas from Lake Kivu studies have been completed that indicate that such an installation of 30 MW appears feasible. Urgent needs to be met by: - Expensive but quickly installed diesels in load centres - Rehabilitation of Ruzizi I - First Stage of Lake Kivu gas The installation of the standard diesels will imply severe financial constraints on the utilities in that the cost of power from those units is likely to significantly exceed the revenue the utility would earn from selling the power produced from them. The expansion plan suggested above is based on the assumption that the utility will do all in its power to ensure the supply of adequate power (or that the Government will subsidize the utility to the extent necessary to ensure that this objective is fulfilled). It is, of course, a business decision by the Government and/or the utility as to the level of subsidy and deficit that is acceptable. 3.3 Medium and Long Term Options (beyond about 2010) A review was carried out of all reasonable and realistic technologies, including the classic options of hydro and thermal generation and renewables such as geothermal, wind, solar and demand side management. All thermal plants based on imported fossil fuels were screened out on the basis of high cost. The renewables were screened out either due to high cost and small size (solar) or lack of identified resources (wind or geothermal) or lack of information (demand side management no information on the potential benefits nor programs that could be considered). The hydroelectric projects that have been retained for the comparative analysis based on the selected evaluation criteria are as follows: 8 All the water available at the plant is now being used. The rehabilitation of the unit would permit some water to be stored for use during the peak period i.e. the energy from the water would be shifted from non-peak time to the time of system peak All options considered: Standard technologies Renewables Demand-side management Renewables and DSM screened out on basis of very high cost or lack of information SSEA Final Report: Synopsis 7

12 Hydro resources retained amount to about 335 MW Hydroelectric plant Installation (MW) Country Kabu Burundi Kagunuzi Complex 34.0 Burundi Kakono 53.0 Tanzania Mule Burundi Nyabarongo 27.8 Rwanda Rusumo Falls 61.5 Rwanda, Tanzania Ruzizi III 82.0 Rwanda, DRC Siguvyaye 90.0 Burundi Thermal resources at Lake Kivu exceed 100 MW The thermal options retained are: Medium speed engines using methane gas from Lake Kivu as fuel, constructed in modules of 30 MW Stage I; A combined cycle gas turbine plant of about 100 MW using methane gas from Lake Kivu. The most realistic candidate projects, in terms of preparedness, generation cost and size are the following: Medium speed engines using methane gas from Lake Kivu as fuel, constructed in modules of 30 MW Stage 1; Kabu 16; Nyabarongo; Rusumo Falls; Ruzizi III. All of the other candidate options require additional studies to prove their technical and financial viability. Most attractive options (on technical grounds) Lake Kivu gas Kabu 16 Nyabarongo Rusumo Falls Ruzizi III 8 SSEA Final Report: Synopsis

13 4 COMPARISON OF OPTIONS 4.1 Approach and Criteria The process used to rank options on the basis of a mix of quantitative and qualitative criteria is called Multi-Criteria Analysis (MCA). There are a number of different MCA methods and the ordinal method of evaluation developed by J.C. Holmes 9 has been selected. The major advantages of using this method are that: Options were compared using a structured approach a) it optimizes stakeholder involvement in the analytical process; and b) it accounts for data limitations that are inherent to studies of the nature of this SSEA. The comparative analysis is carried out in the following five steps: Step 1: Identification of evaluation criteria and indicators; Step 2: Determination of the relative importance of criteria; Step 3: Ranking of options for each criterion using quantitative and qualitative indicators; Step 4: Ranking of options within each category of criteria taking into account the relative importance of criteria; and Step 5: Selection of options to be included in power development portfolios. The following list of criteria, and associated indicators was used. For convenience, they are grouped according to the following five categories: Economic and Financial Technical Project Risks Socio-economic Environmental Note that all costs and other parameters used in this comparative analysis are derived from previous project reports carried out by various authors; care needs to be taken in making and using these comparisons. 9 Holmes, J.C An Ordinal Method of Evaluation. Urban Studies 9 (1): SSEA Final Report: Synopsis 9

