PRESENTATION TO 7 th GERMANY- AFRICAN ENERGY SUMMIT APRIL 2013, GERMANY HYDROPOWER PROJECTS AND INVESTMENT OPPORTUNITIES IN ZAMBIA PRESENTED BY DEPUTY MINISTER OF MINES, ENERGY & WATER DEVELOPMENT HON. CHARLES ZULU, MP ZAMBIA
1. Introduction 2. Current Energy Scenario 3. Challenges and Experiences in Zambia s Electricity Sector 4. Projects Under Implementation 5. Opportunities in Zambia s Electricity Sector 6. Future Energy Strategy 7. Conclusion Presentation Overview
1. Introduction Zambia covers an area of 752,618 km2 and has a population of 13 million people (2010 census) Zambia s average real GDP growth rate has been 5.1 % between 2001 to date. Electricity maximum demand is 1700 MW and is growing at 5% p.a. Electricity demand exceeds existing generation capacity Source: http://www.munoz-group.net/research_ctry_africa.asp Growth in the economy and the need to be a middle income country by 2030 necessitates investment in electricity infrastructure
2. Current Energy Scenario National Energy Consumption Renewable energy utilisation still remains negligible accounting for less than 1% of total consumption The bulk of the biomass is charcoal and firewood
2.1 Electricity Generation Capacity Installed electricity generation capacity is 1983 MW, of which 99% is hydro. Power Plant Capacity (MW) Type Kafue Gorge 990 Hydro Kariba North Bank 720 Hydro Victoria Falls 108 Hydro Lunsemfwa & Mulungushi 50 Hydro Small Hydros 25 Hydro Isolated Generation 10 Diesel Gas Turbines (standby) 80 Gas
2.2 Electricity Demand Forecast Source: Power Systems Development Master Plan, p 7-9
3 Challenges and Experiences in Zambia s Energy Sector 3.1 Challenges Historically the sector has faced the following challenges; Energy tariffs not cost reflective Lack of investment in the sector resulting in power supply deficit Lack of diversity in generation sources (99% hydro) Low Transmission Capacity to certain parts of the country Low electricity access rates especially in the rural areas Heavy dependence on biomass as the major source of energy especially for households Lack of funding for alternative energy sources
3.2 Zambia s Experience in the Energy Sector Cost reflective tariffs key to attracting investment In the last few years the tariff has been increased with the aim of attaining cost reflective levels. The tariffs will continue to migrate upwards over the next few years. PPP implementation models could unlock investment opportunities. Inadequate Government resources are supplemented by Private resources. The Government is doing some projects on PPP basis e.g Kafue Gorge Lower (750MW), Itezhi-Tezhi (120MW)
3.2. Zambia s Experience in the Energy Sector (2) Diversification of energy supply key to sustainable development Over reliance on one source of energy supply could spell catastrophy for an economy. Zambia relies 99% on hydro, in the advent of a drought our ability to keep the economy running would seriously be impaired. Investment has commenced in thermal power plants e.g., Maamba (300MW) and EMCO (300 MW). Lack of investment in the power sector resulting in power supply deficit A power system master plan was developed with the assistance of JICA in 2010 to assist with identification of major projects to be undertaken.
4. Projects Under Implementation 4.1 Generation Projects Under Implementation ITEM NO. PROJECT NAME CAPACITY (MW) COST (US$) 1 KNBE (Zesco) 360 420m 2 ITT (Zesco/TATA) 120 240m STATUS First generator to be commissioned December 2013, second - April 2014 This a Public Private Partnership (PPP) project. Support infrastructure works completed. Civil works for power house and tunnels near completion. Commissioning expected by 2015 3 Kalungwishi (IPP) 247 650m Developer mobilising funds. 4 5 Maamba Coal Fired Station (IPP) EMCO, Coal Fired Station (IPP) 300 750m 300 671m Power station under construction including transmission line. To be commissioned in 2014 Signed implementation agreements with the government. Power purchase agreement with ZESCO under discussion. To be commissioned by 2015 10
4.1 Generation Projects Under Implementation 6 Project Kafue Gorge Lower (PPP) Capacity (MW) Cost (US$) 600 2bn 7 Lusiwasi (Zesco) 86 120m 8 9 Heavy Fuel Oil (IPP) Kabompo Gorge (CEC) 50 60m 34 140m 10 Lunzua (Zesco) 15 50m 11 Lunsemfwa (IPP) 185-255 330-350m Status Feasibility study completed. Lameyer of Germany appointed as Consultant to review study. Government finalising project structure. Planned commissioning 2017 - EIA and feasibility study completed. - Contractor appointed. - Planned commissioning 2015 Installation of equipment in progress. Commissioning planned for May 2013 This an IPP project being developed by CEC. - EIA and feasibility study completed - Support infrastructure works in progress - Main works to commence within this year - Commissioning 2014 This is an IPP project. To be commissioned by 2016 11
4.2 Transmission Projects Under Implementation Zambia is a member of the Southern African Power Pool (SAPP) and has interconnections with Namibia, DRC and Zimbabwe. New interconnections are planned with Malawi, Tanzania and Mozambique Investment in transmission infrastructure will serve mainly two purposes Strengthen internal transmission network to cater for increased load and facilitate power evacuation from new generation plants To strengthen existing regional interconnections and develop new ones.) 12
