Mini-Grid Market Opportunity Assessment: Angola Green Mini-Grid Market Development Programme: African Development Bank (Sustainable Energy Fund for Africa, SEFA) July 2020 The African Development Bank has an overarching objective to spur sustainable economic development and social progress in its Regional Member Countries (RMCs), thus contributing to poverty reduction. The Bank Group aims to achieve this objective by mobilising and allocating resources for investment in RMCs and providing policy advice and technical assistance to support development efforts. The Sustainable Energy Fund for Africa (SEFA) is a special fund administered by the African Development Bank to support to African countries to accelerate the transition towards greener and more sustainable power systems. SEFA supports small and medium-scale renewable energy and energy-efficiency projects through early stage interventions that enhance project bankability and unlock private sector investments in new technologies and businesses. SEFA focus its interventions on three thematic areas: (1) green mini-grids to accelerate energy access to underserved populations; (2) green baseload to support clean generation capacity; and (3) energy efficiency to optimize energy systems and reduce energy intensity. The Carbon Trust wrote this report based on an impartial analysis of primary and secondary sources. The Carbon Trust’s mission is to accelerate the move to a sustainable, low carbon economy. It is a world leading expert on carbon reduction and clean technology. As a not-for-dividend group, it advises governments and companies around the world, reinvesting profits into its low carbon mission. The Carbon Trust would like to thank the Angola’s Ministry of Energy and Water, their contributions which made this report possible. The Carbon Trust would also like to thank members of the following institutions for further input and support: World Bank, AfDB, UNDP, IRSEA (Regulatory Institute for Electricity and Water Services), ENDE (National Electricity Distribution Company), RNT (National Electricity Transport) and PRODEL (Public Electricity Production Company). Benjamin Curnier Gracia Munganga Director General, Carbon Trust Manager, Carbon Trust [email protected] [email protected] Kate Hooper Yuri Lima Handem Associate, Carbon Trust Rural Electrification Expert [email protected] [email protected] PREFACE This paper, part of the Green Mini-Grid Market Development approach for powering mini-grids is to use renewable Programme (GMG MDP) document series, assesses the energy sources, which are widely available across Africa. green mini-grid market in Angola. Green-mini grids include The development of GMGs is not without its challenges, mini-grids powered by renewable energy resources – solar however. In addition to unfriendly policy and regulatory radiation, wind, hydropower or biomass – either exclusively, frameworks, barriers to growth of the private mini-grids or in combination with diesel generation. sector in Africa include the lack of proven business models, Mini-grids are not a new phenomenon in Africa. Almost market data and linkages, key stakeholder capacity, and all national utilities own and operate diesel-powered access to finance. generating facilities not connected to the main grid, In response to these challenges, the African Development which supply electricity to secondary towns and larger Bank (AfDB) designed and launched Phase 1 of the villages. This solution to rural electrification often results GMG MDP in 2015 with grant funding from the AfDB’s in significant financial losses for the utility, required to sell Sustainable Energy Fund for Africa (SEFA). The GMG MDP power at prices significantly below the cost of production is a pan-African platform that addresses the technical, and delivery. Moreover, it leaves the most remote towns policy, financial and market barriers confronting the and villages unelectrified. The latest Sustainable Energy for emerging GMG sector. It is part of a larger Department All (SEforALL) Global Tracking Framework estimates that for International Development (DFID) funded GMG Africa the urban-to-rural divide in access to electricity in Africa Programme, which also includes GMG initiatives in Kenya is as high as 450 %, with 69 % of the population in urban and Tanzania; country-specific GMG policy development areas electrified compared to only 15 % in rural areas. through SEFA; and an action learning and exchange There are three principal options for providing new component implemented by the World Bank’s Energy connections to currently unserved populations in Africa, Sector Management Assistance Program (ESMAP). namely: extension of the national grid; installation of Phase 2 of the GMG MDP, greater