14 Options compared across five categories using 25 criteria Table 1 - Criteria Used for Evaluating Power Options Category: Economic and Financial Economic Viability Financial Viability Gestation Period in Delivering Benefits Category: Technical Level of Service and Flexibility Option s Level of Preparedness Category: Project Risks Technical Risks Financial Risks Risks for Investors and Power Utility Clients Category: Socio-economic Public Health Impacts Due to Population Displacement Contribution of Project to Poverty Reduction Multiple-Use Benefits Impacts on Cultural, Historical and Religious Sites Impacts on Indigenous Communities Impacts on Vulnerable Groups Socio-economic Impacts on the Downstream Reaches Category: Environmental Impact on Resource Depletion Impacts of Greenhouse Gas Emissions Land Requirements Impacts of Air Pollutant Emissions on Biophysical Environment Impacts on Designated Habitats and Natural Sites Impacts of Sedimentation and Erosion within the Reservoir and Downstream Proliferation of Invasive Aquatic Vegetation and Reservoir Eutrophication Environmental Impacts on the Downstream Reaches 4.2 Comparison The ranking of the options are shown in the table on the next page. This table indicates that there is a wide variation in the ranking of options across categories of criteria. There is, thus, no single option that stands out as ranking well under each category. It should also be noted that the rankings reflect only the order of attractiveness but NOT the relative attractiveness of an option. In other words, an option that ranks seventh means that there are six other options that rank higher; it could be that all are virtually equal but the six are only slightly more attractive than the seventh. The ranking of options in the Economic and Financial category is as follows: 1. Ruzizi III (82 MW) 2. Mule 34 (17 MW) 3. Lake Kivu (Engines) (30 MW) 4. Kabu 16 (20 MW) 5. Kakono (53 MW) 6. Rusumo Falls (61.5 MW) 7. Lake Kivu (Combined Cycle) (100 MW) 8. Nyabarongo (28 MW) 10 SSEA Final Report: Synopsis

15 9. Kagunuzi Complex (34 MW) 10. Siguvyaye (90 MW) If one considers only the economic viability within the Economic and Financial category (unit cost per kwh), three projects have a much better performance: Ruzizi III (2.9 /kwh), Rusumo Falls (3.2 /kwh) and Kakono (also at 3.2 /kwh). The next best unit cost, Kabu 16 at 4.4 /kwh is almost 40% more expensive. After Kabu 16 comes the two thermal plants at Lake Kivu, which are another 40% more expensive than Kabu 16. Least cost options are: ( /kwh) Ruzizi III: 2.9 Rusumo: 3.2 Kakono: 3.2 Kabu 16: 4.4 Lake Kivu: 6.1 Overall Summary of Ranking of Options Leadtime (Yrs) Economic & Financial Timeframe CATEGORIES OF CRITERIA Technical Project Risks Socio- Economic Environmental CANDIDATE Kabu MT Kagunuzi Complex 5.0 MT Kakono (High) 5.0 MT Mule MT Nyabarongo 5.0 MT Rusumo Falls (Full) 5.0 MT Ruzizi III 7.0 LT Siguvyaye 6.0 MT Lake Kivu (Engines) 3.0 MT Lake Kivu (Combined Cycle) 3.0 MT MT = Medium Term - 8 to 10 years LT = Long term - beyond 10 years Note: Highlighted rankings are four best hydro projects in the category The Kabu 16, Kakono, Rusumo and Ruzizi III hydro options can be considered as good candidates for portfolio development apart from the estimated onpower dates, all can be considered to be similar: Kabu 16, Burundi: this option has a good overall performance (among the top four hydro options in four of the five categories), except in the environmental category. Anticipated impacts are on the Ruzizi River downstream and are acceptable. Kakono, Western Tanzania: this option has a reasonably good overall performance (among the top four hydro options in three of the five categories). The project was designed as power plus irrigation. The reservoir impact is minimal due to small area and volume. Plant could provide daily peaking, with consequent downstream flow and level variations over three quarters of the year. In addition, the feasibility study will have to consider the issue of the impact of the reservoir on the Minziro Forest Reserve. Rusumo Falls, Rwanda, Burundi and Tanzania: this option has a fair overall performance (among the top four hydro options in two of the five categories). Although ranked 6 in the economic and financial category, this low ranking was due to the high investments required because of the size of the option. However, it is less attractive in the Project Risks, Four best hydro options taking account of all criteria: Kabu 16 Kakono Rusumo Ruzizi III SSEA Final Report: Synopsis 11

