Renewable Energy in Africa
EDITION 2
www.dlapiper.com Renewable Energy in Africa
Contents
DLA Piper in Africa 03 Mauritius 71 Uganda 155
Introduction 04 Morocco 81 Zambia 166
Angola 08 Mozambique 90 Zimbabwe 178
Botswana 19 Namibia 102 Appendix A 186
Burundi 29 Nigeria 113 Acknowledgments 188
Ethiopia 38 Senegal 126 DLA Piper Globally 190
Ghana 49 South Africa 136
Kenya 59 Tanzania 146
2 Renewable Energy in Africa
DLA Piper in Africa
It is often said that doing business DLA Piper Africa has offices in With the benefit of our global reach in Africa offers unique opportunities 20 countries across the continent, and strong local market knowledge, and challenges. We are one of the offering clients unrivalled coverage. we deliver legal services to a broad most active law firms in Africa and This comprehensive offering is the range of clients including: project it is our experience that, in order to result of over 15 years of commitment sponsors; governments; parastatals; see the opportunities and address and experience in Africa, combined EPC and O&M contractors; off-takers; the challenges, it is necessary to with long-standing relationships with and banking and financial institutions understand the cultural, economic and national firms, many dating back to in the renewables, power, oil and gas, political nuances that exist across this the 1990s. These firms have now been telecommunications, infrastructure vast and diverse continent. Our strong brought together as DLA Piper Africa, and mining sectors. and comprehensive presence across and we also have over 200 Africa the African continent gives us this lawyers who work on Africa-related critical local know-how. matters from our commercial hubs around the world. Our commitment to Africa is steadfast.
3 Renewable Energy in Africa
Introduction
Renewable energy (excluding South Africa) is 180kWh, of increased production through legislative support for ambitious in Africa compared to 13,000kWh per capita in recent or soon-to-be operational wind renewable energy development The African continent, with a the US and 6,500kWh in Europe.2 and solar plants. Ethiopia, with the initiatives. population exceeding one billion support of the International Finance people and an estimated combined Generation and distribution Corporation, recently initiated Round There is the potential for significant economy of USD1.5 trillion,1 presents of electricity is fundamental to 2 of Scaling Solar seeking to cover six further growth – the African continent huge opportunities for investors, unlocking economic potential, new projects with a total capacity of is rich with the resources needed developers and operators across the with the development of renewable up to 750MW. Ethiopia is the fourth to produce renewable energy, renewable energy sector. energy projects and innovative country in Africa to join the IFC’s including solar, there is an estimated electricity distribution strategies of Scaling Solar programme. Uganda 10TW of potential capacity or Renewable energy is already giving central importance to the delivery and Zambia, like the more established more. It is therefore unsurprising millions of people in Africa access to of the economic and socio-political programmes in Ethiopia and Kenya that many investors, developers electricity for the first time. However, objectives of central governments. are encouraging the development of and entrepreneurs continue to across the continent over 640 million geothermal energy projects. prioritize African markets and the Africans still have no access to As we reported in our previous vast and diverse opportunities which electricity. Approximately only 40% edition, activity in the sector has The recent implementation of legal they represent for the renewable of the population have access to and continues to grow rapidly, reforms to energy markets in Angola energy sector. electricity. Per capita consumption with countries such as Ghana and and Botswana highlights the drive of electricity in sub-Saharan Africa Kenya each adding hundreds of MW of central governments to provide
1 Statistics from the World Bank Databank, May 2018 (figures relate to Sub-Saharan Africa). 2 Statistics from the Africa Development Bank, May 2018 4 Renewable Energy in Africa The guide
The guide
DLA Piper is proud to release the projects supported by interconnectors hydro and solar power projects of the population with access to power sector. Additionally, the Kenyan second edition of Renewable Energy for the country's existing distribution currently under construction are electricity, Ghana's power demands government in partnership with the in Africa, updating the many changes networks are intended to enhance anticipated to increase capacity by continue to outstrip supply; however, World Bank, launched the Kenya that have occurred since our last capacity over the coming years. 300MW by 2020, helping to boost installed capacity had increased as National Electrification Strategy (KNES) edition. This publication remains an access to electricity from levels which at the end of 2018 to 4,562MW to in December 2018, which provides a ambitious task, seeking to summarize BOTSWANA are currently among the lowest help meet the growing requirement, roadmap for universal access by 2022. each country's regulatory environment Legislative changes introduced in globally. proposals to develop a number for renewable energy, highlight the 2016 have opened the country's of wind and solar farms are being MAURITIUS key policy objectives for national energy market to independent ETHIOPIA implemented with a 225MW wind Formation of the Mauritius Renewable governments and provide insight producers. However, the development Although the dominant energy farm under development and a Energy Agency in 2016 has provided a into the projects which are expected of renewable energy projects backed source in Ethiopia is hydropower, 100MW solar project proposed for the focus point for the further development to deliver these goals. The guide by private investors in a country which represents 90% of the installed Upper West Region of the country. of renewable energy sources to support showcases the diverse approach to historically dependent on state generation capacity, the Ethiopian In September 2018, a further 20MW the country's stable, investor-friendly renewable energy being adopted production remains challenging for government is seeking to diversify solar plant was commissioned at economy. The home solar project was across the African continent, and the the recently formed Botswana Energy with increased investment in wind and Gomoa Onyadze in the Central Region launched in May 2018. This project aims legal, economic and technological Regulatory Authority. geothermal production technologies of Ghana. at installing solar photovoltaic systems developments being implemented in which is recognized as crucial to on rooftops of 10,000 households in the following countries: BURUNDI support the government's National KENYA Social Category tariff 110A as part of A landlocked country at the heart Electrification Programme that aims The enactment of the Energy Act, the Mauritian government’s efforts to ANGOLA of Africa's Great Lakes Region, to attain universal access to electricity 2019, will see KPLC’s monopoly alleviate poverty while contributing to The Angolan government's Burundi holds significant potential through a combination of on-grid and broken as electricity distribution the national target of achieving 35% of proposals to facilitate USD18 billion for the development of renewable off-grid systems. and retail supply may be carried renewable electricity in the energy mix of investment in renewable energy energy which the government's out by other players. This move is by 2025. by 2025 are an ambitious vision for "Burundi Vision 2025" framework GHANA expected to result in an increase addressing the impact felt from the seeks to utilize in order to develop Despite established renewable energy in competition in the distribution rebalancing of the global oil market. sustainable ecological growth. production facilities and a widespread and retail supply of electricity and A program of hydroelectric generation A number of national and regional distribution network providing 82.5% improve the quality of service in the
5 Renewable Energy in Africa The guide
MOROCCO of potential development sites, which of the government's intention to tap SOUTH AFRICA UGANDA Morocco is highly dependent on highlight the potential of the country's into the country's renewable energy Although it provides a regulatory Uganda's renewable energy resources imported hydrocarbon energy to renewable sector. Tariff regimes, potential in order to achieve its and economic framework which are estimated to provide the potential generate electricity, with approximately tax benefits and regulatory measures objective of generating 20% of national is attractive to private investment, for 5,300MW of additional capacity. 96% of its energy needs being are currently under development electricity supplied from renewable South Africa's electricity market Despite a range of operational sourced externally. to provide a legal and economic sources by 2030. Noteworthy is the remains highly concentrated, with biomass, hydro, solar and geothermal framework to attract investment. recently consummated debt financing the state-owned Eskom responsible production plants, this potential To meet the increasing local demand, transaction wherein North South for the generation and transmission remains largely unexploited, putting Morocco implemented a new energy NAMIBIA Power Company Limited raised of 95% of the country's electricity pressure on efforts to keep pace with strategy in 2009, aiming to secure its Namibia's vast potential to support over NGN8.5 billion from a green consumption. Recent attempts growing electricity demand and the supply, to ensure power was priced solar and wind power electricity infrastructure bond. This is the first to implement the government's government's target of achieving competitively and to protect the generation is seen to be an effective certified green corporate bond and the Renewable Energy Independent Power a rural electrification rate of 22% environment by using local energy means of limiting the impact of longest tenured (15 years) corporate Producer Procurement Programme by 2022. Uganda has developed resources, including renewables. climate change and providing a bond issued in the Nigeria debt capital have brought Eskom's role in the standardized power purchase Morocco has committed to increasing platform for the country's socio- markets. market under increased political and agreements and is developing a the share of renewables in its energy economic development. Completion judicial focus, the full consequences of renewable energy feed-in-tariff as mix to 42% by 2020, then rising to 52% of the country's first wind farm will SENEGAL which are yet to be determined. instruments to help promote privates by 2030, complement the solar and hydro Economic growth in Senegal has sector participation in the generation schemes already in operation, recently accelerated, reaching about TANZANIA of electricity from renewable sources. MOZAMBIQUE improving the diversity of renewable 6.5% in the past two years, making With access to electricity currently The country's objective of enabling technologies being utilized in Namibia. Senegal one of the best performing standing at 36% of the population, access to electricity for 50% of the economies in Sub-Saharan Africa. the Tanzanian government's Power population by 2023 and universal NIGERIA Government policy has set the Systems Master Plan seeks to electricity access by 2030 is coupled The Nigerian government's execution objective of achieving a non-biomass improve generation and transmission with its strategic policy of developing of Power Purchase Agreements commercial energy independence rate infrastructure in a manner that utilizes the renewable energy sector. with a total value of USD1.76 billion of at least 15% by 2025, due to the the country's significant renewable The government has commissioned will facilitate the generation of an contribution of renewable energies energy resources. In order to support a Renewable Energy of Mozambique additional 1,125MW of solar power. and biofuels. this objective, the country's regulatory Atlas and an accompanying portfolio The program gives a clear indication system allows and encourages private investment, helping to stimulate the market for hydro and solar schemes.
6 Renewable Energy in Africa The guide
ZAMBIA ZIMBABWE Conclusion This year saw ZESCO apply to the Zimbabwe faces electricity No publication can fully capture the breadth and diversity of the opportunities which the Energy Regulation Board for an supply challenges as a result of African continent offers for the renewable energy sector. However, we hope this guide provides upward adjustment of its electricity aging generation infrastructure an introduction to the key aspects of the legal framework and commercial activity in the tariffs citing prevailing economic and increasing demand. 17 countries presented. We would welcome any feedback on this publication and we would be conditions, system customer base The country's strong potential for happy to discuss the changing landscape of these countries at any time. expansion, and the rising cost of hydro and solar schemes is seen as power from its new infrastructure key to the successful development If you have a specific query concerning renewable energy in Africa, we would be very pleased to and independent power producers of a diversified electricity generation discuss it with you; we have experienced teams in each jurisdiction, spanning all aspects of the (IPPs) as the underlying factors. which enables Zimbabwe to meet renewable energy sector. The application is yet to be its target of reducing emissions by determined by the ERB. The outcome 33% (relative to a business as usual Key Contacts of the "cost of service" survey into baseline) by 2030. electricity tariffs in Zambia is still Natasha Luther-Jones awaited, it is unclear when this will Partner and Global Co-Chair be available. Energy and Natural Resources T + 44 113 369 2978 M +44 796 855 8634 [email protected]
Grant Henderson Director, Africa T +44 207 796 6208 M +44 776 699 1030 [email protected]
For further information on our Energy and Natural Resources practice please visit us at www.dlapiper.com/energy and follow us on our LinkedIn Energy page.
7 01
Angola Renewable Energy in Africa Angola – Overview
Angola Overview KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Civil law jurisdiction; 2018 Doing Business Report: A vast country with a long coastline expenditure and increasing non-oil however, in many areas of the country 175 of 190 (up 7 rankings) and central plateau, Angola thrusts revenue, as well as by devaluing the traditional customary law still plays an inland across Southern Africa to kwanza. important role. 2018 Global Competitiveness Index: border Namibia, Botswana, Zambia, Not yet ranked and the Democratic Republic of the Language(s): Umbundu, Kimbundu, Congo. Angola is struggling with the Kikongo, Tchokwe and Ovambo 2017 Index of Economic Freedom: rebalancing of the global oil market. are national languages, whereas 165 of 180 (down 9 rankings) Oil represents about one – third of Portuguese is the official language its GDP and over 95% of its exports, in Angola. 2016 Corruption Perceptions Index: and the sharp and prolonged decline 164 of 176 (down 1 ranking) in its price since mid – 2014 has had a significant impact on Angola’s 2016 UN Development Programme economy. Reduced revenues have Human Development Index: caused GDP growth to decelerate 150 of 188 (down 1 ranking) from an annual average of 10.3% (from 2004 to 2014), to only 1.5% Population: 29.78 million (since 2015); this has negatively affected non-oil revenues as well. The GDP per capita 2017: USD6,800 government has reacted by cutting
9 Renewable Energy in Africa Angola – Electricity Industry Overview
Electricity Industry Overview
Electrification rates in Angola are through the Joint Order no. 426/17 of very high voltage transmission lines and creation of the Unique Buyer, • to reinforce the role of the currently estimated at 43% in August 17 the technical support group over 40 substations are planned. Finally, being the entity responsible for Regulatory Authority for Electricity cities and less than 10% in rural for the multi-sectoral commission was on the distribution level, more than the purchase of energy from the and Water Supply and Wastewater areas, consequently there is a high created for the review and extension of 600,000 new connections are planned related producers and the sale of Sanitation (IRSEA), in the new dependence on diesel generators for the vision until 2050. in Luanda as well as a high level of energy to the related distributors. market model. electricity generation. The generator investment in the electrification of the The Unique Buyer will acquire all The 2013-2017 action plan for the business and maintenance of such remaining capitals of the provinces and the energy produced in the public The Angola Strategy 2025, with the sector is mainly focused on increasing generators is a very profitable business municipalities, with a total of two million system; strategic objective of harmonious generation capacity, with three mains in Angola, which means that efforts to customers expected to gain access development of the national territory structuring projects (Cambambe reduce dependence on this industry are to electricity by 2017, mostly through • to ensure Rapid Assessment and through a balanced geographical Hydropower Plant; Soyo’s Natural reduced. usage of pre-paid meters, representing Gap Analysis Angola restructured distribution of economic and social Gas Combined Cycle Power Plant and a greater than 40% electrification rate. the current organization through activities, investments in the electricity The Angolan government has an Laúca Hydropower Plant). These three the creation of unique public sector will be crucial to achieving this. ambitious action plan for the period projects represent an increase in power The Transformation Program for the entities for each of the sector’s The initial phases of this strategy have up to 2025 with around USD18 billion of 3.5GW, more than the total power Electricity Sector (PTSE) is already domains: been concluded with the outputs being: worth of investments into renewables currently installed and a significant underway and the main objectives of confirmation of the planned new market underway, and it has a long-term reduction in average generation this program are: • Production – through the model, and the restructuring of the vision for the power sector with a clear cost. The action plan also envisages • to ensure the economic and incorporation of PRODEL E.P.; new public companies. The final phase roadmap to provide modern electricity a strong investment in transmission, financial sustainability of the sector; will focus on the design of the new services to 60% of the population by with the interconnection of the north, • Transmission – through the operation model, and implementing 2025. Through the Presidential Order central and south systems by the end • to promote the entry of private incorporation of RNT E.P. the operational improvement plan. no. 11/17 of February 14, a multisectoral of 2017 (started with the Cambambe capital and private know-how into Despite the ongoing transformation commission was created to review Hydropower Plant whose work is the sector through an attractive • Distribution – through the process, the sector’s public companies and extend the vision until 2050 of already completed) and the creation of a compensation regime based on incorporation of ENDE E.P.; and do not have sufficient human the long-term development strategy, new system in the East, interconnecting PPAs with differentiated feed–in (insufficient training) or technical coordinated by the Minister of Planning the capitals of Lunda Norte, Lunda Sul tariffs for specific cases and the resources to guarantee the strategy’s and Territorial Development, and and Moxico. More than 6,000 km of
10 Renewable Energy in Africa Angola – Electricity Industry Overview
implementation within the proposed available in 2022 by PRODEL • The new and renewable timescale or to ensure the efficient and degree of coverage of the energies objective is to reach exploitation of the current and future consumption tip in all systems the 500MW of installed power infrastructures. exceeding 30%. in Solar, Wind, Biomass and Mini Hydric until 2022. The Ministry of Energy and Water • The transport objective is (MINEA) projects: transporting at least 700MW • The Municipal and Rural • Regarding of expansion of access from the Nothern System to Distribution Objective is to to electricity in urban areas, the remaining and to ensure develop at least 40 distribution municipalities and rural areas: in Annual Interruption Average licenses in isolated systems and Time at Very High Voltage less 100,000 individual solar systems • The access objective is to than 900 minutes. imported and distributed/ achieve a 50% electrification rate marketed. • The distribution objective is in 2022 and electrify 2.6 million to reduce BT customers in • Regarding the expansion of customers by 2022. “postpaid” to less than 50,000 water supply in urban areas, • The equity objective is to and transfer all MT customers municipalities and rural areas: ensure a minimum provincial to metering and to reduce total electrification rate of 20% losses in distribution to less • The supply objective is to by 2022 and extending the than 25%. achieve a urban coverage rate Public Electricity System to 106 of 85% in 2022; a production • Regarding the private participation municipal seats. of drinking water at provincial in the Electricity Sector: and municipal headquarters • Regarding the optimization and from 0.8 million m3/day in 2017 sustainable management of the • The thermal and hydroelectric to 1.8 million m3/day by 2022; to electricity sector: production objective should achieve a rural coverage rate of exceed 1.5 GW of installed 80% in 2022 and an operational • The production objective is power with private investment rate of water supply systems in to exceed 5.4GW of power in 2022. operation of 88% by 2022.
11 Renewable Energy in Africa Angola – Electricity Industry Overview
• Regarding the sustainable water • The wastewater treatment • Expansion of installed nominal Angolan utilities are members of Center/South systems, with a 400kV sector management: objective is to conduct studies capacity kilamba WTP from the Southern Africa Power Pool line, is expected to be completed by leading to the implementation 40,000 to 120,000 m3/day (SAPP) and the Central Africa Power 2020. • The management companies of wastewater collection (+80,000 m3/day). Pool (CAPP). Angola intends to objective is 19 full management systems in all provincial capitals integrate into SAPP through the SAPP integration faces some • Expansion of installed nominal companies in 2022. and to start the construction of development and implementation challenges, including the absence of a capacity calumbo WTP from the wastewater collection and of power generation projects with common regulatory framework; • The basin planning objective is 51,840 to 86,400 m3/day treatment system in four of the a regional impact, namely the Laúca the fact that energy integration 18 main hydrographic basins (+34,560 m3/day). province capitals. Hydroelectric Power Plant, the Soyo processes are linked to economic with a basin plan, including the • Ampliation of the water reserve Combined Cycle Plant, the Cambambe integration; the asymmetries in transboundary basins. • Regarding the reinforcement of capacity of CD’s Cazenga, I and II hydroelectric plant and the the electricity market and the more than 750,000 m3/day of water • The combating drought Mulemba, Golfe, Viana, Nova Hydroelectric of Caculo-Cabaça. characteristics of the transmission tratement in Luanda by 2022: objective is to increase the Vida, Benfica II, Camama, Angola also intends to develop the networks and production capacity; network of hydrometric Capari, Funda Km9, Panguila interconnection of the transmission a huge increase in demand and the • Installation of Ramiros WTP stations to 100 and to conclude and Catete. line with Namibia, to initially provide delay in the development of projects Compact with 1.034 m3/day the studies. electricity to cities in the south of that aim to increase the transmission and Cabala WTP Compact with • Construction of the 4/Bita Angola. There is also the intention to capacity of the networks. With the • The water quality objective 144 m3/day. System with a nominal installed integrate the Baynes Hydroelectric creation of the Regional Master is 18 water quality testing capacity of 259,200 m3/day. • Continuity of construction of Plant into NAMPOWER and RNT-EP Plan for Infrastructure Development laboratories in 2022 and water new CD’s in the scope of new • Construction of the 5/ Quilonga electric networks, whose studies are (CAPP) SAPP intends to start financing quality monitoring program, water supply systems (Bita and Grande System with a underway and are expected to be projects related to the improvement of meeting more than 60% of Quilonga Grande). nominal installed capacity of concluded in 2019. Angola provides networks. the needs. 500,000 m3/day. for the interconnection of the North/ • Expansion of installed nominal • Regarding the construction Center systems through line a 220kV, capacity of Kifangondo WTP of wastewater collection and expected to be completed in 2018 and from 140,000 to 210,000 treatment systems: through the 400kV line, with a forecast m3/day (+70,000 m3/day). in 2019. The interconnection of the
12 Renewable Energy in Africa Angola – Electricity Laws
Electricity Laws
• General Electricity Law – Law No. 14 – A/96 • Models of concession contracts and • Regulation of the Electric Power Supply – state grants to private investors and the of May 31 (with the amendments of Law No. models for the purchase and sale of Decree No. 27/01 of May 18 (establishes criteria for access to them, and establishes 27/15 of December 14). electricity for small hydroelectric power the regime of the supply of electrical energy the rights, duties and the guarantees of The General Electricity Law codified the stations – Presidential Decree No. 82/10 of in very high voltage, high voltage, medium private investors. There are two investment sector restructuring and established a November 22. voltage and low voltage to electrical facilities). regimes which are the prior declaration and legal framework for independent power the special regime. The special regime applies generation. • Regulation of the licensing of electric power • Presidential Decree No. 2/11 of January 5 to the investments made in the priority production, transmission and distribution (approved the Regulation of Commercial sectors of activity and in the development • Electric Energy Selling Rates – Executive facilities – Decree No. 41/04 of July 2. Relations between the all entities, state zones provided for in the law. The production Decree No. 705/15 of December 30. and private, involved in the activities of and distribution of Electric Energy is • Regulation of the licensing of facilities for the production, transmission, distribution and considered by the new law as a priority sector. • The Regulation of the Tariff (Presidential use of electric power – Decree No. 40/04 of use of electricity). The tax benefits are better if the investment is Decree No. 4/11 of January 6) determines July 2. made under the special regime. the criteria and methods for the formulation • Presidential Decree No. 305/14 of of tariffs and prices of electric energy to be • Regulation of Electricity Production – Decree November 20 – created the Public Company • Presidential Decree No. 250/18 of October 30, practiced by the entities covered by it. No. 47/01 of July 20 (established the legal of Energy Production (PRODEL E.P.), which entered into force on the same regime production of electric power in the the company National Electricity Transmission day and revoked Presidential Decree No. • Regulation on access to grids and to the public electric system). System (RNT, E.P.) and the National Electricity 182/15 of September 30 and Presidential interconnections – Presidential Decree Distribution Company (ENDE, E.P.) Decree 164/17 of July 12 approved the No. 19/11 of January 17. • Regulation of Electricity Distribution – Decree Regulation of Private Investment Law (Law No. 45/01 of July 13. • The new Private Investment Law, which No. 10/18 of June 26). • Regulation on the Quality Scheme for the entered into force on June 26, 2018, service provided by the entities of the establishes the principles and general bases public electric system – Presidential Decree of private investment in Angola, establishes No. 310/10 of December 31. the benefits and facilities that the Angolan
13 Renewable Energy in Africa Angola – Electricity Industry Overview
Regulators The main regulator is IRSEA, which regulates the PRODEL E.P. is the Public Company for Electricity agents that are not integrated into the PES and Any production of electricity outside of PES, production, transmission, distribution, and use of Production and has the responsibility of therefore act outside of this system. Distribution including self-production and private supply, electric energy in the public electric system and operating and maintaining the generation is carried out under a public service concession must be developed in accordance with the rules regulates the commercial relationship between facilities belonging to the state. It integrates or by a license when exercised in isolated established in the regulations for the licensing this system and the agents which are not bound Capanga Hydropower Plant, previously under systems. and security of electrical installations. Whenever by it. The Presidential Decree of IRSEA does not the responsibility of GAMEK, and the generation entities outside of PES produce electricity, they Angola’s transmission infrastructure is made up specify which agents are not bound by it but assets of ENE; the former National Company of must obtain a license or concession. To obtain of three separate grid systems (northern, central according to the Law 27/15 of December 14, Electricity. this, they must first reach an agreement with and southern) in addition to isolated grids such only concessionaires and those established the entity holding the license or distribution RNT, E.P.’s main purpose is the transmission of as in the east. The northern grid covers Luanda, through a license which aim to supply under a concession in the geographical area where the electricity through the operation of the National Bengo, Malange, Kwanza Norte and Kwanza public service regime are considered as related electro-produce center is located. Electricity Transmission System, which comprises Sul. The central grid includes Benguela and entities. the very high voltage grid, interconnection Huambo, and the southern grid serves Huila Generation, Distribution and network, national dispatching facilities and and Namibe. Plans exist to link the grids through Transmission related goods and rights, in parallel with the a north-central-south backbone and expand function of the market operator (sole buyer). the grid from 3,354 km to 16,350 km by 2025 In 2014, with the USD1 billion African and to connect to the pool through Namibia Development Bank Electricity Sector ENDE, E.P.’s main purpose is to distribute and (Baynes) and the Democratic Republic of Congo Transformation Program Loan, Angola made commercialize electricity at the national level (Inga). All electrical installations must have an major reforms in the energy sector, including in the scope of the public electric system by establishment license and an operating license the creation of PRODEL E.P., RNT – E.P. and exploiting the infrastructure of the distribution to be able to lawfully operate in the production, ENDE, E.P. networks in high, medium and low voltage, transmission and distribution space. under public services. There are a number of agents of the public electricity system (PES) and
14 Renewable Energy in Africa Angola – Renewable Energy Overview
Renewable Energy Overview
Angola holds great potential for renewable energy has a solar potential of 17.3GW, by MINEA in September 2015, a total published the articles of incorporation distributed over 368 projects, of of 12 new locations with favorable of the agency. The Presidential Decree production. Three main steps are being developed which 120 projects, (3,436MW), conditions for the installation of up no. 88/13 of June 14 established the to increase the production of renewables in Angola. present conditions for grid connection to 3.9GW of power were identified. strategic plan for new environmental by 2017. The most appropriate Several of these sites are close to the technologies, presenting the strategic First, a national renewable energy strategy is being technology to harness the solar main network and sub -stations, which measures that the DNTA-National developed in order to identify the best ways to resource in Angola is photovoltaic have enough capacity to absorb this Directorate of Environmental systems. energy without technical restrictions Technologies should implement. implement the programs and projects of this subject. or significant investments. Secondly, the potential for renewable energies is being HYDROPOWER According to the Angola Energy 2025 BIOMASS identified. Finally the renewable energy project is being vision, the strategy for new renewable According to the Angola Energy implemented, in particular solar photovoltaic systems. energy sets a target of 100MW for 2025 vision, Angola has a potential small hydropower plants up to 10MW. for electricity generation based on Most of Angola’s electricity production been supplying electricity since Additionally, 270MW of new medium biomass and municipal solid waste of comes from small-scale thermal power December 2012; and (2) the Tombwa hydro power plants are expected 3.7GW spread over 42 projects. From stations usually located close to urban thermal power station (8MW) in by 2025. these, 3.3GW are forestry related. centers. This is due to the difficulty of Namibe. implementing adequate infrastructure WIND RENEWABLE ENERGY SOLAR for energy transmission and the fact Angola has a wind potential of 3.9GW, GOVERNING LAWS Angola has a high solar resource that renewable energy is still a new of which 604MW, or 13 projects, Resolution No. 19/11 of September 5 potential with an annual average development. The thermal plants have conditions for grid connection approved the adhesion of the Republic global horizontal irradiance between include: (1) the Morro da Luz thermal by 2017. According to the Rapid of Angola to the International Agency 1,350 and 2,070kWh/m2/year. Angola power station in Luanda, which has Assessment Gap Analysis provided of Renewable Energies (IRENA) and
15 Renewable Energy in Africa Angola – Government Incentive Schemes and Major Projects/Companies
Government Incentive Schemes Major Projects/Companies
Currently no fund to support • Ereda – provides services to • The construction of seven power environmental technologies exists and promotes the renewable plants, totaling around 200MW, in Angola. However, there are in the energy sector, especially wind in several Provinces of Angola was Customs Tariff, two product codes and solar energy. It was selected carried out by a consortium formed related to the renewable energy by the Ministry of Energy and by WinPower, Zagope and Grupo sector in which there is exemption Water of Angola to assist with Gema over 2012 and 2013. from import duties and the development of the national consumption tax: wind and solar atlas and build a • WinPower also contributed to 100MW wind farm with 50 wind the Project of Aldeias Solares with • spark-ignition internal combustion turbines near the city of Tombwa the supply and the installation piston engine (wind energy); and in the Namibe province. Ereda of 42 autonomous small-scale • electric storage batteries, including is also producing a study for the photovoltaic systems with inverter separators therefore, including conceptual design, engineering batteries, totaling 185kWp. square or rectangular: of the kind and technical specifications for a used in photovoltaic cells large-scale (30MW) hybrid system (solar cells). to electrify Baía dos Tigres island in the Angolan province of Namibe. There are also other exempt electrical equipment such as generators and • Energias Renováveis de Angola electric transformers. – assisted on a design project developed for the implementation of solar projects in 23 dispersed villages in the province of Huambo named Aldeias Solares (Solar Villages).
16 Renewable Energy in Africa Angola – Foreign Investment/Ownership
Foreign Investment/Ownership
There is a new central body for the management of development zones; that the corporate headquarters of the Provinces of Supplies from shareholders or changes are exempt from prior Benguela, Huila and the Municipality partners made for external investment investment processes which is AIPEX – Private Investment authorization and the immediate right of Lobito); Zone B (Provinces of purposes may not exceed 30% of the Agency and Export Promotion (Presidential Decree no. to repatriation of dividends. Bie, Bengo, Cuanza-Norte, Cuanza- value of the investment made by the Sul, Huambo, Namibe and other company and are only refundable 81/18 of March 19) and a new Private Investment Law (PIL) There are two investment regimes municipalities of the Provinces after three years from the date (Law no. 10/18 of June 26) and the respective Regulation which are the prior declaration and of Benguela and Huila); Zone C of registration in the company’s the special regime. The special regime (Provinces of Cuando Cubango, accounts. (Presidential Decree No. 250/18 of October 30). applies to the investments made in Cunene, Lunda-Norte, Lunda-Sul, the priority sectors of activity and Malanje, Moxico, Uige and Zaire) The investors are already able to This new PIL, which entered into force investment in the Angolan electricity in the development zones provided and Zone D (Cabinda Province). incorporate a company under the on June 26, 2018, applies to private sector is only allowed in case of for in the Law. The production and The benefits may be granted in prior declaration or special regime investments of any value, whether partnership with Angolan citizens with distribution of Electric Energy is Corporate Income Tax (Imposto going directly to GUE-Guiche Hnico da made by internal or external investors public capital companies or Angolan considered by the new law as a priority Industrial); Property transfer tax Empresa; however, as aforementioned and establishes the principles and companies in which they hold at sector. The tax benefits are better if (Sisal); Real Estate Income Tax (IPU); the benefits are different in both general bases of private investment in least 35% of the capital and effective the investment is made under the Investment Income Tax (IAC) and regimes. After the incorporation Angola, the benefits and facilities that participation in the management special regime. The benefits conferred Stamp Duty. the investors have to register the the Angolan state grants to private reflected in the shareholders’ under this Law apply exclusively to company in AIPEX presenting an investors and the criteria for access to agreement. However, the new PIL the activities included in the execution Whenever the investor, internal investment project with all documents them, and the rights, duties and the determines that there is no minimum of the registered private investment. or external, intends to carry out that the regulation imposes and guarantees of private investors. percentage of mandatory participation The development areas (in which the operations qualified as indirect when the private investment project of national entities in the share capital; benefits are increasingly attributed) investment, these should not exceed is approved will be issued the CRIP – The new PIL repeals the Law no. there is no minimum investment value; are: Zone A (Province of Luanda the value corresponding to 50% of the Certificate of Private Investment 14/15 of August 11. According to the the criteria for granting incentives; and the municipalities that are the total value of the investment. Registration. old Private Investment Law, foreign the priority sectors of activity; the
17 Renewable Energy in Africa Angola – UNFCCC – Paris Commitments and beyond and Relevant Resources and References
UNFCCC – Paris Commitments Relevant Resources and beyond and References
Angola signed the Paris Agreement Relevant Websites on April 22, 2016. In its Intended Nationally Determined Contribution, www.energycom.gov.gh Angola plans to reduce GHG www.purc.com.gh emissions up to 35% unconditionally by 2030 as compared to the Business www.ecgonline.info As Usual (BAU) scenario (base year www.export.gov 2005). In addition, it is expected that through a conditional mitigation www.gipcghana.com scenario, the country could reduce an additional 15% below BAU emission levels by 2030, In achieving its unconditional and conditional targets Angola expects to reduce its emissions trajectory by nearly 50% below the BAU scenario by 2030 at overall cost of over USD14.7 billion.
