Natalie A. Renkhoff
As you are aware, economic development and growth is an essential need. Peace cannot be maintained if there is no development. Giving people access to modern energy is part of development. I encourage our Government to invest in alternative energy sources, especially with the aim to use these forms of energy in those parts of our country that cannot be economically connected to the national power grid.
Founding President Dr Sam Nujoma named on the occasion of the inauguration of the Omburu solar power plant in May 2015, the importance of enhancing the use of renewable energy sources in Namibia.1 At present, however, Renewable Energy (RE) still competes “on an unequal footing with conventional forms of energy”.2
It is a well-known fact that Namibia is blessed with abundant solar, wind and biomass resources. Its solar regime has an average direct insolation of 2,200 kWh/m²/year and minimal cloud cover. Therefore, it is believed that concentrated solar power, for instance, can provide more than 250,000 MW of power generation on suitable land ranking the country’s Direct
Normal Irradiation (DNI) among the best in the world.3
The challenge faced by Namibia today is that domestic generation is not adequate to meet current and future projected demand. Furthermore, the demand for electricity still continues to grow, especially in the Erongo region where due to the rising number of mines, there is significant economic growth. According to Paulinus Shilamba, the former CEO of NamPower, the period after August 2016 will be critical for Namibia’s power supply, hence the need to ensure security of supply for the country.4 RE sources – energy from solar, wind, biomass and the as yet unquantified indigenous resources including geothermal, wave and tidal energies5 – could provide viable alternatives to conventional sources such as oil, coal, gas and nuclear power and might help to diminish the Namibian electricity shortage as many RE sources are available without the necessity to build large-scale power plants first.
Although most RE technologies in today’s market are not yet able to withstand competition from fossil fuels, solar photovoltaic (PV), wind technologies, and to a lesser degree biomass generation have dramatically improved their cost competitiveness in the past years. 6 However, there is still the need for creating a support system in Namibia that is not in place to date.
1 The Energy Sector
1.1 Current and Future Projected Demand
Domestic electricity generation is presently inadequate to meet both current and future projected demand. Namibia’s total electric power demand is approximately 540 MW. The total production capacity delivers only 400 MW, rendering a deficit of 140 MW. In reality, however, the deficit is much higher, as supply from Ruacana is dependent on the seasonal flow,of the Kunene River.7 It is also anticipated that the ongoing developments in the mining sector,will continue to cause higher-than-average consumption growth rates in the future.
Up to 70%8 of Namibia’s electricity requirements are currently imported from the Southern African Power Pool (SAPP) through bilateral and day-ahead market contracts. To complicate Namibia’s current situation, supply constraints in South Africa are resulting in Eskom not being able to meet South African electricity needs, much less those of Namibia.9 For the past,twenty years Eskom has had surplus generating capacity and has sold electricity at extremely low prices by world standards.10 Due to the low cost of imported electricity, the construction of a new power plant has never been considered for the last twenty years11 while on-grid renewable energy projects were not worthwhile. In recent years, the average cost of electricity has increased by 14% per annum.12 As of July 2015, the ECB approved a tariff increase of 9.53%. This means an effective bulk tariff increase from N$ 1.17 to N$ 1.28 per kWh.13
As a result of the huge amount of imported electricity, Namibia has a quite well developed grid in situ in comparison to other African countries thus ensuring large-scale import is possible. The 951 km HVDC line, linking the far north-east with central Namibia, provides a second north-south interconnection to South Africa. Both form parts of the Southern African Power Pool (SAPP) for interconnecting the region.14 The Caprivi Interconnector, commissioned in November 2010 by Zimbabwe, Zambia and Namibia was supposed to reinforce the electricity supply to Namibia. Before the power line was build, electricity from Zambia came via South Africa, and Namibia had to pay wheeling charges.15 The West Coast Development Project involves extensive transmission infrastructure planning and development due to the rapid expansion of mining activities in the Erongo region. As such, the 220 kV transmission spine was reinforced with a second line, and a 220 kV line has been completed to service the Trekkopje Uranium Mine. Additional requests from other mine developers have already been made to NamPower.16 Prior to this, the under-supply had forced the regional energy distributor ErongoRed to encourage new mines to install their own basic power supply for the time being.17
Nevertheless, huge parts of the country are still unelectrified as extending the grid to feed small, isolated communities is not cost effective. The Government has therefore prioritised rural electrification. In the last ten years, over N$250 million has been spent on it.18
1.2 Current and Prospective Power Generation Projects
The Namibian power sector is presently facing various operational and planning challenges due to the rising demand for electricity and the need to become more independent from imports.
Currently, the Ruacana Hydropower station on the Kunene River is Namibia’s main domestic source of power generation. It contributes more than 60% towards the current demand for electricity in Namibia,19 though it was initially planned that Ruacana would be able to meet Namibia’s entire demand.20 In March 2012, the fourth turbine was put into operation at the power station.21 This can boost the total output to 339 MW when all four units are running simultaneously.22 However, due to varying rainfall patterns in Southern Angola, the Ruacana station cannot always meet its maximum production capacity.23
Apart from Ruacana, there are the Van Eck coal-fired power station in Windhoek and the Paratus diesel power station. Both plants were only supposed to be an interim as the Ruacana power station later went on line as initially planned.24 Due to the rising demand however, NamPower is often left with no option other than make use of Van Eck and Paratus. Van Eck and Paratus are very expensive to operate due to extremely high cost of imported coal and diesel fuels, but without these, a constant supply to Windhoek and Walvis Bay, the industrial coastal town, cannot be ensured.25
The Anixas thermal peaking power station, with a capacity of 22.5 MW at Walvis Bay, was inaugurated in November 2011. The power station has already been feeding electricity into the Namibian grid since July 2011 to assist in meeting peak power requirements.26
In May 2015, the Omburu solar power plant close to Omaruru was inaugurated. Inno Sun, a Franco-Namibian company involved in renewable energy projects in Namibia, has thus become the first commercial independent power producer. The capacity of the park is 4.5 MW. This represents 1% of the electricity generation of Namibia or the domestic consumption of 20.000 Namibians. The electricity generated by Omburu is transported through a 1.2 km long powerline, and injected into Omburu transmission substation where it is sold to NamPower. Contrary to experiences expressed by other potential independent power producers, Inno Sun built its solar power plant in four months only following a speedy application process.
As the existing power plants cannot meet the demand and with rising prices for imported electricity, the Government in collaboration with NamPower has put short-, medium and long term plans in place to ensure the security of supply.
Under the Short Term Critical Supply Project a number of short- and medium-term initiatives are planned, while the Kudu gas project and the Baynes hydropower project are Namibia’s long-term projects. The Short Term Critical Supply Project will run until 2018 when the new base load power station is expected to be commissioned. Crucial to the success of the STCS is that everyone in Namibia commits his / her own contribution by reducing personal electricity consumption by at least 10%.27
1.2.1 Short-term Projects
There are a number of short-term projects of which the most important undertaking is to enter into power purchase agreements with other SADC countries to be supplied with electricity by them. This includes not only the negotiation of new power purchase agreements but also re-negotiation of existing ones with neighbouring power utilities, namely with South Africa’s Eskom, Zesco in Zambia, Zesa in Zimbabwe as well as Aggreko Mozambique.28
Besides doing what Namibia already did for decades, namely importing electricity, short-term projects also include generating electricity from renewable energy sources locally, albeit in smaller scale.