16 Socio-economic and Environmental categories because of the following potential main issues: population resettlement, public health (increase of malaria and bilharzias), impacts on natural habitats such as flooding of 250 km 2 of wetlands, impacts of changes in the hydrological and sediments regime on the Akagera National Park and water hyacinth accumulation in the reservoir. An environmental impact study is required to better assess these issues. This option is strategically placed in the region to (a) meet the new loads from the mines in the Kagera District that are being implemented and (b) strengthen, electrically, the backbone transmission system required for the benefits of regional power planning to be enjoyed by all parties. Can also consider: Mule 34 Nyabarongo Ruzizi III, Rwanda and Democratic Republic of Congo: this option has the best rank in the Economic and Financial and in the Environmental categories; it does not involve any population resettlement and has no major negative impacts in the technical, risks and socio-economic categories. However, this option is less well strategically placed in the region and would come on line at least one year later than other options. Among other hydroelectric options, Mule 34 and Nyabarongo can also be considered as candidates for portfolio development although both will require a well-designed resettlement plan. Should NOT consider: Siguvyaye (ranks poorly) Kagunuzi (not an option if Kabu 16 built) The Siguvyaye and Kagunuzi Complex options are less attractive in most categories, including the Economic and Financial category, and should not be considered, at the present time, in portfolio development. Because both thermal options are at a pre-feasibility level and provide a lower level of service than hydroelectric options with storage, they are at a lower rank in the Technical category. However, they have a good overall performance in all other categories. They can thus be included in power development portfolios in the medium or long term. Best evaluated options Kabu 16, Kakono Rusumo Falls Ruzizi III Lake Kivu Gas Engines 12 SSEA Final Report: Synopsis

17 5 BACKBONE TRANSMISSION NETWORK Before a regional development strategy can be implemented, a backbone transmission system is required to ensure that the output from regional power development options can be transmitted to all parts of the region. There is currently an interconnection between Rwanda and Burundi but there is none connecting the districts of Kigoma or Kagera in Tanzania to either of the countries. To ensure that any power development option can be of regional benefit, the following allowances for transmission investments have been included: L kv line from Kigoma, Rwanda to Rwegura, Burundi: 100 km at an estimated cost of US $11 million. L kv line from Kabarondo, Rwanda passing near Ngara to Biharamuro in Kagera Province of Tanzania: about 150 km at an estimated cost of US$ 17 million. L kv line from near Ngara, Tanzania to Gitega, Burundi: about 200 km at an estimated cost of US$ 22 million. L kv line from Gitega, Burundi through Bururi to Kigoma, Tanzania: 240 km at an estimated cost of US$ 24 million. Figure 1 below shows the existing 70 kv and 110 kv systems in the region and the above lines. These lines should be considered as an indicative allowance of the transmission needs for the region in order for it to benefit from the advantages of regionalization. The routing, voltages, line and substation characteristics would be determined through appropriate studies. Backbone of transmission required for regional planning Backbone requires investment of about US$80 Million Backbone provides strong reinforcement of system Between Eastern Kagera District of Tanzania and Western Rwanda Between Rwandan grid and the city of Kigoma in Western Tanzania via Burundi Between Burundian and Rwandan grids via the Interconnection with the DRC at Ruzizi I and II SSEA Final Report: Synopsis 13

18 Figure 1 - Proposed Transmission Line Backbone 14 SSEA Final Report: Synopsis

19 6 PROPOSED POWER DEVELOPMENT STRATEGY TO MEET DEMAND IN THE SUB-REGION FOR NEXT 20 YEARS 6.1 Strategies Examined Discussions with the PSC members and Stakeholders at the meetings held in Dar es Salaam in September 2004 suggested that the following strategies should be examined to meet the power demand for the next 20 years: Scenario 1A Low diversification thermal priority; Scenario 1B Low diversification hydro priority; Scenario 2 Medium diversification; Scenario 3 Maximum diversification, including imports. Wide range of development strategies considered In the above scenarios, diversification should be taken in a wide context; covering a wide geographic area, using various technologies and source of fuel, representing the three countries, and various sizes of project. The strategies serve as illustrations to allow decision makers compare between different regional development opportunities and to allow the comparison of cumulative impacts and the determination of mitigation measures for portfolios of projects. 6.2 Strategy Selected by the Project Steering Committee Scenario 2 has been retained for the following reasons: There are insufficient resources to follow Scenario 1A (methane gas in Lake Kivu) or 1B (local and attractive hydro); There are no known sources of low-cost power currently available from outside the region that would be accessible to the region; It protects against the wide fluctuations in water flows that are common in the region and therefore provides some security of supply during drought periods; It makes use of local resources available throughout the region. Strategy retained is one of medium diversification of resources from within the region SSEA Final Report: Synopsis 15