18 02
Botswana Renewable Energy in Africa Botswana – Overview
Botswana Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Botswana has a dual 2018 Doing Business Report: Botswana is a landlocked country and poverty. Botswana’s economic legal system consisting of customary 81 of 190 (down 10 rankings) in Southern Africa, famous for its model still needs to evolve to progress law that operates alongside the Okavango Delta, the Kalahari Desert as there is a high dependence on 2018 Global Competitiveness Index: common law. Botswana adopted and abundant wildlife. It is mineral the state and little private sector 63 of 138 (up 1 ranking) its constitution upon gaining (diamond) rich and has a democratic investment. independence in 1966, with several 2017 Index of Economic Freedom: and stable political environment, with amendments having been made since, 34 of 180 (down 4 rankings) the Botswana Democratic Party (BDP) most recently in 2006. having been in power since 1966. 2016 Corruption Perceptions Index: With a small population of around 35 of 176 (down 7 rankings) Language(s): English, Setswana. two million people, it has been one 2016 UN Development Programme of the fastest growing economies Human Development Index: in the world since its independence 108 of 188 (down 2 rankings) from Britain in 1966, with an average growth of 5% per annum over the last Population: 2.3 million ten years. However, it still struggles GNI per capita: USD16,380 with unusually high levels of inequality
20 Renewable Energy in Africa Botswana – Electricity Industry Overview
Electricity Industry Overview
Almost 80% of Botswana’s power A request for proposals was issued averages 260MW only from Morupule B Electricity generation and distribution requirement is imported from the for Independent Power Producers to power station since the Morupule “A” in Botswana is dominated by the Southern African Power build, operate and maintain a 300MW plant is undergoing refurbishment. Botswana Power Corporation (BPC), Pool (SAPP), mostly from coal power station. Although the The current peak demand stands the local utility and currently the sole South Africa. The Southern African preferred bidder was selected, at approximately 600MW and the supplier and distributor of electricity. region is currently experiencing a the process appears to have stalled on supply gap is met through imports power generation deficit, and as the government’s concerns over the mainly from South Africa (Eskom) The government of Botswana (GoB) a result, there is a critical need for provision of guarantees. and some from Mozambique (EDM). retains control over electricity tariffs Botswana to augment the internal The two emergency plants, Orapa through the Botswana Energy generation of electricity. The The base generation plants in the 90MW and Matshelagabedi 105MW, Regulatory Authority (BERA), a brand- Electricity Supply (Amendment) Act country currently consist of Morupule are also dispatched when imports are new regulatory body constituted on was amended in 2016 to allow for “A” with an installed capacity of 132MW not available or when they are too April 1, 2017. private sector participation in power and Morupule “B” with 600MW. The expensive. generation. available base generation capacity
21 Renewable Energy in Africa Botswana – Electricity Laws
Electricity Laws
• Botswana Energy Regulatory Authority Act • Electricity Supply (Amendment) Act No. 14 • Presidential Decree No. 305/14 of No. 13 of 2016 (BERA Act). of 2016 – The Electricity Supply (Amendment) November 20 – created the Public Company Act makes provision for the licensing and of Energy Production (PRODEL E.P.), • The BERA Act establishes the Botswana control of undertakings for the generation the company National Electricity Transmission Energy Regulatory Authority, its and supply of electricity and for matters System (RNT E.P.) and the National Electricity mandate, the regulation of the energy incidental thereto and connected therewith. Distribution Company (ENDE E.P.). sector and makes provision for matters incidental thereto. • Presidential Decree No. 2/11 of January 5 • Informing that the new Private Investment Law (approved the Regulation of Commercial • Botswana Power Corporation (Amendment) has already been approved and in a few weeks Relations between the all entities, state Act No. 15 of 2016 The Botswana Power will be published. We anticipate that under and private, involved in the activities of Corporation Act establishes the Botswana the new law the requirements regarding the production, transmission, distribution and Power Corporation for the generation amount invested and the obligation to have use of electricity). and supply of electric power and makes Angolan partners will be changed as well as the provision for matters incidental thereto and procedures that will also be different. connected therewith.
22 Renewable Energy in Africa Botswana – Electricity Industry Overview
Regulators Generation, Distribution The only regulator is the Botswana the environment and ensuring that the • network access and storage and Transmission Energy Regulatory Authority (BERA). best international regulatory practice systems access in natural gas Generation, distribution and BERA’s role is to provide an efficient is maintained in the regulation of the network, gas storage, oil pipelines, transmission of electricity in Botswana is regulatory framework for the energy energy sector. petroleum pipelines and storage subject to licensing by BERA. Generation sector. Its primary mandate is the of oil and petroleum products and distribution is currently dominated BERA has the power to regulate: economic regulation of the energy including third-party access to by the BPC, with only one IPP license sector in accordance with the BERA energy; and having been issued, in respect of a • tariffs in the energy sector; Act. BERA oversees the electricity, proposed coal fired plant. petroleum products, coal, natural gas, • transport and storage • coal supply agreements between bio-energy, solar energy, renewable infrastructure. collieries, coal suppliers and energy, resources and other energy price-regulated generators; sectors. BERA is tasked with ensuring BERA also monitors and inspects that tariffs in the energy sector are fixed licensees and enforces license • license activities in the energy on the basis of a tariff methodology obligations, oversees project sector; that has been set up in a transparent development in the energy sector and manner taking into account GoB implements policy in relation to the • network access for independent policy on cross subsidies between generation of electricity from renewable power producers, privately classes of consumers, ensuring that energy resources. BERA’s powers financed projects in the energy the interests between consumer, may be subject to intervention by the sector; customer and licensee are adequately Ministry of Minerals, Green Technology balanced, protecting and preserving and Energy Security.
23 Renewable Energy in Africa Botswana – Renewable Energy Overview
Renewable Energy Overview
Save for the 1.3MW solar plant at Phakalane near In October 2017, BPC announced that it intended to apply for USD200 million Gaborone, there are no significant existing renewable from the Climate Change to fund solar energy projects in Botswana, but the focus is on projects in the country. developing solar power, as evidenced by the two requests The regulatory framework allows for, for proposal (RFPs) in the market for a solar farm to and encourages, renewable energy, and the GoB, through BPC, is actively supply Gaborone and to supply electricity to 20 villages. pursuing potential solar projects. The potential for wind power projects is also under Two expressions of interest were released in June 2017 in relation to investigation; however, despite a plan emerging from two new solar projects, a 100MW plant Wind Edge Botswana for a 100MW facility in the Kweneng and a solar-hybrid project (please see details on page 25). district, nothing has materialized to date.
24 Renewable Energy in Africa Botswana – Government Incentive Schemes and Major Projects/Companies
Government Incentive Schemes Major Projects/Companies
Government Incentives • North West Transmission Grid – • Morupule B Units 5 & 6 – In 2015, the government issued an The project entails the extension of Marubeni Corporation – this project EOI to construct, operate, maintain, the high-voltage electricity network entails the extension of Morupuile and decommission at the end of its to the Northwest, Chobe and B with an additional 300MW coal economic life, a scalable 100MW Ghantsi Districts, catering for new fired power plant. This will be the solar power plant. Two new solar power capacity requirements and first IPP in Botswana. EOIs were released in June 2017; one connecting areas that are supplied for a 100MW solar plant to service through cross-border power lines • Renewables – There are currently Gaborone and a second solar-hybrid to the national grid. two solar RFPs in the market, put project to service 20 Botswana out by BPC; one in relation to villages.1 Botswana has been working • Construction of Rakola a 100MW solar plant which will with the World Bank to develop a substation – The project consists be used to supply electricity to comprehensive renewable energy of a 220Kv substation in Rakola Gaborone, and one in relation to a strategy.2 as part of a transmission grid solar-hybrid project for powering network expansion. The project 20 villages. The bids have been is mainly aimed at reinforcing submitted and the process is the transmission network in the currently at the evaluation stage. southern region of Botswana.
25 Renewable Energy in Africa Botswana – Foreign Investment/Ownership
Foreign Investment/Ownership
Botswana is a stable and welcoming environment for foreign direct investment. There are no restrictions in respect of foreign ownership of energy projects and there are no exchange control restrictions or limitations on the repatriation of funds.
There are no restrictions of ownership of companies in Botswana. The Companies Act provides that at least one director of the company should be resident in Botswana.
26 Renewable Energy in Africa Botswana – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments and beyond
Obligations Steps taken under Paris Agreement • Botswana ratified the United Nations Framework • There is no dedicated policy to respond to climate Convention on Climate Change (UNFCCC) in 1994. change in Botswana.5 The government of Botswana Botswana signed the Paris Agreement (an agreement has been working on a climate change adaptation and within the UNFCCC) on April 22, 2016, and subsequently mitigation policy since 2010, However, the draft policy ratified the Agreement on November 11, 2016. is yet to be adopted by the parliament.6 In pursuit of sustainable development, Botswana has made • In accordance with Article 2 of the Paris Agreement, voluntary commitment in its Vision 2036 to purse green Botswana has obligations to: growth and attain green economy, which it can be argued to include reducing use of coal powered power • hold the increased global average temperature to stations in of renewable energy resources.7 Botswana’s well below 2ºC above pre-industrial levels; Vision 2036 states “Botswana will have a low carbon footprint, with a society that is aware of and resilient to • increase the adaptability to the adverse impacts of the consequences of climate change. Our planning and climate change and foster climate resilience and low decision-making will take cognisance of vulnerabilities, greenhouse gas emissions in a manner that does and provide for implementation of appropriate not threaten food production; and mitigation and adaption measures."8 • make finance flows consistent with a pathway towards low greenhouse gas emissions and climate- resilient development.3
• Botswana has set itself the goal of reducing its carbo emissions by 15% by 2030,4 which would require approximately USD18.4 billion to achieve.
27 Renewable Energy in Africa Botswana – Relevant Resources and References
Relevant Resources and References
Relevant Websites References 6 Patricia Mogomotsi, Goemeone Mogomotsi, and Wsme Hambira,‘Paris www.energycom.gov.gh 1 export.gov 31/07/2017 “Botswana – agreement on climate change Energy” www.purc.com.gh and Botswana’s Vision 2036: an 2 Team Finland Market Opportunities examination of linkages’ (2018) www.ecgonline.info 25/04/2018 “Botswana– business 16 (1) Chinese Journal of Population www.export.gov opportunities for Finnish companies” Resources and Environment 59, 62.
www.gipcghana.com 3 https://unfccc.int/sites/default/files/ 7 Patricia Mogomotsi, Goemeone paris_agreement_english_.pdf Mogomotsi, and Wsme Hambira,‘Paris agreement on climate change 4 https://www.climatewatchdata.org/ and Botswana’s Vision 2036: an countries/BWA examination of linkages’ (2018) 5 Patricia Mogomotsi, Goemeone 16(1) Chinese Journal of Population Mogomotsi, and Wsme Hambira,‘Paris Resources and Environment 59, 63. agreement on climate change 8 http://www.hrdc.org.bw/sites/default/ and Botswana’s Vision 2036: an files/Vision%202036.pdf examination of linkages’ (2018) 16 (1) Chinese Journal of Population Resources and Environment 59, 62.
As of June 2018.
28 03
Burundi Renewable Energy in Africa Burundi
Burundi Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdictions: The judicial system in 2018 Doing Business Report: The years following independence Burundi is based upon French and 168 out of 190 economies were characterized by instability, German customary law. The judiciary (Up 4 places) massacres took place in 1965, 1972, comprises of the Court of Appeal, 1988 and 1993. The current president 2018 Global Competitiveness: Supreme Court, Tribunals of First Pierre Nkurunziza, is a former rebel 129 out of 137 (up 6) Instance and Constitutional Courts. leader. Burundi sparked a return to 2017 Index of Economic Freedom: unrest in 2015 when he announced a Languages: French, Kirundi, English 157 out of 180 run for a third term. Next presidential and Swahili. elections are to be held in 2020 and 2016 Corruption Perceptions the current president has stated that Index: 159 out of 176 (down 9) he will not run again for presidency. 2016 UN Development programme Human Development Index: 184 out of 188 (no movement)
Population: 10,86 million
GNI per Capita: USD770
30 Renewable Energy in Africa Burundi – Electricity Industry Overview
Electricity Industry Overview
Burundi Electricity REGIDESO is also responsible for Market power distribution and water supply in urban areas, the majority of which The country’s electricity market is are located in the country’s capital traditionally state-owned. Electricity Bujumbura and the surrounding generation and supply in Burundi areas. Electricity is transmitted and is managed and administered by distributed by REGIDESO, whilst Régie de Production et Distribution the Societe Internationale des Pays d’Eau et d’Electricité (REGIDESO), des Grand Lacs (SINELAC), a jointly which operates and controls all of owned utility with Burundi, Rwanda Burundi’s hydro power plants. They and Congo, is responsible for the have a combined installed capacity of development of indigenous and joint 30.6MW and a small amount of hydro power ventures generating and selling capacity, in the form of small units in power to REGIDESO.1 rural areas.
1 http://fortuneofafrica.com/burundi/energy-sector-profile-in-burundi/
31 Renewable Energy in Africa Burundi – Electricity Laws
Electricity Laws
• Law No. 1/13 of April 23, 2015 on the • Decree n° 100/130 of June 23, 2016 related reorganization of the electricity sector in to reorganizing the transmission, distribution Burundi. and marketing of electricity in Burundi.
• Law No. 1/14 of April 24, 2015 relating to • Decree n°100/164 of September 5, 1997 Public Private Partnerships. harmonizing the REGIDESO Articles of Association with Burundi companies Act.
32 Renewable Energy in Africa Burundi – Electricity Industry Overview
Regulators Generation, Distribution The marketing of electricity can lines and 17 transformer stations to The regulatory authority are: and Transmission therefore be carried out competitively interconnect the electric grids of the The legal regimes of the generation, under the conditions laid down by Nile Basin Initiative Member countries • the Ministry of Hydraulics, Energy transmission, distribution and Article 5 of Law No. 1/13. (NBI), namely Burundi, DR Congo, and Mines marketing of electricity in Burundi are Egypt, Ethiopia, Kenya, Rwanda, Sudan, Indeed, the power generation separate. Tanzania and Uganda. • the regulatory authority exercise is subject to the public-private agency; and The transmission, distribution and partnership regime; while the activities marketing of electricity is an industrial of operating an electrical installation are • the electricity generation and and commercial public service under subject to the simple authorization. supply in Burundi is managed the responsibility of the State. Burundi is participating in the region and administered by Régie de The production of electricity contributes wide project to improve interconnection Production et Distribution d’Eau to the public service of electricity but of Electric Grids of Nile Equatorial et d’Electricité (REGIDESO), which does not constitute as such a public Lakes Countries. The project consists operates and controls all of service under the relevant legislation. of the construction and upgrading of Burundi’s thermal power stations. 769 km of 220kV and 110kV power
33 Renewable Energy in Africa Burundi – Renewable Energy Overview
Renewable Energy Overview
• Burundi's electricity consumption • A key feature of the power sector The Moso Sugar Company (SOSUMO) of which approximately 300MW is A PV plant constructed at the relies to a great extent on in Burundi is the very low level operates a 2 x 2MW cogeneration considered to be economically useful. University Hospital of Kamenge in biomass. of electrification; only 2% of the unit fuelled by bagasse (sugar cane Over 150 potential hydropower sites Bujumbura with a capacity of 403kWp 1.6 million households in the residues) providing electricity to the have been identified and 29 are is connected to the national grid. • Households are the main country have electricity. SOSUMO factory and its administrative currently in undergoing construction. consumers of electricity in the buildings. In total, fewer than 30 sites have been GEOTHERMAL country, accounting for 94% of The average consumption of electricity exploited, including eight hydropower While there are approximately 15 hot total consumption. Their needs in Burundi is 23kWh/cap/year, among Additionally, the viability of an urban plants operated by REGIDESO. springs in Burundi, currently only two are almost exclusively met the lowest levels globally. waste to energy project in Bujumbura thermal plants are in operation by by traditional biomass (99%). is under evaluation. The project WIND REGIDESO . Electricity (0.3%), and oil products Burundi renewable energy sources owner would, within a public-private Despite significant potential, wind (0.4%) play an insignificant role. include the following: partnership framework, invest in power is more or less completely WHAT ARE THE MAJOR RENEWABLE the collection, methanization and unexploited in Burundi. With only ENERGY GOVERNING LAWS? • If industry and transport is BIOMASS production of electricity. limited production taking place in the There is no specific law related to included, 94% of all electricity Burundi possesses a peat potential Imbo plain region. renewable energy; they are governed consumption relies on biomass, estimated at 600 million tons. HYDRO POWER by Law No. 1/13 of April 23, 2015 on which is composed by around 70% The exploitable potential would An equatorial and mountainous SOLAR the reorganization of the electricity of fuel wood, 18% of agricultural be around 47 to 58 million tons. country, Burundi benefits from Burundi has significant solar potential. sector in Burundi. residues, 6% of charcoal, and 1% The management of the peat is the substantial hydropower potential, The average annual sunshine of bagasse. responsibility of the National Peat coupled with favorable rain fraction in Burundi is close to Office (ONATOUR). conditions and many waterfalls. 2,000kWh/m2/year. Burundi’s hydropower potential was evaluated in 1983 to be of 1,700MW
34 Renewable Energy in Africa Burundi – Government Incentive Schemes and Major Projects/Companies
Government Incentive Schemes Major Projects/Companies
The country needs to implement A PV plant is currently under Burundi also plans another national large-scale projects, such as local and construction in the Gitega region of the project: Jiji/Mulembwe/Siguvyaye in regional projects to develop its energy country supported by a 25-year power the south of Burundi rated for 100MW potential. purchase agreement. Once complete, or more, and on Ruvubu (Mumwendo the 7.5kWc plant will increase site: 80MW). Mines projects, like MUSONGATI and generation capacity within the country MUREMERA nickel projects, make that by around 15%. energy demand will require more than 50MW. In addition a series of project are anticipated to reach operational status With the opening of more of industries by 2020, These include plants at Kabu after the political crisis, Burundi 16 (20MW) and Mpanda (10,4MW) and therefore requires more than 80MW two regional hydro-electric projects on the existing power capacity.2 projects: Rusizi III (145MW to be divided with Rwanda and the DRC) and Rusumo Falls (61MW to be divided with Rwanda and Tanzania).
2 http://fortuneofafrica.com/burundi/energy-sector-profile-in-burundi/
35 Renewable Energy in Africa Burundi – Foreign Investment/Ownership and UNFCCC – Paris Commitments and beyond
Foreign Investment/Ownership UNFCCC – PARIS Commitments and beyond
Foreign investors may benefit from Burundi ratified the Paris Agreement tax and customs exemptions and on January 17, 2018. The country’s incentives in the areas of labor Intended Nationally Determined legislation, exchange control, entry Contribution contained a and residence of foreigners. commitment to reduce emissions by The country’s free zone regime 20% (relative to a business as usual provides additional incentives baseline) by 2030. to foreign investors and owners operating in Burundi.
36 Renewable Energy in Africa Burundi – Relevant Resources and References
Relevant Resources and References
Relevant Websites
Ministry of Hydraulics, Energy and Mines http://www.ministere-energie-mines.gov.bi/
Regie de Production et Distribution d'Eau et d'Electricite (REGIDESO) http://www.regideso.bi/
Burundi Office of Mines and Quarries (OBM) https://www.obm.bi/
Burundi Agency for Rural Electrification (ABER) http://www.aber-burundi.com/
Agency for the Regulation of Water Supply, Electricity and Mines (AREEM) http://www.ministere-energie-mines.gov.bi/-AREEM-.html
Burundi Agency of Hydraulics and Sanitation in Rural Areas (AHAMR) http://www.ministere-energie-mines.gov.bi/-AHAMR-.html
National Peat Office (ONATOUR) http://www.ministere-energie-mines.gov.bi/-ONATOUR-.html
International Society of Great Lakes Countries (SINELAC) http://www.sinelac.org/
Energy of the Great Lakes Countries (EGL) http://www.egl-grandslacs.org/index.php/fr/
37 04
Ethiopia Renewable Energy in Africa Ethiopia – Overview
Ethiopia Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Civil jurisdiction with 2018 Doing Business Report: Despite being the only African country elements of customary law and 161 of 190 (down 2 rankings) to have largely evaded colonial Constitution of the Federal Democratic rule, landlocked Ethiopia’s history 2018 Global Competitiveness Index: Republic of Ethiopia (1994). has featured military coups, rebel 108 of 138 (up 1 ranking) coalitions and a border war with Language(s): Amharic is the only 2017 Index of Economic Freedom: 142 Eritrea. Ethiopia became a democratic language reorganized by the FDRE of 180 (up 6 rankings) republic in 1991, and adopted its Constitution as the federal working constitution in 1995. With a population 2016 Corruption Perceptions Index: language. of approximately 105 million, it is the 108 of 176 (down 5 rankings) second most populous country in 2016 UN Development Programme Africa and, despite rapid economic Human Development Index: growth of between 8-11% per 174 of 188 (no movement) annum, it remains one of the poorest countries in the world. Population: 105 million
GNI per capita: USD1,730
39 Renewable Energy in Africa Ethiopia – Electricity Industry Overview
Electricity Industry Overview
Until recently, Ethiopia’s electricity The enactment of the Energy transmission and/or distribution and such liberalization have not yet been market was a state-owned vertically Proclamation No. 810/2013 (Energy supply of electricity. Private entities disclosed, one of the areas mentioned integrated monopoly, Ethiopia Electric Proclamation) in 2013 introduced are only permitted to engage in in the party’s statement was the Power Corporation that owned and steps towards the liberalization of generation, off-grid transmission electricity market. operated all aspects of the electricity the electricity market. Generation of and distribution of electricity, as The total installed energy capacity of system. In 2013, the electricity system electricity by IPPs alongside EEP and transmission and distribution/ Ethiopia is recorded to be 4,206MW. was unbundled to some extent, and PPAs to be entered between the IPPs supply through the national grid Out of this, electricity generated from the mandate of Ethiopia Electric Power and EEP and/or EEU were some of is reserved to the government. hydropower plants take the majority Corporation was transferred to two the key changes introduced by the The unification of distribution and share, contributing 89% to the total fully state-owned entities. Accordingly, Energy Proclamation. The Energy supply licenses, coupled with the energy capacity (3,743MW), followed Ethiopian Electric Power (EEP), was Proclamation also introduced legal monopoly granted to the EEU by electricity from wind and thermal established to undertake generation third-party access rules, where the to distribute and supply electricity contributing 8% and 3% respectively. and transmission of electricity and transmission and distribution network through the national grid, has the Ethiopian Electric Utility (EEU) was owners are obliged to give access to further diminished the possibility of established to undertake distribution other license holders on payment of a introducing competition in the supply and supply of electricity. One related prescribed fee. of electricity. Additionally, the tariffs aspect of the Ethiopian electric system related to both the national grid and Only generation (excluding is the unification of distribution and off-national-grid are determined by transmission, distribution and supply of electricity. Based on the the government. The ruling party supply) of electricity is liberalized different electricity laws, distribution has announced its plan to partially in Ethiopia. The current electricity and sale of electricity is granted under liberalize different investment areas laws do not create the possibility a single license. which were under the government’s for competition in the on-grid control. Even though the details of
40 Renewable Energy in Africa Ethiopia – Electricity Industry Overview
Electricity Laws
• Energy Proclamation No. 810/2013 – provides • Geothermal Resources Development • Ethiopian Electric Power Establishment • Investment Proclamation No. 280/2002 – The for the powers and duties of the Ethiopian Proclamation No. 981/2016 – regulates Council of Ministers (Amendment) Regulation Proclamation provides for the state’s exclusive Energy Authority (the regulator) and governs development activities including generation No. 381/2016 – establishes a fully state- monopoly over transmission and distribution/ the issuance, renewal, transfer and revocation of electricity from geothermal resources. owned utility to undertake generation and supply of electricity through the integrated of different kinds of licenses, permits and The Proclamation provides for the rights transmission of electricity in the national grid. national grid. certificates in relation to the electricity sector. and obligations of holders of different kinds The Proclamation also sets mandatory of license (reconnaissance, exploration, • Ethiopian Electric Utility Establishment • Investment (Amendment) Proclamation provisions that regulate the supply of electricity. development and use). Regulation Council of Ministers (Amendment) No. 373/2003 – delegates the Ethiopian Regulation No. 382/2016 – establishes a Energy Agency (predecessor of Ethiopian • Council of Ministers Energy Regulation No. • Ethiopian Energy Authority Establishment fully state-owned utility to undertake off-grid Energy Authority) to issue, renew and cancel 447/2019 – provides for detailed provisions Council of Ministers Regulation No. 308/2014 generation and transmission of low voltage investment permits for transmission and supply on the manner of enforcing the Energy – establishes one of the regulators of the electricity as well as distribution and supply of of electric energy. Proclamation as amended. electricity market, Ethiopian Energy Authority electricity in the national grid. and provides for its organizational structure and powers and duties.
41 Renewable Energy in Africa Ethiopia – Electricity Industry Overview
Regulators There are two main regulators of the • approving the investment plan of • issue, renew and cancel investment case of contravention, penalize complaints over any matter electricity market in Ethiopia. the enterprise submitted to it by permits for the generation, the licensees or the holder of a required to be regulated under the the board; transmission and supply of certificate of competency with Energy Proclamation; and Ministry of Water, Irrigation and electric energy; a fine, suspension or revocation Electricity: • proposing, where necessary, of the license or certificate of • collect fees for the issuance and The Ministry of Water, Irrigation to the Council of Ministers, the • issue and renew licenses for competency, depending on the renewal of licenses and certificates and Electricity has responsibility dissolution, amalgamation or the generation, transmission, gravity of the offence; of competency and for other for promoting the development of division of an enterprise under distribution and sale, import or services rendered by it. water resources and electricity and its control, or the transfer of the export of electricity for commercial • review national grid related tariffs promoting the growth and expansion enterprise or its management in purposes; submitted to it by licensees and of the country’s supply of electric any other manner; and submit its recommendation to energy. As the supervising authority • issue and renew licenses to the government for approval; of EEP and EEU, some of its major • approving, in consultation with the undertake energy audits, energy and, upon approval, regulate the powers in relation to both entities board, the annual and long-term efficiency and conservation implementations thereof and issue include: corporate targets of the enterprise, contracting or consultancy; and regulate the implementation of and following up their fulfilment. guidelines for the determination of • appointing the chairman of the • issue and review certificates off-national-grid tariffs; boards; Ethiopian Energy Authority: of competency; The Ethiopian Energy Authority is • approve electric power purchase • causing the allocation of the initial accountable to the Ministry of Water, • supervise the operations of and network service agreements; capital of the enterprise; Irrigation and Electricity and is licensees and holders of certificates empowered to regulate the electricity of competency to ensure • hear, investigate and, when • determining the increase or market. Some of its major powers compliance with the provisions necessary, mediate or arbitrate decrease of the capital of the include the ability to: of the relevant laws and, in the disputes between parties with enterprise;
42 Renewable Energy in Africa Ethiopia – Electricity Industry Overview
Generation, Distribution and Transmission Transmission and distribution/supply of electrical energy through the national grid system is exclusively reserved for the government. However, private actors, including foreign investors, can engage in the generation of electricity and off- grid transmission and distribution. Currently, EEP and FEU are the main actors in the generation, distribution and transmission of power.
So far, off-grid electricity generation and transmission is not widely deployed. However, the government of Ethiopia has recently launched its National Electrification Programme that aims to attain universal access using both on-grid and off-grid systems.
43 Renewable Energy in Africa Ethiopia – Renewable Energy Overview
Renewable Energy Overview
Ethiopia generates its electricity mainly from renewables, Dam is currently under construction, the announcement of 12 prequalified BIOMASS and when completed will be able to bidders, the RFP was issued in April According to statistics, there are with generation from geothermal, wind and solar sources generate 6,450MW and will be one of 2019 calling prequalified bidders to currently no biomass generation being relatively new technologies in the Ethiopian energy the largest hydropower dams in Africa submit their binding proposal to the sources within the installed generation and among the largest in the world. Director General of the Public Private capacity, despite the fact that sector. Approximately 90% of the installed generation Partnership (PPP-DG). The second the vast majority of the country’s capacity is from hydropower, 8% is from wind sources SOLAR round of Scaling Solar program was energy consumption is composed Photovoltaic power makes up a very issued by PPP-DG in April 2019 calling of traditional biomass fuels. Under a and 1% is from thermal sources. According to the Second small proportion of Ethiopia’s installed on interested developers to submit partnership between the government Growth and Transformation Plan 2015/16-2019/20, the generation capacity, currently sitting their application before July 9, 2019. of Ethiopia and a consortium of at between 1-2%. ENEL has been PPP-DG has announced that it will be international companies (Cambridge priority energy generation sources are hydropower, selected as the preferred bidder for expanding the RFQ to cover up to six Industries Limited, China National geothermal, wind energy and solar energy. Biomass and the construction of the new 100MW projects with a total capacity of up to Electric Engineering, and Ramboll) the Metehara solar plant. This project 750MW. Reppie Project, Africa’s first waste-to- diesel generators are to be used as backup sources. is valued at USD120 million, power energy plant, has begun operation will be sold to the EEP under a 20- WIND in 2018. It is expected that185GWh The government has set the target HYDROPOWER year PPA, and the operation date Wind represents approximately 8% of electricity will be generated from for increasing the total generation The dominant energy source in is scheduled for 2019. Additionally, of the total installed generation this project. capacity to 17,347MW by 2020, Ethiopia is hydropower, which the government of Ethiopia with the capacity. Ethiopia’s total wind capacity Of this, 13,957MW is expected to be represents 90% of the installed support of the International Finance is 324MW. Significant wind farms generated by hydropower whereas generation capacity of Ethiopia. Corporation (IFC) is developing a total include the 120MW Ashegoda wind 1,222MW and 577MW is expected to It has a number of large hydropower of 500MW solar power under the farm, which when installed in 2013 be generated from wind energy and dams, with significant hydropower Scaling Solar initiative. The RFQ for the was Africa’s largest wind farm, and geothermal respectively. Additionally, investment still being made (i.e. the Scaling Solar round one program was the 153MW Adama II wind farm which the government also plans to construction of the 1,870MW Gilgel floated by the EEP in October 2017 began operation in 2015. generate 300MW from solar. Gibe III Dam in 2016). for developing two Solar PV projects The Grand Ethiopian Renaissance each with a capacity of 125MW. After
44 Renewable Energy in Africa Ethiopia – Renewable Energy Overview
Current Issues in the due to its huge reservoir capacity. Renewables Sector Availability of foreign currency to IPPs The Grand Renaissance Dam has to remit their earnings from PPAs and been a source of several issues tariff rates that allow full recovery of since commencement of the cost have been raised as the main project in 2011. There are concerns issues in the overall electricity market. about the government’s payment of compensation due to lost land Renewables Laws caused by the construction of the There is no specific renewable energy project. Compensation is owed to law in Ethiopia. Renewable energy approximately 700 farmers, is governed by the general energy a number of whom maintain that related laws. the compensation is inadequate. Additionally, Egypt has concerns that the dam will harm agricultural land and restrict the generational capabilities of Egypt’s Aswan dam,
45 Renewable Energy in Africa Ethiopia – Government Incentive Schemes and Major Projects/Companies
Government Incentive Schemes Major Projects/Companies
There are no government incentives • The Grand Ethiopian Renaissance Dam – projects, to be developed by EEP, specific for renewables. However, this project, on completion, is due to be the government of Ethiopia and one of foreign investors engaged in the the biggest energy project in Ethiopia Tulu Moye/Corbetti Geothermal for each renewable energy sector are entitled (with a generation capacity of 15,000GWh/ respective project. Each project has a to the general incentives available year), and the largest dam in Africa, being budget of approximately USD2.2 billion. to foreign investors under the 1,800m long, 155m high and a reservoir These projects are the result of six years investment laws. The investors will of 74,000 million m3 in volume. There will of work begun by Reykjavik Geothermal also be entitled to open a foreign be two power stations, to be operated by in 2011. It is hoped that this will be currency bank account as well us EEP, installed on the dam (6,000MW). As of the kick-start of further investment retain some portion of their earnings August 2017 the dam was 60% completed. in geothermal and a major step in in a convertible currency. Once completed, the reservoir is predicted renewables for Ethiopia. to take between 5 and 15 years to fill. • Major Energy Companies – the major • Reppie Project – the Reppie Project is a actors in the electricity market are EEP and waste-to-energy plant built on a landfill site EEU. Currently there is no private sector on the outskirts of Ethiopia’s capital, Addis involvement in hydropower generation. Ababa. It began operating in 2018 and the However, Ethiopia has recently welcomed plant was built on the anticipation that it major IPPs in geothermal, solar and wind will deal with 1,400 tonnes of waste per generation. As detailed above, Reykjavik day and ultimately account for 30% of the Geothermal has signed a PPA with the EEP capital’s domestic electricity needs. for the Corbetti Geothermal Project and Enel Green Power, a subsidiary of Enel, • Tulu Moye and Corbetti Geothermal has announced that it has won the Projects – in December 2017, 520MW Metehara 100MW solar bid. PPAs and Implementation Agreements were entered into for two geothermal
46 Renewable Energy in Africa Ethiopia – Foreign Investment/Ownership
Foreign Investment/Ownership
Ethiopian investment law classifies investment areas into has the power to issue a Regulation four categories: that opens areas exclusively reserved for the government or for joint ventures between the • areas of investment reserved The Investment Regulation lists the government and private investors to exclusively for government; investment areas which are expressly private investors. open for foreign investors. Foreign • areas of investment reserved investors that wish to engage The Ethiopian Energy Authority has exclusively for joint investment with in an investment area not listed been delegated with the power to government; in the schedule attached to the issue, renew and cancel investment Investment Regulation and in areas permits for investors that wish to • areas of investment reserved for exclusively reserved to domestic engage in generation, transmission Ethiopian nationals; and investors are required to apply for and supply of electrical energy. a special investment permit from As the result of such delegation, no • areas of investment open to the Investment Board. In passing a application for a special investment foreign investors. decision, the board is expected to take permit is required to engage in the into account whether the investment generation and off-grid transmission Investment activities in the first three area under question can be handled and distribution of electricity. areas are expressly listed under by domestic investors alone. As part the Investment Proclamation and of their decision, the board may look Regulation of Ethiopia (Investment into the availability or otherwise of Regulation). local capacity to deliver the service to clients. The Council of Ministers also
47 Renewable Energy in Africa Ethiopia – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Ethiopia ratified the Paris Agreement Relevant Websites on January 17, 2017 and in its Power Africa Ethiopia Fact Sheet, Intended Nationally Determined March 28, 2018 can be accessed Contribution committed the country at: https://www.usaid.gov/sites/ to reduce its emissions by 64% default/files/documents/1860/ (relative to a business-as usual EthlopiaPACFS_3-13-2018_1.pdf baseline) by 2030, In the long-term, Ethiopia intends to achieve its vision of becoming carbon-neutral, with the mid-term goal of attaining middle- income status.