Projects actively involving the people of Namibia are the so-called Demand Side Management (DSM) programmes.29 The programmes include the distribution of 1 million LED lights, the twenty-thousand solar water heater campaign, virtual power station (VPS) and demand reduction (DR) campaigns. Under the theme ‘Power of Knowing’ public awareness campaigns are run advocating energy saving initiatives. The aim of the LED campaign is the reduction of the lighting load during peak demand times, as well as the stimulation of the local energy efficient lighting market. While the LED campaign is expected to reduce the peak demand by up to 30 MW, the solar water heater campaign will lead to a reduction of approximately 10 MW.30
Furthermore, the turbine runners of the three old units at the Ruacana hydropower station will be replaced. The replacement of the runner for Unit 1 was completed in December 2014, while the commissioning of the runners for Unit 2 and 3 is expected before the end of 2015. This replacement adds additional 15 MW bringing the total installed capacity to 347 MW. The success, however, will depend on the rainfall in coming years. Additionally, the Van Eck coal power station is rehabilitated. NamPower decided to extend the life span of the power station by ten years through replacing and refurbishment most of its major components and to fully automate its functions. Van Eck meets then its original design output of 120 MW and a guaranteed base-load output of at least 90 MW. NamPower also negotiates with independent power producers who will feed in electricity into the grid from renewable energy sources.
Utilisation options for power plants fuelled by biomass from encroacher bush were already identified in several studies. These options include decentralised biomass power plants as well as decentralised hybrid power plants based on biomass and solar.
1.2.2 Medium- and Long-term Projects
Currently, the Government seems to have given priority to the Kudu gas power project. The Kudu gas project had been approved by Cabinet. However, this has happened when the now Prime Minister still has been Minister of Finance. The current Minister of Finance assessed the financial risks of the project and does not support it as he “worries that the Kudu gas project will use up the total fiscal space Namibia has and the country will not have the ability to raise any more funds for other projects”.31 For the moment, Kudu became again a controversially discussed topic.
According to the envisaged timeline, the Kudu power project is expected to come on stream in 2018. It is going to be a combined cycle gas turbine power station. Kudu is seen as a strategic project as it will be the only large power station in the country. It is supposed to be a platform for the development of energy intensive, export orientated industries vital to the next phase of Namibia’s economic development.32 The plant is supposed to generate 800 MW of which Namibia will consume about 400 MW while the surplus is intended to be sold to other SADC countries.
For the Kudu project, gas is taken from the Kudu field to the plant via a 170 km pipeline. The Kudu power station will be located in Uuvlei, 25 km north of Oranjemund. The Kudu gas field itself lies in the Orange sub-basin at an ocean water depth of 560 feet. It was already discovered in the 1970s. The gas field will have a life span of approximately 23 years.
As the Xaris gas to power project is apparently not high on the agenda currently, the second long-term project Namibia is focussing on is the Baynes hydropower project. For the Baynes power station, with an envisaged capacity of 350-400 MW to be shared equally between Namibia and Angola, the environmental impact assessment has been conducted and the conclusion is that the project is technically and commercially feasible.33 Both the Namibian and the Angolan governments have agreed to develop the Baynes option further after studies conducted on the Epupa as well as the Baynes site along the Kunene, revealed that while the Epupa site was technically preferable due to greater storage capacity, the Baynes site would be less disruptive to the life of the indigenous Himba community and would have less environmental impacts.34 The next course of action will be the establishment of Baynes project offices both in Windhoek and Luanda that are in charge of planning the support infrastructure such as roads, transmission lines, and housing as well as overseeing the public participation process with affected indigenous communities. The Baynes hydropower plant is supposed to cost approximately U$ 1.3 billion and is expected to be commissioned by 2024.35 Hydropower projects are subject to intense geo-political considerations in Namibia as all rivers with current and potential hydropower generation are situated along international boundaries and their sources of origin are outside Namibia.36
All long-term power generation projects by Namibia as well as other SADC countries are supported by the so-called Zizabona project. Zizabona is a joint electricity transmission interconnector project which links the power networks of Zimbabwe, Zambia, Botswana and Namibia. It is the aim to establish a second transmission corridor besides the existing central transmission corridor from Zambia through Zimbabwe, Botswana into South Africa.
The current energy crisis is by no means purely Namibian. The whole SADC region suffers from an energy shortage, and is gradually implementing reforms of the electricity sector so as to ensure that the supply of reliable and adequate electricity is guaranteed, whereupon each country has its own project(s) to be developed. According to the International Energy Agency, sub-Saharan Africa will require more than US$ 300 billion in investment to achieve universal electricity access by 2030.37 Although universal access is not a realistic goal, it is estimated that half of the amount will indeed be invested by SADC countries in the near future.
The SADC Energy Ministers recently noted a capacity shortfall of 8,247 MW.38 However, within the following year it is expected that almost 2,800 MW will be commissioned, and the whole region is planning to have 24,062 MW of new generation capacity installed by 2019. Noteworthy, 70% of the newly generated electricity will be coming from renewable energy sources. If a majority of SADC countries realise its plans of constructing new power plants, the electricity shortfall within SADC can be described as short- and medium-term, not long-term. This means that putting measures in place to mitigate a looming energy crisis is an urgent issue that cannot be tackled by Namibians long-term project Kudu gas, but will be better addressed by setting up a substantive amount of solar and wind plants with a construction time of only a few months; the Omburu solar plant for instance has been built within four months. Recognising the need for urgent action while fears of uncertainty over the future supply are mounting, Cenored for example has decided on a 5 MW solar power plant for Otjiwarongo and plans exist to set up similar plants for the towns of Tsumeb, Outjo, Okakarara, Okahandja, Grootfontein and Khorixas.39 And so intend more local authorities to do.40
Nevertheless, most SADC countries focus merely on long-term planning, and the countries’ visions are similar to what Namibia foresees as its desired future. Large scale plants are supposed to be constructed that meet not only the national demand but also supply neighbouring countries with electricity. Once there is a surplus of electricity within SADC, electricity prices for imported electricity might come down again. While it is in line with Namibia’s energy policy to meet its own demand by locally produced electricity, even though the SADC electricity market might not demand for this in the foreseeable future, there is no urgent economic need to plan for power plants that produce half of its electricity for export purposes, especially against the backdrop that other SADC countries will be able to produce their electricity from their newly erected power plants cheaper than this will be possible for Namibia’s Kudu gas power plant due to the fact that it is costly to harvest gas off-shore in rough seas.
2 Regulatory Framework
The Ministry of Mines and Energy, in cooperation with the Electricity Control Board (ECB), serve as the regulatory bodies of the electricity sector. With NamPower as Namibia’s electricity generating utility, the Regional Electricity Distributors (REDs) are in charge of supply and distribution of electricity to consumers, at least where REDs are already in place.