4.2 Transmission Projects Under Implementation ITEM NO. PROJECT NAME length (km) COST (US$) EXP. COMM. DATE 1 Livingstone Muzuma Kafue Town line upgrade (ZESCO) 348 70m Funds secured from the World Bank and European Investment Bank. Consultant appointed. Planned completion 2014 2 3 4 5 Pensulo Chipata 330kV line (ZESCO) Pensulo - Kasama 330kV line (ZESCO) ITT Mumbwa Lusaka West line (ZESCO) KNBE Kafue West 330kV line (ZESCO) 285 165m 400 167m 276 133m 135 67m - Financial close attained - Contractor appointed - Works have commenced - Completion 2015 - Financial close attained - Contractor appointed - Works have commenced - Completion 2015 Funds secured from AfDB, EIB, AFD Contractor under procurement Completion 2014 - Contractor appointed - Works commenced - Completion 2014 6 Maamba Muzuma 330kV line (MCL) 55 65m - Contractor procured - Works to be completed in 2014 7 ZIZABONA (ITC) 450 250m 2015 8 Leopards Hill Luangwa 132kV line (ZESCO) 187 63m 2014 13
4.3 Distribution Projects Under Implementation Distribution projects being undertaken to: Reinforce the distribution network to meet the increasing power demand To replace aged infrastructure To improve service delivery Typical investments are in the following: Construction of new substations Construction of new distribution lines Replacement and extension of network supervision and control systems 14
4.3 Distribution Projects Under Implementation ITEM NO. 1. 2. PROJECT NAME Establishment of New Substations in Lusaka Reinforcement of existing substations COST (US$) EXP. COMM. DATE 20m 2014 12.9 2013 STATUS Some projects are under procurement while others are under execution Some projects are under procurement while others are under execution 3. Replacement of aged equipment 17.2m 2013 Under execution 4. Reinforcement of lines 14.5m 2014 Under execution 5. Upgrading and extending SCADA systems 8.7m 2013 Under procurement 15
5. Opportunities in Zambia s Energy Sector 5.1 Hydro Power Generation Hydropower current estimated potential is 6,000 MW of which about 30% has been exploited. Going forward, there is need for comprehensive study to determine country wide potential Project name Estimated Capacity Location Status Kafue Gorge Lower 750 MW Kafue River Project structure being finalised Mombututa & Mambilima 950 MW Luapula River Feasibility study being done by CEC Lusiwasi Hydro 86 MW Lusiwasi River Open for funding Batoka Gorge 800 MW Zambezi River Open for investment Devils Gorge Hydro 800 MW Zambezi River Open for investment Mpata Gorge 550 MW Southern Province Open for investment
5. Opportunities in Zambia s Energy Sector 5.2 Transmission lines Project name Second Kabwe Pensulo 330kV line Kasama Nakonde 330kV line (Part of Zambia Tanzania Kenya Interconnector) Length Cost (US$) Status 300 90m Open for investment 220 65m Open for investment MFEZ Lusaka South Substation - 36m Open for funding, procurement in progress ZIZABONA Project Zambian portion 400kV line 200 80m Open for investment Installation of SVC at Luano 220 kv -- 15m Open for funding, procurement in progress
5. Opportunities in Zambia s Energy Sector 5.3 Distribution System Expansion Project name Capacity (MVA) Cost (US$) Status Establishment of new 33/11kV substations 200 71.5m Open for Investment Reinforcement of 11 & 33kV overhead lines and cables Distribution Loss Reduction and Improvement of Safety in the Mine Township N/A 38.2m Open for Investment N/A 20m Open for Investment Firming up of distribution primary substations (33/11kV) 140 70m Open for Investment Replace obsolete 11 & 33kV switchgear N/A 33.4m Open for Investment 18
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6. Future Energy Strategy Diversify Electricity Generation Attain Cost Reflective Electricity tariffs Implement feed in tariff to encourage small scale private investments in renewable energy sources Explore policy measures aimed at boosting development of non- traditional sources of energy such as renewable energy 20
6.1 Renewable Energy Renewable Energy Source Solar Thermal Electricity Biomass Combustion and gasification Biomass Biomethanation Biomass Extraction, processing for transport Opportunities Increasing Rural electrification rates Back up supply Lighting, refrigeration and Electricity generation Electricity generation Heating and cooking Ethanol for blending with gasoline to replace leas as octane enhancer Resource Availability 6-8 sunshine hours a day Potential Energy Output 5.5kWh/m 2 /day 50 million hectares -woodlands Agro Waste, Forest Waste & Sawmill waste Animal, municipal, Industrial Waste & Waste water Sugar cane, Sweet sorghum Jatropha Geothermal Electricity generation 80 Hot springs. Wind Water pumping and maize grinding Average 3m/s Specific areas with averages of 6m/s
6.1 Renewable Energy (2) Investment opportunities include: Development of mini grids e.g. solar, small hydro and biomass Importation of technologies to harness renewable energy sources such as solar, wind, geothermal, biomass and small hydro. Setting up manufacturing plants for renewable energy technologies such as wind mills, biogas digesters, solar systems and Gasifiers among others Renewable energy enterprises in rural areas providing both sale and back up services As commitment to promote renewable energy: The Zambia Development Agency provides for incentives for electricity generated from Solar Energy. There are also tax exemptions on solar equipment and other equipment that will assist in energy management.
7. Conclusion 1. Even though there is a deficit in power generation, the Zambian power sector is vibrant with many projects at various stages of implementation expected to be completed by 2018. 2. Opportunities for new generation and transmission projects exist. Completion of the generation projects will add more than 1700MW to the National Grid. 3. Renewable energy development is still insignificant in Zambia. The Government is keen to provide policy direction and incentives for the development of these technologies.
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