20 7 AN INDICATIVE POWER DEVELOPMENT PORTFOLIO FOR THE SUB-REGION 7.1 Medium and Long term Development The portfolio proposed is the following: The short-term program defined in Section 3.2; Continue by alternating with hydro plants and an expansion of Lake Kivu in the medium to long term. The definition of the portfolio is shown in the table below those options in bold should be considered as requiring immediate decisions as to implementation. Option name Type Year of commission Average Annual Energy (GWh/year) Peak Capacity (MW) Ruzizi I Rehab Hydro 2006 N/A 10 8 Diesel using Thermal 2006/07/08/ imported fuel Lake Kivu Gas Engines 1 Thermal Kabu 16 Hydro Rusumo Falls Hydro Lake Kivu Gas Thermal Engines 2 30 Kakono Hydro Lake Kivu Gas Thermal Engines 3 30 Ruzizi III Hydro The chart below displays the contribution of the new power plants to the region s power demand: Reserve margin included to allow for maintenance and unforeseen plant shutdowns. Level selected is very low. Demand and Capacity - M Indicative Development Portfolio Years Load Load + 20% Reserve Planned Expansion 10 Rehabilitation will improve plant s flexibility and availability of power, but add little extra energy 16 SSEA Final Report: Synopsis

21 The above portfolio should be considered as an indicative power development proposal as future studies may suggest a different order to the development of each of the options included in the portfolio. These uncertainties include: The extraction of methane gas from a lake to feed a diesel engine is a new technology that has not been tried on a large scale (the existing plant is about 1 MW); Kabu 16 has been studied to the feasibility level; detailed design is required; Rusumo Falls has been studied to the design stage (according to the reports prepared); however, a review of these reports indicates that there are gaps in the database; and Kakono and Ruzizi III have only been studied at the prefeasibility level. Completion of the required studies and experience at Lake Kivu could identify difficulties in the implementation of any of the options proposed which could delay their commissioning (or even eliminate them from further consideration). Additional studies required to confirm the order and timing of implementation of these power development options 7.2 Cumulative Impacts The cumulative greenhouse gas emissions (GHG) for this portfolio are about 700 thousand metric tons equivalent of CO 2 per year once all options have been installed. The magnitude of these emissions represent 12% of 2000 emission levels for the three countries joint emissions. Compared to the world emissions these cumulative emissions are not significant (0.003%). However, even if they are not significant, these additions to the environment will still contribute in a cumulative way towards climate change. Forty percent of the energy produced will come from thermal options, mainly from diesel engines burning methane gas extracted from Lake Kivu. Because of the nature of the fuel used, the total amount of nitrous oxides and sulphur dioxide (NOx and SO 2 ) produced by Lake Kivu gas engines will have a minor cumulative impact. The location of the Lake Kivu power plants being away from large cities also contributes to maintain this attribute. The hydro portion of the portfolio includes two options in the Lake Victoria basin and two options on the Lake Tanganyika basin. The cumulative impacts on both of these basins of adding these hydro projects would generally be in the areas of: Some resource depletion as related to deforestation; Significant loss of remaining wetlands and some loss of forest reserve; Minor modification of the sediment load and nutrient transport in the basin. A basic assumption is that a backbone of transmission lines will be built to facilitate the transfer of power between countries. The transmission requirements include about 2,000 hectares of right-of-way along about 700 kilometres of transmission line. Because most of these lines will be through agricultural lands and savannah, the amount of deforestation should be small. Cumulative Greenhouse gas emission from all options included would increase national level by 12%; an insignificant amount in a worldwide context. Hydro impacts are in deforestation, loss of wetlands and modification of sediment load and nutrients going into Lakes Victoria and Tanganyika. Impacts of transmission is mainly in deforestation on right-of-way SSEA Final Report: Synopsis 17