2.1 Ministry of Mines and Energy
The Ministry of Mines and Energy is the custodian of the country’s energy sector. Since 1993, the Ministry has had a department responsible for promotion of RE. The power to regulate the RE market is conferred on the Minister through the Electricity Act.41
The White Paper that fostered the restructuring of the electricity supply and distribution industry in Namibia was the basis for a study,42 which was supposed to be in itself, the foundation for the first Electricity Act. 43 The initial Electricity Act from 2000, has subsequently been repealed by the Electricity Act No. 4 of 2007, which is still in force. Although the Electricity Act neither deals with RE in detail nor provides any specific provisions for the regulation of the RE market, it contains a rule of jurisdiction for RE. Section 43(j) states: “The Minister may make regulations in relation to instalment and implementation of renewable energy technologies, the use thereof (including the placing of obligations on persons with regard thereto) and the provision of electricity there from.” Thus, the Electricity Act states explicitly, that under Namibian law, the entire RE market can be regulated by regulation and the person in charge therefore is the Minister. However, such regulations do not exist yet.
Many other jurisdictions throughout the world require an Act of Parliament for the decision on how to give direction to the development of RE. It is questionable if such an important issue as the opening of the electricity market to RE, is not better left to Parliament, as the democratically elected legislative authority. Generally, to strengthen a democracy, it is desirable to leave those decisions to Parliament that are not only very costly for the tax payer, but more importantly, affect society as a whole, since electricity and its supply is a basic human need.
However, as the Government is undertaking a law reform at the moment, there will be significant developments in the future governing the electricity sector and thus, regulating the sector will not be left to the Minister by way of regulation.44 A draft version of the Namibia Energy Regulatory Authority Bill is already available. It deals explicitly with the issue of renewable energies. According to the Bill, the newly established Namibia Energy Regulatory Authority may regulate renewable energy, energy efficiency, and energy conservation through sector specific legislation.45
2.2 Electricity Control Board
The Electricity Control Board (ECB) is a statutory regulatory authority established in 2000 under the first Electricity Act No. 2 of 2000. Through the new Electricity Act No. 4 of 2007, the mandate of the ECB and its core responsibilities were expanded. The core mandates of the ECB are according to Section 3 of the Electricity Act, to exercise control over and regulate the provision, use and consumption of electricity in Namibia, to oversee the efficient functioning and development of the electricity industry and security of electricity provision, to ensure the efficient provision of electricity, to ensure a competitive environment in the electricity industry in Namibia with such restrictions as may be necessary for the security of electricity provision and other public interest, and to promote private sector investment in the electricity industry in accordance with prevailing Government policy.46 As an independent regulatory body, the ECB is thus in charge of regulating electricity generation, transmission, distribution, supply, import and export to Namibia.47 The ECB has the sole mandate to approve electricity tariffs in Namibia and in this regard has developed tariff methodologies for generation, transmission and distribution.48 In order to make electricity available to the poor, the ECB devised a project that focuses on RE to look at the pro-poor tariffs.49 With regard to the Electricity Act’s mandate to promote the integration of the private sector into the energy sector, the ECB worked in the past on an independent power producer (IPP) and investment market framework to create a conducive environment for IPP investment. However, the ECB admits that negotiations of power purchase agreements between NamPower and the IPPs have not reached desired objectives yet.50 The ECB is also responsible for the issuance of licences,51 while it is not involved in generation projects itself, its sole duty is to assist the Government in creating an enabling environment.52 The Commonwealth’s Secretariat Advisory Division: Economic and Legal Section (ELS) assisted the ECB in its improvement process to become the overarching energy regulator that oversees gas, RE and other energy sources.53 The ECB executes its statutory functions through the Technical Secretariat headed by the Chief Executive Officer.
The ECB has established, among other things, the Revolving Fund on Renewables54 that is still in operation today and provides guarantees to people who would otherwise not be able to have access to loans from commercial banks for investing in RE systems. The fund was initially managed by the Namibia Development Corporation (NDC), after which it was passed on to the management of NamPower for a short period of time, before it entered the private sector.55 However, the Namibian revolving fund is not comparable to the national funds that are being increasingly used around the world to promote RE development. They are normally useful Government tools inasmuch as, although the boundaries of use are set in law, flexibility can be built to ensure that fund resources adapt to changing market needs consistent with national objectives.56 The Namibian revolving fund is neither set in a rule of law nor is the fund designed to generally improve the use of RE technologies. The only beneficiaries are families and individuals not connected to the grid that want to buy solar home systems. One also has to differentiate between the revolving fund and the National Energy Fund Act57 which does not deal with the promotion of RE. The National Energy Fund Act empowers the Minister only to impose a levy on in Namibia generated hydropower or wind power for the benefit of the fund,58 but it does not allow RE producers to benefit from the fund. This had been already criticised in a study funded by the Renewable Energy and Energy Efficiency Institute Partnership (REEEP) in 2010. It was suggested that the National Energy Fund Act be amended or to pass a regulation under Section 43(j) of the Electricity Act to allow RE producers to also benefit from the fund.
The ECB is also involved in the development of a new legal framework for RE and investigations to find the best procurement mechanism for promoting RE technologies in Namibia. In August 2015, the ECB invited consultants to tender for the development of a Policy on RE, while the first stakeholder meeting has already been hosted by the ECB in February 2015.59
2.3 Other Market Actors
The sector’s other main market actors are NamPower and the Regional Electricity Distributors (REDs). Namibia’s electricity generating utility, the Namibian Power Corporation, is the bulk supplier to mainly REDs, mines and local authorities, where REDs are not operational.60
NamPower is wholly owned by the Government of Namibia and has three core businesses, i.e. generation, trading and transmission. The utility also fulfils the role of the system administrator. All electricity imports and exports, and all wheeling arrangements using the Namibian electricity transmission grid, are controlled and managed by NamPower.61 All independent power producers (IPPs) that want to input electricity from RE technologies into the grid have to initially negotiate power purchase agreements with NamPower. In 2010, NamPower created a new department for RE under the Energy Trading and New Works Business Unit to spearhead RE projects and facilitate their implementation. Meanwhile, the department is involved in three specific broad areas of RE that include wind and biomass energy, bush encroachment for electricity generation as well as hybrid mini-grid systems in off-grid areas.62
The Regional Electricity Distributors (REDs) are responsible for supply and distribution of electricity to consumers within their respective licence areas.63 REDs were introduced in the course of the restructuring of the electricity market in 2000.64 Although the reform of the electricity distribution industry (EDI) had started five years ago, it remained incomplete with only three of five envisaged regional energy distributors set up so far.65 Currently, there are three REDs operating in Namibia: Erongo Red, Nored and Cenored.
The new Electricity Bill, which is currently under review, is set to modify the single-buyer market model which gave NamPower a monopoly.66 The new modified single-buyer market model allows distributors and large off-takers to participate directly in the wholesale market.67 The expected time of completion of the new Electricity Bill is mid 2016.