48 05
Ghana Renewable Energy in Africa Ghana – Overview
Ghana Overview KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Common law and the 2018 Doing Business Report: Formerly known as the Gold Constitution of the Republic of 120 of 190 (down 12 rankings) Coast,Ghana became – in 1957 – Ghana 1992. the firstAfrican country south of the 2018 Global Competitiveness Index: Saharato gain independence from Language(s): English, African 111 of 138 (up 3 rankings) colonial rule. Gold, cocoa and oil languages including Akan, Hausa, form the bedrocks of a strong and Ga and Ewe. 2018 Index of Economic Freedom: stable economy. Ghana is one of the 109 of 180 (up 9 rankings) most progressive and developed countries on the continent and 2018 Corruption Perceptions Index: often hailed as a model for African 78 of 180 (down 8 rankings) democracy and growth, but more recently the economic boom 2018 UN Development Programme has been challenged by growing Human Development Index: government debt, high rates of 140 of 189 (up 1 ranking) inflation and a weakening currency. Like many African countries, power Population: 29.07 million demand outstrips reliable supply. Electricity also remains expensive GNI per capita: USD4,150 and is therefore a major inhibitor to socio-economic development. 50 Renewable Energy in Africa Ghana – Electricity Industry Overview
Electricity Industry Overview
• Ghana’s electricity market is • Ghana imports as well as exports • Electricity supply in 2018 was due to banks and trade creditors. • In recent years, and with the segmented, with different players electricity to its neighbors. Its 16,350GWh, comprising 36.8% The securities issued by ESLA increasing development of having responsibility for the exports of power; however, hydro, 62.15% thermal, 0.19% are backed by receivables the renewable sector, proposals for generation, transmission and outstrips imports. In 2018, a total renewables and 0.86% imports. emanating from the Energy off-grid solutions where producers distribution (see below). of 384.95GWh and 277.07GWh Sector Levy which is imposed aim to generate electricity for were exported respectively to • The National Electrification Scheme under the Energy Sector Levies specific individual entities are on • Installed generation capacity Togo/Benin and Burkina Faso. A net of the government of Ghana has Act, 2015 (Act 899). the rise. operational and available for grid of 217.17GWh was also exchanged a policy objective of achieving power supply as at the end of 2018 between Ghana and Côte d’Ivoire. universal access to electricity by all • There are currently four renewable was approximately 4,562.5MW. This was made up of 139.69GWh Ghanaians by 2020. As of 2018, energy plants feeding into the In spite of this, actual electricity imports and 77.48GWh exports. 85% of the Ghanaian population national grid. A 2.5MW solar plant produced is low for various reasons had access to electricity. developed by the state owned including the high cost of fuel for • Growth in demand for electricity Volta River Authority and two operating the country’s thermal for both domestic and industrial • In 2016, the government of 20MW solar plants developed by plants. The country is therefore use, coupled with the rather slow Ghana established ESLA PLC, independent power producers. looking to cheaper sources of pace of development of its energy a public limited liability company There is also a 100kW biogas electricity especially renewables infrastructure, has left Ghana charged with responsibility for electricity generation plant including solar. consistently playing catch-up to issuing long-term bonds to pay developed by Safi Sana Ghana satisfy its electricity needs. the country’s energy sector debts Limited, an IPP.
51 Renewable Energy in Africa Ghana – Electricity Laws
Electricity Laws
• Energy Commission Act, 1997 (Act 541) Act 541 establishes the legal framework for the regulation, management, development and utilization of energy sources in Ghana. It establishes the Energy Commission which is the licensing body of the energy sector in Ghana (see below).
• Public Utilities and Regulatory Commission Act, 1997 (Act 538) Act 538 establishes the Public Utilities Regulatory Commission (see below).
• Renewable Energy Act, 2011 (Act 832) The Renewable Energy Act is a relatively new law in Ghana which sets out the legal framework for the production and sale of energy from renewable sources in Ghana. It also provides incentives for producers of energy from renewable sources (see below).
52 Renewable Energy in Africa Ghana – Electricity Industry Overview
Regulators Generation, Distribution Transmission is carried out by There are two main energy customs, levies and other duties, and Transmission the Ghana Grid Company Limited regulators in Ghana: equipment and machinery In the mid-1990s, Ghana embarked (GRIDco). GRIDco owns and operates necessary for the development, on a reform of its energy sector. the transmission grid mainly • The Energy Commission is production and utilization of This led to the separation of the at 161KV with a total length of the licensing authority of the renewable energy sources. generation and transmission about 5,100 km. energy sector. It serves as functions of the Volta River Authority the government’s energy policy • The Public Utility Regulatory and the conversion of the state- There are three distribution advisor by making national Commission (PURC) regulates owned power distributor, Electricity companies in Ghana. The ECG is the energy policy recommendations the provision of utility services in Corporation of Ghana, into a main distributor of electricity (with and is “committed to developing the electricity and water sectors. private company limited by shares – over 70% market share) alongside and elaborating national policies It is mandated to, among other Electricity Company of Ghana (ECG). Northern Electricity Distribution and strategies for all renewable things, provide guidelines on Company and Enclave Power resources such as biomass, solar, rates for provision of utility The reform led to the participation Company. Pursuant to agreement geothermal, water and wind." services, examine and approve of IPPs in the electricity sector, between the government of Ghana The Energy Commission is tasked rates for provision of utility especially in the area of generation. and a consortium of investors, the with, among other things, services, and monitor compliance However, the Volta River Authority distribution functions of the ECG the responsibility to consult with with performance standards remains the major generator of were taken over by a new company, the Public Utilities Regulatory of service providers in the electricity. The Volta River Authority Power Distribution Services Ghana Commission and recommend energy sector. is solely owned by the government of Limited (PDS) in February 2019. PDS financial incentives necessary for Ghana. is now required for the next 20 years the development, production and to distribute electricity to all the utilization of renewable energy areas previously under the control of sources. It is also mandated to the ECG. recommend exemption from
53 Renewable Energy in Africa Ghana – Renewable Energy Overview
Renewable Energy Overview
The renewable energy sector as a contributor to the from renewable energy sources shall be guaranteed for energy mix in Ghana has a relatively recent history. With period of ten years and subsequently be subject to review the passage of the Renewable Energy Act, 2011 (Act 832) every two years." the country has seen significant growth in the area of HYDROPOWER duration of between 1,800 and 3,000 renewables with over 100 companies registering to provide Hydroelectric power remains the hours per annum. most dominant form of renewable renewable energy solutions to the country’s energy needs. energy in Ghana. There are currently WIND However, only four renewable energy projects have been three hydro-electric dams, all on There are a number of proposals the Volta River and all state-owned, to develop wind farms in Ghana – connected to the national grid (a 2.5MW solar facility, with a combined installed capacity the most well-known of them is two 20MW solar facilities and a 100kW biogas electricity of 1,580MW contributing to about the proposed 225MW wind farm 36.80% of the country’s total power at Ayitepa, for which all requisite generation plant). The contribution of renewables to supply in 2018: (a) the Akosombo dam; licensing, we understand, has Ghana’s total energy mix is currently estimated at 0.19%. (b) Kpong hydro-electric dam; and (c) been obtained. the Bui dam. With the country’s policy of having renewables contribute to BIOMASS 10% of its energy mix, there is much opportunity for private SOLAR Research has shown that Ghana has In recent years and with the passage great potential for producing energy investors in the renewables space to contribute to achieving of the Renewable Energy Act, 2011 biomass although no identifiable this target. The Renewable Energy Act requires an electricity (Act 832), private sector involvement in project has been put on stream. solar has seen a significant increase. A 2014 proposal by a Norwegian distribution utility or bulk customer to procure a percentage company to build a 600MW plant is yet of its total electricity purchase as specified by the PURC Solar resource is abundant in Ghana. to take off. The monthly average solar irradiation from renewable energy sources and provides in terms of is between 4.4 and 5.6kWh/m2/ incentives, that a “…feed-in-tariff rate fixed for electricity day (16-20K/m/day), with sunshine
54 Renewable Energy in Africa Ghana – Renewable Energy Overview
Current Issues in the Renewables Industry The major issues confronting the tariffs agreed with power producers, renewables industry in Ghana is the including those from renewable upfront cost involved in producing sources. At the height of the energy energy from renewable energy crisis in Ghana, numerous PPAs were sources and the ability to recover such entered into between the government costs within a reasonable timeframe. and various power producers. Most of In the past, the government of Ghana these are yet to come on stream. With guaranteed payments from the state- the relatively stable power situation owned distribution utility (ECG), which in the country, there is a new drive to was the major off-taker for electricity renegotiate downwards the feed-in produced in Ghana. There has recently tariffs agreed with these independent been a shift away from providing such power producers, the result being guarantees and investors have had a decrease in their potential profit to find other ways of securing the margins and an increased period over payment obligations of the electricity which initial cost of their investments distribution company. An additional may be recovered. issue is the drive to renegotiate the
55 Renewable Energy in Africa Ghana – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
The Renewable Energy Act, 2011 • An operator of a transmission or • The Volta River Authority is the • On September 15, 2018, a further (Act 832) provides for a feed-in tariff distribution system is required operator of the Akosombo and 20MW solar plant constructed scheme with three components: to, at the request of a renewable Kpong dams. Built in the 1960s, by Meinergy Ghana Limited was energy generator, connect such the Akosombo dam remains the commissioned at Gomoa Onyadze • Renewable purchase obligation: generator to the transmission single largest producer of electricity in the Central Region of Ghana. Every electricity distribution utility or distribution system within its in Ghana with an installed capacity or bulk consumer of electricity is coverage area. of just over 1,000MW. Bui Power • Volta River Authority developed required to purchase a percentage Authority has also developed a a 2.5MW solar power project of its total electricity purchase from 400MW hydro dam at Bui in the in Navrongo in the Upper East renewable sources. Brong-Ahafo Region of Ghana. With Region. The plant has been government policy to build dams operational since May 2013. • Guaranteed feed-in tariff rates: across the three northern regions The feed-in tariffs fixed for of Ghana, there is potential for • A 225MW wind farm project is electricity from renewable sources private sector participation in the being developed in the Ningo- are guaranteed for a period of ten development of small dams across Prampram District by Upwind years and subject to review every those regions. Ayitepa Limited. two years thereafter. • In July 2016, BXC Ghana Limited • Ghana-based solar power project connected to the grid its 20MW developer Home Energy Africa is solar power plant in the Central developing a 100MW proposed Region of Ghana. solar power project in the Upper West Region of Ghana.
56 Renewable Energy in Africa Ghana – Foreign Investment/Ownership
Foreign Investment/Ownership
Foreign investment in Ghana received a significant boost • exemptions from import duties, sales tax or excise duties on plants, with the passage of the Ghana Investment Promotion machinery, equipment or parts Centre Act, 2013 (GIPC Act). The GIPC Act established thereof required for the enterprise. the Ghana Investment Promotion Centre (GIPC) which is The GIPC Act set minimum capital responsible for encouraging and promoting investments requirements for foreigners who wish to invest in Ghana. The minimum in Ghana and creating an attractive incentive framework. capital requirement may be met in cash or capital goods relevant to the Incentives for registering with the technology transfer agreement investment. A foreigner in a joint GIPC include: registered under the GIPC; and (iv) venture with a Ghanaian is required to the remittance of proceeds (net satisfy a minimum capital requirement • unconditional transferability of all taxes and other obligations) of USD200,000 and the Ghanaian through any authorized dealer in the event of sale or liquidation partner is required to hold at least bank in freely convertible currency of the enterprise or any interest 10% of the equity of the joint venture. of: (i) dividends or net profits attributable to the investment; In the case of solely owned foreign attributable to the investment; enterprise, the foreigner is required to (ii) payments in respect of loan • guarantees against expropriation; invest at least USD500,000. servicing where a foreign loan has been obtained; (iii) fees • automatic expatriate quotas; and and charges in respect of any
57 Renewable Energy in Africa Ghana – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Ghana ratified the Paris Agreement Relevant Websites supplyplan/2018_Electricity_Supply_ on September 21, 2016 and in its Plan.pdf Energy Commission – http:// Intended Nationally Determined www.energycom.gov.gh/ Contribution committed the country Public Utilities Regulatory promotingrenewable-energy to reduce its emissions by 15% Commission – (relative to a business as – usual http://www.purc.com.gh/purc/ Energy Commission – Ghana baseline) by 2030, Ghana also set a Wholesale Electricity Market Bulletin, conditional reduction target of up to Electricity Company of Ghana – Issue No. 38 – http://www.energycom. 45% reduction in emissions by 2030, http://www.ecgonline.info/ gov.gh/emop/ghana-wholesale- subject to availability of international electricity-market-watch-monthly- support for finance, technology International Trade Administration – bulletin/category/17-2019-monthly – transfer and capacity building. https://www.export.gov/ bulletin article?id=Ghana-Energy
https://www.transparency.org/cpi2018 Ghana Investment Promotion Centre – http://www.gipcghana.com/ https://www.heritage.org/index/ country/ghana
http://hdr.undp.org/en/2018-update
2019 Electricity Supply Plan for the Ghana Power System – http://www. gridcogh.com/media/photos/forms/
58 06
Kenya Renewable Energy in Africa Kenya – Overview
Kenya Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Kenya government’s Big Four Agenda, Jurisdiction: The Constitution of 2019 Doing Business Report: This East African country on the Indian which seeks to enhance investment Kenya 2010 and common law. 61 of 190 (up 19 rankings) Ocean is well-known for its savannah in manufacturing, provide affordable and wildlife. As the founding member housing, enhance food and nutrition Language(s): English and Swahili. 2018 Global Competitiveness Index: of the East African Community, it is security and achieve 100% universal 91 of 138 (up 5 rankings) a major player in East Africa. With health coverage by 2022. the deep-water port of Mombasa 2019 Index of Economic Freedom: and borders with Somalia, Ethiopia, 130 of 180 (up 5 rankings) South Sudan, Uganda and Tanzania, it is a significant communications and 2018 Corruption Perceptions Index: logistics hub for the region. Kenya’s 144 of 176 (up 1 ranking) economic development blueprint, Vision 2030, aims to create “a globally 2017 UN Development Programme competitive and prosperous country Human Development Index: with a high quality of life by 2030.” 142 of 189 (up 4 rankings) Vision 2030 is supplemented by the
Population: 49.7 million
GNI per capita: USD3,250
60 Renewable Energy in Africa Kenya – Electricity Industry Overview
Electricity Industry Overview
The Kenyan energy market is liberalized, In terms of demand, electricity demand options, mini-grids and stand-alone community facilities and enterprises Generating Company (KenGen). While with different state entities having grew by 8.8% in 2018 from 1,656MW solar systems that complement grid in the furthest corners of Kenya which most of the mini‐grid stations are diesel- responsibility for the generation, the previous year to 1,802MW while the extension and intensification) as means lack grid networks and the Last Mile fired generators, hybriding of four transmission and distribution of power. installed generation capacity increased through which to electrify households Connectivity Project (LMCP), which diesel power stations with solar has Previously, the electricity supply industry by 0.76% from 2,259MW to 2,351MW. and businesses throughout the country. involves extension of the low voltage been undertaken to improve on the structure was that of a single buyer The additional capacity includes 10MW The decision as to how best to electrify network to reach households located affordability of power. model with all generators, including of geothermal generation from OrPower each region is determined with the help within 600 m of a transformer. independent power producers (IPPs), 4 Inc., 2.5MW from Chania and Gura of geospatial technology, which provides In addition and given the high selling power in bulk to Kenya Power hydro power plants developed by the an overview of population density in Alongside the KNES launch, the maintenance costs of diesel generating and Lighting Company Limited (KPLC) Kenya Tea Development Authority (KTDA) relation to the existing grid – thereby government also launched the Electricity stations, REREC has shifted to renewable for dispatch and onward distribution and 0.25MW of solar generation from identifying areas in which off-grid Sector Investment Prospectus which energy generation in the off-grid areas to consumers. However, with the Strathmore University – the first solar solutions would be the best option. outlines the investment opportunities in and is implementing 26 solar mini-grid enactment of the Energy Act, 2019, plant to be connected to the national the energy sector over the next five years projects in the off-grid Counties of Wajir, KPLC’s monopoly is set to be broken as grid under the Feed-in Tariffs (FiT) policy. The strategy further highlights the crucial valued at approximately USD14.8 billion. Turkana, Marsabit, Mandera and Garissa. electricity distribution and retail supply role that the private sector will play in The prospectus highlights opportunities may be carried out by other players, so According to the government, total providing off-grid solutions for Kenyan in power generation, transmission, Several private companies are also long as they are licensed by the Energy access to electricity in the country homes, businesses and community distribution, off-grid electrification, operating in the off-grid energy sector in and Petroleum Regulatory Authority now stands at 75%. However, the service centers in remote parts of mini-grids and solar systems for homes Kenya, including Powerhive and Vulcan, (EPRA). This move is expected to result government is looking to expand the country. and institutions and aims to help which sell small-scale power directly to in an increase in competition in the universal access to all parts of Kenya investors and financiers identify suitable consumers through mini-grids. There are distribution and retail supply of electricity in an economically viable manner. KNES will be implemented alongside investment opportunities. also private players in solar lanterns and and improve the quality of service in the In this regard, the government in other electrification programmes such single-home solar systems. power sector. partnership with the World Bank, as the Kenya Electricity Modernization With respect to off-grid energy, there launched the Kenya National Project (KEMP) which is aimed at are currently 21 mini‐grid stations, As at 2018, the total installed off grid The interconnected system in Kenya had Electrification Strategy (KNES) in increasing access to electricity and 19 of which are owned by the Rural capacity was 31.6MW, consisting of a total effective capacity of 2,278MW December 2018, which provides strengthening KPLC, the Kenya Off-grid Electrification and Renewable Energy thermal (30.4MW), solar (0.69MW) and as at 2018. This comprised 47% a roadmap for universal access by Solar Access Project (KOSAP), which is Corporation (REREC) and managed wind (0.55MW). geothermal, 30.1% hydro and 20.6% 2022. The strategy has identified designed to scale-up electrification in by KPLC. The other two are owned thermal. least-cost options (such as off-grid households, market centers, schools, and managed by the Kenya Electricity 61 Renewable Energy in Africa Kenya – Electricity Industry Overview
Electricity Laws
• The Constitution of Kenya, 2010, (wind power, biomass, small hydro, solar, provides that: biogas and geothermal) and prescribes the contents of a standardised power purchase • the national government shall be Agreement (PPA). This Policy has been responsible for energy policy including incorporated into the newly enacted Energy electricity and gas reticulation and energy Act, 2019. regulation; and • The Energy Act, 2019 – which came into • county governments shall be responsible force on March 28, 2019. The Act seeks to for county planning and development consolidate the laws relating to energy; including electricity and gas reticulation promote renewable energy; promote and energy regulation. exploration, recovery and commercial • Sessional Paper No. 4 of 2004 – laid the utilization of geothermal energy; regulate policy framework upon which cost-effective, midstream and downstream petroleum and affordable and adequate quality energy coal activities; and regulate the production, services will be made available to the supply and use of electricity, among others. domestic economy on a sustainable basis The legislation is expected to create an during the period 2004-2023. enabling environment for the government’s Big Four Agenda. • The Feed-in-Tariff (FiT) Policy, 2012 – aims at promoting generation of grid connected electricity from renewable energy sources
62 Renewable Energy in Africa Kenya – Electricity Industry Overview
Regulators • Energy and Petroleum Tribunal energy development mechanisms In order to enhance exploitation of following the enactment of the Energy • Ministry of Energy (MoE) – (EPT) – has the responsibility of such as carbon credit trading, the vast geothermal resources in Act 2019, which allows for electricity responsible for energy policy hearing and determining disputes among others. Kenya, in 2008, the government set distribution by other players licensed formulation through which it and appeals relating to the energy up a fully government-owned special by EPRA. provides an enabling environment and petroleum sector arising from • Nuclear Power and Energy Agency purpose vehicle – the Geothermal for all stakeholders. the Energy Act, 2019 and any (NPEA) – established under the Development Company (GDC), REREC carries out grid extension at other statute. The EPT replaces the Energy Act, 2019. NPEA’s principal to manage the geothermal exploration medium and low voltage in areas • Energy and Petroleum Regulatory Energy Tribunal that existed under objectives include promoting the risk and attract investors. The GDC is which are considered uneconomic for Authority (EPRA) – established the repealed Energy Act. development of nuclear electricity tasked with developing steam fields electrification by KPLC. under the Energy Act, 2019 as in Kenya and carrying out research, and selling geothermal steam for successor to the Energy Regulatory • Rural Electrification and Renewable development and dissemination electricity generation to KenGen and County governments have the Commission, as the energy sector Energy Corporation (REREC) – activities in the energy and nuclear to private investors. function of preparing county energy regulatory agency responsible for established under the Energy Act power sector. NPEA takes over plans (incorporating petroleum, economic and technical regulation 2019. In addition to overseeing from the Kenya Nuclear Electricity The Kenya Electricity Transmission renewable energy and electricity of electric power, renewable energy, the implementation of the Rural Board that existed under the Company Limited (KETRACO), which is master plans), county energy coal and petroleum sub-sectors. Electrification Program, REREC’s repealed Kenya Nuclear Electricity government-owned, is responsible for regulation (including regulation and Its functions also include extended mandate under the Board Order. the development, maintenance and licensing of retail petroleum service tariff setting, review, licensing, Energy Act, 2019 includes operation of the national transmission stations), county gas reticulation enforcement and approval of power developing and updating the Generation, distribution grid network. It is also responsible systems as well as implementation purchase and network service renewable energy master plan; and transmission for facilitating regional power trade of county electrification projects. contracts. It oversees pricing and establishing energy centers in the The Kenya Electricity Generating through its transmission network. Consequently, counties work in plays a role in negotiation of PPAs Counties; developing, promoting Company Limited (KenGen) is the collaboration with REREC and KPLC to between Kenya Power and Lighting and managing use of renewable leading electric power generation All generators sell power in bulk enhance connectivity in the country. Company Limited (KPLC) and the energy (excluding geothermal); company, producing about 75% to KPLC, for dispatch and onward power producers. coordinating research in renewable of electricity capacity installed in transmission and distribution to energy; developing appropriate the country. Independent Power consumers. KPLC is currently the local capacity for renewable Producers (IPPs) account for about distribution licensee in most parts of technologies; and offering clean 24% of the country’s installed capacity. Kenya. However, this is set to change
63 Renewable Energy in Africa Kenya – Renewable Energy Overview
Renewable Energy Overview
In Africa, Kenya leads in exploiting renewable energy hydropower generation and mitigating 6,000MW comprising large hydros (Energy Management) Regulations, increase in electricity costs by (sites with capacity of more than 2012 also require all designated sources to provide energy required to complement the minimizing dispatch of expensive 10MW) and small hydros. Currently facilities (industrial, commercial realization of Vision 2030, The renewable energy sub- thermal power. over 820MW is exploited, mainly and institutional users of energy in large installations owned by the consuming more than 180,001kWh sector in Kenya significantly contributes to the overall At present, the country has 653MW national power generation utility, per year) to conduct energy audits. energy mix in Kenya. By way of example, renewable installed capacity and a geothermal KenGen. Potential for small hydros is Such designated facilities are required development plan is being over 3,000MW, of which about 25MW to commence implementation of energy, mainly from hydro and geothermal sources, implemented by the GDC. Detailed has been developed. energy saving measures identified accounted for 70% of total of the total energy purchased surface studies of some of the by such audits and accomplish at geothermal prospects in the country SOLAR least 50% savings within a period of in 2018 with geothermal contributing 47% and hydro have been undertaken. Evaluation of Kenya has great potential for the use three years. 30.1% of that energy. This is expected to increase with this data sets suggest that 5,000MW of solar energy throughout the year to 10,000MW can be generated from because of its strategic location near Various companies are operating the commissioning of the 165MW Olkaria V power plant the high temperature resource areas the equator with 4-6kWh/m2/day levels in the off-grid solar energy sector, in June 2019. in Kenya. of insolation. Solar utilization is mainly including players in solar lanterns, for photovoltaic (PV) systems, drying single-home solar systems, and The Renewable Energy Department GEOTHERMAL HYDROPOWER and water heating. renewable energy mini-grids. By under the Ministry of Energy KenGen has been at the forefront of Although hydropower contributes way of example, the pay-as-you- is responsible for leading the driving the country’s green energy in bulk to energy production in In 2017, there was a significant go model, popularized by M-Kopa development and regulation of agenda mainly from geothermal Kenya, the risk of unreliability during surge in the use of solar energy Solar, has taken off in Kenya’s solar the renewable energy and energy resources. Currently, 80% of KenGen’s periods of drought has pushed the following the coming into force of energy sector, enabling low-income efficiency through research and energy portfolio is geothermal and government to favor solar, wind, the Energy (Solar Water Heating) households, in off-grid locations, planning, development of standards hydro. In 2018, contribution from thermal and geothermal generation Regulations, 2012 which required all to rent, and later own, home solar and regulations, compliance geothermal resources increased by 4% in its current plans for the energy buildings with hot water requirements power systems. and enforcement. to 47% of the total energy purchased sector. Kenya has an estimated exceeding 100 liters per day to install by KPLC easing overreliance on hydropower potential of about solar heating systems. The Energy
64 Renewable Energy in Africa Kenya – Renewable Energy Overview
The government also initiated Kenya has vast unexploited wind promoted agro forestry and social ВIOGAS Among the key recommendations of the Kenya Off-grid Solar Access resources and high wind potential forestry programmes to increase the Biogas potential in Kenya has been the task force was the reduction of Project (KOSAP) for electrification of making it suitable for potential stock of woody biomass on farms identified in municipal waste, sisal tariffs under the FiT Policy. This was institutions far from grid using solar investors. A good example of the wind to make up for the loss of forest and coffee production. The total based on the assumption that the PV systems. By the year 2020, it is potential in Kenya is the LTWP, which trees as forestland is converted into installed electric capacity potential of cost of equipment for FiT projects had projected that the installed capacity of has recorded an average of above agricultural and settlement land. all sources ranges from 29-131MW, reduced and the knock on effect of solar photovoltaic systems will reach 80% capacity factors. generating 202 to 1,045GWh, which such reduction should be a reduction 100MW generating 220GWh annually. COGENERATION is about 1.3% to 5.9% of the total in the tariff per unit of electricity. The government of Kenya has In Kenya, cogeneration using bagasse electricity purchased in the system. WIND estimated that 2GW of wind capacity as a primary fuel is common practice Further, the taskforce recommended The Lake Turkana Wind Power Project will be installed in Kenya by 2030. in the domestic sugar industry. Current issues in the the introduction of a renewable (LTWP) and the Ngong Hills Wind The industry comprising of six sugar renewables industry energy auction system where the Power Project are the only wind farms BIOMASS companies produces an average In 2016, a taskforce was constituted government will, when need arises, that are connected to the national Biomass fuels are the largest source 1.8 million tonnes of bagasse with to review Power Purchase Agreements purchase electricity from the lowest grid, with capacities of 310MW and of primary energy in Kenya with fiber contents of about 18% by weight (PPAs) negotiated between the bidder. This is expected to lead to a 25.5MW respectively. The LTWP is wood-fuel (firewood and charcoal) annually. A good example is Mumias Independent Power Producers (IPPs) reduction of electricity costs in the the largest wind power plant in Africa accounting for about 68% of the total Sugar Company, which currently and government on grounds of country and to enable the regulators having achieved full commercial primary energy consumption. About exports approximately 21.5MW of economic changes. The taskforce was manage the capacity supply and operation in March 2019. Wind energy 55% of this is derived from farmlands power to the national grid. to recommend appropriate policy demand in Kenya as envisaged in the development in Kenya is expected to in the form of woody biomass as well action that will enable the government Least Cost Power Development Plan. increase from private investments, as crop residue and animal waste achieve value for money on all PPAs facilitated by the FiT Policy and the and the remaining 45% is derived signed to date. Least Cost Power Development Plan. from forests. The government has
65 Renewable Energy in Africa Kenya – Renewable Energy Overview
Additionally, whereas Kenya is keen Access to financing for the service owing to the long coastline which to facilitate energy supply through providers also remains a challenge Kenya enjoys. The most developed mini-grids and other off-grid solutions especially due to inconsistent conversion systems use tidal energy, through the private sector, there is application of PPA negotiation thermal energy, marine currents and currently no clear policy framework process, and difficulties in securing ocean waves. A private investor has to guide the development of mini- land, among others. expressed interest in developing grids and investors lack clarity as to a 100MW electric tidal wave whether mini-grids will eventually be According to MoEP, there are also power plant. connected to the national grid once currently renewable energy sources the same arrives at a mini-grid and the and technologies that have not applicable tariff. yet been widely demonstrated or commercialized. These include ocean energy, biomass gasification, bio-refinery technologies and concentrating solar power. Of particular interest is ocean energy,
66 Renewable Energy in Africa Kenya – Government Incentive Schemes
Government Incentive Schemes
In order to attract foreign direct • exemption from tax on interest investments in the renewable paid on loans from foreign sources energy sector, the government has for investing in the energy or undertaken the following initiatives: water sectors;
• development of the FiT Policy • exemption from payment of stamp to promote the generation of duty in respect of instruments electricity from renewable energy executed in respect of transactions sources which has been revised relating to loans from foreign twice (2010 and 2012) and more sources received by investors in recently codified into the Energy the energy sector; and Act, 2019; • exemption from withholding • development of a renewable tax payments made to a non- energy portal (http://www. resident for services rendered renewableenergy.go.ke/) which under a PPA including the design, offers a “one stop shop” guide to construction, installation, testing, renewable energy projects; commissioning, operating and maintenance of a power plant. • zero-rating the import duty and removal of Value Added Tax on renewable energy equipment and accessories;
67 Renewable Energy in Africa Kenya – Major Projects/Companies
Major Projects/Companies
• Lake Turkana Wind Power for Industrial Cooperation Ltd, • Meru 400MW Wind Power • IPPs Solar Power Projects – initiatives while KfW has given Project (LTWP) – LTWP has KLP Norfund Investments AS and Project – KenGen is set to develop ERC has signed various PPAs GDC a concessional loan of been generating and supplying Sandpiper. a 400MW wind power farm. with investors proposing 40MW EUR80 million for the drilling of 15- electricity in to the Kenyan national Construction of the first phase projects to be developed under the 20 geothermal wells, undertaking grid since September 2018, • Menengai Geothermal Project – of the project was set to begin in FiT Policy including Alten Energy several consultancies and installing when construction of the 436 km an estimated 1,600MW project. 2019 but has been delayed due to Solarfarms, Radiant Energy, Eldosol a water pipeline to supply water for Loiyangalani – Suswa transmission GDC has realized 160MW of challenges in acquiring land for the Energy Limited and Kenya Solar drilling. line was completed by KETRACO. steam at the well head. GDC project. The German Development Energy Limited. The various components that has contracted three IPPs to Bank and the French Development • Suswa Geothermal Project – has make up the Project have all been construct three power plants Agency have jointly committed • Olkaria Project – owned and an estimated potential of 750MW completed and include 365 wind under Phase I (commenced 2011). EUR120 million (KES13.4 billion) managed by KenGen. GDC’s 59 which will be developed in phases, turbines, (each with a capacity Ground breaking for power plant towards the first phase of the geothermal wells in Olkaria have a with the first three phases totalling of 850kW) and a high voltage construction took place in February power project. total yield of 412MW. GDC is selling 300MW. substation connected to the 2017 and completion is expected 320MW of steam to KenGen for Kenyan national grid through the within 18 months. • Garissa Solar Power Plant electricity generation, generating • Akiira Geothermal Project – transmission line constructed by – developed by the Rural annual revenue of KES3 billion. Akiira Geothermal project is a the Kenyan government. The wind • Kipeto Wind Energy – has a Electrification and Renewable By providing steam for electricity 140MW geothermal power project farm provides 310MW of energy generation capacity of 100MW. Energy Corporation (REREC) and generation, GDC has helped utilising the steam resources in to Kenya’s national grid and the The project is the second largest managed by KENGEN, this Project displace diesel power plants the Kenyan Rift Valley. The project power will be bought at a fixed wind power project in Kenya. sits on 85 hectares of land and has which generate expensive and will be connected to the Kenyan price by KPLC over a 20-year period Developed by Kipeto Energy 200 solar panels with an installed environmentally unfriendly power. national grid. The project is in early in accordance with the PPA. The Limited Company (SPV) with the capacity of 50MW. This Project is construction/exploration drilling project was developed by the LTWP principal players being Overseas the largest grid connected solar • Baringo-Silali Block Geothermal phase. D1 Frontier Market Energy consortium comprising KP&P Africa Private Investment Corporation, power plant in East and Central Project – has an estimated and Carbon Fund is the substantial B.V and Aldwych International as Craftskills Wind Energy Africa and currently contributes potential of 3,000MW. shareholder in the SPV, Akiira co-developers, Investment Fund International Limited, International about 2% of the national The government of Kenya is Geothermal Ltd. for Developing Countries, Vestas Finance Corporation and ACTIS. energy mix. funding the construction of access Eastern Africa Limited, Finnish Fund roads and community engagement
68 Renewable Energy in Africa Kenya – Foreign Investment/Ownership
Foreign Investment/Ownership
Currently, there are no foreign An Investment Certificate entitles a There are currently no foreign The above local content requirements investment restrictions that apply to foreign investor to various benefits; exchange controls in Kenya and are enhanced by the requirements in the power sector. Foreign investors in the key benefit being entitlement to foreign currency is freely repatriable. the construction sector which stipulate the power sector in Kenya receive the various operating licenses, depending that foreign contractors undertaking same treatment as local investors and on the sector in which the holder Non-citizens may only hold land on construction works in Kenya must are subject to similar requirements operates. The holder of an Investment the basis of leasehold tenure and either enter into a joint venture with as local investors. To encourage Certificate is also entitled to entry such leases may not exceed a period local contractors or locally subcontract investment in Kenya, in 2004, permits for three members of the of 99 years. Non-citizens also cannot not less than 30% of the value of the Parliament enacted the Investment holder’s management or technical acquire agricultural land. contract work (for which registration Promotion Act, 2004 which aims to staff and three entry permits for the is sought) and transfer technical skills reduce delays in relation to licensing, owners, shareholders or partners. In terms of local content not available locally to a local person immigration and negation of tax requirements, the Energy Act 2019 or firm. incentives and exemptions with the The following reforms have also been requires parties involved in the energy relevant authorities. Under that Act, made to encourage economic growth: sector to prepare annual and long To encourage listing of companies, a state entity known as the Kenya establishment of one-stop shops for term local content plans which should with effect from January 1, 2016, Investments Authority was established multiple government services – known give first consideration to goods the corporate tax rate for newly listed with the main objective of promoting as Huduma Centers; streamlining manufactured in Kenya and services companies was reduced from the investments in Kenya. A foreign of business startup requirements; provided within the relevant county as normal 30% rate to a 25% rate for a investor may apply for an Investment and, increased transparency in well as qualified and skilled Kenyans period of five years commencing from Certificate from the Kenya Investment property registration including online with respect to employment at all the financial year of listing. Authority if, among other things, the processing of land transactions. levels of the value chain. Such plans amount to be invested by a foreign should also ensure that adequate investor is at least USD100,000 or the provision is made for on the job equivalent in any currency. training for Kenyans.