22 7.3 Mitigation Measures Mitigation for thermal: Clean fuel Good O & M Mitigation for hydro: Erosion protection Protect spawning and rearing habitats Maintain water releases for environmental purposes Mitigation for transmission backbone: Small amount of deforestation A wide variety of mitigation measures are available for thermal plants. Mitigation measures for standard thermal plants include: 1. For diesel generation using imported fuel, choose the cleanest fuel economically available. 2. Comprehensive maintenance, monitoring and reporting system should be followed throughout the operational life of the power plant. For the Hydro options the following main measures are proposed: Conservation of land adjoining the reservoir for erosion prevention and changes in agriculture practices on slopes susceptible to erosion are the most appropriate measures in the region. A conservation management plan should be initiated as soon as a decision to build a power development option is taken; Creation and protection of spawning and rearing habitats for fish in reservoirs or in tributaries is needed if a fisheries program is planned; Water release policies are needed take into account ecological issues downstream of the dam. The application of a minimum flow at all times is now the norm for new hydro installations. Periodic releases of water to recreate annual flooding cycle are also part of a good ecological management practice; When required, development and implementation of a resettlement plan to assist all members of affected communities in their efforts to improve their livelihoods and standards of living, or at least to restore them to their pre-displacement levels; Control of public health risks through cooperation between the project developer and public health authorities; and Maximization of local employment during construction and operation and development of multiple-use of reservoir and facilities. Proposed portfolio Lake Kivu Gas (indigenous, low cost, low impact on physical and social environment). Kabu 16 (low cost, fast implementation). Rusumo Falls (low cost, needed to supply mining loads AND strengthen backbone BUT some environmental and socioeconomic impacts). Ruzizi III (lowest cost and lowest impacts BUT not ready for implementation). Kakono (reasonable cost, some environmental issues). Portfolio has minor impact on greenhouse gases and some impact on deforestation, loss of wetlands and modification of sediment load and nutrients going into Lakes Victoria and Tanganyika. Design of all options need to take into account mitigation measures. 18 SSEA Final Report: Synopsis

23 8 NEXT STEPS IN IMPLEMENTING THE POWER DEVELOPMENT STRATEGY 8.1 Regional Actions Required In order to achieve the schedule of transmission and generation additions required to meet the regional demand, a series of actions must be taken by the respective governments and project proponents. The key actions are summarized below: Actions Required to Achieve On-Power Schedule Shown Year Action Required Action by: 2005 Study and commit backbone transmission All three countries Commitment to final studies for Kabu 16 Burundi Commitment to design update for Rusumo Falls All three countries Start design update and EIA for Rusumo All three countries Final agreements/committment of first phase of Lake Kivu plants Rwanda, DRC Approve and procure 3 x 10 MW diesels All three countries Start Kabu 16 final studies Burundi Start design and procurement for Kivu gas engines Project Proponent 2006 Install 3 x 10 MW diesels All three countries Procure 1 x 10 MW diesel Project Proponent Start rehab of Ruzizi I Units 1 and 2 DRC Agreement on implementation of Ruzizi III All three countries Start Ruzizi III feasibility study Burundi, Rwanda, DRC Design for transmission system All three countries Approval and implementation plan for Kivu gas engines Rwanda Start procurement of Kivu gas engine No. 1 Rwanda Kabu 16 - approval and implementation plan, design Burundi Kakono - start feasibility study Tanzania 2007 Install 1 x 10 MW diesel Project Proponent Procure 1 x 10 MW diesel Project Proponent Kabu 16 - begin construction Project Proponent Complete transmission construction Project Proponent Start construction of Rusumo Project Proponent Complete Kakono feasibility study Tanzania 2008 Complete installation of 1 x 10 MW diesel Project Proponent Complete installation of No 1 Kivu gas engine Project Proponent Approval and implementation plan for Rusumo All three countries 2009 Complete installation of 1 x 10 MW diesel Project Proponent Kakono approval and implementation plan Tanzania 2010 Kakono design Tanzania Construction / installation of No 2 Kivu gas engine Project Proponent 2011 Kakono begin construction Project Proponent Commitment to construction of Ruzizi III Burundi, Rwanda, DRC Ruzuzi III - approval/plan/design Burundi, Rwanda, DRC Ruzizi III - begin construction Burundi, Rwanda, DRC Construction / installation of No 3 Kivu gas engine Project Proponent SSEA Final Report: Synopsis 19