Already back in 2014, a national connectivity policy has been drafted that was supposed to be brought before a Cabinet committee. The then Minister for Mines and Energy agitated for the position that NamPower should not distribute electricity to mines. Under the current legal framework NamPower supplies mines with electricity, sidelining the REDs.68 It was also suspected that if the duties of REDs are undertaken by municipalities, they might tend to subsidise other sectors through higher electricity tariffs.69
2.4 Namibia Energy Institute
In December 2012, Cabinet approved the transformation of the Renewable Energy and Energy Efficiency Institute (REEEI) into the Namibia Energy Institute (NEI). NEI was officially launched on 20 May 2014. Like the Renewable Energy and Energy Efficiency Institute (REEEI), NEI also does not primarily act as a market actor but its practical role in supporting RE technologies should not be underestimated.
NEI is supposed to be a leading institute for energy research and development in Africa. Its mission is to contribute to Namibia’s industrialisation by linking energy research, technology, policy, and education to the needs of industry and, to socio-economic development imperatives, initiatives and programme. Other than REEEI, the scope of NEI is not limited to RE and energy efficiency. NEI consists of for centres, namely the Centre for Electricity Supply (CES), the Centre for Petroleum, Oil and Gas (CPOG), the Centre for Nuclear Sciences (CNS), and the Centre for Renewable Energy and Energy Efficiency (CREEE). NEI is involved, among others, in the Off-Grid Energisation Master Plan (OGEMP), the Namibia Energy Efficiency Programme in Buildings (NEEP), the Namibia Wind Resource Assessment Project (NWRAP), the National Integrated Resource Plan (NIRP) and will be engaged in developing a database for Africa Renewable Energy (DARE).
NEI was also involved in initiating the successful bid to host SACREE in Namibia. On 24 July 2015, the SADC Centre for Renewable Energy and Energy Efficiency (SACREE) was launched. Namibia is the host country being able to prevail against five other competitors.
3 Legal Framework
Both off-grid and grid-connected energy production from RE resources requires a special institutional and legal framework which is, unfortunately, not in place to date. This is not only bemoaned by independent power producers of RE but also by state officials. In its annual report of the ECB, one can read that an overwhelming need exists to transform Namibia’s energy regulatory and institutional framework because the current one is largely non-existent and partially outdated.70 As there is a mutual consent among all involved stakeholders, including those who raise environmental arguments about not using one of the world’s best solar, wind and biomass resources, to pave the way for RE technologies, the Government has begun to work on a comprehensive legal framework which is by no means an easy task.71 The Ministry of Mines and Energy is currently working on a number of projects, such as the review of the White Paper and the New Energy Regulatory Framework, which will eventually provide for RE integration into the overall energy mix,72 while the ECB is in the process of preparing a Policy for RE.
It remains to be seen how the new legal framework on RE is likely to turn out. It is left to hope that it is comprehensive and yet more harmonised as for example the national environmental law turned out to be after countless policies and regulations were implemented that often do not take into account former legislation. This situation, as a matter of fact, also characterises the current status of the RE legal framework. Although it is indeed fragmented, there are numerous programmes, master plans and projects that alas, often overlap in their scope.
3.1 White Paper on Energy Policy of Namibia
The White Paper on Energy Policy, that still forms the basis for Namibia’s energy policy, was developed by the Energy Committee, which was established in 1996 for this purpose, and issued by the Ministry of Mines and Energy in 1998. Having framed an initial energy programme within the scope of NDP 1,73 the Ministry wanted to draft a comprehensive energy policy for all energy sub-sectors.74 The White Paper is the culmination of a two-year effort by the Committee and an international team of energy experts.75 It is currently under review.76
The White Paper attempts to balance the Ministry’s interest in attracting private sector investments to Namibia with the appropriate level of Government regulation in the energy industry.77
With regard to RE, the White Paper is considered to be the landmark policy but it is not the first document addressing RE. First steps to promote RE were already taken shortly after independence. In 1993, MME launched a programme called ‘Promotion of the use of renewable energy sources in Namibia’, which was supported by the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ, now GIZ). As a result, in 1996, the Government launched the first solar revolving fund under the Home Power Project with support from Renewable Energy for African Development (REFAD), an American development organisation.78 All these projects were in line with the Harare Declaration on Solar Energy and Sustainable Development which Namibia signed at the World Solar Summit in September 1996.
The White Paper is divided into four parts. Part 1 describes the economic and development context for the energy sector. Policies for the energy demand sectors are laid down in part 2 with the main focus on energy needs of urban and rural households. Part 3 presents policy choices related to the energy supply sector including RE, whilst part 4 deals with cross-cutting issues.79
The White Paper focuses on meeting seven energy goals: effective governance, security of supply, social upliftment, investment and growth, economic competitiveness and economic efficiency as well as sustainability. Special attention is given in the White Paper to those demand sectors that have been neglected historically, namely, poor urban and rural households.80 The White Paper points out that at this early stage, not enough was known about the problems and needs in this sector. Therefore, national studies were supposed to be initiated as a basis for future development, including the issue of sustainable biomass usage in rural areas.81 In an effort to meet these goals, a number of projects and programmes were initiated, implemented and facilitated by the Government and through partnerships with development organisations and the private sector. Some will be introduced below.
In 2008, in an extensive study under REEECAP, all these policy goals were explored separately within the context of eight scenarios where each scenario attempted to depict a particular policy option.82 What has been discovered is that there is not one single scenario that satisfies all of the policy criteria. Some options are economically efficient but do not maximise the use of renewable resources. Several are inexpensive but do not guarantee security of supply. Others, in turn, maximise the use of renewable resources but are expensive.83 The conclusion drawn was that, although all energy goals are technically coequal, there is a necessity for the Government to make a decision as to which option should be given the priority in the long-term.