in scope and scale as separate “mini” grids to operate independently from compared to Phase 1, was launched in November 2017 the main grid; and stand-alone generating systems that for 2.5 years. supply individual consumers. The most cost-effective In its Africa Energy Outlook 2014, the International Energy Agency (IEA) predicted that by 2040, 70 % of new rural electricity supply in Africa will most affordably come from stand-alone systems and mini-grids. The GMG MDP funded by SEFA, SEforALL, ESMAP and similar programmes, which are contributing to falling costs, technological advancements and more efficiencies in GMG development, will help ensure that up to two thirds of this supply is powered by renewables. The goals of the GMG programme are central to AfDB’s mission of spurring sustainable economic development, social progress and poverty reduction in its regional member countries. Off-grid and mini-grid solutions are a key component of the AfDB’s New Deal on Energy for Africa, launched by the Bank’s president in January 2016. The New Deal, a transformative, partnership- driven effort, aspires to achieve universal access to energy in Africa by 2025. This report was prepared by the Carbon Trust at the request of the AfDB, SEFA team. It was written by Kate Hooper and Gracia Munganga and reviewed by Benjamin Curnier of the Carbon Trust. The Carbon Trust is a mission-driven organization helping businesses, governments and the public sector accelerate the move to a low carbon economy. The content of this report was reviewed by Brendan Coleman of the AfDB’s GMG MDP, and Anders Pedersen, Chief Regional Power System Officer (AfDB) and cleared by Dr Daniel-Alexander Schroth, Advisor to the Vice President for Power, Energy, Climate and Green Growth at the African Development Bank. Contents Executive Summary | 10 1 | Introduction to the | 13 Green Mini-Grids Market Development Programme 2 | Country and Sector 2.1 Country Overview | 14 2.2 Overview of the Energy Sector | 16 Overview 2.3 Overview of the Power Sector | 30 2.4 Overview of the Off-Grid Sector | 33 3.1 Data availability | 42 3 | Green Mini-Grid 3.2 Mini-Grid Potential: Methodology | 42 3.3 Assessing Mini-Grid Potential: Results | 43 Potential 3.3 Renewable Energy Potential for Mini-Grids | 48 4.1 Energy Sector Policies and Regulatory Frameworks 4 | Directory Directory | 53 4.2 Data Sources Directory | 54 4.3 Stakeholder Directory | 54 References | 60 List of Figures Figure 1 Political Map of Angola (Source: Ontheworld Maps, 2019) | 14 Figure 2 Average Monthly Temperature and Rainfall of Angola 1901-2016 (Source: World Bank) | 14 Figure 3 Total Final Consumption (TFC) by Source, Angola 1990-2017 (Source : IEA, 2017) | 16 Figure 4 Total Primary Energy Supply (TPES) by Source 1990-2017 (IEA, 2019) | 17 Figure 5 Angola GHG Emissions by Sector 1990-2014 (Source : ClimateWatch, 2019) | 17 Figure 6 Current Structure of the energy sector key players in Angola. Source: Carbon Trust Analysis | 18 Figure 7 Electrification target 2025 broken down by technology. Source: MINEA 2014 | 22 Figure 9 Scope of Activities under the General Electricity Act (Source : (Gesto Energy, 2016)) | 27 Figure 10 Electricity Final Consumption per capita in Angola 1990-2016 Source: IEA 2019 | 18 Figure 11 Existing and Planned Transmission Lines, and Population Density Map (Source: Carbon Trust Analysis) | 32 Figure 12 Overview of rural electrification sites for mini-grids as presented in Angola Energia 2025 | 34 Figure 13 Localities to be electrified through ‘isolated systems’ (mini-grids) (source: MINEA, 2014) | 36 Figure 14 Population density in Angola by region, with current and planned transmission network, (Source: Carbon Trust analysis) | 44 Figure 15 Areas best served by mini-grids, shs and grid extension (source: Carbon Trust analysis) | 44 Figure 16 RNT Infrastructure and isolated generation (Current and ongoing projects in 2017) Source: MINEA, 2017 | 45 Figure 17 Northern Grid: Current (2017) and grid extension projects under construction and due to be completed by 2022. | 45 Figure 18 Southern, Central and Eastern Grids: Current (2017) and grid extension projects under construction and due to be completed by 2022. | 45 Figure 19 Hydropower potential and location of small-hydro potential sites inventoried by DNEL (MINEA, 2014) | 48 Figure 20 Surface Run-off map and Hydropower Potential Atlas | 49 Figure 16 Biomass Potential from Forests (MINEA, 2014) | 50 Figure 17 Biomass Potential from Sugar Cane (MINEA, 2014) | 50 Figure 18 Biomass Potential - All technologies (MINEA, 2014) | 51 Figure 19 Annual average global horizontal irradiation and solar projects with grid connection capacity (MINEA, 2014) | 51 Figure 20 Mean wind speeds and high potential identified sites