24 8.2 Financing Needs to Support the Proposed Strategy Investments of over US $ 606 million required for generation alone over next 15 years; additional US$ 80 million required early for transmission backbone. The need for investment is examined without consideration of the ownership of the projects; whether private or public funds are used, the level of investment is likely to be the same. The requirements are shown in three different time periods: Project Size Investment (US$ millions) (MW) Ruzizi I Rehab 8 2 Diesel using imported fuel Lake Kivu Gas Engines Kabu Rusumo Falls Lake Kivu Gas Engines Kakono Lake Kivu Gas Engines Ruzizi III Transmission Backbone N/A 80 Total Requirements Longer Term Actions The following points are actions that can facilitate the implementation of regional power trade but are not required to implement the retained projects. Though they are important, they affect the longer term and cannot be considered as requirements for the short term. No legal or regulatory barriers were found that hinder the regional power trade Legal and regulatory frameworks need to be adjusted to explicitly address: Encouragement of foreign investment Right to export profits Environmental protection Involuntary resettlement Adjustments Needed to the Legal and Regulatory Framework Generally, no legal or regulatory barriers to the implementation of cooperative power generation or regional power trade between Burundi, Rwanda or Tanzania were found. However, the legal and regulatory frameworks will need to be adjusted so as to expressly address the following issues: How to encourage foreign investments: This particular issue is legally addressed in the Rwanda Investment Code, as well as in the Tanzania National Energy Policy. It will need to be addressed specifically in Burundi. The right of foreign investors to own assets, including properties (land, buildings) in the country: This right should be granted specifically in each country. The right to export profits out of the country: The Rwanda Investment Code sets down the instances where funds can be externalised. Similar conditions should also be formulated in Burundi and Tanzania. The government protection offered to foreign investors: The Rwanda Investment Code explicitly guarantees such protection and 20 SSEA Final Report: Synopsis

25 sets down clear rules for resolution of disputes between foreign investors and the Rwanda Investment Promotion Agency or the Government of Rwanda. Similar rules and procedures should also be put into effect in Burundi and Tanzania. The existence of a credible environmental assessment process of projects to help ensure that they are environmentally sound and sustainable: To qualify for financing and to generally facilitate the smooth realization of hydropower generation projects, the legal and regulatory frameworks of Burundi, Rwanda and Tanzania will need to ensure credible protection of critical natural habitats against significant conversion or degradation. These legal and regulatory frameworks will also need to ensure that, whenever a project affects an international waterway, and in the absence of appropriate agreements between the riparian countries, negotiations in good faith are carried out so as to reach appropriate agreements or arrangements. Involuntary resettlement: To qualify for financing and to generally facilitate the smooth realization of hydropower generation projects, Burundi, Rwanda and Tanzania will need to ensure that they have in place adequate compensation and involuntary resettlement policies National Energy Policies to Support Regional Power Trade Energy policy at the national level should guide the development of a minimum policy platform to support regional power trade in the following areas: Each country should make the security of power supply a fundamental goal in its energy policy. Both Burundi s and Tanzania s energy policies set as a goal the improvement of the security of supply. It is recommended that this also be the case in Rwanda s Energy Policy. Imports need not be regulated or, if they are, as little as possible, ensuring only they are not more costly than native generation when such is available. As for exports, a disposition of the law on energy should contain a clause authorizing the Minister responsible for energy matters to issue license to an applicant for an international transmission line that set conditions to limit exports for the purpose of operational security of the network and quality of supply as is the case in Burundi. One other question that should be addressed is that of access of independent power producers to transmission networks, notably for regional trade. This would involve modifying the status of the present utilities, from single buyer to supplier of transmission services, require putting in place transmission system operators, the creation of open access same-time information systems with grid codes, ancillary services, etc. Facilitate power trading by providing clear ground rules: Security of power supply Regulation of imports (little as possible) Set conditions for exports Access by IPPs International experience from regional electricity power trading arrangements such as those in Southern Africa Power Pool highlight that the core elements of a minimum policy platform to facilitate and support the development of a regional electricity market include: At least a functional separation of transmission from generation with appropriate ring-fencing between the two functions; SSEA Final Report: Synopsis 21