However, both the REEECAP study and the White Paper clearly show that RE can contribute to the realisation of at least several of Namibia’s overall energy policy goals, mainly the goals of social upliftment, economic competitiveness and efficiency, security of supply and sustainability.84 The potential to achieve the strongest impact is, according to the White Paper, the widespread use of decentralised solar PV systems to provide basic electricity services in remote areas. Such decentralised options for rural electrification are often cheaper than extending the grid over long distances, allowing for improved economic efficiency in rural areas, thus, contributing to the goal of social upliftment. While off-grid electrification contributes to the goals mentioned, the potential use of RE – including hydropower – for grid-connected electricity can contribute to the policy goals of sustainability as well as security of supply by virtue of diversification and the use of locally available RE resources.85
Throughout the White Paper, the role RE can play for poverty reduction is one of the most important topics. As it is a fact that a significant part of the population will not have grid access in the future, the White Paper distinguishes between off-grid and grid electrification and elaborates on the role that RE technologies, particularly solar systems, will play in meeting rural energy needs. In areas where it is not viable to extend the national grid, RE systems will have to substitute grid electrification. RE might also provide an interim, first-step solution in areas where access to the grid is not envisaged in the short to medium term.86 Like their urban counterparts, rural communities depend on public facilities to fulfil some of their most basic needs, while the quality of these services can be severely hampered by lack of electricity.87 In this respect, the White Paper also discusses the importance of a stable rural water supply where photovoltaic pumps could play a major role in the future as replacements for diesel pumps.88
The White Paper also mentions the large gap between as to what renewables can potentially contribute to the energy policy goals and what they are presently contributing. Therefore, the Government has to face various institutional challenges amongst which are: establishment of an adequate institutional and planning framework, which provides for the balanced provision of all forms of energy; development of human resources and public awareness; a set-up of suitable financing systems for RE applications, in order to increase their affordability and to encourage economic choices which are based on life-cycle costs; and an improved co-ordination among Government ministries engaged in energy provision.89
Meanwhile, some of the so-called policy statements, which are explicitly formulated at the end of each paragraph throughout the White Paper, have been partially reached or at least first steps have been undertaken. This is especially so in the case for those policy statements with regard to human resource development and public awareness. The following policy statements were thus met to the Government’s satisfaction through NAMREP: Government will develop and implement RE awareness programmes, ensure education in RE and include the rational use of energy in school curricula, universities, vocational training centres and other institutions of instruction. With regard to the policy statement of improving the institutional and planning framework, one can state that despite the regrettable fact that a comprehensive legal framework is still missing and no in depth support schemes have been developed, at least some single programmes followed the implementation of the White Paper that facilitated supporting the use of RE specifically in off-grid areas for poverty reduction. A comprehensive national support scheme to enhance RE is still missing, although the Government has committed itself to facilitating adequate financing schemes for RE applications and to encourage Government agencies, investors and users to make decisions based on the life-cycle costs of alternative energy options rather than those exclusively based on the initial cost.90 However, progress has been made in establishing a loan finance system that is available for the rural poor to finance RE home systems. The White Paper’s chapter on RE closes with suggestions that specific tariff structures, as well as fair access to the grid for independent power producers of RE, should be discussed in the future.91 These two suggestions have become the most urgent in the fourteen years following the introduction of the White Paper.
3.2 Rural Electrification Programme
Even though modern RE planning relies up to the present day on the principles laid down in the White Paper, RE was already an issue immediately after independence and prior to the launch of the White Paper. Only the reasons for promoting RE were still different. Electrification was a priority and since electricity via the grid was cheap and easily accessible, whilst environmental concerns were still not very high on the agenda, RE technologies were only regarded for off-grid electrification. The first rural electrification programme ran parallel to solar systems that were made available for those not benefiting from grid extension. Since independence, great efforts were made in both grid and off-grid electrification with the result that Namibia today has a fairly good network coverage in comparison with other SADC countries. Almost 200,000 out of 500,000 households in Namibia are grid electricity consumers.92 This in turn means that not only more consumers are able to benefit from RE fed into the grid, a good network coverage also means more demand for bigger RE installations and calls for well considered schemes of feeding environmental friendly produced electricity into the grid.
As use of RE in off-grid areas will always be on a small-scale, one can say that all grid extension endeavours were, at the same time, early efforts to pave the way for today’s advanced RE technologies. The Namibian Government forced rural electrification from the very outset having already embarked on a national rural electrification programme in 1991.93 The rural electrification programme commenced in the densely populated central northern regions of the country between 1991 and 93. In 1992/93, the western Kavango Region was electrified, followed by the eastern Kavango Region in 1993/94. Proceeding in a clockwise direction around the country, the electrification programme covered parts of the Otjozondjupa and Omaheke Regions in 1994/95, and most main centres in the Hardap and Karas Regions between 1995 and 98. The first phase of rural electrification in the Caprivi Region took place in 1995/96, with the northern regions benefiting from a second phase during 1997. Larger settlements in the Erongo and Kunene Regions were electrified in 1998/99.94 The programme, in its first phase, aimed to cover all main rural centres and large settlements. Typically, these main centres and settlements comprised institutional, commercial and domestic infrastructure plus formal and informal housing. 95 Consumers located within a 500m radius of the distribution transformers were also offered connections at no charge.96 This was the first large-scale rural electrification project to be implemented in the country and is in fact, one of the first of its kind in Southern Africa.97 After the first round, roughly 15% of the rural population had access to electricity.98 The rural electrification programme is still in force and has been grant-financed since its commencement by the Namibian Government, the Norwegian Government and NamPower.99 However, nowadays a restricted approach has been undertaken. Under the new approach, the rural electrification programme will only cater for Government institutions, public institutions and business centres and only up to the step-down transformer for businesses. The new approach will omit individual homesteads. Against restricting the programme to the new group of beneficiaries, socio-economic concerns were raised, however, once the electrification of Government institutions has been completed, the normal countrywide rural electrification programme will resume.100
In parallel with the grid electrification efforts, after independence, the Ministry of Mines and Energy instituted a revolving credit fund for solar home systems in an attempt to provide remote rural households with the opportunity to acquire basic electrification for their homes.101 Therefore, under the so-called Home Power Project, loans were provided at low interest rates to purchasers of solar home systems. About one hundred technicians from all target regions were trained on how to install and maintain solar home systems. From 1996 until 2001, 456 systems were installed in Namibia.102 The revolving credit fund nowadays celebrates its revival as the new Solar Revolving Fund that was re-launched in 2011. The new Solar Revolving Fund is nothing other than the replacement of the Home Power Project, only with a reduced emphasis on education and training of suitable personnel.
3.3 REDMP – Rural Electricity Distribution Master Plan
The next step of rural electrification was to cater for substantially smaller and more remote settlements and farms. Cost effectiveness, as well as financial and economic feasibility, was a crucial factor in the allocation of available funds in an equitable manner among unelectrified localities. It was in this context that the Ministry of Mines and Energy, together with NamPower, embarked on the Master-Planning Project, which should take into consideration the country’s thirteen regions.103 During the ensuing period, the Rural Electricity Distribution Master Plan (REDMP) and the Off-Grid Energisation Master Plan were prepared. The REDMP was compiled in 2000 and updated in 2005.104 The time-frame of the Master Plan extends over a period of twenty years.105 In accordance with the Local Authorities Act, rural areas are defined as those that fall outside the proclaimed municipal areas and include diverse settlement types ranging from commercial farms to communal areas. Unelectrified informal settlements around urban areas were not included in REDMP, as they are covered by OGEMP due to the fact they are areas of great population growth. The Master Plan has identified a total of 5,858 settlements without electricity. Of these, only 1,543 are scheduled for electrification within the next twenty years after the launch of REDMP. The remaining settlements, comprising of over 100,000 households, will not be electrified during that time. The Master Plan considers both grid and off-grid electrification options and includes all thirteen regions, mainly prioritising economically active centres such as schools, clinics, businesses and Government institutions but also extends to those households in the immediate vicinity that do not exceed a five hundred metre radius from the transformer point.106 This means that both REDMP and the new approach of the Rural Electrification Programme have predominantly the same target group, while individual homesteads, especially informal ones, are not covered by either programme.
