Southern African Power Pool Report to SADC
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Southern African Power Pool Report to SADC By The SAPP Executive Committee Harare, ZIMBABWE 23-25 APRIL 2007 1 SOUTHERN AFRICAN POWER POOL CONTENTS 1. Status of the SAPP 2. Market Price Determination 3. SAPP Tariff Study 4. Diminishing Generation Surplus Capacity 5. Western Power Corridor Project 2 SOUTHERN AFRICAN POWER POOL 1. STATUS OF THE SAPP 1.1 Update on the SAPP IGMOU The Revised IGMOU was signed by Ministers responsible for energy in the SADC region on 23 February 2006 in Gaborone, Botswana. The Revised document took into account the following: Restructuring of the SADC Power sector reforms in SAPP member countries The SAPP-Zaire (DRC) Agreement Participation of other stakeholders, such as IPPs Membership of the SAPP All Member Countries have signed the Revised IGMOU. 3 SOUTHERN AFRICAN POWER POOL 1.2 Update on the SAPP IUMOU The following documents were circulated to SAPP Members in January 2007 for comments and approval: i. The Final Draft of the Revised IUMOU ii. Membership Guidelines iii. Membership Application Forms The SAPP EC had requested incorporating a clause on dispute resolution, and this has been done including a clause on confidentiality. In terms of SAPP governance, differentiation between CC Board and Management Committee has been made. The Revised IUMOU is now ready for signing. 4 SOUTHERN AFRICAN POWER POOL 1.3 SAPP-RERA MOU The SAPP-RERA MOU has been approved by both SAPP and RERA and both are ready to sign the document. SAPP and RERA have both recognized the benefits of working together to: Achieve their respective goals Ensure capacity building Ensure cooperation and harmonization in the region, and Keeping each other informed of their respective projects and actions. 5 SOUTHERN AFRICAN POWER POOL 1.4 Host Country Agreement On 13 March 2006, the Government of Zimbabwe and SAPP signed a Host Country Agreement for the hosting of the SAPP Coordination Centre in Harare, Zimbabwe. The Agreement has given the SAPP a Diplomatic Status in Zimbabwe and has helped the SAPP to: To be fully recognized as a SADC Institution in Zimbabwe Achieve its stated aims, goals and objectives Reduce its operating costs and tax burden on member states, and Receive support and donations from cooperating partners without difficulties. The SAPP is grateful to the assistance given by the Government of Zimbabwe. 6 SOUTHERN AFRICAN POWER POOL 1.5 Revision of the 2001 Pool Plan The results of the SAPP 2001 Pool Plan were that: The estimated cost of the SAPP Integrated projects was USD 8 billion. The total sum of the individual country project was estimated at USD 11 billion. A potential saving of USD 3 billion could have been achieved if the projects were implemented in a coordinated manner. Unfortunately, due to the difficulty of getting funding, the implementation has not been achieved as previously planned. 7 SOUTHERN AFRICAN POWER POOL 1.5 SAPP Pool Plan - CONTD The current revision of the SAPP Pool Plan of 2001 is funded by a World Bank grant to the tune of US$1 Million. The revision is in line with the SAPP requirement of revising the plan every after 5 years. Work on the Pool Plan is expected to be completed in November 2007. The completed Pool Plan will provide input into the SADC Regional Infrastructure Development Master Plan. 8 SOUTHERN AFRICAN POWER POOL SAPP Pool Plan Objectives To develop an Integrated Generation and Transmission Plan in order to take full advantage of the available power pooling opportunities. To Highlight the benefits that can be derived for members from a co-ordination of their individual expansion plans. To develop electricity supply systems providing least-cost to consumers and minimizing negative environmental impacts. To take into account energy security and requirements of member countries. 9 SOUTHERN AFRICAN POWER POOL 2. MARKET PRICE DETERMINATION 2.1 STEM Operations 2.2 Progression from STEM to Competitive Market 10 SOUTHERN AFRICAN POWER POOL 2.1 STEM Operations 2.1.1 Supply and Demand Supply Demand Demand far much 350,000 outstrips the supply. 300,000 For 2006: 250,000 9 Demand 1,705-GWh 200,000 9 Supply 372-GWh 150,000 [MWh] 9 Traded 217-GWh 100,000 Data for 2005: 50,000 9 Demand 3,857-GWh - 9 Supply 1,138-GWh rch uly ber May J Ma tember January ep ovem 9 Traded 291-GWh S N Month Demand and supply January-December 2006 reductions in 2006. 