26 Non-discriminatory open access to national transmission networks operated by a transmission system operator (TSO); Transparent and harmonized pricing principles for transmission access, wheeling (energy transit), and ancillary services; Transparent and harmonized standards for transmission interconnection, metering, reliability, types of ancillary services, and system safety; De-monopolization of import and export of electrical energy by a single national entity. The networks of Tanzania, Rwanda and Burundi should embark on a process for reforms that would foster regional trade. In the development of regional power trade, all of the policy elements need not be in place to establish crossborder trade between the three countries. However, it must be recognized that as the regional electricity market develops and matures these policy elements will need to be addressed over time. 22 SSEA Final Report: Synopsis

27 Conceptual diesel No. 2 oil Appendix - Project Summaries Type Combustion diesel plant burning No. 2 Oil Location To be installed as required in Kigali Rwanda, Bujumbura - Burundi and Kigoma Western Tanzania. Project description Units would be 4-8 MW each, medium speed units, depending on supplier and financing. Capacity and Energy Installed capacity per unit 7.5 MW (nominal size) Annual energy at 60 % PF 40 GWh Annual energy at 80 % PF 53 GWh Transmission Plants would be located at nearest substation to load centre. Costs (2004) Capital cost 7.5 MW - engines 6.00 $ Million IDC 0.54 Env. mitigation allowance Included Total 6.54 Average generation cost 75% PF 12.8c/kWh (Crude - 40 $/bbl) Implementation Financing Procurement and installation Earliest on-power assumed as 2006 Environmental issues CO 2, and air pollutant emissions will be high in comparison to hydro. Production of NO x and SO 2 emissions in urban areas. Energy payback ratio is low. Socio-economic Public health impacts related to air pollutant emissions Need for comprehensive maintenance to be implemented. Previous studies and N/A reports Conventional diesel plant Rapid installation Low capital cost Earliest onpower: 2006 VERY high operating and fuel cost SSEA Final Report: Synopsis 23

28 Kabu 16 Hydroelectric Development Kabu 16 hydro 20 MW 4.4 / kwh Earliest onpower: 2010 Displacement of 75 persons Riparian users for 3.5 km downstream affected Type Location Hydroelectric project with hourly pondage Burundi, on the Kabarantwa river 16 km above confluence with Ruzizi, 50 km north of Bujumbura. Project description Project would comprise a small conventional gravity dam in the main river channel with a full supply level of 1081m, approximately 11 metres above normal river levels. The dam would create a small headpond (0.02 km 2 area) with live storage equal to 2 hours of plant output. The dam would be 18.5 metres high, and include spillway gates. Power facilities would include intake above the dam, a 3400 m of power tunnel and penstock, and a two unit powerhouse with an installed capacity of 20 MW under a head of 191 m. Capacity and Energy Installed capacity 20 MW Firm capacity 13 MW Average annual energy 112 GWh Transmission Firm energy 67 GWh Proposed new backbone grid would extend to Rwegura. 6 km of 110 kv line with a cost of 2.5 $ million for the line and upgraded substation at Rwegura has been included in the total project capital cost. Costs (2004) Capital cost $ Million IDC 6.01 Env. mitigation allowance 0.00 Total Average generation cost 4.4 cents/kwh Implementation Field investigations and final engineering design required Environmental impact assessment and resettlement action plan are required Preparation of tender documents Earliest on-power estimated as 2010 Environmental issues Socio-economic Previous studies and reports During the dry period of 5 months/year hourly flow and level variations would be experience downstream for the 16 km to the Ruzuzi river. Effects on the Ruzizi river and in the Ruzizi reserve should be acceptable. Some 75 persons (1995 estimate) would be displaced from the small headpond and project area. Riparian users downstream of dam would be affected severely over 3.5 km for 5 months/year unless a minimum flow release is established. SOGREAH Feasibility study of Kabu 16 for Burundi MEM, November 1995, including an environmental impact study. Project was included in a series of studies (Coyne and Bellier in 1983, Lahmeyer in 1983, EDF in 1988 and SOGREAH in SSEA Final Report: Synopsis