One objective of REDMP is to provide guidelines and establish priorities for the upgrading and extension of the existing distribution networks which will enable the Ministry to establish new networks to meet the demands of the target groups in both an orderly and cost effective manner.107 That is why REDMP includes a dynamic planning tool that enables the Ministry to re-evaluate electrification programmes as and when priorities change. Scenario analyses and rankings of electrification projects based on electricity demand and electrification costs are made on a continuous basis to ensure that REDMP always remains current.
3.4 OGEMP – Off-Grid Energisation Master Plan
The Off-Grid Energisation Master Plan108 was commissioned by the Ministry of Mines and Energy in 2005, released in early 2006 and approved by the Namibian cabinet in mid 2007. It is based on the policy statements laid down in the White Paper. The Ministry designed and launched OGEMP to ensure that those areas, where grid electrification is unfeasible, will be appropriately developed through off-grid energy solutions based largely on solar energy technologies. In 2007, the Cabinet directed the Ministry to make sufficient budgetary allocations for the implementation of OGEMP. The development of OGEMP was already initiated by the Ministry through NAMREP in 2005 and the guidelines for the establishment of energy shops were compiled under REEECAP. Workshops and consultative meetings were held prior to the launch to openly discuss the proposed OGEMP concept.109
The overall objectives of OGEMP are: to promote off-grid rural electrification through the use of RE systems, to promote and utilise indigenous Namibian RE resources for energy provision and to improve the quality of rural life through the provision of energy services.110
To realise these OGEMP objectives, the so-called Solar Revolving Fund (SRF) has been integrated under OGEMP. The idea of a fund was not new. A fund to make energy solutions affordable had already been established by the Government in 1996 under the Home Power Project. When the SRF was introduced fifteen years ago, the Government identified that one of the main barriers to rural electrification was the high upfront costs for solar products.111 As this problem remained constant over time, the fund was re-launched in April 2011 by the Ministry of Mines and Energy. Under the SRF scheme, communities have access to credit finance via the OGEMP revolving funds to make RE solutions affordable.112 Thus, clients are able to obtain Government loans for the installation of RE technologies. The SRF is an ownership model, where the end user purchases a solar system by making use of the revolving credit scheme facility and thus, becomes the owner of the system. The system’s owner is responsible for the system and its maintenance.113 To date, technologies that have been financed through the SRF include solar home systems, solar water pumps and solar water heaters.114 The SRF is not only earmarked to finance solar home systems (SHS) and solar water heaters (SWH) but also photo-voltaic pumps (PVP) and energy efficient fridges for end users and energy shops.115 The SRF has financed solar systems to the tune of N$ 53 million since 2011.116 Of the systems financed, solar home systems accounted for the lion’s share (1,671), followed by solar water pumping systems (269) and only 72 solar water heaters.117 Until recently, the scheme has been overwhelmed and had difficulties in meeting the demand for loans as the contribution of the Ministry to the fund was only N$ 4 million per annum.118 The budget allocated to the SRF increased annually and now the processing time for applications has come down to approximately three months.
Another important approach to meet the OGEMP objectives is the energy shop concept. Therefore, it is stipulated in OGEMP that solar energy shall be promoted by establishing energy shops within a reasonable distance of targeted communities. The shops are supposed to sell suitable, approved energy products and compatible appliances119 and inform people as to their use. The aim of energy shops is to initially stock RE technologies but they are also a central point for information dissemination and a networking hub for SRF.120 Additionally, energy shops serve as payment collection centres for the national off-grid energy financing mechanism, thus working hand in hand with the SRF administrator.121 Energy shops will be established in all the country’s thirteen regions. A total 180 shops are planned to be set up over the next twenty years with one energy shop in each region during the first year. The focus for the first year was on urban, informal settlement areas. Focus will later change to establish energy shops in rural areas.122
One example of an energy shop is the solar cellphone charging business in Windhoek’s informal settlement of Havana. The cellphone charging shop consists of a solar panel, a solar cellphone charging system with ten charging sockets and two lights. The system is capable of charging roughly twenty cellphones per day and provides daily electricity for three hours for each light.123
From the very beginning concerns were raised on whether the energy shops being set up in all regions will be successful. Indeed, a review of the operation and performance of 13 energy shops that were launched in 12 regions revealed a number of challenges being faced by the shops, among them the lack of means or desire to finance the purchase of stock, lack of adequate technical expertise in RE technologies and the failure to market their services. The poorly stocked energy shops lacked the technical know-how to draft business plans and other requirements that would help them to access the various available RE loan facilities. The owners of most energy shops were found to be reluctant to invest their income into the relatively new and untested RE sector. Furthermore, the study revealed that none of the 13 energy shops had submitted the required monthly sheets of their stock turn-over as most of them had forgotten about the requirement while others found the process too cumbersome. Generally, however, the energy shops were found to be providing customers with access to a variety of energy technologies, and were consulting with customers regarding their SRF loan applications. The study recommended that energy shops should diversify their services and become solar PV installers for instance in order to make their businesses more viable. It was also emphasised that additional training needs to be offered.124
3.5 NEEP – Namibia Energy Efficiency Programme in Buildings
The Namibia Energy Efficiency Programme in Buildings is a programme funded by the Global Environment Facility (GEF) and spearheaded by the Ministry of Mines and Energy with support of the United Nations Development Programme (UNDP). The implementation period ended in 2014. The objective of NEEP was to reduce Namibia’s energy-related green-house-gas emissions through nationwide adoption of energy efficient technologies and practices in the commercial and residential building sector, with a focus on Government office buildings, hospitals, hotels, schools and a few residential buildings.125
The most sustainable component of NEEP was to increase institutional capacity and awareness, of which, the indicator in this regard is a Green Building Rating System. In order to implement the Green Building Rating System, a Green Building Council for Namibia (GBCN) has been established, which still develops and operates the rating system and promotes and facilitates green building practices. 126 Additionally, it coordinates its projects and works closely with the World Green Building Council (WorldGBC).127 Shortly before the end of the implementation period, the Ministry of Mines and Energy commenced a still ongoing programme to revise the outdated National Building Codes and to introduce new rules that incorporate RE technologies and energy efficiency principles. This programme is a vital part in Government’s efforts to tackle the current energy crisis, as studies have indicated that buildings account for approximately 40% of the world’s energy usage.128
The Government’s intent of using RE in public buildings is by no means a new. It was already the subject matter of a cabinet directive stating that all Government and parastatal buildings’ hot water requirements should be met through the installations of Solar Water Heaters (SWH) only. This applies not only to new buildings but also to all replacements or renovations of old Government buildings. The cabinet directive stated that the acquisition and installation of solar water heaters for Government institutions and parastatals should be done through open tender.129 The implementation of this directive was part of phase two of NAMREP.130 It is desirable if the directive will be extended particularly to the Government’s Mass Housing Scheme. The beneficiaries of this scheme will likely rely on grid electricity and such additional use has not been factored into Namibia’s electricity demand projections.131 Besides that, it contradicts NamPower’s efforts in its DSM campaign to replace 20,000 electric geysers with solar water heaters. These efforts will be nullified if 185,000 electric geysers will be installed within the Mass Housing Scheme.132
3.6 REEECAP – Renewable Energy and Energy Efficiency Capacity Building Programme
The Renewable Energy and Energy Efficiency Capacity Building Programme ran from 2006 to 2008 and was funded by the Danish Government. The Renewable Energy and Energy Efficiency Institute was the implementer of REEECAP whose objective was to increase the capacity of the Namibian resource base in selected areas to enable it to contribute to the implementation of the national policies for RE and energy efficiency133 as stated in the White Paper and NDP 2.134 REEECAP’s strategic focus was on enhanced capacity for both rural and urban decision makers in energy planning. A total of twenty-one sub-projects with titles like Energy Efficiency Strategic Plan, Review of Building Codes, and Electricity Supply and Demand Management Options were undertaken. One of the most remarkable studies is the latter.135 It is insofar still of importance as it has been the precursor of all later studies answering the question as to the best energy mix for Namibia.