69 Renewable Energy in Africa Kenya – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Kenya ratified the Paris Agreement Relevant Websites on December 28, 2016, and in its Ministry of Energy and Petroleum – http://energy.go.ke/ Intended Nationally Determined Contribution (INDC) seeks to abate Energy and Petroleum Regulatory Authority – https://www.erc.go.ke/ its GHG emissions by 30% by 2030 relative to the BAU scenario of 143 Kenya Electricity Generating Company Limited – www.kengen.co.ke/ MtCO2 and in line with its sustainable development agenda. This is also Kenya Electricity Transmission Company Limited – https://www.ketraco.co.ke/ subject to international support in the form of finance, investment, Renewable Energy Portal – http://www.renewableenergy.go.ke/ technology development and transfer, and capacity building. Kenya Power and Lighting Company – http://www.kplc.co.ke/
Rural Electrification and Renewable Energy Corporation – www.rea.co.ke/
Kenya Law – http://www.kenyalaw.org/
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Mauritius Renewable Energy in Africa Mauritius – Overview
Mauritius Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: French-based civil legal 2019 Doing Business Report: Mauritius is located off the southeast system with elements of English-based 20 of 190 (up 4 rankings) coast of Africa, and is an island state common law. of 1.3 million inhabitants spanning 2018 Global Competitiveness Index: 1,865 km2. Since its independence Language(s): English (Official 45 of 138 (no movement) in 1968, Mauritius has benefitted Language), Mauritian Creole, Bhojpuri, from stable political and economic and French. 2019 Index of Economic Freedom: conditions. However, environmental 25 of 180 (down 5 rankings) circumstances place the country at significant risk to climate change, 2018 Corruption Perceptions Index: and in particular rising sea levels. 51 of 176 (down 1 ranking) The country’s current account deficit is expected to remain smaller than 2018 UN Development Programme in recent years, as is consistent with Human Development Index: some persistent slack in Mauritius’ 65 of 188 (down 1 ranking) economy, coupled with strong tourism earnings and favorable global energy Population: 1.3 million prices.
GNI per capita (2017) : USD22,570
72 Renewable Energy in Africa Mauritius – Electricity Industry Overview
Electricity Industry Overview
The Central Electricity Board (CEB) Mauritius moved away from a Local and renewable energy sources is the sole agency for transmission, mono-crop-based economy towards are biomass, hydro, solar and wind distribution, and sale of electricity in diversification. Industrialization, energy. Biomass energy consists mainly Mauritius. which followed, was accompanied of bagasse, a by-product of the sugar by heavy investments in export- industry, and contributes about 22% of There has been a steady growth oriented sectors, especially in the the primary energy supply. Fuel wood in demand for electricity, driven by textile and manufacturing industries. and charcoal are minimally used. economic development, supported These industries, by their operational Hydropower plants, with a combined by substantial ongoing investments nature, are more electricity intensive. installed capacity of 59MW, is virtually in electrification. Access to electricity Demand for the purchase of the entire hydro potential. Furthermore, in 2016 stood at 91.89% within electricity is mainly, therefore, Mauritius has a good solar regime the urban population and 98.78% the result of a re-engineering of the with a potential average annual solar nationwide. In 2019 Mauritius’ economy, accompanied by bolstering radiation value of some 6kWh/m2/day. electricity production stood at strategies in the hospitality, The wind regime in Mauritius is very 2.9 billion kWh, with its consumption commercial and manufacturing good in some areas, with an annual at 2.7 billion kWh. The electricity sectors and ongoing diversification average speed of 8.1 m/s at 30 m above market in Mauritius has, since into new economic sectors (ICT, ground level. then, evolved into a more dynamic seafood and financial services). operating environment, due to an The demand has also increased due accelerated growth in demand post to the breakthrough of automation the 1990s. The rapid growth was, and the penetration rate of electric most likely, the effect of structural home appliances. changes in the domestic economy.
73 Renewable Energy in Africa Mauritius – Electricity Laws
Electricity Laws
• Electricity Act 1939 and regulations made • Mauritius Renewable Energy Agency Act 2015 thereunder – making provision for and in – an Act to provide for the establishment of the connection and licensing of electricity the Mauritius Renewable Energy Agency for services, the safety of electrical installations, the purpose of promoting the development the establishment of an Inspectorate, the and use of renewable energy. determination of tariff. • Utility Regulatory Authority Act 2004 – • Energy Efficiency Act 2011 and regulations providing for the establishment and made thereunder – setting up the Energy management of a Utility Regulatory Authority. Efficiency Management Office.
• Central Electricity Board Act 1963 – pledging of debentures and debenture stock in respect of the CEB, collection of license fees, fixing the powers of the minister and the conditions when it comes to exemption from income tax.
74 Renewable Energy in Africa Mauritius – Electricity Industry Overview
Regulators • The Central Electricity Board: • promote efficiency in both compliance by licensees with • advising the minister on renewable The main regulators are: A parastatal body wholly owned by operations and capital investments standards and applicable regulations energy policy and strategy; the government of Mauritius and in respect of utility services; and and making such information • Utility Regulatory Authority (URA): reporting to the Ministry of Energy publicly available; • elaborating a renewable energy The URA was set up in 2016 by the and Public Utilities. It is empowered • promote competition to prevent strategic plan (every five years); Utility Regulatory Authority Act 2004 by the Central Electricity Board unfair and anti-competitive • protect the interest of customers in to act as an independent body to Act 1963 to “prepare and carry practices in the utility services relation to any utility services; and • assessing the feasibility and regulate utility services, including out development schemes with industry. competitiveness of renewable electricity. In relation to the energy the general object of promoting, • examine and make energy projects and making sector, the URA sets and regulates coordinating and improving Its main functions are to: recommendations to a licensee recommendations; tariffs for electricity, resolves the generation, transmission, in respect of any Power complaints related to utilities and distribution and sale of electricity” in • implement the policy of government Purchase Agreement. • promoting and supporting acts in an advisory capacity to the Mauritius. The primary responsibility relating to applicable utility services; research and development into government on relevant policy and of the URA is, but is not limited The Mauritius Renewable Energy renewable energy technologies; legislative issues as well as assisting to, the economic regulation of • grant, vary and revoke licenses in Agency (MARENA): Enacted by the with policy implementation. The electricity and water services as well respect of a utility service; MARENA Act of 2015, MARENA • developing guidelines and URA also has a role in ensuring as wastewater disposal services, as was created in 2016 to oversee the standards for renewables projects sustainability of services, protecting provided for in the Utility Regulatory • enforce the conditions laid down in development of renewable energy and for evaluation and approval of customer interests, promoting Authority Act, 2004. an undertaking authorization; in Mauritius. It is responsible for on and off grid renewable projects; efficiency in operations and capital promoting renewable energy and investments in utility services The URA is an independent body and • regulate tariffs and other charges creating an environment conducive • defining a funding strategy for and promoting competition in its objectives are to: levied by a licensee; to the development of renewable renewables projects; and the section. It also grants, varies energy, including creating necessary and revokes utility licenses and • ensure the sustainability and • mediate or arbitrate disputes mechanisms, frameworks and standards • devising accreditation monitors compliance by licensees viability of utility services; between customers and licensees; to enable an increase in the use of principles for operators in the with standards and applicable renewable energy and an increase renewables sectors. regulations. • protect the interests of both • establish and implement adequate in the number of renewable energy existing and future customers; systems for monitoring the projects. MARENA's role includes:
75 Renewable Energy in Africa Mauritius – Electricity Laws
Generation, distribution various 66kV-to-22kV substations Presently, the CEB delivers electricity and transmission scattered over the island. The CEB’s to approximately 422,000 customers Transmission, distribution and the distribution system supplies electricity across the island through its sale of electricity in Mauritius are at lower voltages from its substations distribution system. Traditionally, the undertaken solely by CEB, who to various customers’ premises flow of electricity in the distribution currently produce 40% of the country’s through 22kV-to-415V and 6.6kV- network was uni directional from the total electricity requirement. This is to-415V distribution transformers. CEB’s substations to its customers. done via four thermal power stations The transmission network consists Since 2011, the distribution system and eight hydroelectric plants. of 16 major substations and 300 km has undergone a major change as The remainder of the country’s of single-circuit transmission lines. customers are henceforth able to requirement is purchased from IPPs The transmission network is made up generate their own electricity and consisting predominantly of private of a mix of underground cables and export the excess to the distribution generators using bagasse as a biofuel overhead lines. Overhead lines, which network. and imported coal. form around 94% of the network, greatly predominate because of their The transmission network, operating practicality and lower costs. at the highest voltage of 66kV, transports power in bulk from the main sources of generation to
76 Renewable Energy in Africa Mauritius – Renewable Energy Overview
Renewable Energy Overview
While bagasse remains the key source to increase the use of renewables in by the earth, and offshore wind farms of renewable energy (89%), 4.2% of Mauritius from 20% to at least 35% which, following preliminary results electricity generation comes from by 2025. by the Mauritius Research Council, hydro, wind, landfill gas and solar PV. demonstrate the potential for large The micro-climate generated by the scale developments in the waters of The home solar project was launched unique topology of Mauritius, its Mauritius and Rodrigues. in May 2018. This project aims at attractive investment climate and installing solar photovoltaic systems existing research institutions working Current issues in the on rooftops of 10,000 households in on renewable energy projects, renewables industry Social Category tariff 110A as part of are the key assets of Mauritius as Mauritius is vulnerable in terms of the government’s efforts to alleviate a test base for R&D projects that high population density and fragile poverty whilst contributing to the can be replicated on a regional ecosystems. The supply, distribution national target of achieving 35% of scale. Moreover, opportunities for and utilization of energy are critical renewable electricity in the energy collaboration exist for the use of the issues for the country’s future. In this mix by 2025. The country welcomes waters of Mauritius as a test base for context, the challenges of energy all types of renewable energy projects, marine renewable energy projects. management are typically of a in line with international best practices Other transformational energy particularly politico-economic nature. in the sector. projects include: Deep Ocean Water Applications (DOWA) that exploit Offshore wind farms have future deep sea water currents for cooling potential in Mauritius. In 2009 the and other uses, geothermal energy government released its long-term (currently under study) which taps energy strategy, which laid out its plans into the potential of heat generated
77 Renewable Energy in Africa Mauritius – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
CEB is constantly integrating Small- There are tax incentives for • SARAKO 15.2MW Solar Power income communities to be energy Scale Distributed Generation investments in renewable energy Farm in Bambous, operational sufficient, save energy costs and (SSDG) using PV technologies, projects and/or equipment, including: since February 18, 2014. protect the environment. from residential, commercial and even industrial customers. CEB has • all interest income derived from • Solar Field Ltd in Mont-Choisy, • Agrinergie project – under launched a second phase of SSDG debentures issued to finance a 2MW solar facility, operational construction. A 17MW solar after the success of phase one. Under renewable energy projects, since January 30, 2017. project located in Henrietta jointly SSDC, customers generating electricity previously taxed at 15%, will be developed by the Akuo Energy using solar energy will offset their exempted from tax provided that • Synnove – L’Esperance Moka Indian Ocean teams and Medine. monthly energy imported from the the projects have been approved (Synnove Solar (Mauritius) One Ltd) grid, if any, with the energy generated by the MRA; and in L’Esperance, a 2MW solar plant, • The CEB signed an Electricity by their PV installations, exported to operational since January 4, 2017. Supply and Purchase Agreement the grid and bank (store) any excess • investment in solar energy units in relation to a 9MW wind farm energy in the grid, in the form of can be deducted in the form of • Synnove in Petite Retraite (2MW in 2016 with a French company, kilowatt-hour (kWh) credits. investment allowance. solar project), operational since Quadran, in joint venture with a January 4, 2017 and pending local partner. 8.64MW extension. • A 29.4MW wind farm project, • Eole Plaine des Roches Wind involving Indian firm Suzlon in Farm in Plaine des Roches, joint venture with a local partner operational since March 15, 2016. Padgreen Ltd, has not yet started Consists of 11 wind turbines of operations. A date for completion 580kW each. of construction is currently scheduled for July 2018. • Home Solar Project, operational since May 2018 – it helps low-
78 Renewable Energy in Africa Mauritius – Foreign Investment/Ownership
Foreign Investment/Ownership
Of the 33 economic sectors looked at in the World Bank report, 32 are fully open to foreign investment in Mauritius. The only exception is television broadcasting, where foreign capital participation in a company must be less than 20%. However, the World Bank report draws attention to the difficulties of investing in certain sectors in Mauritius such as electricity generation and distribution, waste management and recycling, and port and airport management, due to their monopolistic market structure and domination by a state-owned enterprises.
79 Renewable Energy in Africa Mauritius – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Mauritius was one of the first Relevant Websites countries to ratify the Paris Agreement CIA World Fact Book – https://www.cia.govilibrary/publications/the-world- in April 2016, and have set a target factbook/geos/mp.html of 30% emissions reduction by 2030, compared to a business as usual International Trade Administration – https://www.export.gov/ emissions level of 7 million tonnes of article?id=Mauritius-Renewable-Energy CO2 e. The target, which is equivalent to a 4% cut on emissions levels in Ministry of Energy and Public Utilities – http://publicutilities.govmu.org/English/ 2014, is conditional on Mauritius Pages/Publications.aspx obtaining international support.
Mauritius Board of Investment – http://www.investmauritius.com/
Carbon Brief: Country climate pledge tracking – https://www.carbonbrief.org/ paris-2015-tracking-country-climate-pledges
Mauritius launches an Expression of Interest for Offshore Wind Farms – http://www.investmauritius.com/investment-opportunities/energy.aspx
Expressions of Interest for the Development of Offshore Wind Farms for the Republic of Mauritius – http://www.investmauritius.com/media/414322/E0I- Offshore-Wind-Farms_060317.pdf
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Morocco Renewable Energy in Africa Morocco – Overview
Morocco Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Civil law and the 2019 Doing Business Report: Considered as of one the most Constitution of the Kingdom of 60 of 190 developed economies in Africa, Morocco of 2011. the Moroccan economy is marked 2018 Global Competitiveness Index: by steady growth, low inflation and Language(s): Arabic (Official 75 of 140 gradually falling unemployment. Language), French. 2019 Index of Economic Freedom: The Moroccan economy continues 75 of 180 to attract foreign investment. The attractiveness of Morocco is 2018 Corruption Perception Index: associated, on one hand, with its 73 of 180 political stability and its generally favorable business environment. 2018 UN Development Program On the other hand, the Moroccan Human Development Index: government has recently introduced 123 of 188 a number of important economic reforms in order to attract more Population: 36.6 million foreign investment.
GNI per capita (2017): USD2,860
82 Renewable Energy in Africa Morocco – Electricity Industry Overview
Electricity Industry Overview
The electricity market in Morocco is Depending entirely on the partially open to competition for the international primary energy production and commercialization market to satisfy the growing local of electrical energy from renewable demand of electricity, Morocco has energy sources for customers implemented its National Energy connected to VHV/HV/MV. Strategy aiming to reach a share of 52% of installed power capacities Annual demand of imported fossil from renewable energy sources fuel increase of 8% since 2011. by 2030, According to the Moroccan Ministry of Energy, Mines and Sustainable Energy efficiency in parallel with the Development, future primary energy development of renewable energy demand could reach 26 Mtoe in 2020 forms a major part of Morocco’s and 43 Mtoe in 2030, The Ministry energy strategy, Morocco’s energy estimates that national consumption strategy aims at saving 12% in 2020 could reach 49 TWh/y by 2020 and and 15% in 2030 of its total energy 65 TWh/y by 2025. consumption.
83 Renewable Energy in Africa Morocco – Electricity Laws
Electricity Laws
• The Law No. 16-08 modifying and completing • The Law n° 16-09 creating the Moroccan the Dahir No. 1-63-223 of August 5, 1963 Agency for Development of Renewable creating the Moroccan Water and Electricity Energy and Energy Efficiency (ADEREE) to Company. This law grants public or private develop and promote renewable energy operators, at their request, and subject to and energy efficiency. ADEREE is now called the prior authorization of the Moroccan Moroccan Agency of Energy Efficiency (AMEE) Ministry of Energy, Mines and Sustainable and focus on energy efficiency. Development, the right to produce electricity for their own needs. • The Law No. 57-09 relating to the establishment of the Moroccan Agency for • The Law No. 13-09 on renewable energy Solar Energy (MASEN) to carry out a program promoting renewable energy production for developing integrated solar power and providing framework for developers and generation projects with a total capacity of investors in clean energy projects. According 2000MW. MASEN is now called Moroccan to this law, the electricity produced by the Agency for Sustainable Energy and is in operator of a renewable energy power charge of the realization of all renewable generator may be sold to local private entities energy projects (except the projects under or may be exported. However, this regime the Law No. 13-09). is subject to a prior authorization from the Moroccan Ministry of Energy, Mines and • The Law No. 58-15 modifying and completing Sustainable Development. New amendments the law No. 13-09 on renewable energy. to this law are contemplated. The aim of This law increased the minimum threshold of the new draft is to amend the regulatory hydropower plants from 12MW to 30MW. framework for renewable energy production to ensure more transparency.
84 Renewable Energy in Africa Morocco – Electricity Industry Overview
Regulators Generation, Distribution and Transmission • The Moroccan Ministry of • The Moroccan Agency for • supporting the administration ONEE is the sole buyer and seller and Energy, Mines and Sustainable Sustainable Energy – MASEN. by proposing national and the sole importer/exporter of bulk Development. The Moroccan MASEN is responsible for managing regional plans and incentives for electricity. Ministry of Energy, Mines and renewable energy in Morocco. renewable energy and energy Sustainable Development efficiency development; and Exceptions to the monopoly role of established the legal framework • MASEN leads development • realization, promotion, ONEE have been introduced following for the sector, ensures the practical program of integrated projects management, monitoring and the entry into force of the laws No. implementation of the national aimed at creating an additional coordination of renewable 13-09 and 16-08, which allow for direct energy strategy and oversees a 3,000MW of clean electricity energy and energy efficiency contracting between the operator of number of subordinated agencies generation capacity by 2020 and a development programs within a renewable energy power generator and departments. further 6,000MW by 2030, the framework of the national and industrial customers connected to The goal is to secure 52% of strategy. VHV/HV/MV. • The Moroccan Water and the country’s energy mix from Electricity Company – ONEE. renewable sources by 2030. ONEE, however, holds a monopoly ONEE has a dominant role in on the transmission of electricity and Morocco’s electricity markets • The Moroccan Agency for is responsible for the construction, as it operates throughout the Energy Efficiency – AMEE. operation and maintenance of the whole value chain: generation, AMEE’s mission is to contribute electric transmission system as well transmission and distribution. to the implementation of the as planning development of the government’s policy on the electricity network. promotion of renewable energy and energy efficiency. Its mission includes:
85 Renewable Energy in Africa Morocco – Renewable Energy Overview
Renewable Energy Overview
SOLAR Project, spanning over a period of biogas. Morocco also has plans to As part of its strategy towards ten years with a total investment generate bioenergy using household energy use, Morocco gives priority estimated at MAD31.5 billion will waste and biogas using wastewater. to developing renewable energy enable the country to bring the The aim is to strengthen the biomass and sustainable development. With installed capacity, from wind energy, sector, with a view to replacing fuel oil abundant solar resources (a potential from 280MW in 2010 to in the industrial sector. of 2,600kWh/m2/year) and a strategic 2,000MW in 2020. position at the heart of an energy Current issues in the hub, Morocco offers a wide range of HYDROPOWER renewables industry investment opportunities in the sector Hydropower is a traditional The major issue confronting the of thermal and photovoltaic solar component of Morocco’s renewable renewable energy sector in Morocco energy, including the launch of the energy industry. Hydro-electric power is the slow authorization procedures, following structuring programs. capacity is expected to reach 2,000MW particularly in terms of technical by 2020 and up to 3,100MW by 2030. approval through the Moroccan Water WIND and Electricity Company. As part of its strategy towards energy BIOMASS use, Morocco has undertaken a vast Morocco’s large agricultural sector wind energy program, to support the and the fact that a large part of the development of renewable energy and waste generated is made up energy efficiency in the country. of organic components are a boon to The Moroccan Integrated Wind Energy power generation from biomass and
86 Renewable Energy in Africa Morocco – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
The Moroccan government has • The Moroccan project of Solar • Akhfenir (200MW), Foum El carried out substantial reforms in Energy aims at providing a Oued (50MW) and Haouma order to shape a legal, regulatory capacity of electricity production (50MW) operated by Nareva. and institutional framework that of 2,000MW by 2020, The project • Jbel Khalladi (120MW) operated would stimulate renewable energy is situated in five major sites: by Acwa Power. development. Ouarzazate, Ain Beni Mathar, Foum Al Oued, Boujdour and Sebkhat • The development of new wind The law no. 13-09 aims at promoting Tah. The two technologies – energy farms is planned as follow: and liberalizing the renewable energy concentrated solar power (CSP) sector but does not introduce fixed and photovoltaic – are designated • Taza (150MW) awarded to EDF tariffs. It requires, however, that all to be used in these stations. This EN and Mitsui. economic and technical be set and project is developed by MASEN. negotiated by the producers directly • The 850MW project: Tanger 2 with the grid operator ONEE. (150MW), Tetouan (300MW), • The Moroccan Integrated Wind Tiskrad Laayoune (300MW) and There is, however, no implemented Energy Project will enable Morocco Boujdour (100MW) awarded to feed-in tariff in Morocco or specific tax to increase the capacity of its wind Enel Green Power, Nareva and incentives. projects, from 280MW in 2010 to Siemens. 2,000MW by 2020,
• Major projects:
• Tarfaya (300MW) operated by Engie and Nareva.
87 Renewable Energy in Africa Morocco – Foreign Investment/Ownership
Foreign Investment/Ownership
Morocco actively encourages foreign Foreign and domestic private entities Moroccan law provides under the investment. There is no requirement may establish and entirely own investment charter specific financial, for a foreign investor to partner with a business enterprises, barring some tax and customs advantages for local shareholder. sector restrictions (national bank, air investors, as part of agreements or and maritime transport companies, investment contracts to be concluded The Moroccan Agency for Investment phosphate extraction). with the state, provided that they meet and Export Development (AMDIE) is the required criteria. Morocco’s primary agency responsible There is no requirement for prior for the development and promotion approval of foreign direct investment, of investment in Morocco. Moroccan and formalities related to investing legislation governing foreign direct in Morocco do not pose a significant in applies equally to Moroccan barrier to investment. and foreign legal entities, with the exception of certain protected sectors.
88 Renewable Energy in Africa Morocco – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
On September 21, 2016, Morocco Relevant Websites ratified the Paris Agreement, and Moroccan Ministry of Energy, Mines and Sustainable Development – submitted its Nationally Determined www.mem.gov.ma/ Contribution, with a target of reducing greenhouse gas emissions including Moroccan Water and Electricity Company – www.one.org.ma/ land use, land use change and forestry by 17% by 2030. With sufficient Moroccan Agency for Energy Efficiency – www.amee.ma/index.php?lang=en international support, Morocco aims to further decrease emissions by Moroccan Agency for Sustainable Energy – MASEN – www.masen.ma/ 42% by 2030.
89 09
Mozambique Renewable Energy in Africa Mozambique – Overview
Mozambique Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Mozambican civil law, 2018 Doing Business Report: Mozambique, located on the east the Constitution of the Republic of 138 of 190 (down 1 ranking) coast of Africa, borders Tanzania, Mozambique. Malawi, Zambia, Zimbabwe, South 2018 Global Competitiveness Index: Africa and Swaziland. Originally a Language(s): Portuguese. 136 of 138 (down 3 rankings) Portuguese colony before gaining its independence in 1975, Mozambique 2017 Index of Economic Freedom: has since been one of Africa’s fastest 158 of 180 (down 19 rankings) growing countries, at a rate of approximately 9% for the majority of 2016 Corruption Perceptions Index: the last decade. Mozambique benefits 142 of 176 (down 30 rankings) from ample arable land, water, energy, as well as newly discovered natural 2016 UN Development Programme gas and mineral resources offshore, Human Development Index: and accordingly around 67% of its 181 of 188 (down 1 ranking) population reside and work in rural areas. Mozambique relies heavily upon Population: 28.9 million (2017 foreign assistance due to the majority Population Census) of its population living below the poverty line. GNI per capita: USD1,190 91 Renewable Energy in Africa Mozambique – Electricity Industry Overview
Electricity Industry Overview
The Mozambican Energy market is the Southern African Development state-controlled, and such control is Community and the Eastern African conducted through Electricidade de Community. The import and export Mocambique (EDM), the national utility of electricity in Mozambique has company, as the sole off-taker entity increased positively throughout the and manager of the national grid, years; however, in relation to the rate through supervision of the Energy of exported electricity particularly Regulatory Authority (ARENE). to South Africa, according to the September 2017 Renewables report Mozambique’s energy potential is in Mozambique, there is a report of a one of the highest in Southern Africa, drop from 98% to 77%. with installed generation capacity of around 2,905.45MW and substantial At present only approximately energy resources, including hydro, 24.8% of the Mozambican population solar, wind, geothermal, natural has access to electricity. This is due to gas and coal. Almost 100% of an undeveloped power distribution power currently generated is from network and bureaucracy involved in hydroelectric power, mostly through developing new power projects. The the Zambeze Basin. The geographical government has set a five-year plan positioning of the country gives (2015-2019) which aims to increase Mozambique a privileged, strategic access to electricity. Mozambique’s position and role in the regional aim is to enable access to electricity energy sector, acting both as a route for 50% of the population by 2023, to the countries inland well served and achieve universal energy access by harbors, railway and pipeline by 2030. systems and as an interface between
92 Renewable Energy in Africa Mozambique – Electricity Laws
Electricity Laws
• Law No. 15/2011, of August 10 (Public Private • Decree No. 43/2005, of November 29 Partnership Law or PPP Law). (National Grid Management Regulations), in which the government appointed EDM as • Law No. 21/97, of October 1 (Electricity Law). the entity responsible for management of the National Power Transportation Grid. • Decree No. 11/2017, of September 8 (creates the Regulating Authority of Energy). • Decree No. 29/2003, of June 23 (The tariff system for the sales of Electricity). • Decree No. 58/2014, of October 17 (Regulation Establishing the Tariff for New • Decree No. 8/2000, of April 20 (Concession and Renewable Energy). Award Regulation).
• Decree No. 16/2012, of June 4 (Public Private • Resolution No. 62/2009, of October 14 Partnership Law or PPP Law Regulations). (approves the New and Renewable Energy Development Policy). • Decree No. 48/2007, of October 22 (Regulations of Licenses for Electric Installations).
93 Renewable Energy in Africa Mozambique – Electricity Industry Overview
Regulators Generation, Distribution In the prosecution of EDM’s mandate, Ministry of Mineral Resources and Grid Manager, which is the entity Energy Regulatory Authority (ARENE) and Transmission EDM shall seek to extend the National Energy (MIREME) as it is today was responsible for management of the – supervises, regulates, represents, Historically, the then regulatory authority Transmission Grid, introduce innovation created in 2015 and oversees the National Power Transportation Grid. inspects and has sanctioning powers CNELEC had limited powers to oversee in the power domain, as well as conduct extractive industry and the power sectors EDM has 20% of the country’s generated pursuant to the law. It launches and the sector, due to the fact that EDM a strict management of the funds and and: (i) plans, manages, supervises and capacity and it receives all power oversees the public tender process for in practice had ended up playing commercial aid. ensures the execution and compliance of produced by IPPs. EDM buys most of new power concessions. this role, being both a referee and a the government policy in relation to the its power supply from Hidroelectrica de player within the same market. A new EDM is the primary supplier of electricity The National Energy Council (Conselho undertaking of geological investigations; Cahora Bassa (HCB), the largest hydro regulatory authority ARENE with broader to consumers, but the law also allows Nacional de Electricidade) (CNELEC) (ii) supervises the exploration of mineral facility in Mozambique. The majority powers has been instituted, and is now for the participation of IPPs and related was re-established as an independent and power resources; and (iii) supervises of the electricity generated at HCB is operational. third-party access to the grid. However, advisory regulatory body for the the development and expansion of exported to South Africa, with a small in practice in order to make the power electricity sector in early 2008. CNELEC infrastructure for the supply of electrical amount to Zimbabwe. EDM’s main purpose is to provide projects feasible, EDM always enters was instructed to conduct a review of power, natural gas and petroleum the public service of generation, into partnerships with IPPs in order to To mitigate the cost of expanding the the current methodology used by EDM products. transmission, distribution and sale of generate electricity on one side and grid to rural areas the government in setting tariffs. CNELEC has since energy in the national territory, conduct buy from the other side. The National Electricidade de Mocambique (EDM) – made rural electrification development a December 2017 been closed down and the import and export of energy in Transmission Grid Regulation allows state-owned company is governed by priority led by the Mozambique Energy replaced by ARENE. Mozambique, as well as conduct and regulates third-party access to the Law No. 6/2012 of February 8 (the State Fund (FUNAE) which was established installation, maintenance and renewal of electrical work. Owned Companies Law) and is overseen in 1997. FUNAE is responsible for The National Directorate of Electricity goods and equipment allocated to the by MIREME. EDM is the sole electricity the promotion of the development, is a MIREME subordinate department exploration and undertaking of public The power to MOZAL, an aluminium utility and electricity off-taker in the generation and use of several forms responsible for approval of power services. smelter company, is supplied through country. EDM is active on the entire value of low cost energy, for the purpose of projects implementation, approvals to High Voltage Direct Current lines, chain, from generation, transmission, subsequent supply to rural and inhabited conduct feasibility studies, as well as EDM’s roles also include, the execution owned by MOTRACO, a joint venture distribution and trade of electricity in urban areas. FUNAE focusses on smaller issuance of authorizations related to the of contracts with consumers, in transmission company between Eskom, Mozambique EDM was appointed as the off-grid projects of less than 10MW. establishment and operation of electrical relation to the installation or rent of EDM and Swaziland Electricity Board. National installations, among others. equipment, obtaining financial means required for the development of the power sector, conducting or managing feasibility studies, as well as providing required training.