11 SOUTHERN AFRICAN POWER POOL 2.1.2 Actual Energy Prices Energy Traded [M Wh] Energy & Prices, 2006: Monetary Value [x10 US$] 9 Traded 217-GWh 70,000 9 Prices 1.3 - 1.5 60,000 USc/kWh 50,000 Data for 2005: 40,000 9 Traded 291-GWh 30,000 9 Prices 0.4 - 1.4 20,000 10,000 USc/kWh - Energy trading peaked from May-July 2006, y ly ar ch u er u ar May J corresponding to winter Jan M temb months. ep S November Trading during off peak Month Energy Traded & Monetary Value 12 SOUTHERN AFRICAN POWER POOL 2.2 STEM Progression to Competitive Market The STEM was introduced in April 2001 as a precursor to a full competitive market. The following members are current STEM Participants: BPC EDM Eskom HCB NamPower SEB ZESA In January 2004, the SAPP started the development of a competitive market with funding from Government of Norway and Sida. 13 SOUTHERN AFRICAN POWER POOL Measures introduced to achieve reliability and security of supply: STEM contracts are all firm Non delivery penalties apply Security deposit required before Participants trade Shorter financial settlement periods, within 5 days Energy prices in the STEM are achieved by matching offers and bids using “pay-as-bid” method. The competitive market has been designed to use a “uniform pricing” method. The market is a day-ahead market (DAM). DAM Market trials started on 10 April 2007 and will be on for the next three months. Market opening to be considered when governance issues are resolved with the SAPP. 14 SOUTHERN AFRICAN POWER POOL 3. THE SAPP TARIFF STUDY Following the Ad Hoc meeting held in Namibia in July 2004, it was resolved to: 9 Implement cost reflective tariffs 9 Adopt regulatory principles to enhance the tariffs The SAPP has initiated a Tariff Study and has appointed a Consultant. Key stakeholders such as RERA would be consulted DBSA is funding the study which shall be completed in Aug 2007. 15 SOUTHERN AFRICAN POWER POOL SAPP Tariff Study - CONTD The outcome of the Study will be to highlight: 9 Cost reflectiveness of tariffs in Member countries 9 Competitiveness regionally & internationally 9 Implications of capacity expansion projects on tariffs 9 Energy efficiency implications on tariffs 9 Analyse and recommend best practices 16 SOUTHERN AFRICAN POWER POOL 3. DIMINISHING GENERATION SURPLUS CAPACITY 3.1 Status of Power Supply Situation 3.2 Commissioned Generation Projects 3.3 Future Short & Long Term Generation Projects 3.4 Priority Transmission Projects 17 SOUTHERN AFRICAN POWER POOL 3.1 Power Supply and Demand Installed Available 2006 Peak No. Country Utility Capacity Capacity Demand [MW] [MW] [MW] 1 Angola ENE 742 590 432 2 Botswana BPC 132 120 473 3 DRC SNEL 2,442 1,170 993 4 Lesotho LEC 72 70 101 5 Malawi ESCOM 305 261 251 6 Mozambique EDM 307 320 HCB 2,250 2,075 7 Namibia NamPower 393 390 408 8 South Africa Eskom 42,011 36,208 34,807 9 Swaziland SEB 51 50 188 10 Tanzania TANESCO 897 680 567 11 Zambia ZESCO 1,752 1,302 1,302 12 Zimbabwe ZESA 1,990 1,825 1,904 TOTAL 53,124 44,741 41,744 Non-coincidental 2006 peak demand for interconnected grid: 40,554 MW Available hydro capacity varies depending on season 18 SOUTHERN AFRICAN POWER POOL SAPP Generation Vs SAPP Load Forecast Net Capacity Peak Demand 60,000 50,000 40,000 30,000 20,000 Capacity [MW} 10,000 - 2003 2005 2007 2009 2011 2013 Year The SAPP Planning Data is indicating that SAPP runs out of generation surplus capacity after the year 2007. 19 SOUTHERN AFRICAN POWER POOL Load shedding in ZESA, ZESCO and NamPower in 2006 at peak periods Interruptible Load Contracts, Demand Market Participation and DSM utilised in ESKOM. (Experience in 2006) This demonstrated that supply was not adequate The forecast for 2007 indicates that actual generation reserve capacity would be lower than normally planned. Demand Side Management Initiatives have been initiated and supported 20 SOUTHERN AFRICAN POWER POOL 3.2 Commissioned Generation Projects [2004-2006] Total Capacity Commissioning Country Plant Capacity [MW] (MW) Date Comment Angola Capanda 1 2 x 130 260 2004 New Tanzania Ubongo 2 x 40 80 2005 New Zambia Kariba North 1 x 30 30 2004 Uprating South AfricaCamden 2 x190 380 2005 De-mothballed Zambia Kariba North 30 30 2005 Uprating South AfricaCamden 190 190 2006 De-mothballed South AfricaArnot 6 x 20 120 2005 - 2006 Upgrade Swaziland Maguga 20 20 2006 New Zambia Kafue Gorge 2x15 30 2006 Uprating Total 1140 Type Percentage Hydro 35% Gas 7% Coal 58% 21 SOUTHERN AFRICAN POWER POOL New Generation Projects in 2007 ESKOM commissioned 2 x 190 MW at Camden in 1st quarter of 2007. ESKOM to commission 1050 MW – Commercial Operation by May 2007 (OCGT). SEB to commission 20 MW at Maguga by July 2007. 22 SOUTHERN AFRICAN POWER POOL Priority Projects The SAPP priority projects have been agreed as follows: 1. Rehabilitation & associated transmission projects. 2. Short-term generation projects Expected to be commissioned before 2010 Completed feasibility studies Approved Environmental Impact Assessment 3. Transmission projects 4. Medium to Long-term generation projects Expected to be commissioned after 2010 Most have no feasibility studies and EIA 23 SOUTHERN AFRICAN POWER POOL 3.3 Classification of Generation Projects Capacity Estimated Cost No.