The study developed eight generation scenarios that aim to illustrate different applications and interpretations of the Namibian energy policy as defined in the White Paper. This has been the first comprehensive study for Namibia that considers alternative energy sources, fossil fuels and hydro electricity options plus various possible supply mixes.136 As it was one of the objectives of the study to explore the potential and role of RE resources, one of the scenarios was the so called ‘maximum renewable energy option (including hydro)’.137 The interesting key conclusions, from an electricity price perspective, were that on the one hand the maximum renewable scenario would indeed cause the highest electricity prices.138 However, on the other hand, the renewable maximised scenario would make the greatest contribution to GDP due to high construction costs involved in building additional hydroelectric power stations and also the requirement of significant plant size for concentrated solar power stations. 139 The renewable maximised scenario also created the highest number of jobs as the implementation of the biomass generation option (invader bush) was part of the scenario.140 The study concluded, generation from renewable resources is desirable but is not without risks and cannot be expected to supply all Namibia’s electricity needs, at least not in the short term. According to the study, if hydro is excluded, it will be possible to have RE producing 20% of electricity needs without escalating end consumer prices more than 7% above the cost of importing electricity from South Africa.141
3.7 NIRP - National Integrated Resource Plan
The National Integrated Resource Plan (NIRP) for the power sector is the latest milestone on the way leading to an integrated legal framework, although the approach was not used for the first time. In July 2011, the ECB in collaboration with the World Bank started to work on an integrated resource plan that is going to look at the resources of Namibia to generating power for the next two decades. It was completed in 2013. NIRP is supposed to determine the optimal resource mix for electricity generation in the country and to answer the question as to what the cheapest source of energy for Namibia is, and how to get energy to Namibia as a whole.142 The Government’s energy policy calls for domestic power generation to meet 75% of the system’s annual requirement – initially, this target was set to be reached by 2010 already. NIRP developed a power-system demand forecast for the next twenty years. It considered the likely requirements in each sector of the economy, reflecting projected economic and population growth rates. The forecast was adjusted by offsets from energy efficiency gains considered possible from implementation of a demand-side management programme.143 Then the full range of power-generation technologies that could be of interest in Namibia and estimated parameters for each were identified. After ranking based on the present value of system costs, ten scenarios were ranked. The scenarios and findings were often not so different from those eight scenarios investigated in the Electricity Supply and Demand Management Options under REEECAP. NIRP also paved the way for an increased use of renewable power by PV and wind-power plants. It made precise recommendations not only for net-metering, but also took into account all other RE procurement mechanisms in its scenarios.
There are several new studies in the pipeline being based on the NIRP findings. These are with a special focus as to how to integrate the policy goal of poverty eradication into Namibia’s energy future. The following two are of special interest: These are the National Electricity Support Mechanism and a study to improve electrification of peri-urban and rural areas. The studies, on which the ECB embarked in consultation with the Government, are aimed at addressing the issue of affordability of electricity to low consuming households. Final consultations for the implementation are underway with the Government for the National Electricity Support Mechanism. The latter study is ongoing with recommendations expected to be made to the Government during the last quarter of 2015.144 Both projects are supposed to bring about positive development-related prospects and opportunities while contributing to the quest of poverty eradication.
3.8 CSP TT NAM and Other RE Projects
The Concentrating Solar Power Technology Transfer for Electricity in Generation in Namibia project (CSP TT NAM project), which is being implemented by NamPower, with MME, UNDP, the National Planning Commission and NEI as key stakeholders, aims to increase the share of RE in the Namibian energy mix by developing the necessary technological framework and conditions for the successful transfer and deployment of CSP technology for on-grid power generation. The CSP TT NAM project has also identified the best possible sites for the establishment of CSP pilot power plants. The only recently launched project is currently maintaining a database of interested local and international CSP role players where about ten international and at least fifty local role players have been registered.145 This project prepares for the goal to make solar power quickly available to bridge the time until a base load power station goes online.
The fact that the future for RE is beginning to look brighter can be observed from the number of new projects which are currently investigating the opportunities for different RE sources. The CSP TT NAM project is concentrating on CSP only, however, there are more examples focusing on other RE sources:
As a pilot project in Namibia, a scientific and technical research on Namibia’s wind resources is currently undertaken. The speciality that makes the project a pilot is the use of existing MTC masts to assess wind resources through measurement, data management and analysis. Using telecommunication masts for wind measurements, although not ideal, can however significantly cut the costs of wind measurement146 and might therefore become an example for other developing countries.