94 Renewable Energy in Africa Mozambique – Renewable Energy Overview
Renewable Energy Overview
Mozambique holds a wide range of to create a map of the potential identified a total of 1,446 new WIND BIOMASS renewable energy resources within development sites and assess the possible hydropower projects with an There is a special focus on wind Mozambique has great potential for the country which covers sufficient potential for power generation estimated potential of 19GW, with 351 energy in the South. However, harnessing bioenergy, particularly amounts for export. It has a total from each of the existing renewable priority projects with an estimated several other locations throughout from forest biomass and agricultural renewable potential of over 23,026GW. resources, and identify and study potential of 5.6GW. the territory also provide conditions biomass (farming residues). The Solar energy is the most abundant several projects at a technical and for the development of projects at residues from forestry activity could renewable resource in Mozambique economic prefeasibility level, by way of SOLAR reasonable prices. Despite the high generate 750GWh of energy, and an with a potential of 23,000GW. Statistics attracting investors to the renewable The country’s global irradiation generation potential of wind power estimated 3.1 million barrels of oil published in the Renewables in sector. varies between 1,785 and projects, Mozambique currently has in equivalent of biofuel without affecting Mozambique-National Status Report/ 2,206kWh/m2/year. Solar is the pipeline a small number of wind the biodiversity. October 2017. HYDROPOWER abundant in the Tete province, projects due to the higher complexity The largest power generation plant is Niassa, Nampula, Cabo Delgado of the technology, the means of GEOTHERMAL The national renewable market has the Cahora Bassa hydro dam operated and Zambezia provinces. transportation, storage and assembly The country has geothermal potential been recently developed, and finds by the government-owned HCB. This The project portfolio has identified of equipment. Winds are of medium- in the north of Mozambique of itself in a stage of legal, tax and is the second largest dam in Africa, a total of 343 projects distributed low intensity, with speed ranging 147MW, of which 20MW are priority regulatory framework development. with a capacity of 2,075MW. HCB in the provinces referred to above, from 4 to 6 m/s at an altitude of 80 m. projects. As of 2013, no geothermal Due to the noticeable abundance sells 65% of its existing generation to among which the Atlas establishes Mozambique has a potential of 4.5GW, projects had been identified. Despite of renewable resources and the South Africa and the remaining 35% 189 locations for the possible of which 1.1GW has a potential grid higher risk and cost, geothermal government developing the renewable is sold to the northern regions of development of solar projects connection. Mozambique plans to projects offer the possibility of energy sector as a strategic policy, Mozambique and to Zimbabwe. HCB’s and highlights 43 priority projects. build 100MW of onshore wind energy supporting the quality of energy and the government conducted an audit operations are located on the Zambezi Mozambique’s first utility-scale and 125MW of small hydro power by electrification in Niassa province, in on the different sources of renewable River in Tete Province. solar power plant, a photovoltaic 2025. particular. energy in Mozambique, which resulted plant with a capacity of 40MW, was in the compilation of the Renewable The average rainfall in Mozambique is commissioned in Zambezia Province Energy of Mozambique Atlas (the 1,023mm/m2. In 2013 the country held in 2016. Atlas) and the Renewable Energy 104 drainage basins, of which 11 have Projects Portfolios. This audit sought high hydrographic potential. The Atlas
95 Renewable Energy in Africa Mozambique – Renewable Energy Overview
Current issues in the Renewables Laws Renewables Industry The renewable energy sector legal The legal framework remains under framework is relatively new in development. The natural power grid Mozambique, and is currently still and respective infrastructure requires under development. As a result, improvement The government has the renewables sector largely relies been working towards developing on general legislation concerning the strategies to eliminate constraints electricity sector (see above). within the sector, and has enacted the Resolution No. 62/2009, of As well as the electricity law, the key October 14, 2009 (which approves renewables laws are: the New and Renewable Energy Development Policy). • Decree No. 58/2011, of November 11 (Regulation on Fossil Biofuels); and
• Resolution No. 22/2009, of May 21 (Biofuel Policy and Strategy).
96 Renewable Energy in Africa Mozambique – Government Incentive Schemes
Government Incentive Schemes
The government published a notice The government has also created a Pursuant to the Draft Electricity The government also allows certain • a reduction in the rate of the on September 21, 2017 in a local specific tariff regime for the renewable Law Bill sponsors making use projects to benefit from tax benefits Corporate Income Tax (Imposto newspaper regarding the launch energy sector, namely the REFIT tariff, of renewable energy sources to and exemptions for custom duties on sobre o Rendimento das Pessoas of a portfolio of potential sites for which provides attractive advantages develop a project in Mozambique, the import of equipment. Colectivas – IRPC) by 80% in the the development of renewable to those within the renewables would require a standard first five financial years from the energy projects (based on the Atlas), sector (for instance, preferential fees administrative License, as opposed In accordance with the provisions of Commercial Operation Date; estimated at the approximate amount for the sale of electricity in projects to current fully-fledge Concession the Fiscal Benefits Code, approved of USD500 million. up to 10MW), in order to promote as provided by the current Electricity by Law No. 4/2009, of January 12, • a reduction in the IRPC rate by development of renewable energy and Law. Of note that the process to investors may be granted: 60% from the sixth to the tenth Furthermore, the government investor interest. obtain a license in comparison to a financial years; and is extending the opportunity Concession, would be much easier • exemption from customs duties of financing renewable energy Moreover, apart from incentive and quicker. and value added tax (IVA) on goods • a reduction in the IRPC rate by projects in Mozambique to private schemes mentioned above, the and equipment falling under class 25% from the 11th to the 15th entities, with the purpose of making government is currently reviewing the The Draft Electricity Law Bill also K of the Customs Tariff Pauta( financial years. way for investment in this sector, Electricity Law. The Draft Electricity provides for a longer validity of the Aduaneira) and respective parts and increasing the Mozambican Law Bill introduces reforms to easy authorization required for a project, in and accessories relating to such population’s access to electricity, the licensing of new power projects, comparison to the current Electricity plant and equipment; particularly to 332 villages within the particularly the development of small Law, increasing the maximum term Mozambican territory. dimension power projects.1 from 25 to 35 years, therefore creating a more appealing and friendly business environment.
1 Projects with installed nominal capacity less than 50MW and greater than 4MW.
97 Renewable Energy in Africa Mozambique – Foreign Investment/Ownership
Major Projects/Companies
• HCB (Hidroeléctrica de Cahora The following projects are in the Bassa) – restarted functioning in pipeline: 1997 with capacity of 2,075MW. • Cahora Bassa Norte – • CTRG (Central Térmica de Hydroelectrical power project with Ressano Garcia) – in February a capacity of 1,245MW. 2015 the Ressano Garcia Gas Power Plant started operations, • Mphanda Nkuwa – Hydroelectrical holding a 175MW installed capacity. power project with a capacity of 1,500MW. • Gigawatt – in November 2015 Gigawatt inaugurated its gas • ACWA Power – Coal fired powered plant with an installed thermoelectrical power project a capacity of 120MW, of which with capacity of 600MW. 100MW are allocated to the supply of EDM. • JINDAL – Coal fired thermoelectrical power project a with capacity of 150MW.
• Scatec Mocuba – 40MW solar project (to be commissioned in December 2017).
98 Renewable Energy in Africa Mozambique – Foreign Investment/Ownership
Foreign Investment/Ownership
Shares corresponding to a 5% interest clause which provides a b Notice 20/GBM/2017, of years counting from the date of Shareholder loans and related in the project must be listed on the mechanism for the calculation December 22 (Foreign Exchange entry of funds or equipment into the companies’ loans which charges Mozambican Stock Exchange from the of the residual price). Rules and Procedures). country will result in non-recognition interest rates are pre-approved for an fifth year of commercial production, or of the right to export dividends and amount up to the equivalent to USD5 be guaranteed by the state or other The government has extended the (a) to (b) above are together the repatriation of the invested capital in million and only subject to registration appointed public entity appointed opportunity of financing renewable Foreign Exchange Regulations. case of divestment. with the commercial banks, provided (here, EDM) in a percentage not less energy projects in Mozambique to the following conditions are met: than 5% nor greater than 20% of the private entities, financing may be Foreign Direct Investment (FDI) EXTERNAL LOANS referred capital (Article 33(1) (a) of the provided by foreign lenders, national in Mozambique does not require Investment in the form of external • the interest rate is higher than 0% PPP Law and Article 64 of the PPP Law banks, development banks and prior authorization and shall only shareholder loan is allowed. but inferior to the base lending Regulations). This obligation promotes international cooperation agencies. be subject to registration with the Shareholder loans and related rate of the loan denomination; inclusion of Mozambican natural commercial bank. companies’ loans are subject to persons in the local market. To encourage the financing or foreign Central Bank of Mozambique approval. • maturity of the loan is equal or investment of renewable projects When the FDI is implemented by According to Foreign Exchange Rules superior to three years; and In regards to foreign ownership, in Mozambique, the government the import of equipment, machinery and Procedures, shareholder loans the project shall be held by the provides attractive conditions, and other material goods as well and related companies’ loans for any • the loan is encumbrance free and SPV (incorporated under the including customs and fiscal incentives as in form of intellectual rights, amount are already pre-approved commission free. laws of Mozambique) up to the as referenced above. the registration shall be effected and only subject to registration with expiry or term of the concession with the Central Bank, through the the commercial banks, provided the contract, when it shall revert to FOREIGN EXCHANGE CONTROL commercial banks. following conditions are met: the government at the payment of Foreign Exchange Control is an established price. The price is governed by: The registration of funds grants the • the interest rate is 0%; established by the concessionaire applicant the right to export dividends and the government during a Law No. 11/2009, of March 11 and repatriate any funds brought into • maturity of the loan is equal or the negotiation of the Power (Foreign Exchange Law); and the country in case of divestment. superior to three years; and Concession Contract, (i.e. the Power There is a minimum FDI requirement Concession Contract will include a of MZN2.5 million (USD41,666). Failure • the loan is encumbrance free and to register FDI for a period of three commission free.
99 Renewable Energy in Africa Mozambique – Foreign Investment/Ownership
Third-party external loans are subject Shareholder loans, related companies’ The transfer of funds abroad, resulting to Central Bank of Mozambique loans and third-party external from FDI, in the form of profits or approval. According to the Foreign loans which do not comply with the distributed dividends, loans and Exchange Rules and Procedures, requirements mentioned above will shareholders’ loans, in the form of external loans up to the amount require prior authorization from the interest, portfolio investments and correspondent to USD5 million are Central Bank. The Central Bank, when other forms of capital investment no already pre-approved and only subject analysing the request, considers longer require authorization from to registration with the commercial the solvency ratio of the company the Central Bank of Mozambique; banks, provided the following requesting the loan in order to analyze however, the transaction must conditions are met: the financial strength of the company be registered with the Central in order to make the debt service. Bank of Mozambique through the • the interest rate is not higher The company is considered stable intermediary bank (Article 57 of the than the base lending rate of the when its equity is equal to or above Foreign Exchange Law Regulations). denomination currency of the 30% of the loan amount. financing, added by four base points; Also of relevance in this case is the applicable interest rate, which shall • the sum of the base lending rate not be higher than the interest rate and the margin does not exceed practiced in the internal market. the interest rate practiced in the national banking system; and
• the loan has a maturity equal or higher than three years.
100 Renewable Energy in Africa Mozambique – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Mozambique ratified the Paris Agreement in November 2017, the country’s Relevant Websites Intended Nationally Determined Contribution (INDC) states the government’s https://www.globallegalinsights.com/practice-areas/energy-laws-and- intention to work with development partners to improve climate change related regulations/mozambique#chaptercontent1 date management systems and implement a robust low emission development
path with the hope of reducing per capita emissions from 1.4 t CO2e per capita https://www.export.gov/apex/article2?id=Mozambique-Energy in 2010 to around 0.7 to 0.8 t CO2e per capita in 2030 compared to expected
business as usual emissions of around 1.5 t CO2e per capita over this period. http://global-climatescope.org/en/country/mozambique/#/enabling-framework
http://www.funae.co.mz/
http://www.edm.co.mz/
http://www.portaldogoverno.gov.mz/
http://www.ine.gov.mz
http:/www.mireme.gov.mz
101 10
Namibia Renewable Energy in Africa Namibia – Overview
Namibia Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdictions: The Namibian judicial 2018 Doing Business Report: Saara Kuugongelwa-Amadhila has branch operates a traditional 107 out of 190 economies (up 1) been President since 2015 and her court structure. The legal system party, South West Africa People’s 2018 Global Competitiveness: is a combination of Roman-Dutch Organisation (SWAPO), is expected to 90 out of 137 (down 6) common law, customary law, dominate in the 2019 elections. The international law elements that can be 2017 Index of Economic Freedom: economic outlook is for slow growth, traced back to Westminster style law. 174 out of 180 fuelled by the agricultural and mining industries following contractions 2016 Corruption Perceptions Index: Languages: English (official), over successive quarters. The African 53 out of 176 (down 8) Afrikaans, German, Oshivambo, Development Bank may be key to Herero, Nama. 2016 UN Development programme increased investment in energy Human Development Index: and water infrastructure, while the 125 out of 188 (up 2) diamond and uranium markets will be ones to watch closely. Population: 2.53 million
GNI per Capita USD10,320
103 Renewable Energy in Africa Namibia – Electricity Industry Overview
Electricity Industry Overview
• Namibia’s energy sector comprises • Namibia boasts one of the efforts to develop this resource is a state-owned enterprise, Authority to regulate electricity, formalized electricity, upstream oil world’s largest solar irradiation and develop its renewable energy and which is regulated by the downstream gas, including and gas, and downstream liquid regimes, with the country industry, these initiatives have Electricity Control Board (ECB) gas pipelines and storage fuels subsectors, as well as the receiving considerable solar been stymied by the absence of in respect of electricity supplied facilities, downstream petroleum less formalized downstream gas radiation of up to 7KWh/m2/day a coherent, clearly pronounced by it, and matters incidental pipelines and storage facilities, and thermal energy subsectors. of global horizontal irradiance. energy policy. As such, the thereto. renewable energy, energy Currently, the country’s energy Moreover, Namibia has high government of Namibia has efficiency and conservation as • Electricity Act 4 of 2007 (2007 sector is dominated by liquid fuels wind power potential, especially implemented a National Renewable well as to provide for the powers Electricity Act): which accounted for some 58% in coastal areas where wind Energy Policy which aims to and functions of the Namibian of all energy consumed in 2014, speeds reach 10 meters/second improve access to modern, clean, Energy Regulatory Authority, • This Act regulates the powers while electricity as well as biomass or faster. Furthermore, Namibia environmentally sustainable, and structure, staffing, financial of the ECB and provides for accounted for some 20% each, with is uniquely placed to transform affordable energy services for all provisions and other incidental its functions. Furthermore, the remainder in the form of coal the challenge of an invasive plant Namibian inhabitants. matters. it provides for the requirements and liquid petroleum gas. species (encroacher bush) into an and conditions for obtaining opportunity for biomass-based licenses for the provision of • Throughout the past decade, energy, with large bush encroached Electricity laws electricity and provides for the country’s total energy areas that have the potential to • Powers of the SWA Water and the powers and obligations of consumption grew by some generate between 6-30MWh/ Electricity Corporation Act 14 of relevant licensees. 3% per annum, while electricity hectare from the conversion of 1980 (ECA): consumption has increased by bush into bioenergy. • Namibia Energy Regulatory an average annual rate of some • This Act makes provision for the Authority Bill 2017 (Draft): 4.1%. During the last five years, the • In light of the above, Namibia’s approval of the tariffs levied and Namibian economy has grown by renewable energy represents the conditions imposed by the • This Bill, currently in draft an average of 5.5% per annum. a valuable economic resource Namibian Electricity Corporation form, aims to establish a for Namibia. In the past, while (Pty) Ltd (now known as single sectoral regulator, the the country has made proactive ‘Nampower’ (NamPower)) which Namibian Energy Regulatory
104 Renewable Energy in Africa Namibia – Electricity Industry Overview
Regulators The main electricity regulator in import to and export from Namibia • NamPower: NamPower’s core • Ruacana Power Station, • REDs: The REDs are regional Namibia is: through, inter alia, the issuing of business is the generation, a hydroelectric plant on the electricity distributing companies licenses. transmission and the trading of Kunene River at Ruacana at tasked with supplying electricity • The ECB: The ECB is a statutory energy, which takes place within the Angolan border (240MW); to residents in a specific region. regulatory authority which was NamPower and the Regional the Southern African Power A restructuring study completed by initially established in terms of • Van Eck Thermal Plant in Electricity Distributers (REDs), Pool (SAPP) which is the largest the Ministry of Mines and Energy the Electricity Act 2 of 2000, which Windhoek, powered by coal although strictly speaking are multilateral energy platform on (MME) in 1998 recommended Act was subsequently repealed (120MW); and not electricity regulators, are key the African continent. NamPower that Namibia be divided into five by the 2007 Electricity Act, which stakeholders in the electricity supplies bulk electricity to Regional • Anixas Power Station in areas and that a single electricity re-established the ECB and distribution system of Namibia. Electricity Distributors, Mines, Walvisbay, powered by diesel distributor be established for each expanded its mandate and core In light of the major role they play Farms and Local Authorities (where (22.5MW). area solely responsible for electricity responsibilities. The core mandate in the distribution of electricity Regional Electricity Providers distribution in that area. REDs are of the ECB is to exercise control Apart from the existing electricity to consumers, they could quite are not operational) throughout private companies with state-owned over the electricity supply industry generating facilities, NamPower is possibly be regarded as electricity Namibia. NamPower operates enterprises and other entities being with the main responsibility of currently embarking on the Baynes regulators for the reasons three major electricity generating its shareholders. regulating electricity generation, Hydroelectric power plant, which is mentioned below. facilities, being: transmission, distribution, supply, elaborated on below.
105 Renewable Energy in Africa Namibia – Electricity Industry Overview
Generation, Distribution and makes recommendations to the includes the important function of Municipality, and some supply in 2005, and serve the north‐central and Transmission MME regarding the issue, transfer, balancing the supply of electricity to points that remain connected to the and the Erongo region respectively. MME is the custodian of the country’s amendment, renewal and cancellation the prevailing demand. In addition, transmission grid for historic reasons. Two additional REDs, i.e. one for energy sector. The Electricity Supply of licenses, and the approval of it is the contracting party for imports, the central and one for the southern Industry (ESI) is regulated by the ECB. conditions on which electricity is primarily from South Africa, Zimbabwe The REDs are responsible for the regions, may be established in The ESI’s main role players are the provided by a licensee. and Zambia. NamPower’s transmission distribution and supply of electricity future. Presently, however, local and MME, ECB, NamPower, the REDs, and section is divided into two businesses, to consumers within their respective regional authorities, and NamPower, a handful of municipalities and mines. NamPower, as the country’s only i.e. the wires and the supply business. areas. In June 2009, three REDs remain the licensed distributors electricity utility, encompasses three The wires business is responsible for were established and made fully in the areas not covered by REDs. The ECB sets the required license main ring‐fenced businesses, namely the transmission network. The supply operational. NORED was established There is considerable debate about conditions and oversees the generation, trading and transmission. business looks after transmission in 2002, and serves the country’s the establishment of the central and processes for the issuance of such NamPower also fulfils the role of customers including some large north‐central regions. Both CENORED southern REDs. licenses. Among others, it assesses system operator and trader, which mines, the REDs, Windhoek and Erongo RED were established
106 Renewable Energy in Africa Namibia – Renewable Industry Overview
Renewable Industry Overview
The renewable energy sector in Namibia government plans for renewable energy to feed electricity they do not use back HYDROELECTRICITY resource’s potential. While Namibia has is expanding. Several factors make to contribute to more than 70% of the into the grid. Net metering will greatly Hydropower needs specific mention a high abundance of other renewable Namibia an attractive location for the country’s energy mix by 2030, As such, contribute to poverty alleviation in as a renewable source of energy. The alternatives that are currently more development of renewable energy there is much opportunity for private Namibia. Baynes Hydropower station (which is commercially viable such as solar and projects (owing to its high resource investors in the renewable energy soon to be completed) is a very valuable wind, the Renewable Energy Policy still WIND potential for solar; relatively good sector and to contribute to achieving generation asset that has the potential supports the inclusion of geothermal The NAD180 million wind power potential for wind in many areas and low this target. of supplying Namibia and Angola with energy. project at Lüderitz is nearing its population density) and as a result, this reliable, clean electricity for generations SOLAR completion which will be Namibia’s BIOMASS sector is poised for robust growth. to come. It is envisaged that the Baynes Namibia’s abundance of solar resources first-ever wind farm. The wind farm Namibia is endowed with abundant mid-merit/peaking power station’s However, for investor interest to and the increasing affordability of solar is being built by Innosun Energy biomass in the form of “encroacher capacity would be 600MW which will be translate into significant new capacity, technologies make the implementation Holdings, which will add 5MW of bush.” Approximately 30% of Namibia shared equally by Namibia and Angola. measures have to be put in place to of solar technologies a high priority in electricity to the national power grid. is covered by encroacher bush. The Like the Ruacana Power Station, the help accelerate renewable energy the country. The Namibian government Innosun is a Namibia-registered energy content of this resource has new dam will function as a mid-merit investment, procurement, project and the private sector have contributed company owned by Namibian and been estimated to be 1,000TWh.vi. peaking station, so that NamPower can development, and project completion. to large-scale solar farming projects, French investors. Innosun is currently Forests in Namibia also constitute a avoid buying imported power during The government of Namibia has which include recent solar power planning on building a second 5MW predominant source of biomass for peak hours. implemented a National Renewable plants being installed in Otjiwarongo, solar park at Aussenkehr, on the energy. Using biomass for energy cuts Energy Policy which points Namibia Keetmanshoop, Omaruru and Arandis. banks of the Orange River, as well as GEOTHERMAL back on greenhouse gas emissions. in the right direction in terms of Also, various rooftop solar installations a third wind farm to supply Namdeb Namibia has a number of hot springs NamPower has performed an utilising Namibia’s renewable energy exist which were developed after the Diamond Corporation (Pty) Ltd with across the country indicating availability assessment of several commercially resources. To date, although Namibia net metering system was implemented. electricity. Wind power is getting of geothermal resources, which could available technologies to determine the has an abundance of renewable energy Namibia recently developed net cheaper and more efficient through potentially be used for electricity most suitable scenario for generating resources, renewable energy however, metering rules for the REDs. Net new technologies being discovered, generation, process heat, or other electrical power from encroacher bush only accounts for a small amount of metering allows residential and making it a very logical solution for the applications. There has been very little in Namibia. the installed capacity. With the new commercial customers who generate Namibian energy market. development of these resources to National Renewable Energy Policy, the their own electricity from solar power date and limited data is available on this
107 Renewable Energy in Africa Namibia – Government Incentive Schemes
Government Incentive Schemes
The MME has a renewable energy One of the key functions of the division • to improve framework conditions relationships with national and division which is tasked with the is the implementation of the OGEMP. for Renewable Energy and Energy international bodies with similar implementation of Renewable Energy The OGEMP is a 20-year program Efficiency technologies; and objectives; and and Energy Efficiency programmes. aiming to provide access to appropriate The key functions of the division are: energy technologies to communities • to create dialogue platforms for • Renewable Energy and Energy living in off-grid areas, through: advancement of Renewable Energy Efficiency Institute (REEEI). REEEI • conducting research on Renewable and Energy Efficiency. was established in 2006 following Energy resources in Namibia; • solar electrification of public a collaboration agreement with institutions; A number of NGOs also exist to the Polytechnic of Namibia. The • public awareness campaigns on promote the development of mandate of REEEI is to address Renewable Energy and Energy • establishing of Energy Shops; and renewables in Nambia: barriers that hinder the entry of Efficiency; Renewable Energy and Energy • credit financing of solar • Renewable Energy Industry Efficiency. In 2014 this institution • implementation of the Off- technologies. Association of Namibia. Founded was transformed into the Namibia Grid Energisation Master Plan on May 19, 2008, its objective is Energy Institute (NEI) to include the (OGEMP); and Another national programme of the defined as giving emphasis to other energy sectors. division is the promotion of Renewable industry representation, promoting • offer subsidized loans to rural and Energy and Energy Efficiency: renewable-energy, ensuring urban clients to procure solar energy adherance to quality standards, technologies. • to create a culture of energy lobbying for renewable energy consciousness; issues; and establishing professional
108 Renewable Energy in Africa Namibia – Major Projects/Companies
Major Projects/Companies
According to the MME, the major central-northern Namibia over players in the energy industry in an area of approximately Namibia are: 120 000 km2.
• Ellis Shilengudwa Inc. has been • NORED. Incorporated in 2001, involved in a number of major northern Namibia’s regional projects in Namibia, including: Electricity Distributor, NORED, has put itself on the world map • Omburu Power Project (5MW) as a reliable energy supplier. In which is the first operational 2016/2017, NORED delivered photovoltaic solar plant in electrification programs to the Namibia; and Kavango, Zambezi, Omusati, Oshana, Kunene and Ohangwena • other solar projects also include Region: the, Osona Power Project, Outapi Power Project (4.9MW), • CENORED is the third licensed Ombepo Wind Power Project regional electricity distribution (5MW) and the Arandis Power company to be established in Project (3.8MW) as well as the Namibia. Its license area covers Ohorongo Solar Plant (5MW) the Otjozondjupa and Kunene and the 5.4MWp (DC) Solar regions and has a customer Project in Okatope. base of 40,000 customers and distributes electricity to various towns and settlement areas of
109 Renewable Energy in Africa Namibia – Foreign Investment/Ownership
Foreign Investment/Ownership
Foreign investment in Namibia is be formed for the exploitation of such business or category of business This new legislation does not make who have been socially, governed by the Foreign Investments rights. which, in the minister’s opinion, is provision for local ownership, it does economically or educationally Act 9 of 1990 (Foreign Investments engaged primarily in the provision of however grant the Minister a vast disadvantaged by past Subject to compliance with any Act). services or the production of goods number of powers and functions discriminatory laws and practices; formalities or requirements prescribed which can be provided or produced which includes the approval of an According to the Foreign Investments by any law in relation to the relevant adequately by Namibians, and, with investment proposal by a foreign • the contribution of the investment Act, no foreign national engaged business activity, a foreign national effect from the date of such notice, investor, provided that they are to the implementation of in a business activity or intending may invest and engage in any no foreign national shall, subject to satisfied that the conditions set out in programmes and policies aimed to commence a business activity business activity in Namibia which any the provisions of section 7(3) of the Section 14 of the said Act have been at redressing social and economic in Namibia shall be required to Namibian may undertake. Foreign Investments Act, through the met and a substantial number of the imbalances in Namibia, including provide for the participation of the For the purposes of any law governing investment of foreign assets, become requirements set out in Section 4(2) gender-based imbalances; government or any Namibian as the establishment and carrying on of engaged in or be permitted to (b) of the Act are fulfilled or likely to shareholder or as partner in such any business activity or the taxation become engaged in any business so be fulfilled in a specified period. These • the transfer of technology and business, or for the transfer of such of any income, or any other aspect, specified or falling within any category requirements include: technological skills; business to the government or any of any business activity, a foreign of business so specified. Namibian: provided that it may be • joint venture with Namibians; national shall be in no different • the development of managerial a condition of any license or other New legislation, to wit, the Namibia position than any Namibian, except skills; authorisation to or any agreement Investments Promotion Act 9 of 2016, • the employment creation for as may be otherwise provided by the with a foreign national for the grant of set to repeal the Foreign Investments Namibians; Foreign Investments Act. • the promotion of research, rights over natural resources that the Act has been promulgated, however development and innovation; government shall be entitled to or may The Minister may, however, by has not taken effect yet. • the contribution of the investment acquire an interest in any enterprise to notice in the Gazette, specify any to the advancement of persons
110 Renewable Energy in Africa Namibia – Foreign Investment/Ownership
• the value addition to the natural 1. Local Ownership. or educational imbalances arising resources and manufacturing out of racially discriminatory laws or 2. Management Control and sector and procurement of goods practices before the Independence of Employment Equity. and services; Namibia. 3. Human Resources and Skills However, the NEEEF is still in draft • the environmental impact and development. form and it is uncertain whether and contribution to environmental The local ownership pillar dictates that in what form this bill will be passed. benefits; and any private sector enterprise that is established after the commencement • other matters relating to the of NEEEF may commence business improvement of the economy only when such enterprise has and development benefits in the secured 25% ownership by a racially public interest as the Minister may disadvantaged person or persons or prescribe. such higher percentage as may be determined by the minister through Further, in terms of the proposed notice in the government Gazette. NEEEF Bill, the NEEEF will promote transformation through six Racially disadvantaged persons are empowerment pillars (of which three identified as all persons who belong to are mandatory and are subject to a racial or ethnic group which was or scoring). The three mandatory pillars is, directly or indirectly, disadvantaged are: as a consequence of social, economic,
111 Renewable Energy in Africa Namibia – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Namibia ratified the Paris Agreement Sources in September 2016. The country’s MME’s official website: http://www.mme.gov.na/directorates/energy/renewable/ Intended Nationally Determined Contribution contained a commitment NamPower’s official website: https://www.nampower.com.na/ to reduce emissions by 89% (relative to a business as usual baseline) by Prefeasibility study for biomass power plant in Namibia http://www.the-eis.com/ 2030. Namibia has identified the need data/literature/Final_Executive%20Summary_NamPower%20EBtP%20Study.pdf to attract additional investment to the tune of some USD33 billion (at The Electricity Control Boards official website https://www.ecb.org.na/ 2015 prices) to enable it to meet this commitment. The National Renewable Energy Policy of 2017
Intended Nationally Determined Contributions (INDC) of The Republic of Namibia to the United Nations Framework Convention on Climate Change, September 2015
112 11
Nigeria Renewable Energy in Africa Nigeria – Overview
Nigeria Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: The Constitution of the 2019 Doing Business Report: With a population of approximately Federal Republic of Nigeria, Federal 146 of 190 (down 1 ranking) 190 million, Nigeria accounts Statutes, State laws, Case Law (Judicial for about 50% of West Africa’s Precedent), supplemented by common 2018 Global Competitiveness Index: population. Nigeria’s real GDP is law and equity, customary law and 115 of 140 (down 3 rankings) expected to grow by about 2.3% in Islamic law. 2019 and 2.4% in 2020, based on 2019 Index of Economic Freedom: the accelerated implementation Language(s): English (official 111 of 180 (up 1 ranking) of economic recovery and growth language), Hausa, Igbo and Yoruba plans. Although the private sector and several others. 2018 Corruption Perceptions Index: is the main driver of the economy, 144 of 180 (no movement) its potential has not been fully exploited as it faces significant 2018 UN Development Programme challenges – including power Human Development Index: shortages and under-investment 157 of 189 (no movement) in infrastructure.
Population: 190.9 million
GNI per capita: USD2,080
114 Renewable Energy in Africa Nigeria – Electricity Industry Overview
Electricity Industry Overview
Nigeria’s total installed electricity into generation, transmission and 1,125MW of solar power to the grid. generation capacity is estimated distribution companies, as well as Though disagreements relating to the to be 12,522MW, whilst current the transfer of assets, liabilities and solar feed-in tariff have stalled signing available capacity is circa 6,800MW. staff of the National Electricity Power of the Put Call Option Agreements by Nigeria achieved its highest peak Authority (NEPA) to the Power Holding 12 of the 14 project developers, the generation output of 5,222.3MW in Company of Nigeria (PHCN) and to signing of the PPAs is a clear indication December 2017. As of March 2019, successor generation, transmission of the government’s intention to tap the installed electricity generation and distribution companies. into the renewable energy potential of capacity from thermal sources In addition, the Nigeria Bulk Electricity the country. stood at approximately 81% with Trading Co Plc NBET was incorporated the remaining 19% being hydro- to serve as a bulk trading entity in the generated. The annual consumption electricity market. of electricity per capita is estimated at less than 150kWh (compared to The government of Nigeria is an average in Sub-Saharan Africa determined to ensure that the of 552kWh per capita and a world country’s power sector is more fully average of 2,975kWh per capita). diversified and not dependent on any single energy source. To this end, The Electric Power Sector Reform the NBET, Federal Ministry of Power, Act 2005 (EPSRA) assisted with the Works and Housing and 14 project liberalization of the energy market by developers, in July 2016, signed creating a framework for unbundling USD1.76 billion power purchase of the state-owned power entity agreements (PPAs) to generate
115 Renewable Energy in Africa Nigeria – Electricity Industry Overview
Electricity Laws
• EPSRA is the primary energy legislation and captive power generation as generation of ancillary regulations are made from time to electricity exceeding 1MW for the purpose time by the Nigerian Electricity Regulatory of consumption by the generator, and which Commission (NERC). The ESPRA is the main is consumed by the generator itself, and not statutory legislation aimed at regulating sold to a third party. Its provisions empower the electricity sector in Nigeria. It contains industrial customers to generate the power guidelines for the licensing and regulation of needed for their operations and eliminate all parts of the electricity value chain in Nigeria technical losses as the power produced is (the generation, transmission, distribution consumed directly by the generator. (See below) and supply of electricity). It also establishes the NERC to monitor the sector and enforce • The Nigerian Electricity Regulatory Commission regulations. (See below) Application for Licenses (Generation, Transmission, System Operations, Distribution • The Nigerian Electricity Management and Trading) Regulations 2010. This regulation Services Authority Act 2014 (NEMSA). This Act outlines the manner, requirements and fees establishes NEMSA to carry out the functions for application for generation, transmission, of enforcement of technical standards and distribution and trading licenses from NERC. regulations and certification of all categories It also states the criteria for renewal or of electrical installations to ensure the efficient suspension of a license by NERC. production and delivery of safe and sustainable electricity. (See below)
• The Nigerian Electricity Regulatory Commission (Permits for Captive Power) Regulations 2008. The regulation defines
116 Renewable Energy in Africa Nigeria – Electricity Industry Overview
Regulators The NERC is the main regulator inspections, testing and certification of under a management contract) and TCN’s core mandate broadly covers created by the EPSRA. The NERC all categories of electrical installations, the Hydro Generation plants Kainji, the operation and management of is authorized to issue regulations, electrical meters and instruments jebba and Shiroro (which were the high voltage (330/132kV) transmission guidelines and set tariffs for electricity etc. to ensure the efficient production subject of separate concessions to system assets, generation dispatch supply in Nigeria through a tariff and delivery of safe, reliable and private investors). The management functions (system operations) and order, which consists of various sustainable electricity power supply. contract with Manitoba Hydro provision of open access transmission methodologies (currently the NERC International Nigeria Limited (MHINL) services on regulated tariffs. uses the Multi-Year Tariff Order). Generation, Distribution expired in 2017 and management The NERC undertakes economic and Transmission has since been handed over to a local The Discos control the supply of regulation of the Nigerian electricity As mentioned above, in 2005, the internal team of the TCN. electricity within a designated supply industry and serves the NEPA, was transferred to the PHCN. geographical area. Before purpose of maintaining a supervisory This was further unbundled into At present, there are 23 grid- May 15, 2017, generation companies role over the privately run business 11 distribution companies (Discos), connected generating plants in could not sell directly to end entities operating within the sector. six generation companies, and one operation and this comprises of the users; however, with the advent It also has the mandate to license transmission company, and the privatized generating companies, of the Eligible Customers’ Regime operators, determine operating assets, liabilities and staff of PHCN Independent Power Producers and (implemented by the NERC Eligible codes and standards, establish were transferred to the successor the generating stations under the Customer Regulations 2017), customer rights and obligations and companies. The Nigerian government National Integrated Power Project. generating companies are now set cost-reflective industry tariffs. has divested its majority interest in the free to generate and sell electricity successor companies by divesting 60% The TCN is presently fully owned and directly to end users. (See below) The Nigeria Electricity Management of its interests in these entities (save operated by the government and its Services Authority enforces technical for the Transmission Company) (TCN) operations cover the whole country. standards and regulations, technical (which was not privatized but was put
117 Renewable Energy in Africa Nigeria – Renewable Energy Overview
Renewable Energy Overview
Nigeria is endowed with vast and supply. The REP successfully embarked at encouraging private companies to in 2012. It sets out a road map for Alaoji Power Station (1,074MW), varied natural resources, including on Rural Electrification, providing and invest in solar home systems for off-grid increasing the role of renewable energy Olorunsogo II Power Station (675MW), massive supplies of water, solar, wind installing Stand Alone Solar Systems for communities. The REA also provides solar in achieving sustainable development. and the Calabar Power Station and biomass. This vast potential in 600 households as well as training in home system companies with access (561MW). The Alaoji and Olorunsogo II renewable energy resources is mostly Mutum Biu, Gassol, Taraba state. to the rural electrification fund with The REMP stresses the need for the Power Stations operate on combined untapped, hence the government of the expectation that access to cheaper integration of renewables in buildings, cycle gas turbines. There are no Nigeria has developed and committed In addition, the REP successfully financing will result in cost saving which electricity grids and for off-grid electrical biomass power projects underway in to several plans and programs aimed at attracted investment, from the Synergent will be transferred to the end user in the systems. According to the REMP, Nigeria. There are also private sector ensuring the development and growth of Powershare Group of Companies, in a form of affordable rates. Nigeria intends to increase the supply led projects which are adding to the renewable energy. 50MW solar farm in Kaduna which was of renewable electricity to 23% in 2025 power generation capacity, the Afam officially launched by the Minister of Biomass is also gaining a lot of and 36% by 2030, Renewable electricity Thermal Power Plant in Port Harcourt The Nigerian Renewable Energy and Environment and Kaduna State Governor interest and attention. This interest would then account for 10% of Nigeria’s is expected to generate and deliver Energy Efficiency Policy (NREEEP), in September 2011. is largely from the government total energy consumption by 2025. The 340MW to the National grid when it approved in April 2015 by the Federal through the REP. For example, Minister of Power, Works and Housing comes on stream. The Dangote group Executive Council, commits Nigeria to In terms of existing generation capacity, working in conjunction with Carbon recently revealed the Road Map for have also invested in a Qua Iboe IPP achieving 20% of its national electricity hydropower is the main source of Quest and Adamawa state, the REP Steady, Incremental and Uninterrupted which is proposed to generate 540MW supplies from renewable energy sources renewable energy in Nigeria. Solar office is establishing an integrated Power Supply. It confirms the drive to by 2021. The Azura-Edo power project by 2030. In addition, the NERC has energy is mainly used in urban and Rice Processing and Power increase generation capacity by the use has been regarded as a landmark committed to stimulating investment in rural areas for street lighting, domestic Generating Facilitator that intends of energy sources including solar, wind, achievement in the power sector as renewable energy generation in Nigeria home use, and in some rural areas for to use self-generated power from hydro and coal. Nigeria’s first project-financed IPP. and has set a target of a minimum irrigation projects and to power water rice-husk. of 2,000MW of electricity generation pumps. The government encourages THERMAL The power project with a generation from renewables by 2020. The Federal the provision of electricity to off-grid The Renewable Energy Master Plan The Nigerian government has developed capacity of 459MW is the first Nigerian Ministry of Environment has also initiated areas of Nigeria by means of solar (REMP) was developed by the Energy ten thermal generation plants under power project to benefit from a Partial a Renewable Energy Programme (REP) power. This is done through the Rural Commission of Nigeria, in collaboration the National Integrated Power Project Risk Guarantee from the World Bank. with the objective of addressing the Electrification Agency (REA) which with the United Nations Development which are currently held by the Niger nation’s challenge of moving towards was inaugurated in 2006. The REA Programme in 2005 and was reviewed Delta Power Holding Company Limited. clean, reliable and sustainable energy provides policy and regulation aimed The largest of these plants are the
118 Renewable Energy in Africa Nigeria – Renewable Energy Overview
SOLAR In 2016, NBET signed power purchase Partners, a French independent by NERC, acknowledging that JBS Wind USD5.792 billion for the construction of There is huge potential for solar power agreements with 14 firms for the power producer. Greenwish will invest Power Limited has met all regulatory the 3,050MW Mambilla Hydro-Power in Nigeria, with analysts projecting that construction of solar power plants in USD280 million to build solar power requirements to commence operation. project at Gembu in Taraba. The contract Nigeria could generate over 50% of eight states in Nigeria that will generate plants in Nigeria that are expected to was awarded to a consortium of three required power by deploying solar PV 1,125MW of electricity. It is understood start producing electricity in the first The Nigerian continental shelf is about Chinese companies, China Gezhouba panels on just 1% of Nigeria’s land mass that the generated electricity will be fed quarter of 2018. A plant in the south 42,285 km and this represents a huge Group Corporation, Sinohydro (estimated at 923,970 km2). first to the distribution companies where eastern state of Enugu will produce potential for the development of offshore Corporation Limited and CGCOC Group the solar plants are sited and the excess 100MW, and the other two plants will wind farms. There is particularly huge Co. Limited, for the engineering and There are opportunities for solar power fed to the national grid. As part of the be 50MW each and located in the potential for wind energy development turn-key contract, including civil and developers to partner with distribution project, it is understood that a 100MW northern Kaduna and Jigawa states. in the north of Nigeria as wind speed is electro-mechanical works. The scope companies to provide embedded plant is planned for Bauchi state and a There is however no publicly available highest in Sokoto, Jos, Bauchi and Kebbi of work of the project will include the power generation, particularly for the 50MW plant in Nasarawa state. information as to the status of the states. construction of four dams and 700 km of distribution companies in northern project. transmission lines. Nigeria. The northern part of Nigeria has Other off-grid projects include: HYDROPOWER the highest potential for solar projects Furthermore, on May 15, 2019, the • University of Ibadan (10MW) – WIND There are currently three hydropower given the high level of solar radiation Federal Executive Council approved provides renewable electricity to Presently, there are no operational generation stations in Nigeria – Kainji, (about 5.0-7.0kWh/m2/day). Utilizing solar a USD1 billion loan from the Chinese the university community and its wind power plants in Nigeria. However, Jebba and Shiroro power stations. These power generation in the northern part of EXIM Bank for the 30MW Gurara II environs. This project serves as a pilot Vergnet Groupe and the Federal power stations account for about 26% the country has the potential to steadily hydropower project. This followed project with additional projects being Ministry of Power have completed the of all electricity produced in Nigeria. increase the power generation capacity the conclusion of the concession process proposed for other universities in construction of a 10MW wind power The country is reasonably endowed in Nigeria. There is a ready market for whereby North South Power Company Nigeria. The Project was being carried plant in Katsina state and this plant is with large rivers and some natural solar power developers to operate in due was chosen as the concessionaire out in partnership with the German expected to be commissioned in 2018. falls, hence, there are opportunities for to: the huge demand for power supply; for the hydropower components of government and became operational In addition, the NBET is in negotiations small and large hydro projects. Small high population density; and the fact that the Gurara dam. Upon conclusion of in October 2016. with JBS Wind Power Limited for the hydropower is defined in the REMP as all solar power projects take less time to the hydropower project, the Gurara dam construction of a 100MW wind power hydroelectricity schemes below 30MW. reach commercial operations compared will produce an estimated 115GW per • Greenwish Partners – proposed farm in Plateau state and a provisional to the conventional gas-fired generation. In a bid to tap into the potential for more hour of energy annually. 200MW solar power plants in three Independent Power Producer license has hydropower plants, the Federal Executive states in Nigeria by Greenwish been issued to JBS Wind power Limited Council, in August 2017, approved 119 Renewable Energy in Africa Nigeria – Renewable Energy Overview
Another noteworthy development in • Lack of Earmarked Funding for equipment. Naira volatility has financing, widening the gap as private sector participation in renewable energy financing in Nigeria NBET: NBET was created as part exacerbated this problem as tariff payments are in naira. For the power generation from renewable is the recently consummated debt of the PHCN privatization but is described more fully below. generation companies, feedstock energy technologies. According financing deal that saw North South not funded through FGN’s budget. gas which is priced in USD yet they to Section 5 of the regulation, the Power Company Limited, the operators Securing funding for NBET and • Unresolved Liquidity issues in the are unable to get full payment Nigerian Bulk Electricity Trading of the Shiroro Hydro-electric power credit support for its obligations Sector: There is a revenue shortfall for their invoices from NBET, who Company shall purchase 50% of station, raise over NGN8.50 billion from remain an issue to be addressed which has caused liquidity issues is unable to recover full value of the renewable energy electricity a green infrastructure bond. This is the through various structures throughout the value chain of their invoices from the distribution capacity limit established by first certified green corporate bond and (including partial risk guarantees). the power sector and which has companies. The distribution the regulation, while electricity the longest tenured (15 years) corporate remained unresolved. The liquidity companies also have a claim that distribution companies shall take bond issued in the Nigeria debt capital • Bilateral Arrangements: To date, issues are caused by several factors the legacy debts owed to each up the remaining 50% of the markets. The funds raised from the the Nigerian authorities have including but not limited to the lack of their distribution companies capacity. (See below) capital market will be used to finance primarily relied upon bilateral of a cost-reflective tariff adjusted has yet to be paid by the federal the capital expenditure of North South approaches from investors rather appropriately for inputs such as government and was an obligation Power Company Limited whose business than competitive tenders. This inflation, available generation agreed to during the privatization. model is designed to encompass a broad has in turn fuelled uncertainty capacity, foreign exchange rate range of technologies and power types regarding the appropriate level fluctuation, etc. In addition the Renewables Laws including hydropower, wind, biomass of tariff. One reason that projects devaluation in the naira has • EPSRA encourages the promotion and solar. currently under development deepened this liquidity crisis of electricity from all sources of further as the foreign exchange Current Issues in the have experienced delays relates to energy including renewables. Renewables Industry prolonged discussions about tariff differential is till yet to be reflected levels. in the tariff. Another result of the • Regulations on Feed-In Tariff Despite Nigeria’s vast and varied devaluation is the effect it has had for Renewable Energy sourced renewable energy potential, the • Naira Denominated Tariffs: NBET on the ability of investors to meet electricity in Nigeria, 2015. renewable energy sector remains prefers to denominate PPA tariffs their debt service obligations as underdeveloped and untapped because in Naira, whilst most IPPs rely a majority of the financing for the • The regulation aims to boost power prospective investors still have to upon USD financing to purchase power sector is USD-denominated supply in the country and stimulate grapple with the following challenges:
120 Renewable Energy in Africa Nigeria – Government Incentive Schemes
Government Incentive Schemes
Power Production Tax Credit for Finance, Grants and Feed-in and Licensing electricity generation companies Loans Incentives is aimed at incentivizing the The NREEEP commits to providing In pursuance of the NREEEP, adoption of renewable energy. access to finance lines for the government has declared a The government has committed renewable energy projects as commitment to ensuring that the to ensuring that renewable energy well as generation, distribution NBET, distribution companies or becomes more widespread by and transmission infrastructure, any other identified off-takers are approving the following tax including for grid extension, and encouraged to buy the electricity incentives: more importantly for off-grid, mini- offered to the electricity market from grid and feed-in systems, all based renewable energy sources. However, • five-year tax holidays to on renewable energy. Through this will be done at a rate fixed by manufacturers from date the NREEEP, the government also the NERC. In addition to this off- of commencement of commits to providing assistance in take guarantee, the government has manufacturing; and allocating or granting of land for committed to a “simplified licensing renewable energy projects; as well as procedure” for IPPs selling electricity • five-year tax holidays on dividend providing soft loans and special low from renewables to the grid (up to incomes from investment into interest loans from a Power Sector 50MW). renewable energy sources. Development Fund to renewable energy projects. There are also incentives for importers to import energy efficient appliances and lighting through exemption from excise duty, sales tax and customs duty for two years on the importation of renewable energy equipment and materials.
121 Renewable Energy in Africa Nigeria – Major Projects/Companies
Major Projects/Companies
Existing Hydro Power Proposed Hydro Power circa 47% complete, with the • Kashimbila Hydropower Plant Stations Stations first phase to be completed in (40MW) – construction of this • Kainji and Jebba Power Plants • Mambilla Power Plant (proposed December 2019. hydropower plant located in (1,338.4MW) – these plants 3,050MW) – a joint venture of Taraba state has been completed; have an installed capacity of Chinese Civil and Engineering • Kiri Power Plant (proposed however, the transmission 1,338.4MW and compose 20% of Companies was awarded the 35MW) – construction of this site is infrastructure required for grid Nigeria’s power generation. The engineering and turn-key proposed on the Kiri Dam in Guyuk connection is pending. In addition, concessionaire, Mainstream Energy contract, including civil and local government area of Adamawa the process of appointing a Solutions Limited, is, as a result, electro-mechanical works for state in the north east of Nigeria, concessionaire is ongoing. Nigeria’s largest generator of USD5.792 billion. The project will damming the Gongola River. renewable clean energy. be jointly financed by the Federal Government of Nigeria (15%) and • Gurara Hydropower Plant: • Shiroro Power Plant (600MW) – the China Export Import, EXIM, (proposed 30MW) – located in Shiroro Hydro Electric Plc Bank (85%). Kaduna state, the 30MW project is (a subsidiary of North South estimated to cost USD18.4 million Power Company Limited) is • Zungeru Power Plant (proposed and it is expected to address the the concessionaire and operator 700MW) – the project is located in gap in electricity supply across the of the Shiroro power plant. Niger state, Nigeria and comprises country, particularly in the North- four units of 175MW each. It is West states of Nigeria. understood that the project is
122 Renewable Energy in Africa Nigeria – Foreign Investment/Ownership
Foreign Investment/Ownership
The Nigerian energy sector is Furthermore, foreign investors may open to foreign participation. invest in Nigeria by way of foreign Foreign companies are required direct investment. i.e. investment in to incorporate a separate entity in e.g. ownership of productive assets, Nigeria (Companies and Allied Matters i.e. factories, mines and land, either Act 1990). This separate entity may by setting up businesses or through be fully owned by foreign investors. foreign portfolio investment, which In certain sectors, i.e. the oil and is where foreign investors make gas sector, companies with Nigerian purchases in the country’s stock and ownership (51%) are given preferential bond markets. treatment and consideration in the award of contracts, but this does not apply to electricity generation. Foreign investors must also register with the Nigerian Investment Promotion Commission.
123 Renewable Energy in Africa Nigeria – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments and beyond
Obligations • increase the adaptability to Steps taken under Nigeria’s Ministry of Environment has • Nigeria signed the United Nations the adverse impacts of climate Paris Agreement planned to issue NGN150 billion green Framework Convention on Climate change and foster climate The Nigerian government has bonds to the public. Change (UNFCCC) in 1994. Nigeria resilience and low greenhouse introduced Green Bonds. These bonds signed the Paris Agreement (an gas emissions in a manner enable capital-raising and investment agreement within the UNFCCC) that does not threaten food for new and existing projects with on September 22, 2016, and production; and environmental benefits. The bond is a subsequently ratified the fixed-income security issued to finance • make finance flows consistent Agreement on May 16, 2017. It was projects that have a positive impact on with a pathway towards low the 146th country to endorse the environment, and will fund a range greenhouse gas emissions and the Agreement. of renewable energy, afforestation, climate-resilient development. and environmental projects. Nigeria • In accordance with Article 2 of Nigeria has set itself the goal of is the first African nation to issue a the Paris Agreement, Nigeria has reducing its carbon emissions by sovereign nation to issue a sovereign obligations to: 20% unconditionally and 45% with green bond, and is the fourth international support by 2030 through nation in the world to issue one. • hold the increased global energy, transport and agriculture In 2017, Nigeria issued NGN10.69 average temperature to well projects that would reduce carbon billion (USD29 million) bonds over below 2°C above pre-industrial emissions and mitigate the effects of three projects. The bond’s tenor is levels; climate change. five years and investors receive an annual coupon at 13.48%. Following increased calls for climate funding,
124 Renewable Energy in Africa Nigeria – Relevant Resources and References
Relevant Resources and References
References
Electric Power Sector Reform Act 2005 accessed at: http://www.nercng.org/index.php/library/documents/Regulations/Electric-Power-Sector-Reform-Act-(EPSR)-2005/
NERC Eligible Customer Regulations 2017 accessed at: http://www.nercng.org/index.php/library/documents/Regulations/NERC-Eligible-Customer-Regulation-2017/
Nigerian Electricity Regulatory Commission Application for Licences (Generation, Transmission, System Operations, Distribution and Trading) Regulations, 2010 accessed at: http://www.nercng.org/nercdocs/Regulation-for-the-Application-for-Licence.pdf
Nigerian Electricity Regulatory Commission (Permits for Captive Power) Regulations 2008 accessed at: http://www.nercng.org/nercdocs/Regulation-for-Captive-Power-Generation.pdf
Regulations on Feed-In Tariff for Renewable Energy sourced electricity in Nigeria, 2015 accessed at: https://www.iea.org/media/pams/nigeria/NIGERIA_FIT_regulation2015enteringintoforceFeb2016.pdf
The Nigerian Electricity Management Services Authority Act 2014 accessed at: http://www.nemsa.gov.ng/site/wp-content/uploads/2017/08/NEMSA_ACT_2015.pdf
125 12
Senegal Renewable Energy in Africa Senegal – Overview
Senegal Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: Senegal is a civil law 2018 Doing Business Report: Located in West Africa, Senegal is jurisdiction. The Fourth Constitution 140 of 190 (up 7 rankings) bordered by Gambia, Guinea, Mali, of Senegal was adopted in 2001 and and Mauritania. It has been one of amended in 2016 and 2019. 2018 Global Competitiveness Index: the most stable countries in Africa, 106 of 138 (up 6 rankings) and is a member of the Economic Language(s): French is the official Community of West African states. language of Senegal but the most- 2017 Index of Economic Freedom: Economic growth in Senegal has spoken is Wolof. 120 of 180 (down 9 rankings) recently accelerated, reaching about 6.5% in the past two years, making 2016 Corruption Perceptions Index: Senegal one of the best performing 64 of 176 (down 3 rankings) economies in Sub-Saharan Africa. Almost three-quarters of this 2016 UN Development Programme recent growth is due to a higher Human Development Index: contribution from exports, whose 162 of 188 (up 8 rankings) volumes increased by almost 15% and 13% in 2015 and 2016 respectively, Population: 15.8 million underpinned by a more diversified base in agriculture, fishing, and GNI per capita: USD2,480 mining.
127 Renewable Energy in Africa Senegal – Electricity Industry Overview
Electricity Industry Overview
• Senegal’s electricity market is state- energies. In 2014 Senegal’s electricity controlled, with the generation, production mix was dominated by oil, distribution and transmission of coal and gas sources, which made up power performed by the state-owned approximately 88% of the total, while national company Senelec. around 9% came from hydroelectric generation, and the remaining 3% • As at March 2018, the installed from other sources. capacity was 864MW comprising: • As of 2014, according to World • Thermal: 733MW Bank statistics, approximately 61% of the population of Senegal • Hydro: 60MW had access to electricity. This • Solar: 50MW1 constitutes approximately 85% of the urban population, but only 33% • The state of Senegal has defined a of the rural population. development plan for the 2013-2017 generation fleet based on an energy mix policy involving coal, natural gas, hydroelectricity and renewable
128 Renewable Energy in Africa Nigeria – Electricity Laws
Electricity Laws
The major renewable energy governing laws • Decree No. 2011-2013 implementing the are the following: renewable energy orientation Act relative to the conditions of purchase and payment of • Act No. 2010-21 of December 20, 2010 on the the surplus of renewable energy generated framework law on renewable energy. for self-consumption.
• Act No. 81-22 of June 25, 1981 establishing tax • Ministerial order No. 29/MEMI of advantages in the field of the use of solar and April 21, 1999, establishing a Quality wind energy. Control Unit for photovoltaic components.
• Decree No. 2011-2013 implementing the renewable energy orientation Act relative to conditions of purchase and pricing of the electricity produced by power plants from renewable energy sources, and the conditions of their connection to the grid.
129 Renewable Energy in Africa Senegal – Electricity Industry Overview
Regulators
The main regulators of the energy distribution of hydrocarbon, is a functions, it contributes to the The Commission also has powers to • ensure compliance with sector in Senegal are: consultative organ which deals development of national strategies take individual decisions in the energy competition in the sector; with the oil and gas segment of the related to the electricity sector: sector. Its role is to: • Of Petroleum and Energies; • determine the structure and sector. composition of tariffs • advising the Minister of Energy • examine applications for a • The Electricity Sector Regulatory The Minister of Energy develops on all legislative and regulatory license or concession; • apply, if necessary, sanctions Commission (its deals with the and proposes general policy and plans for the electricity sector; to operators for breaches of electricity segment), which is an • ensure compliance with the standards for the electricity sector and duty; and independent authority responsible terms of the licenses and to the President of the Republic. for regulating the production, • offering to the Minister of concessions; • it also has broad investigatory The Minister also grants licenses transmission, distribution and sale Energy orders related in powers in the sector. and concessions provided by the • make changes to general of electricity; and particular to the rights and Energy Act, and has the power licenses, concessions or their obligations of companies, third- to remove them. The Electricity specifications; • The National Committee for party access to the network and Commission has a number of main Hydrocarbons, created by Act No. business relationships with their • ensure compliance with responsibilities which include 98-31 of April 14, 1998 on import, customers. technical standards; advisory functions and decision- refining, storage, transport and making powers. In its advisory
130 Renewable Energy in Africa Senegal – Electricity Industry Overview
Generation, Distribution and Transmission
Generation, distribution and generation plants and the Manantali capacity with the remainder transmission of power is performed hydroelectric plant for a total installed owned by IPPs. In 2016 there was by Senelec (the state-owned national capacity of 634.56MW. The Non- 70MW of solar and 125MW of coal company in charge of generation, Interconnected Network includes the projects in construction by IPPs. distribution and transmission of regional plants of Tambacounda and power). Boutoute (Ziguinchor) and nearly 26 • Distribution and sales: senelec isolated centers distributed between is the concessionaire for the The interconnected grid represents the regions of Kaolack, Tambacounda, transmission and distribution the bulk of the Senelec network Kolda and Ziguinchor. The RNI has network in Senegal (with with more than 90% of the installed an installed capacity of 42.5MW fully the exception of Manantali capacity in 2012. This network is thermal and represents only 6% interconnection) and operates mainly concentrated in the western of the total installed power at the in a monopoly condition for and northwestern parts of the country country level. the purchase and sale of and is used to supply the largest wholesale power. cities, mainly Dakar, Thies, Louga, • Generation: provided by Senelec Diourbel, St. Louis, Matam, Kaolack power plants, independent and Fatick, The Interconnected Grid distributors authorized outside production fleet is currently composed Senelec concessions (mainly in of Senelec facilities in Dakar, Kahone rural areas) and IPPs. Senelec owns 1, Kahone 2, Saint-Louis, independent approximately half the generation
131 Renewable Energy in Africa Senegal – Renewable Energy Overview
Renewable Energy Overview
Government policy has set the SOLAR the project developer Senergy PV SA BIOMASS Current Issues in the objective of achieving a non-biomass As one of the sunniest countries in the (15%) and Senegal’s Sovereign Fund Biomass is the primary source of Renewables Industry commercial energy independence rate world (3,000 hours a year3), Senegal for Strategic Investment (32%). energy (55%), but it is not used in Communication between layers of of at least 15% by 2025, due to the has a very significant potential for electricity generation. Although government administration and contribution of renewable energies solar power, but currently it has not WIND considered renewable, the use of private investors can be arduous, and and biofuels. been well exploited. The country There is potential for wind power in biomass as fuel wood and cooking a lack of local expertise in renewable benefits from strong sunshine over Senegal, the wind pattern in Senegal generates significant emissions with energy can be problematic. The government’s Letter on the practically all its extent with an annual is 6 m/s on average (50 m above sea a harmful impact on the population. Energy Sector Development Policy irradiation varying from the south-east level) on the north-east coast of the The country has good potential for the (adopted in October 2012) also to the north-west between 1,850 and country, the Grande Côte, from Dakar use of biomass as an electricity source contains a target of having 15% 2250kWh/m2/year or an average of to Saint Louis. The potential exists on through its production of agricultural of primary energy produced from 5.7KWh/m2/d. this strip of Niayes long 200 km and waste (3.3 million dry tons). renewable sources (excluding 50 km wide and where agricultural biomass) by 2025. This figure would Senegal’s first solar plant came activities are concentrated. Pumping HYDROPOWER correspond to having more than online in 2017, the 30MW plant water for irrigation and connecting The Senegal River has significant 25% of the projected electricity mix was constructed in Santhiou Mékhé villages out of the grid are two viable hydroelectric potential, estimated being of renewable origin in 2025. near Méouane, in the Thiés region applications of wind energy. at 1,200MW.4 Currently between Given the expected doubling of in northwest Dakar. Its USD47 approximately 60-75MW of electricity fossil energy capacity, the country is million cost was financed 53% by In 2016 the Overseas Private is generated from the Manantali therefore strongly committed to the French investment firm Meridiam Investment Corporation, the US Hydroelectric Power Plant and the development of renewable energies. and by Proparco, a development government’s development finance Felou hydroelectric plant, each of In this context, the country has financial institution partly owned institution, and Lekela Power signed which are shared with Mali and launched several tendering by French Development Agency a commitment for the development, Mauritania. programs in renewable energies. and private shareholders which construction and operation of a 158MW The national electricity company, promotes investments in Africa, Asia, wind farm in Taiba N’Diaye, Senegal. Senelec, offers 20-year guaranteed Latin America, and the Middle East. PPAs. The remaining funds were provided by
132 Renewable Energy in Africa Senegal – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
Senegal is strongly committed to • Major projects have generally been connected in West Africa and was the development of renewable carried out through the efforts commissioned in October 2016. energies with the launch of several of the government and bilateral bid solicitation programs in renewable cooperation. • The Taiba Ndiaye Wind Project energies, including: in 2018, led by investors Lekela • Electrification of the Saloum Power, is a 158MW wind farm with • The Rural Electrification Priority Islands – withsupport from the 40 turbines. Program is adopted as a framework Spanish government, more than for the implementation of the State 10,000 isolated photovoltaic • The Ten Merina solar power plant Rural Electrification Program. systems were installed and around in 2018: Ten Merina has similar ten villages were equipped with features to the Senergy project: • Program for the promotion mini-power plants. a generating capacity of 30MW of renewable energies, rural using similar technology and electrification and sustainable • Senergy 2 project – initiated combining the French expertise of supply of domestic fuels. in 2012, the project is owned investment specialists Meridiam by Greenwish Africa REN, an and Solairedirect (a subsidiary of • Project of sustainable management investment vehicle bringing French energy provider Engle). and participation of traditional and together 45% of foreign and alternative energies. local investors, including • Other programs are currently Senegal’s Caisse des Depots et being implemented by Indian • Pilot project for the production of Consignations. The Senergy 2 cooperation and other donors. oil from microalgae under basins. solar PV plant is the first utility- scale solar PV plant operated by an Independent Power Producer to be
133 Renewable Energy in Africa Senegal – Foreign Investment/Ownership
Foreign Investment/Ownership
Tax relief measures, guarantees and benefits are granted to investors through the code of investments. Transparency, clarity and breadth of benefits make this code a particularly attractive tool for the investor. It provides for customs and tax benefits for new businesses and extension projects. These benefits include the exemption from customs duties, the suspension of VAT and the reduction of the tax rate on profits.
134 Renewable Energy in Africa Senegal – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Senegal ratified the Paris Agreement Relevant Websites on September 21, 2016. In its http://www.energie.gouv.sn/ Intended Nationally Determined Contribution, Senegal committed References to reducing its greenhouse gas emissions by 5% (relative to a 1 https://www.usaid.gov/powerafrica/senegal business-as-usual baseline) by 2 Just to flag that https://www.usaid.gov/powerafrica/senegal contains updated 2030, It also committed to a further figures from March 2018 but US aid is potentially not as reliable a source. target of 21% reduction conditional on the support of the international 3 https://en.wikipedia.org/wiki/List_of_cities_by_sunshine_duration community. 4 https://www.africa-eu-renewables.org/market-information/senegal/ renewable-energy-potential/
135 13
South Africa Renewable Energy in Africa South Africa – Overview
South Africa Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdiction: South Africa has a mixed 2019 Doing Business Report: Ease of Covering over 1.2 million km2 of land legal system, comprising elements of Doing Business: and 4,620 km2 of water, South Africa common, civil, and customary law. 82 of 190 (no movement) is the 25th largest nation in the world, with a population of over 54 million. Its Language(s): Official languages – 2019 Index of Economic Freedom: peaceful political transition is known Afrikaans, English, Ndebele, Sepedi, 102 of 180 (down 21 rankings) as one of the most remarkable political Sotho, Swazi, Tsonga, Tswana, Venda, feats of the past century. The African Xhosa, Zulu. 2018 Global Competitiveness Index: National Congress has been driving 67 of 140 (down 6 rankings) the policy agenda since 1994. Due to consistent and sound budgetary 2018 Corruption Perceptions Index: policies, South Africa has been able to 73 of 180 (down 9 rankings) tap into international bond markets with reasonable sovereign risk 2016 UN Development Programme spreads. Human Development Index: 113 of 189 (up 6 rankings)
Population: 58 million
GNI per capita: USD12,860 137 Renewable Energy in Africa South Africa – Electricity Industry Overview
Electricity Industry Overview
The electricity market is a approximately 48.27GW. The majority As at March 2016, IPPs provided South Africa is a member of the concentrated one dominated by of generated capacity is sold by 3,392MW of generation capacity to Southern African Power Pool (SAPP) Eskom, a state-owned entity. Eskom Eskom to municipalities that distribute Eskom (of which 460MW is attributable which allows it to trade electricity is responsible for the majority electricity to end users. Remaining to coal, 588MW is attributable with Southern African Development of generation, transmission and generation is provided by independent to gas, 970MW is attributable to Community (SADC) countries, distribution of electricity in South power producers (IPPs) and the wind, 1,165MW is attributable including (among others) Botswana, Africa. In addition, Eskom owns, municipalities themselves. to solar, 10MW is attributable to Lesotho, Mozambique, Namibia, operates and maintains 95% of the hydro and 199MW is attributable to Eswatini (previously Swaziland), national transmission network and Eskom‘s generation capacity is made other sources). Zambia and Zimbabwe. shares the distribution network with up of coal (85.12%), gas (5.63%), hydro licensed municipal distributors (see (4.67%), nuclear (4.34%) as well as A recent, notable development is that below). wind power plants (0.23%). the Department of Energy (DOE) of South Africa has implemented the Eskom generates in excess of 95% Municipal generation assets consist Renewable Energy Independent Power of the electricity used in South Africa of coal (64.4%) and gas fired power Producer Procurement Programme and more than 40% of the electricity plants (14.66%), as well as pumped (REIPPP Programme), which allows the in Africa. storage hydro power plants (20.91%). private sector to bid for the right to generate and sell renewable energy In terms of capacity, the total installed to Eskom, the sole buyer under the power capacity in South Africa program (for the infusion of this is currently estimated to be power into the national grid).
138 Renewable Energy in Africa South Africa – Electricity Laws
Electricity Laws
• National Energy Act 2008 (Act 34 of 2008) – • Central Energy Fund (CEF) Act 1977 (Act aims to ensure that diverse energy resources 38 of 1977) – as amended, provides for the are available in sustainable quantities and determination of levies to be imposed by the at affordable prices in South Africa. In South African state. addition, the Act provides for the increased use of renewable energies, contingency • National Energy Regulator Act 2004 (Act energy supplies, the holding of strategic 40 of 2004) – established a single regulator energy feedstock and carriers and adequate to regulate the electricity, piped-gas and investment in energy infrastructure. petroleum pipeline industries.
• Electricity Regulation Act 2006 (Act 4 of 2006) – establishes a national regulatory framework for the electricity supply industry to be enforced by the National Energy Regulator of South Africa (NERSA). The Minister of Energy is empowered to make determinations for the establishment of IPPs to increase the supply of electricity.
139 Renewable Energy in Africa South Africa – Electricity Industry Overview
Regulators • promote competitive and efficient • Eskom‘s generation assets are TRANSMISSION South Africa‘s distribution industry has NERSA functioning of the energy industry leveraged heavily on coal (greater Transmission of electricity, via the been in severe difficulty, primarily due NERSA is an independent regulator in order to sustain socio-economic than 80%) with gas, hydro, nuclear transmission network, is undertaken to well publicized financial difficulties established under the National Energy development in South Africa; and wind power each contributing almost exclusively by Eskom at both municipal level and at Eskom Regulatory Act which regulates the less than 6% to its generation (95%). Power is transmitted from level which has led to a maintenance electricity, gas and petroleum pipeline • facilitate affordability and capacity. power stations over high voltage backlog of distribution assets. industries. NERSA issues, amongst accessibility in the energy industry transmission lines to various However, Eskom is making progress others, generation licenses and to balance the socio-economic • Municipal generation assets substations across the country. under its universal electrification enforces their compliance, regulates interests of all stakeholders in are, again, highly leveraged on The network of transmission lines is program. It has spent approximately all tariff increases proposed by Eskom, support of economic development coal (greater than 60%) with the referred to as the National Grid. USD390 million connecting 275,830 provides national grid codes, develops of South Africa and a better life for remainder predominantly reliant on new households to the electricity regulatory rules for relevant industries all; and gas fired power and hydro power. At the destination substations, power grid across South Africa during the and determines the applicable is transformed or stepped down to 2017/2018 financial year. standards. • position and establish NERSA as a • Independent generation assets lower voltages to allow for distribution. credible and reliable regulator in (including those procured under South Africa has about 28,000 km NERSA has formulated the following order to create regulatory certainty. the REIPPP Programme) are highly of high voltage transmission lines. five strategic outcome-oriented goals: leveraged on wind and solar Generation, Distribution (both concentrated solar and DISTRIBUTION • facilitate security of supply and Transmission photovoltaic), with coal, landfill Distribution via the distribution to support sustainable socio- GENERATION gas and hydro power making up network, which is the final stage in economic development in South There are three notable sources of the most notable portion of the the delivery of electricity to end users, Africa; energy generation in South Africa balance. is currently undertaken by Eskom, – Eskom, municipalities and IPPs. together with 187 municipalities. • facilitate investment in The energy mix for these sources of Approximately 7% of South Africa‘s South Africa has roughly 325,000 km infrastructure in the energy generation are detailed below: electricity production comes from of distribution lines. industry to support sustainable renewable sources. socio-economic development in South Africa;
140 Renewable Energy in Africa South Africa – Renewable Energy Overview
Renewable Energy Overview
South Africa has an abundance of The current IRP sets out a target of the Inga Hydro Power Project) and contracted capacity; solar PV systems), is able to generate renewable energy resources, in 13,225MW of renewable energy split 1,000MW (coal, which relates to two just under 2 million kWh per year particular solar and wind. down into targets of 4,725MW to already procured projects). The wind • BW2 – 1,040MW of contracted from about 5,500 modules and has be produced by photovoltaic solar, and solar allocations would likely be capacity; a guaranteed lifetime of 20 years. Although there has been a fair 6,360MW by onshore wind, 1,200MW procured under upcoming rounds of This is one of the only projects which amount of traction in the emergence by concentrated solar, 195MW for the REIPPP Programme and the gas/ • BW3 – 1,457MW of contracted has been able to successfully take of off-grid renewable energy small hydro, 25MW for landfill gas, diesel allocations are likely (at least capacity; advantage of this development. One solutions, these have by and large 210MW for biomass,110MW for in part) to be procured under an of the drawbacks is that such a project been self-consumption projects. The biogass and 400MW for small-scale upcoming gas-to-power programme • BW3.5 – 200MW of contracted will be subject to some fairly onerous majority of renewable energy projects, renewable energy projects (small to be implemented by the DOE. The capacity; and conditions, including (i) that the of any notable size, which are not scale solar, wind, biomass and landfall Draft IRP Update has run a 60-day producer must be a net user (buying self-consumptive, have been procured gas projects with a generation public comment and consultation • BW4 – 2,205MW of contracted more electricity than it sells); (ii) a pursuant to the REIPPP Programme. capacity of between 1-5MW each). process but is, at the date of this capacity. bidirectional meter must be installed On August 27, 2018, the DOE publication, still to be finalized. by the municipality (which must be The DOE has published the 2010-2030 published the Draft IRP 2018 (Draft For the most part, the legal framework purchased by the producer); and (iii) Integrated Resource Plan (IRP) which IRP Update), which was intended to The REIPPP Programme is intended in South Africa does not allow IPPs there is a daily fee payable to Eskom is a 20-year projection and living plan be a draft update to the current IRP. to be one of the mechanisms used to to sell energy into the grid outside (approximately ZAR13 per day (which on electricity supply and demand in Among other things, the Draft IRP deliver on the commitment to achieve of the REIPPP Programme, although is in stark contrast to a country like South Africa. It is aimed at, among Update made the following proposed certain of the IRP targets. To date Cape Town has piloted a program France, which charges the equivalent other things, reducing South Africa‘s allocations for new additional there have been five bid windows (due to a series of amendments to of approximately ZAR1.50 per unit to primary reliance on fossil fuels (such capacity to be procured prior to 2030: (BWs) of the REIPPP Programme, in the local regulatory regime) allowing domestic producers)). as coal and diesel), and diversifying 8,100MW (wind), 8,100MW (gas/ which preferred bidders have been this which has yielded limited success. the national energy mix to include diesel), 5,670MW (solar, photovoltaic appointed in the following capacities: The Black River Park Solar project, renewable energy. only), 2,500MW (hydro, which will with a total project size of 1.2MW (one facilitate the RSA-DRC Treaty on • BW1 – 1,425MW of of the world‘s largest roof mounted
141 Renewable Energy in Africa South Africa – Renewable Energy Overview
Current Issues in the energy projects). However, this debate human capital for generating the Renewables Industry seems to have been dispensed with, coal required to produce electricity, principally due to several studies thereby leading to job losses. The Under the REIPPP Programme, the showing renewable energy to be interdict was subsequently overturned majority of preferred bidders under the more cost effective option and on March 29, 2018 by the High Court, BW 3.5 and 4 and the small-scale changes in high level appointments at ruling that the application was not renewable energy program have the DOE (including the minister). urgent. experienced substantial delays and a certain degree of controversy The most recent development in Following the subsequent ruling, surrounding these delays after this stemmed from an urgent bid to the Minister of Energy has signed Eskom refused to sign PPAs for 27 interdict the signing of PPAs for the a number of these outstanding renewables projects that had won aforementioned projects procured PPAs, adding more than 2,300MW of preferred bidder status in 2015. during rounds 3.5 and 4 of the REIPPP electricity to the National Grid. Programme. On March 12, 2018, One of the issues hindering the the National Union of Mineworkers The president has recently merged implementation of these projects of South Africa (NUMSA), together the departments of mineral resources has also been the ongoing debate with Transform SA, applied for and and energy, appointing the former about whether government should, obtained an urgent court interdict minister of mineral resources (Gwede as an alternative, pursue a nuclear stopping Eskom from signing these Mantashe) as the minister responsible energy program and whether this 27 PPAs. The applicants alleged for the newly merged department. poses a cost benefit to the country that signing of these contracts (as opposed to the cost associated would result in Eskom requiring less with the implementation of renewable
142 Renewable Energy in Africa South Africa – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
Other than the REIPPP Programme, A list of notable projects announced Bokpoort CSP – this 50MW tax incentives have been provided by as preferred bidders under the concentrating solar power plant the South African Revenue Service REIPPP Programme is included at project utilized parabolic trough in the form of a capital allowance Appendix A. Several notable projects technology and was built by a joint for assets used in the production of or transactions are listed below. venture of Spanish companies renewable energy. ACCIONA, SENER and TSK and Touwsrivier Project – this 44MW South Africa‘s Crowie for ACWA project was sponsored by Soitec Power. The project is the first in Africa SA and is notable for two reasons. equipped with molten salt tanks that First, it is larger than any operational provide a thermal storage capacity concentrating photovoltaic CPV plant of 9.3 hours. In its first month of in the world. Second, it was financed commercial operation, the plant by a USD110 million bond which is produced electricity continuously for the first publicly-listed project bond 161 hours (or more than six days) ever issued to finance a CPV plant, as which, we understand, was a new well as the first time that a bond has record at the time for a plant of this been used to finance a solar plant in type in Africa. South Africa.
143 Renewable Energy in Africa South Africa – Foreign Investment/Ownership
Foreign Investment/Ownership
The DOE has reported that the REIPPP Programme has resulted in USD14 billion of foreign economic direct investment and created over 20,000 construction and 35,000 operational jobs.
Minimum ownership by local communities in an IPP of 2.5% is required as a procurement condition. Minimum ownership by black people in an IPP of 12% is required as a procurement condition.
There are no restrictions on foreign ownership of companies in South Africa.
144 Renewable Energy in Africa South Africa – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
South Africa ratified the Paris Relevant Websites Agreement on November 1, 2016 and https://www.africa-eu-renewables.org/market-information/south-africa/energy- in its Intended Nationally Determined sector/ Contribution committed the country to a peak, plateau and decline trajectory https://www.gov.za/about-sa/energy range for greenhouse gas emissions, with the overall target for emissions https://www.gcls.gov.za/sites/default/files/docs/resourcecentre/yearbook/ by 2025 and 2030 to be in a range Energy-SAYB1516.pdf between 398 and
614 Mt CO2e.
145 14
Tanzania Renewable Energy in Africa Tanzania – Overview
Tanzania Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdictions: The Judicial system 2018 Doing Business Report: Being a union between Tanzania of the United Republic of Tanzania 144 out of 190 economies (up 7) Mainland and Zanzibar Island to form is based on the common law legal what is now called Tanzania; or referred 2018 Global Competitiveness: system made up of British laws, as well to as the hub of peace. His Excellency 113 out of 137 (up 3) the laws do adhere to the Tanzania John Pombe Magufuli was elected the customary laws as well as Islamic Laws 2017 Index of Economic Freedom: fifth president of the United Republic of in few aspects. 97 out of 180 Tanzania in 2015. Since his appointment, the services industry and infrastructure 2016 Corruption Perceptions Index: The Legal system contains the Court have attracted investment, while the 116 out of 176 (down 1) of Appeal of Tanzania, the High Court country's tourism industry keeps on of Tanzania (Commercial Division, 2016 UN Development programme blooming, with the benefits from being Labour Division, Economic Crimes Human Development Index: the home of Mt. Kilimanjaro Division and the Main Registry), these 151 out 188 (up 1) and National Parks like the Serengeti, are the two courts of records. Other and the Ngorongoro crater. Tanzania has Population: 57.31 million than the two highest courts, there is been endowed with diverse renewable the Resident Magistrate’s Court, GNI per Capita: USD2,920 energy resources including, hydropower, the District Court and the Primary biomass, solar and wind. Tanzania is also Courts. endowed with Natural gas.
Languages: English, Swahili. 147 Renewable Energy in Africa Tanzania – Electricity Industry Overview
Electricity Industry Overview
Electricity is provided by a central There are isolated mini-grids in grid which is owned by a state remote areas which produce electricity utility known as TANESCO (Tanzania through renewable energy sources. Electricity Supply Company Limited). Recent developments have led to TANESCO is the primary source for natural gas becoming a major source electricity generation, distribution of electricity generation; however, and transmission in Tanzania, with increased hydropower and solar a current generation capacity of power schemes demonstrate the c1500MW. However, demand is potential for renewable electricity projected to increase sharply to generation in the country. 4700MW by 2025 due to an increase The Tanzanian government’s Power in industrial activities. System Master Plan (PSMP) looks to exploit such potential through TANESCO is the only entity currently the development of a portfolio of with the license to sell electricity diversified power sources which directly to end users through the provide a resilient and flexible Main Grid. The electricity laws allow generation base. generation and distribution of electricity to end users in remote areas.
148 Renewable Energy in Africa Tanzania – Electricity Laws
Electricity Laws
Electricity generation, distribution and transmission is governed by:
• The Electricity Act.
• The Energy Water Utilities Regulatory Authority Act.
• The following regulations/rules:
• The Electricity (Generation, Transmission and Distribution Activities) Rules, 2018 GN 442;
• The Electricity (Development of Small Power Projects) Rules, GN. No 77 of 2018;
• The Electricity (Grid Distribution Codes) Rules GN No. 441 of 2017;
• The Electricity (Market Re-Organization and Promotion of Competition) Regulations, GN No. 325 of 2016; and
• The Electricity (Licensing Fees) Rules 2016.
149 Renewable Energy in Africa Tanzania – Electricity Laws
Regulators • The Ministry of Energy (MOE) • The Rural Energy Agency (REA)
MOE is responsible for policy The REA is a body under the MOE and formulation and implementation. spearheads the promotion of access to It enables policies and laws which electricity in rural areas. facilitate an environment for Generation, Distribution stakeholders to invest in the energy and Transmission sector, which includes renewable • Generation, transmission and energy. distribution is monopolized by • The Energy Water and Utilities TANESCO, which also owns the Regulatory Authority (EWURA) national grid.
The EWURA is responsible for the • Licenses for generation, technical and economic regulation of distribution and transmission are Tanzania’s electricity, water, oil and gas. issued separately.
• TANESCO • There are a few isolated mini grids that generate and distribute TANESCO is a state-owned company electricity in isolated areas. and is the main generator, transmitter and distributor of electricity.
150 Renewable Energy in Africa Tanzania – Renewable Energy Overview
Renewable Energy Overview
Renewable energy is mostly available for the delivery of power to public WIND POWER in rural areas where the national facilities. Large scale grid-connected The areas of Kititimo and Makambako grid is not available. Therefore, plants are envisaged by the PSMP have been identified as potential sites renewable energy generation is more which identifies a potential for for the development of wind power focus and centralized in community c800MW of solar generation. generation. development. GEOTHERMAL Renewable Energy Laws Generation of electricity through The country has the potential for Renewable Energy is governed by: renewable sources is slowly significant electricity generation from • The Electricity (Generation, integrating with the commercial geothermal which the National Task Transmission and Distribution electricity production. However, Force on Geothermal Development Activities) Rules, 2018 GN 442. as renewable energy currently only has been mandated to develop. provides electricity to mini-grids HYDRO POWER • The Electricity (Development of wide scale utilization has not been Hydro power has played a key Small Power Projects) Rules. achieved. role in the country’s electrical Renewable Energy generation and remains a target • The Electricity (NET-METERING) Sources for increased production through Rules, 2018, GN 76. both large and small scale schemes. SOLAR POWER The government’s PSMP identifies The country’s high levels of solar 16 potential large scale schemes with energy have provided the basis a combined generation capacity of for a range of on-grid and off-grid c.3,000MW and a series of small scale solar plants. The off-grid market is schemes with an additional capacity supported by the Sustainable Solar of c480MW. Market Package offering incentives
151 Renewable Energy in Africa Tanzania – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
There are no large-scale government MAJOR PROJECTS incentives schemes in relation to • Rural Energy Agency Projects (REA) renewable energy generation. partly funded by the Sustainable Further there are no tradable green Energy Fund for Africa (SEFA) of the certificates issued by the Ministry of African Development Bank. Energy. However, there is a Scaling up renewable Energy Program that • World Bank’s International Finance is implemented by the Ministry of Corporation – Farm Wind Project Energy, as an initiative to promote 100MW Project. mini grids and renewable energy generation. • Tanzania – Lighting Africa Project.
PROJECT COMPANIES • Rift Valley Energy
• Norsk vind Energi
• MCC 20 Hainan International
• Aldwych International Limited
152 Renewable Energy in Africa Tanzania – Foreign Investment/Ownership
Foreign Investment/Ownership
Foreign investments is mostly focused World Bank conducting an Energy on hydro and solar energy generation. Sector Management Assistance However, studies indicate that wind Program. The program aims to create power is likely to become an area for an energy map using satellite imaging investment in the future. The first and required an investment of major wind power project is underway USD2 million. The program has made in Singida. mapping data on energy available, which has had the flow on effect of Foreign investment is minimal in increasing foreign investments in the bioenergy and geothermal energy. renewable energy sector in Tanzania. The potential in Tanzania for renewable energy has resulted in the
153 Renewable Energy in Africa Tanzania – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources & and beyond References Relevant Websites
Tanzania ratified the Paris Agreement in April 2018. The country’s Intended Tanzania Mainland Zanzibar Island Nationally Determined Contribution contained a commitment to reduce Ministry of Energy Ministry of Land, Housing, Water and emissions by 10-20% (relative to a https://www.nishati.go.tz/ Energy business-as-usual baseline) by 2030, https://www.zanzibar-energy.com Ministry of Finance and Planning http://www.mof.go.tz/ Ministry of Finance and Planning https://www.mofzanzibar.go.tz/ Energy and Water Utilities Regulatory Authority (EWURA) Zanzibar Renewable Energies http://www.ewura.go.tz Efficiency Programme https://www.zanzibar-energy.com Tanzania National Electric Supply Company (TANESCO) Zanzibar Utilities Regulatory Authority http://www.tanesco.co.tz/ (ZURA) http://www.zura.go.tz/ Rural Electrification Agency http://www.rea.go.tz/ Zanzibar Electricity Corporation https://zeco.co.tz/
154 15
Uganda Renewable Energy in Africa Uganda – Overview
Uganda Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdictions: The Constitution of 2019 Doing Business Report: Uganda is a landlocked country in East of the Republic of Uganda 1995 127 of 190 Africa and is well-known for its natural (as amended), Acts of Parliament, beauty, savannah, wildlife and warmth 2018 Global Competitiveness Index: Common Law and Equity. of its people. Uganda is also one of the 117 of 140 world’s fastest-growing populations. Languages: English. 2017 UN Development Programme Uganda is a founding member of Human Development Index: the East African Community, and has 162 of 189 significant trading links with neighbors Kenya, Tanzania, Rwanda, Burundi, Population: 43 million South Sudan and the Democratic GNI per capita: USD1,820 Republic of Congo. A fully-liberalized economy, Uganda’s economic development blueprint, Vision 2040, sets out to transform Ugandan society into a modern and prosperous middle-income status country by 2040,
156 Renewable Energy in Africa Uganda – Electricity Industry Overview
Electricity Industry Overview
The Uganda energy sub-sector is The total transmission network length by the Rural Electrification Agency partially liberalized and delineated is 2,569.8 km (1,008 km of 220 kV, (REA). The government has so far across three discrete areas: 1,526 km of 132 kV and 35.2 km of implemented over 10,000 km of generation, transmission and 66 kV). medium-voltage power lines and distribution. The sector regulator is approximately 9,000 km of low-voltage the Electricity Regulatory Authority The role of establishing a tariff distribution power lines. This has (ERA), established in 1999 following structure and investigating tariff translated into the connection of the enactment of the Electricity charges is vested in ERA, and Uganda’s over 700,000 customers onto the Act 1999. tariff model is a cost-reflective tariff. national grid. Uganda’s weighted generation tariff Uganda has an installed capacity is currently USDC 6.67/kWh and it is With respect to off-grid energy, of approximately 1,179.2MW and a expected to reduce to USDC 5.34/ ERA has licensed several private and system peak demand of approximately kWh (a reduction of 17.45%) once REA-sponsored isolated grids so as to, 650-700MW. Installed and generation the Karuma hydropower dam majorly, promote rural electrification. capacity is dominated by hydropower. is commissioned. Off-grid installed generation capacity The three major power dams are currently stands at 7.5MW. Bujagali II (250MW), Isimba (183MW) In terms of rural electrification, the and Nalubaale [Owen Falls] (180MW). government of Uganda established Currently, construction is ongoing the Rural Electrification Fund in on the 600MW Karuma dam, which 2001 with the primary objective of is expected to be commissioned promoting the equitable coverage in December 2019. Additional of rural electrification in Uganda hydropower projects with a total rating through the increased provision of of 1,954MW are currently in various access to electricity for economic, stages of studies and development. social and household use. The Rural Electrification Fund is administered
157 Renewable Energy in Africa Uganda – Electricity Laws
Electricity Laws
• The Constitution of the Republic of Uganda 1995 (as amended) – provides for the government of Uganda’s responsibility to develop an energy policy.
• Electricity Act 1999 and accompanying regulations/statutory instruments – provides for the establishment of the sector regulator, the generation, transmission, distribution, sale and use of electricity, the licensing and control of activities in the electricity sector and the liberalization of the electricity sector.
158 Renewable Energy in Africa Uganda – Electricity Laws
Regulators
• Minister of Energy and Mineral • Rural Electrification Fund – Development – responsible for established by the Electricity energy policy formulation through (Establishment and Management which it provides an enabling of the Rural Electrification Fund) environment for all stakeholders. Instrument 2001 to promote the equitable coverage of rural • Electricity Regulatory Authority electrification in Uganda through – the energy sub-sector regulator the increased provision of access to established by the Electricity Act electricity for economic, social and to regulate, license and supervise household use. the generation, transmission, distribution, sale, export, and importation of electrical energy in Uganda, and other related matters.
159 Renewable Energy in Africa Uganda – Electricity Laws
Generation, Distribution the prevailing government policy public limited company which took and Transmission at the time, the available spinning over the distribution system for the reserve for a particular source of supply of electricity from UEDCL in On-grid electricity generation is power based on national peak certain territories under a concession a fully liberalized market, with demand, the general state of the (including all the associated several projects sponsored by national energy mix and other wide- operational assets) for the period both private and governmental ranging technical, financial and March 1, 2005 to February 28, 2025. entities. In principle, the licensing policy considerations before deciding process for generation under an application. Electricity transmission is handled by the Electricity Act is an unsolicited, the Uganda Electricity Transmission non-competitive framework, and The distribution function is also fully Company Limited (UETCL) under ERA’s role is to evaluate applications liberalized, and with nine entities Uganda’s singe buyer/off-taker received from project developers licensed to distribute electricity. One electrical energy purchase model. against a defined set of eligibility key player is the Uganda Electricity UETCL is a governmental entity criteria. Only in exceptional cases Distribution Company Limited formed for the specific purpose of will ERA issue a generation license (UEDCL), a governmental entity bulk power supply/transmission and under the Electricity Act through a formed for the specific purpose system operation, operation of high competitive tender process, in which of distributing electrical energy voltage transmission grid and power the mainstream procurement rules in licensed territories and which import and export. The 33KV-and-over will apply alongside the Electricity Act. owns the 33KV-and-below voltage electricity transmission grid in Uganda Importantly, generation licenses are electricity distribution grid in Uganda. is operated by UETCL. not issued as of right. ERA considers Umeme Limited is a well-known
160 Renewable Energy in Africa Uganda – Renewable Energy Overview
Renewable Energy Overview
Uganda’s 2007 Renewable Energy Policy To promote the development and dams with a total rating of 118MW were ERA has also licensed several private the main geothermal areas of Kibiro, sets out to make modern renewable use of renewable energy sources, the licensed. The main objective of the GET and REA-sponsored isolated grids with Panyimur and Buranga. Drilling of energy a substantial part of the national government of Uganda has developed FiT Program is to assist East African a capacity of 0.5-2MW so as to, promote temperate gradient wells is expected energy consumption. The overall policy the renewable energy feed-in-tariff (RE- nations in pursuing a climate resilient rural electrification. to start in Kibiro and Panyimur in goal is to increase the use of modern FiT) as an instrument for promoting low-carbon development path resulting 2019. In order to attract private renewable energy to over 60% by 2020. private sector generation of electricity in growth, poverty reduction and climate Various private companies also provide sector participation, the government from renewable energy sources. change mitigation. pay-as-you-go energy for off-grid is currently developing a geothermal Uganda developed a bespoke renewable The Ugandan RE-FiT is designed to customers by selling solar home policy and legislation. energy policy and encouraged investment provide price certainty to renewable SOLAR systems on an affordable payment plan in renewable energy sources because energy generators. Depending on the Uganda currently has 40MW of solar to domestic consumers who are not BAGASSE/CO-GENERATION of four unique challenges: an electricity phase, the tariff covers a number of grid-connected systems: 20MW connected to grid-supplied electricity. Co-generation using bagasse as a supply deficit on the national grid, technologies and is attractive because operated by MSS Xsabo Power Limited primary fuel is common practice in escalating oil prices on the international it is based on the levelized cost of each (Great Lakes Energy Company), 10MW WIND the domestic sugar industry. Uganda’s market, the need to make electricity technology and not the avoided cost. operated by Access Solar Uganda Uganda has no grid-connected wind 2010 National Sugar Policy encourages accessible to the rural population through Limited (Access Power) and 10MW systems. An off-grid solar and wind sugar factories to produce close to grid extension and isolated grids and to HYDRO operated by Tororo Solar North Uganda hybrid system is currently operating and 100MW of green electricity from fulfil the government’s commitment on Although hydropower contributes the Limited (Building Energy Italy). An supplying power to rural communities burning bagasse, mainly for own-use greenhouse gas emissions reductions bulk of energy production in Uganda, additional 20MW is expected to be in Kotido, Napak and Namayingo and with the surplus to be dispatched under the Kyoto Protocol and contribute the risk of unreliability during periods commissioned: 10MW operated by districts. These systems supply power to for sale to the national grid. to the global fight against climate change. of drought has caused the government Emerging Power (Uganda) Limited households, health centers and schools. to consider solar, wind, thermal and (Access Power and Total Eren) A 20MW bagasse plant operated by According to Vision 2040, Uganda geothermal generation in its current and 10MW operated by Tororo PV The Ministry of Energy and Mineral Kakira Sugar Limited plant was licensed expects to increase its installed capacity plans for the energy sector. The fall Power Company Limited (Aga Kham Development is in the process of under the GET FiT Program. Another to 41,738MW. The required capacity of water levels in Lake Victoria is Development Network and Fotowatio developing a wind resource map. 26MW co-generation plant operated by is projected to be generated from considered a particular risk concern. Renewables Ventures). Two of the SCOUL Uganda has also been licensed renewable energy technologies such projects (Access Solar Uganda Limited GEOTHERMAL and awaits commissioning. as geothermal (1,500MW), nuclear The development of mini-hydro power and Tororo Solar North Limited) were The exploitation of geothermal energy (24,000MW) solar (5,000 MW), biomass dams is a special focus area. Under the developed under the GET FiT Program. is currently at exploration stage. (1,700MW) and peat/biomass (800MW). GET FiT Uganda Program, 14 mini-hydro Exploration has been carried out in 161 Renewable Energy in Africa Uganda – Government Incentive Schemes
Government Incentive Schemes
In order to attract foreign direct • Providing a value added tax investment in the renewable exemption in respect of the supply energy sector, the government has of any goods and services to the undertaken the following initiatives: contractors and subcontractors of hydroelectric power, solar power, • ERA has developed standardized geothermal power or bio-gas and power purchase agreements, wind energy projects. implementation agreements and model licenses in consultation with development partners, lenders and project developers. This has resulted into the reduction in advisory service costs and the time required to negotiate the power purchase agreement between the developers and the single off-taker (UETCL).
• Development of the renewable energy feed-in-tariff as an instrument for promoting private sector generation of electricity from renewable energy sources.
162 Renewable Energy in Africa
Major Projects/Companies
• 600MW Karuma hydropower (through special-purpose vehicles). • 180MW Nalubaale hydropower dam: When completed in The project was financed through dam: The Nalubaale dam December 2019, the 600MW a syndicated loan from a cluster of (previously named the Owen Falls Karuma hydropower dam will development financial institutions dam) was constructed between be Uganda’s largest rated dam. and commercial banks led by the 1947 and 1954 when Uganda The project is developed by International Finance Corporation was still a British Protectorate. the government of Uganda, and the African Development Bank. It is currently owned by the with the Uganda Electricity government of Uganda (through Generation Company Limited as • 183MW Isimba hydropower dam: the Uganda Electricity Generation the implementing agency. The The 183MW Isimba hydropower Company Limited). Eskom Uganda engineering, procurement and dam was commissioned in March Limited (a subsidiary of Eskom construction contractor is China’s 2019. The project is developed Holdings South Africa) holds a Sinohydro Corporation. The project by the government of Uganda, 20-year concession to operate, is financed through a government with the Uganda Electricity manage and maintain the dam. concessional loan facility from Generation Company Limited China’s Exim Bank. as the implementing agency. • Independent solar power The engineering, procurement projects: ERA has licensed 60MW • 250MW Bujagali II hydropower and construction contractor was of on-grid solar generation dam: Uganda’s second largest China International Water and capacity. 40MW has so far generation facility, which was Electric Corporation. The project been commissioned. commissioned in July 2012. The is financed through a government project is owned by the Aga Khan concessional loan facility from Fund for Economic Development China’s Exim Bank. and Norway’s SN Power AS
163 Renewable Energy in Africa Uganda – Foreign Investment/Ownership
Foreign Investment/Ownership
Uganda’s economy is fully liberalized shares are held by a person who is not no governmental consent (such and there is no restriction against a citizen of an East African Community as, for example, that of the Central foreign investors and investments, Partner State. Bank or the Minister of Finance) is including in the electricity sector. required to pay foreign currency The Investment Code Act provides that in and out of a bank account held The Investment Code Act 2019 a qualifying foreign investor is entitled in a Ugandan commercial bank. contains a requirement for all foreign to a certificate of incentive which Payments in this respect include fees/ investors to hold an investment shall provide details of the incentives charges to off-shore suppliers and license, but this requirement can be given. The Act does not set out the contractors and dividends to non- properly classified as an administrative nature and scope of incentives to be resident shareholders. compliance matter for all foreign provided, and it is expected that this investors and does not act as an entry important aspect will be addressed in There is a blanket prohibition barrier. Significantly, the investment subsidiary regulations to be passed under Ugandan law against foreign license is subordinate to any license in due course. companies owning or holding land in granted by a regulatory authority perpetuity (freehold or mailo tenure) Uganda has no exchange control in a business sector in which the interest in land. Foreign companies restrictions. The applicable regulatory foreign investor plans to operate. can only hold a leasehold (periodic) requirement is that all payments in A foreign investor includes a company interest granted by a Ugandan citizen foreign currency, to or from Uganda, incorporated under the laws of any for a maximum single period of between residents and non-residents, country other than that of an East 99 years. or between non-residents, shall be African Community Partner State, or a made through a licensed commercial company incorporated under the laws bank. The net effect of this liberalized of Uganda in which the majority of the exchange control position is that
164 Renewable Energy in Africa Uganda – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Uganda ratified the Paris Agreement 2016 (an agreement within Relevant Websites the United Nations Framework Ministry of Energy and Mineral Development – Convention on Climate Change) on https://www.energyandminerals.go.ug/ September 21, 2016. In line with this global commitment, Uganda’s Ministry of Finance, Planning and Economic Development – Nationally Determined Contribution https://www.finance.go.ug/ Support Programme seeks to help the country reduce greenhouse Electricity Regulatory Authority – https://www.era.or.ug/ gas emissions in forestry and wetlands, energy, transport and Uganda Electricity Transmission Company Limited – http://www.uetcl.com/ agriculture sectors. It is projected that this programme will catalyze Uganda Electricity Generation Company Limited – https://www.uegcl.com/ investment towards realizing Uganda’s commitment for 22% greenhouse Rural Electrification Fund – http://www.rea.or.ug/ gas emissions reduction by 2030, In 2018, Uganda became the first country in Africa to sign the United Nations Development Programme Development Partnership Plan for Nationally Determined Contributions.
165 16
Zambia Renewable Energy in Africa Zambia – Overview
Zambia Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdictions: Common law and the 2019 Doing Business Report: Formerly known as Northern Rhodesia Constitution of Zambia, adopted in 1991 86 of 190 (up 1 ranking from 2018) until it was renamed upon gaining and most recently amended in 2016. independence in 1964, Zambia is 2018 Global Competitiveness Index: a presidential democratic republic. 118 of 138 (no movement) Languages: English (official language), It is split into ten provinces and 100 Bemba, Kaonde, Lozi, Lunda, Luvale, 2019 Index of Economic Freedom: districts, with the capital city being Nyanja/Chewa and Tonga. 138 of 180 (down 16 rankings Lusaka. Zambia’s largest economic from 2017) sector is mining, with other major sectors being agriculture and tourism. 2018 Corruption Perceptions Index: Economic growth, whilst previously 105 of 180 (up 9 rankings from 2017) good, has slowed and has maintained 2017 UN Development Programme at approximately 3% since 2015. Human Development Index: 144 of 189 (down 4 rankings from 2016)
Population: 17.09 million (2017)
GNI per capita PPP: USD3,920 (2017)
167 Renewable Energy in Africa Zambia – Electricity Industry Overview
Electricity Industry Overview
• The installed generation capacity Zambia Development Agency and creating conditions that ensure Systems Development Master this goal, a Renewable Energy as of June 30, 2017 in Zambia was (ZDA), electricity demand in Zambia availability of adequate supply Plan was put in place which Strategy was developed by 2,885.91MW which is comprised has increased at an average 3% of energy from various sources provides for an increased the Ministry of Energy and the predominantly of generation (150-200MW) each year. which are dependable at the lowest generation capacity target of United Nations Development from hydropower, followed by economic, financial, social and 4,337MW by 2030; Programme. Solar and wind generation from coal, heavy fuel oil • Zambia’s power sector is liberalized environmental costs. resource map has also been an • increase nationwide access to and diesel respectively. and private participants can get a ongoing exercise; electricity. To achieve this goal license for generation, transmission • The 2008 NEP accordingly seeks, a Rural Electrification Master • promote efficient energy use • As at 2017, 26% of the Zambian or supply. inter alia, to: Plan was put in place which sets through energy conservation population have access to targets of increased access to and substitution; and electricity. This is made up of 45% • The Zambian government • promote the modern use electricity at 66% at nationwide of the urban areas and 14% of formulated the first National of biomass for electricity • promote cost reflective level, 91% in urban areas and rural areas. Energy Policy (NEP) in 1994 which generation, LPG and biofuels. tariffs. To achieve this goal, 51% in rural areas by 2030; sought to promote optimal supply To achieve this goal, a Biofuels a Renewable Energy Feed- • ZESCO Limited (ZESCO), a vertically and utilization of energy, especially Framework was put in place • increase the contribution of coal in Tariff (REFIT) Policy was integrated electricity utility, indigenous energy forms, for and blending ratios defined as energy source in the national developed in 2015. dominates the market in generation, socio-economic development in i.e. ethanol 10% and energy mix; transmission, distribution and a safe and healthy environment. bio-diesel 5%; • increase the utilization of supply. It is a public utility, with the The NEP was revised in 2008, with • expand generation and renewable energy sources by government of the Republic of focus tilting towards diversification transmission capacity. To addressing the barriers to their Zambia being the sole shareholder. of the country’s energy mix achieve this goal a Power wider dissemination. To achieve According to figures from the through use of renewable energy
168 Renewable Energy in Africa Zambia – Electricity Laws
Electricity Laws
• Electricity Act: Chapter 433 of the Laws of • Energy Regulation Act: Chapter 436 of the Zambia (1995) – The Electricity Act regulates Laws of Zambia (1995) – The Energy Regulation the generation, transmission, distribution Act provides for, inter alia, the licensing of and supply of electricity in Zambia, as well undertakings for the generation, transmission, as provides for matters connected with distribution or supply of electricity and matters or incidental thereto. The Act generally connected with or incidental thereto. In terms prohibits the establishment or operation of an of the Act a person may not establish or undertaking for the generation, transmission, operate an undertaking except in accordance distribution or supply of electricity other than with the Act and under the authority of a in accordance with the Act and the Energy license issued under the Act. The licenses Regulation Act. which may be granted under the Act in the electricity sub-sector are: a generation license, • The Electricity (Grid Code) Regulations, a transmission license, a distribution license Statutory Instrument No. 79 of 2013 – The and a supply license. The Act also establishes Electricity (Grid Code) Regulations specify the Energy Regulation Board (ERB) as the technical requirements for connection to, and authority responsible for the regulation of the use of, the national electricity transmission energy sector in Zambia. system (the Zambian Grid). Any undertaking that seeks to connect to or otherwise use the Zambian Grid will be required to comply with the regulations.
169 Renewable Energy in Africa Zambia – Electricity Industry Overview
Regulators
The Energy Regulation Board (ERB) • monitoring efficiency and • monitoring competition in Agency, formulating measures to is responsible for regulation of the performance of licensees; the energy sector with the minimize the environmental impact industry in all aspects. The ERB is Competition and Consumer of the production and supply established under section 3 of the • receiving and investigating Protection Commission with a of energy and enforcing such Energy Regulation Act. The ERB is consumer complaints relating view to promoting competition measures by the attachment of the governed by a board which consists to, inter alia, services provided and accessibility to any company appropriate conditions to licenses of seven non-executive members by undertakings and price or individual who meets the basic held by an undertaking. appointed by the Minister of Energy adjustments by undertakings, and requirements for operating as a from among eminent persons who have regulating such services or price business in Zambia, and developing The Minister of Energy exercises adequate knowledge, experience and adjustments by the attachment and implementing appropriate a supervisory role over the ERB. qualifications in engineering, finance, of appropriate conditions to rules to promote competition in The Department of Energy under law, natural resources management, licenses held by undertakings or the energy sector; the Ministry of Energy and Water electricity industry, petroleum industry by such other means as the board Development provide general policy and administration. The chairperson considers appropriate; • in conjunction with the Zambia guidance and energy resource and vice chairperson of the board are Bureau of Standards, designing management. elected from among the members. • regulating the location or standards relating to the quality, construction of a common carrier safety and reliability of supply of The ERB’s functions include: or energy facility, including the energy and fuels; and installation or the carrying out of • issuance of licenses in the energy any works by any undertaking; • monitoring environmental sector; energy issues with the Zambia Environmental Management
170 Renewable Energy in Africa Zambia – Electricity Laws
Generation, Distribution The majority of the distribution and and Transmission transmission activities are carried out by ZESCO. The ZESCO transmission According to the ERB, the total national grid comprises transmission lines installed generation capacity as of and substations at 330kV, 220kV, June 30, 2017 stood at 2,885.91MW, 132kV and 66kV voltage levels. comprising 2,392.3MW of hydro ZESCO’s transmission and distribution generated power, 300MW of coal systems across the country measure generated power, 88.6MW of diesel in excess of 4,700 km. The backbone generated power, 105MW of heavy of the ZESCO grid is built on a 330kV fuel oil (HFO) generated power, and transmission system (covering about 0,06MW of solar generated power. 2,241 km) running from the southern The majority of generation capacity part of the country where the major is owned and operated by ZESCO generating stations are located. About which, as at June 30, 2017, had a 348 km of 220kV transmission lines total of 1,856.5MW in installed hydro serve as interconnectors with the generation plants and 8.6MW in neighboring Democratic Republic of installed diesel generation plants. Congo (DRC), Namibia and Zimbabwe. Other power producers owned the The company also has widespread remaining 1,020,81MW of installed telecommunications networks generation capacity, with the main ones following the installation of optic fibre being Kariba North Bank Extension on its transmission lines. Power Corporation (360MW), Maamba Collieries Limited (300MW), Itezhi-Tezhi The Copperbelt Energy Corporation Plc Power Corporation (120MW), Ndola (CEC), a privately owned company, also Energy Company Limited (105MW), owns a transmission and distribution Copperbelt Energy Corporation Plc network consisting of over 1,000 km of (80MW) and Lunsemfwa Hydro Power 66kV and 220kV transmission lines and Source: IRENA Company Limited (55MW). 42 high voltage substations. According 171 Renewable Energy in Africa
to CEC, the company’s transmission non-mining customers of Lumwana, system currently has a capacity to Kabitaka and Kulumbila areas in carry over 500MW of power. The CEC’s the North-Western Province. NWEC transmission and distribution network purchases power from ZESCO and is concentrated in the Copperbelt supplies to its customers. As of end Province of Zambia where the company of 2016, NWEC was reported to supplies and distributes electricity have a customer base of 2,378. ZPC primarily to mining companies based distributes electricity to community on the Copperbelt. service, residential, small businesses and the commercial customers in Lunsemfwa Hydro Power Company Ikelenge district in the North-Western Limited, another independent power Province of Zambia. producer, also operates a transmission system in the Central Province of Zambia.
Other independent power producers involved in distribution are North- Western Energy Corporation Limited (NWEC) and Zengamina Power Company Limited (ZPC). NWEC has a license to distribute electricity to
172 Renewable Energy in Africa Zambia – Renewable Energy Overview
Renewable Energy Overview
HYDROPOWER • The Rural Electrification Authority and EREN Renewable Energy, to Current issues in the • In 2017 the ERB commissioned • Hydroelectric power is the (REA) has successfully implemented construct a 500GWh wind farm, the renewables industry a “cost of service” study using dominant form of renewable a 0,06MW (60KW) solar grid pilot country’s first wind power plant. • In 2017, the ERB approved a hike in international consultants with a energy in Zambia and as of project in Mpanta village, Samfya domestic electricity tariffs charged view to setting appropriate cost June 30, 2017 accounted for district of Luapula Province, which GEOTHERMAL by ZESCO. This approval saw an reflective tariffs for electricity users approximately 82.9% of its total is currently supplying electricity to • According to information from the increase in domestic tariffs by an at various supply points in the generation capacity. However, a group of villagers. Other than this Ministry of Energy, there are 80 average 75%. Early this year, ZESCO electricity market. However, it is Zambia is looking to expand on pilot project, there are currently no recorded hot springs in Zambia, again applied to the ERB for an reported that the study was never its generation methods due to an other operational grid-connected some (about 35) of which have upward adjustment of its electricity concluded and the consultant’s over-reliance on hydro generation. solar power plants in Zambia. The good energy potential. tariffs citing prevailing economic mandate has since expired. It is yet majority of solar power currently conditions, system customer base to be communicated whether the • As of June 30, 2017, there were in use is through solar energy • There is one small geothermal expansion, and the rising cost of study will be continued or four main hydropower plants: systems and products supplied generation plant at Kapishya power from its new infrastructure recommissioned. Kafue Gorge, Kariba North Bank, to individual commercial and Hot Springs. and independent power producers Itezhi-Tezhi and Victoria Falls. residential customers. (IPPs) as the underlying factors. • Feasibility studies are being The application is yet to be • According to the ERB, Zambia’s WIND conducted in the Kafue. determined by the ERB. In addition, hydro generation potential is • According to the Africa-EU ZESCO has been reported to estimated at more than 6,000MW. Energy Partnership, wind energy have expressed an intention to potential in Zambia is not currently renegotiate electricity tariffs under SOLAR considered to be high. power purchase agreements • Solar power is currently being entered into by it with independent established within Zambia. See • In August 2017 the US government power producers (IPPs) with the Scaling Solar and GET FiT below. awarded a USD1.05 million grant aim of ensuring parity between its to two developers, Access Power buying and selling prices.
173 Renewable Energy in Africa Zambia – Government Incentive Schemes
Government Incentive Schemes
Renewable energy feed- • the Ministry of Energy and Water • to provide a platform for Phase In line with the implementation Tax incentives in-tariff (REFIT) strategy Development (MEWD); 2 through, inter alia, preparation of Phase 1 of the REFiT Policy, the Currently there are no income tax The Zambian government has put in and issuing of a comprehensive Zambian government launched GET incentives specifically provided to place a renewable energy feed-in-tariff • the Energy Regulation Board (ERB); Integrated Resource Plan FIT (discussed below). The government companies engaged in the renewable (REFiT) Policy aimed at lowering the before end of the three-year has also prepared and issued REFiT energy sector. barriers for increased private sector • ZESCO Limited; and period in relation to future rules and regulations, a draft REFiT involvement in renewable energy generation allocations taking into generation license, a standardized Companies engaged in the building power generation, increasing power • the private sector. consideration resource mapping, REFiT PPA, a standardized connection and installation of power stations generation through private sector developments in generation agreement and a standardized in a multi-facility economic zone or investments in renewable energy (in The REFiT Policy provides for technologies, location, distribution implementation agreement for an industrial park are entitled to the short term) and contributing to objectives aimed to be achieved in two network, etc. projects eligible under the REFiT 0% import duty on capital goods, the creation of a diversified energy phases. Phase 1 is a three-year period programme. machinery (including specialized mix and increase energy security whose objectives are: As part of Phase 1, the government motor vehicles) imported for business in Zambia (in the medium term). undertook to, inter alia, prepare The term and specific objectives and operations for a period of five years. The REFiT Policy was developed • to provide for the development and issue a REFiT tariff for the REFiT action points of Phase 2 are to be with assistance from US Agency for of small-scale renewable energy allocation, develop a REFiT pricing determined at the end of Phase 1. Proposed government International Development through projects totalling 200MW, of which framework (model); prepare and issue incentive schemes the USAID Southern Africa Trade Hub 100MW would be hydropower and REFiT guidelines, standards, rules and We are not aware of any proposed (SATH) that provided both Technical 100MW non-hydropower; regulations; and prepare and issue incentive schemes currently being and financial support. The draft REFiT standardized licensing agreements, discussed by the government. Policy was finalized in April 2015. • to provide for the development of PPAs, connection agreements and an initial 5MW of renewable energy implementation agreements for the The principal stakeholders for power through micro-generation; REFiT program. the implementation of the REFiT and policy are:
174 Renewable Energy in Africa Zambia – Major Projects/Companies
Major Projects/Companies
• Scaling Solar: Zambia signed up to • Scaling Solar Round 2 was totalling 120MW to three • Kariba North Bank Hydropower Scaling Solar, a World Bank Group announced in 2017 and a consortiums, namely, Building Generation Project: Located in program designed to make it request for prequalification Energy and Pele Energy, Globeleq Siavonga on the Zambezi River next easier for governments to procure was issued. A total of 12 out and Aurora Power Solutions to the existing Kariba North Bank solar power quickly and at low cost of 21 bidders have since been and InnoVent and CEC. Each Power Station is another 360MW through competitive tendering announced as prequalified. consortium has been awarded two Power Station. A provision for the and offering prearranged A request for proposal projects. GET FiT also launched a extension of the existing one was financing, insurance products, and document is to be sent to the hydropower tender in December made during the planning and risk products: prequalified bidders. There is 2018. A total of 30 prequalified construction of the Kariba North no further news, however. bidders have since been Bank Power Station. Kariba North • Enel Green Power and Neoen announced and the request for Bank Extension (KNBE) Power • GET FIT: GET FiT Zambia is Consortium won Round 1 proposals is expected to be issued Station was then developed by a designed to assist the Zambian scaling solar. Neoen Neoen in the fourth quarter of 2019. Special Purpose Vehicle (SPV) called government in the implementation commissioned its 54MW Kariba North Bank Extension Power of its REFiT Policy (see above). GET Bangweulu solar PV plant in • Kafue Gorge Lower (KGL) Power Corporation Limited (wholly owned FiT Zambia aims to procure 200MW March 2019, which is expected Station: The Zambian government by ZESCO) at an estimated cost of of renewable energy projects to supply as many as 30,000 initiated the construction of USD420 million. within the next three years. It households and several the USD2 billion 750MW KGL supports small– to medium-scale businesses with electricity. Enel hydroelectric power station on the • Itezhi Tezhi Project: Development Independent Power Producer (IPP) also commenced operations at Kafue River in November 2015 and of a 120MW hydro power plant projects up to 20MW. The initial its 34MW Ngonye solar PV plant looks to be completed by 2020, by Itezhi Tezhi Power Corporation phase of the GET FiT programme, in April 2019. Once fully up and Zambia has appointed ZESCO for (a joint venture between ZESCO which was launched in early 2018, running, the plant is expected the development of the project. and Tata Power) at the site of the had a target outcome of 100MW to produce around 70GWh KGL is being built by a Chinese Itezhi Tezhi dam on the Kafue River. In April 2019 GET FiT announced per year; and company, Sino-Hydro Corporation. The plant was commissioned in the award of six solar PV projects early 2016.
175 Renewable Energy in Africa Zambia – Foreign Investment/Ownership
Foreign Investment/Ownership
The Investment Promotion arm of GUARANTEE AGAINST INVESTMENT INCENTIVES UNDER building and installation of power sector or product under the ZDA Act. the Zambia Development Agency has NATIONALIZATION THE ZDA ACT stations is designated priority sector This category of investors is entitled the mandate to promote Zambia’s The ZDA Act provides investors The Zambia Development Agency Act under the ZDA Act. This category to only the non fiscal incentives as investment opportunities locally and guarantee against nationalization. No. 11 of 2006 (as amended in 2014) of investments is entitled to the follows: internationally in order to attract Please see investment incentives (the ZDA Act) offers a wide range of fiscal incentives set out in the ‘Tax foreign and local investors in the under the ZDA Act below. Further, incentives in the form of allowances, Incentives’ section above. • investment guarantees different sectors of the economy, the Bill of Rights under the Zambian exemptions and concessions for and protection against including energy. Constitution provides for protection companies. The Act provides for In addition to fiscal incentives, this state nationalization; and against deprivation of property. investment thresholds to qualify category of investments is entitled to There are no restrictions or limits Generally no property of any for fiscal and non-fiscal incentives. the following non-fiscal incentives: • free facilitation for application of on foreign ownership; no capital description may be compulsorily There is only one category of immigration permits, secondary controls and guarantee of investment acquired or taken possession of by the investors who can be considered for • investment guarantees licenses, land acquisition and is available. government unless by or under the investment incentives under the ZDA and protection against utilities. authority of an Act of Parliament which Act, while the rest only receive non- state nationalization; and Foreign investment/ownership is provides for payment of adequate fiscal incentives. common in the renewable energy compensation for the property • free facilitation for application of projects being undertaken in Zambia. acquired or taken possession of. The Category 1: Investments of immigration permits, secondary There has also been a lot of foreign constitution provides exceptions to USD500,000 and above in a designated licenses, land acquisition and interest expressed in the Scaling Solar this general protection, for example priority sector in a Multi-facility utilities. and GET FiT programs. where acquisition or possession is in Economic Zone or an Industrial Park, satisfaction of any unpaid statutory are entitled to fiscal incentives as Category 2: Investment of not less taxes or rates due, or in execution of provided under the Income Tax Act than USD250,000 in any sector or court judgments or orders. and the Customs and Excise Act. The product not provided for as a priority
176 Renewable Energy in Africa Zambia – UNFCCC – Paris Commitments and beyond
UNFCCC – Paris Commitments Relevant Resources and and beyond References
Zambia ratified the Paris Agreement Relevant Websites on December 9, 2016. In its Intended https://datamorldbank.org/country/zambia Nationally Determined Contribution, Zambia set a target of 47% reduction https://www.cia.gov/library/publications/the-world-factbook/geos/za.html in emissions by 2030. http://taxsummaries.pwc.com/ID/Zambia-Overview https://cecinvestor.com/cec- release-of-2017-annual-report/
https://www.africa-eu-renewables.org/market-information/zambia/renewable- energy-potential/
References
https://assets.kpmg.com/content/dam/kpmg/pdf/2014/09/taxes-incentives- renewable-energy-v1.pdf
Energy Regulation Board, Overview of the Energy Sector in Zambia: Case of Renewable Energy, Presentation to the Promoters of Renewable Energy Technologies, November 2015. Available at: http://www.erb.org.zm/content.php?viewpage=rfit
Energy Regulation Board, Statistical Bulletin: January to June 2017. Available at: http://www.erb.org.zm/content.php?viewpage=stbn
https://static1sguarespace.com/static/52246331e4b0a46e5f1b8ce5/ t/598320fb37c 58140e7594109/1501765888030/Paralle1+3B_Besa+Chimbaka_ ERB+Zambia.pdf
https://static1.sguarespace.com/static/58c95e0c5016e18d705d710a/t/5a047a1 1c830258632ad02bc/1510242838567/FINAL_REFiT+Strategy%2C+2017.pdf 177 17
Zimbabwe Renewable Energy in Africa Zimbabwe – Overview
Zimbabwe Overview
KEY FACTS BUSINESS ENVIRONMENT PROFILE Jurisdictions: The judicial system 2018 Doing Business Report: The political landscape had been comprises the Common law 155 out of 190 economies (down 4) dominated by Robert Mugabe since (non statutory or unwritten Anglo independence from the British in 1980. 2018 Global Competitiveness: Roman Dutch Law) Legislation Case Law After 37 years in power, Mugabe 124 out of 137 (down 2) (Precedent) and Customary Law. It is a resigned in 2017, succeeded by plural system, influenced by South Africa 2017 Index of Economic Freedom: Emmerson Mnangagwa, another and shows traits of Roman-Dutch law. 174 out 180 Zanu-PF member. Reforms have been promised; however, social unrest may 2016 Corruption Perceptions Index: hamper growth. 154 out of 176 (down 4)
2016 UN Development programme Human Development Index: 154 out of 188 (up 4)
Population: 16.53 million
GNI per Capita USD1,850
179 Renewable Energy in Africa Zimbabwe – Electricity Industry Overview
Electricity Industry Overview
Zimbabwe’s energy market faces the SADC Power Pool (SAPP) – where the challenge presented by ageing governments can buy and sell power energy assets and infrastructure. within the pool. Private projects can Coupled with increasing requirements apply to be market participants in for electricity consumption, the the SAPP. country has significant potential for investment in renewable energy The market is currently structured production and distribution. in a single-buyer model due to the lack of competition in the distribution The vast majority of the rural of power. The Zimbabwe Electricity, population remains unelectrified. Transmission and Distribution Zimbabwean rural households Company (ZETDC) has therefore principally rely on wood fuel for their become the single buyer responsible cooking requirements. This presents for purchasing power and selling to a vast opportunity in clean energy all customers as well as importing technologies for cooking and heating. and wheeling power. However, the There is also a disparity between the market is undergoing a transition urban and industrial energy demand and is in the initial stages of moving and the available supply, resulting in towards increased competition in the a deficit. generation, distribution and supply of electricity. Zimbabwe is a participant in the South African Development Community regional electricity grid
180 Renewable Energy in Africa Zimbabwe – Electricity Laws
Electricity Laws
• Energy Regulatory Act, 2011 [Chapter 13:23].
• Electricity Act [Chapter 13:19].
• Electricity (Licensing Regulations) [Statutory Instrument 103 of 2008].
• Electricity (Levies) Notice [Statutory Instrument 6 of 2008].
• Inefficient Lighting Products Ban Regulations [Statutory Instrument 21 of 2017].
• Electricity Distribution Code Regulations [Statutory Instrument 47 of 2017].
• Electricity Grid Code Regulations [Statutory Instrument 91 of 2017].
181 Renewable Energy in Africa Zimbabwe – Electricity Laws
Regulators The Zimbabwe Energy Regulatory ZERA operates independently, managed Authority (ZERA) is the regulator tasked by the Energy Regulation Authority with the regulation of the entire energy Board. Previously, it was a state sector, which includes electricity, gas enterprise monitored by the Ministry of and petroleum. ZERA is mandated Energy and Power Development. by the Zimbabwe Energy Regulatory Generation, Distribution Act (Chapter 13:23), as read with the and Transmission Electricity Act (Chapter 13:19) and the The current legislative framework Petroleum Act (Chapter 13:22). ZERA’s allows for Independent Power role is to regulate the procurement, Producers (IPPs). It also allows for production, transportation, private sector players to be involved transmission, distribution, importation, in the generation, supply and and exportation of energy derived from distribution of electricity. ZETDC is any source through licensing operators the national distributor and retailer in the energy industry in Zimbabwe. of electricity, while the Zimbabwe Electricity Supply Authority is the ZERA also regulates the entire national supplier of electricity through energy sector in Zimbabwe in a fair, the Zimbabwe Power Company (ZPC). transparent, efficient and cost-effective manner for the benefit of the consumers and energy suppliers.
182 Renewable Energy in Africa Zimbabwe – Renewable Energy Overview
Renewable Energy Overview
Zimbabwe’s renewable energy Renewables Laws resource base is made up of: vast Currently there is no specific legislative solar energy radiation (20 MJ/m2/ framework for renewable energy day); hydro; municipal solid waste; generation, distribution and supply. municipal sewage biogas; agricultural The government has however recently waste; forestry waste. enunciated its policy position with regards to renewable energy in the The dominant types of renewable draft National Renewable Energy energy in Zimbabwe are hydro-electric Policy (NERP). The NERP is still in energy and solar energy. draft form and is due to be approved Both public and private projects during 2018. are in the hydro-electric and solar energy space. The market is not yet experiencing participation from emergent renewable technologies.
183 Renewable Energy in Africa Zimbabwe – Government Incentive Schemes
Government Incentive Schemes Major Projects/Companies
• National Energy Policy; • rebate and suspension of duty on MAJOR PROJECTS • National Energy Policy imported goods and machinery; The major project company currently Implementation Strategy; is the publicly owned ZPC. • National Renewable Energy Policy; • offshore foreign currency accounts • Zimbabwe Biofuels Policy; (subject to Exchange Control MAJOR COMPANIES • Independent Power Producers Approval); • The major project is Kariba South framework; and extension project, which has an • Renewable Energy Feed in Tariff. • guaranteed remittance of 100% of expected initial 150MW generation dividends; capacity from Unit 7. A further These policies all work together for 150MW is expected to come onto better promotion of renewable energy. • upon divestment, repatriation of the grid from Unit 8. There are also tax/fiscal incentives 100% of invested capital; for projects depending on the size • The government funded Tokwe- and scale, which have a designated • temporary work permits for foreign Mukosi Dam which is being National Project Status, given the workers; and equipped to export 15MW. criticality of this sector. Incentives granted to renewable projects typically • tax holiday (typically five years). include, but are not limited to:
184 Renewable Energy in Africa Zimbabwe – Foreign Investment/Ownership
Foreign Investment/Ownership UNFCCC – Paris Commitments and beyond
Following the amendment of the Zimbabwe ratified the Paris country’s indigenisation laws, 100% Agreement in September 2017. foreign ownership of brownfield The country’s Intended Nationally and greenfield energy projects is Determined Contribution contained permissible. Accordingly, foreign a commitment to reduce emissions investors may participate in any by 33% (relative to a business-as- capacity as lenders/project sponsors, usual baseline) by 2030, The country’s contractors and equity participants development goals identify increased without being subject to ownership hydro-electric production as key restrictions. to enabling Zimbabwe to achieve this target.
185 Renewable Energy in Africa Appendix A
Appendix A
Listed below are a selection of the notable projects announced as preferred bidders under the REIPPP Programme, broken down into rounds in which they were procured, provinces in which they are situated, technology type and generation capacity.
• • GAUTENG Round 1 of the REIPPP Kalkbult Solar Plant (PV) (75MW) Round 2 of the REIPPP Linde (PV) (36.8MW) • • • programme Kathu Solar Energy Facility (PV) Programme Sishen Solar Facility (PV) (74.4MW) Adams Solar PV 2 (PV) (75MW) (75MW) • Solar Capital De Aar 3 (PV) (75MW) EASTERN CAPE • KaXu Solar One (CSP) (100MW) EASTERN CAPE KWAZULU NATAL • Dorper Wind Farm (Wind) (100MW) • Khi Solar One (CSP) (50MW) • Grassridge (Wind) (60MW) WESTERN CAPE • Mkuze (Biomass) (16MW) • Jeffreys Bay (Wind) (138MW) • Lesedi Power Company (PV) • Tsitsikamma Community Wind • Aurora (PV) (9MW) • Cookhouse Wind Farm (Wind) (64MW) Farm (Wind) (94.8MW) • Gouda Wind Facility LIMPOPO (140MW) • Mainstream De Aar Solar PV • Amakhala Emoyeni (Phase 1) (Wind) (138MW) • Tomburke/Tobivox Solar Park (PV) (PV) (48.25MW) Eastern Cape (Wind) (140MW) • West Coast 1 (Wind) (94MW) (60MW) FREE STATE • Mainstream Renewable Power • Project Dreunberg (PV) (75MW) • Letsatsi Power Company (PV) Droogfontein (PV) (48.25MW) Round 3 of the REIPPP NORTHERN CAPE (64MW) • Noblesfontein (Wind) (75MW) FREE STATE Programme • Ilanga CSP 1/Karoshoek Solar One • Solar Capital De Aar (Pty) Ltd • Boshoff Solar Park (PV) (60MW) (CSP) (100MW) EASTERN CAPE LIMPOPO (PV) (75MW) • Stortemelk Hydro (Pty) Ltd (Hydro) • Khobab Wind (Wind) (138MW) • Nojoli Wind Farm/Cookhouse • Soutpan Solar Park (PV) (28MW) (36.8MW) • Loeriesfontein (Doornpan) 2 Wind (Wind) (87MW) • Witkop Solar Park (PV) (30MW) WESTERN CAPE Farm (Wind) (138MW) • Red Cap – Gibson Bay (Wind) • Hopefield Wind Farm/Umoya NORTHERN CAPE • Longyuan Mulilo De Aar 2 North (110MW) NORTH WEST (Wind) (65.4MW) • Bokpoort CSP Project(TX) (CSP) Wind Energy Facility (Wind) • RustMo1 Solar Farm (PV) (7MW) • Klipheuwel/Dassiesklip Wind (50MW) (139MW) FREE STATE Energy Facility (Wind) (26.19MW) • Jasper Power Company (PV) • XiNa Solar One (CSP) (100MW) • Pulida Solar Park (PV) (75MW) NORTHERN CAPE • Touwsrivier Project (PV) (44MW) (75MW)
186 Renewable Energy in Africa Appendix A
WESTERN CAPE FREE STATE NORTH WEST Round 4 (extended) of • • • Electra Capital (Pty) Ltd (PV) (75MW) Kruisvallei Hydro (Hydro) (5MW) the REIPPP Programme De Wildt Project (PV) (50MW) • Mpumalanga • Bokamoso Project (PV) (68MW) Round 3.5 of the REIPPP • Ngodwana Energy (Biomass) WESTERN CAPE • Zeerust Project (PV) (75MW) Programme (25MW) • Soetwater Project (Wind) (142MW) • Waterloo Project (PV) (75MW). • Perdekraal East Project (Wind) NORTHERN CAPE NORTHERN CAPE (108MW) EASTERN CAPE • Kathu Solar Park (CSP) (100MW) • Aggeneys Solar Project (PV) (40MW) • Excelsior Project (Wind) (32MW) • Wesley-Ciskei Project (Wind) • Redstone Solar Thermal Power • Droogfontein Solar Park (PV) (33MW) Project (CSP) (100MW) (75MW) NORTHERN CAPE • • Round 4 of the REIPPP Dyason’s Klip 1 and 2 solar projects Solar Capital Orange Loeriesfontein Programme (PV) (each 75MW) (PV) (75MW) • Konkoonsies II Solar Facility (PV) • Kangnas Project (Wind) (137MW) EASTERN CAPE (75MW) • Greefspan PV Power Plant Number • Golden Valley wind farm (Wind) • Sirius Solar Project (PV) (75MW) Two (PV) (55MW) (117MW) • Copperton Project (Wind) (102MW) • Nxuba wind farm (Wind) (139MW) WESTERN CAPE • Garob Wind Farm Project (Wind) • Oyster Bay wind farm (Wind) • Karusa Wind Farm (Wind) (140MW) (138MW). (140MW) • Roggeveld (Wind) (140MW)
187 Renewable Energy in Africa Acknowledgements
Acknowledgements
We are grateful to our colleagues in DLA Piper Africa for their contribution to this publication. Thank you to all our contributors, including:
Amrin Mamad Madina Chenge ANGOLA BOTSWANA Arvin Halkhoree Mouhamed Kebe ADCA – CARVALHO & ASSOCIADOS, Minchin & Kelly Beatrice Nyabira Nicholas Ecimu DLA Piper Africa member firm DLA Piper Africa member firm Brian Malcomess Nigel Drew T +24 492 6612 525 T +26 739 12734 Briar Blount Oluwatomi Etomi [email protected] [email protected] Catarina Neto Fernandes Pascal Mwanyika www.adca-angola.com www.minchinkelly.bw Christine Murangi Pride Jani Claver Nigarura Rainor Robinson Dayo Idowu Robin Durairajah BURUNDI ETHIOPIA Dimitri Papaefstratiou Ruth Conolly Rubeya & Co Advocates Mehrteab Leul & Associates Law Office Dominic D.K. Qasshigah Saad El Mernissi DLA Piper Africa firm, Burundi DLA Piper Africa member firm Emma Whitfield Simon Collier T +257 79 92 13 60 T +251 115 159 798 Eustace Ngoma Sophie Linnell http://rubeya.bi/index.php/en/ [email protected] Farai Nyabereka Terence Dambe www.mehrteableul.com Jack Banks Shani Gunawardana Jamie MacDonald Jennifer Keogh Jurie Badenhorst GHANA KENYA Kizzita Mensah Reindorf Chambers Iseme, Kamau & Maema Advocates Leopoldo de Amaral DLA Piper Africa member firm DLA Piper Africa member firm Liilnna Kifle T +233 302 2256 74 | +23 330 2249 564 T +254 20 2773 000 [email protected] [email protected] www.reindorfchambers.com www.ikm.co.ke
188 Renewable Energy in Africa Acknowledgements
MAURITIUS MOZAMBIQUE NAMIBIA Juristconsult Chambers Sal & Caldeira Ellis Shilengudwa Inc DLA Piper Africa member firm DLA Piper Africa member firm DLA Piper member firm T +230 465 0020 T +258 21 241 400 T +264 61 242 224 [email protected] [email protected] www.esinamibia.com www.juristconsult.com www.salcaldeira.com
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