Namibia has also made use of the existing Memorandum of Understanding between the Austrian Government and SADC to foster development in solar thermal technology in the country. Namibia has become part of a group of SADC countries working on the development of a SADC-wide Solar Thermal Technology Platform that will produce a roadmap for this technology in the region.147
4 Benefits of and Barriers to Renewable Energy
Sustainable energy means use of resources in a manner that provides ongoing energy to meet the needs of the current population, without comprising conditions for future generations. To achieve this balance, energy must be replenished, environmental harms must be minimised, and costs have to be affordable.148 Since the political and regulatory focus is on sustainability and not on renewable resources per se, the way they are harnessed requires thoughtful analysis to ensure that a RE investment is in fact meeting the sustainability objective.149
In order to implement governmental decisions in favour of RE technologies and to invest in support schemes to enable RE to withstand competition from fossil fuels, the benefits and obstacles plus all alternatives to RE technologies, have to be carefully balanced against each other. Thereby, Namibia’s electricity sector faces several challenges due to its sometimes conflicting imperatives that cannot all be met at one time as they are: safeguarding the security of supply, introducing cost-reflective tariffs without throttling the economy, stimulating investments and attracting new sector participants, continuing the electrification of rural Namibia, and developing Namibia’s RE resources.150
RE offers numerous benefits in the short, medium and long term, whereof, the long-term benefits are probably the most obvious. The use of RE will contribute to not only making Namibia less dependent on imported electricity but above all, independent from imported fossil fuels as the price of oil, natural gas and other materials can be extremely volatile, whereas the price of RE is predictable and stable. This creates a strong incentive for companies looking for energy security.151 By increasing the use of RE, Namibia’s future electricity supply mix will capitalise on local comparative advantages, ensure local value addition and job creation 152 if the national generation capacity is expanded through smaller-scale RE technologies.153 In terms of environmental sustainability, it has to be taken into account that RE neither produces CO² nor other greenhouse gases. And, unlike coal and nuclear power plants, it does not consume huge amounts of water, which is itself a scarce resource.154 The short-term benefits are most obvious in rural areas where RE contributes to off-grid electrification and thus to poverty reduction. The production of RE is the most promising way of providing affordable energy to areas far from available points of connection to the grid. Due to the vastness of the country and low population density, many areas will probably never be connected to the grid. The Government holds the view that the gap in economic development and quality of life between rural and urban population in the country might be addressed through rural electrification.155
However, there are some drawbacks that have to be overcome also. These comprise, in the first instance, the potentially higher energy prices. It is a fact that the high installation cost of RE technologies and lack of well-marketed, affordable and easily accessible financing schemes for the purchase, installation and maintenance of equipment as well as a missing guarantee of price stability for independent power producers still remain the major impediments for the implementation of RE technologies in Namibia.156 The problem that RE technologies often have a higher capital cost – but conversely, often a lower operating cost also – what makes loan finance facilities necessary to spread the cost over time, had already been mentioned in the White Paper as a reason for the existence of a large gap between what renewables can potentially contribute to the energy policy goals and what they are presently contributing.157
Since then, some circumstances have changed, starting with the creation of the revolving fund that aims to provide a guarantee for people who would otherwise not be able to access loans from commercial banks to buy solar home systems.158 Today, almost all financial institutions in Namibia offer funding for RE at very low interest rates thanks to the fund. Secondly, the price for electricity has risen dramatically in recent years so that grid parity159 has been reached for some RE technologies. So long as imported electricity was cheap, most on-grid RE projects were not worthwhile, but now Namibia is reaching the point where, for instance, locally produced solar electricity is cheaper than that bought from the main supplier. Finally, there is a lot of potential for RE technologies in Namibia to be financially supported by development organisations. Namibia has abundant RE resources and RE has become one of the hot topics throughout the world in connection with the international climate change debate. Almost all development organisations in Namibia are involved in RE projects in some way, while no one has the support of coal-fired power plants on the agenda. Some160 even argue that Namibia has the potential to become the first country161 that meets its energy demand entirely from renewables, something the Danish Samsø island and El Hierro that belongs to the Spanish Canary Islands realised so far.162 If the Government turned this vision into a national policy goal, a run on investment in RE in Namibia would begin. In any event, any form of legal enhancement of RE technologies must be accompanied by a support scheme that the Government has to decide on. Alas, it has not been done as of yet.
The White Paper considers some more obstacles that contribute to the low input of RE to Namibia’s energy budget and to which a solution has yet to be found. It addresses them as key institutional challenges. Among them are first and foremost the establishment of an adequate institutional and planning framework as well as improved coordination among Government ministries. But the White Paper also addresses typical challenges for Namibia, such as the lack of human resources and public awareness of energy efficiency that leads to low social acceptance of the technology.163 Indeed, there is only limited technical experience in the country, but raising awareness has already been the subject matter of numerous programmes since the implementation of the White Paper. Additionally, solar panel theft has already become a problem throughout Namibia. The victims are not only corporate entities – the most affected being Telecom, the Namibian Broadcasting Corporation (NBC) and MTC – but also communities and farmers who rely on power-generating solar panels for the functionality of their farms or the entire community. Therefore, in 2009 the Namibia Technical Committee on Renewable Energy formed a taskforce to address the problem of solar panel theft.164
5 Procurement Mechanisms
The White Paper states that effective governance is of vital importance in the electricity sector. This entails implementation of appropriate legal, regulatory and institutional frameworks, combined with increased efforts in building capacity at Government level through development of appropriate governance structures.165 It states further that at present, RE competes on an unequal footing with conventional forms of energy. Examples of this include the facts that rural electrification, using the grid, is subsidised, while off-grid household electrification, using RE is not. And the institutional structures for planning, supplying and regulating conventional commercial forms of energy are well developed, whereas those for RE technologies, such as solar photovoltaics, are only partially in place.166
Although RE is supported in the White Paper, explicit support mechanisms are still in the process of being developed. In fact, currently, there are virtually no legal incentives for private producers to produce RE and feed electricity into the grid. There is recognition that market forces alone cannot permit RE technologies to gain ground and contribute significantly, without deliberate support mechanisms in one form or another.167 Generally, the optimum utilisation of RE requires a contribution of appropriate procurement mechanisms and a favourable investment framework. Doubtless, the pricing mechanism for RE is going to be one of the major bottlenecks to large-scale development of RE projects. In order to ensure that future policy efforts will be based on “the goals of secure supply, profitability and environmental protection”168, it might be worthwhile for Namibia to look at the lessons learnt from other countries with regard to the political and regulatory frameworks most conducive to development of RE.169 The experience of countries with a longer tradition of using RE could be tapped regarding the appropriate design since it is an undisputed fact that many countries that have experienced growth in these technologies have done so after a massive energy policy shift.170
On the basis of already conducted studies and giving careful consideration to experiences made in other countries, the Government is now developing a comprehensive set of regulations and laws that take into account the promotion of RE efficiency, while at the same time facilitating fair market access, market support structures and incentives for those investing in RE plants. It is the Government’s aim to encourage independent power producers to set up RE generation plants in Namibia confident in the knowledge that they can recoup their investments when they feed energy into the grid.171 The Government emphasises that there are currently many barriers to the entry of RE onto the electricity market but there are also numerous procurement mechanisms to address these problems. These are the main instruments used throughout the world:172
5.1 Feed-in Tariffs
The most common form of tariff-based incentive used around the world is the type of feed-in tariff that states an obligation for utilities to buy energy at fixed purchase prices for a fixed term.173 The purchase price is normally different depending on the type of RE. The feed-in tariff purchase prices are usually based on the cost of RE generation paired with considerations as to social cost, investor requirements and political will. With a feed-in tariff, any customer or entity is normally eligible to sell energy under the terms of the tariff.174
Feed-in tariffs are often set forth in primary energy legislation, as is the case in, for instance, Kenya and Germany. South Africa also adopted feed-in tariffs in 2009. However, they were marred by controversy from the outset, leading to its abrogation and replacement with a system of public competitive bidding in 2011.175 Nevertheless, feed-in tariffs are currently the most common procurement mechanism in developing countries.176
Tariff-based incentives for RE have the disadvantage, that they usually increase the costs of electricity production. It is a principle of electricity regulation that energy prices should reflect economic costs. Where a company or operator has mandatory purchase requirements to buy and resell power produced by renewable resources, the regulator must ensure that the costs relating to that purchase are included in the tariff rate. It is then up to the policymaker to decide whether these additional costs should be spread evenly among all customers, or there should be exemptions for vulnerable customer groups or special industrial and commercial activities and whether or not an increase in tariff rates, will discourage economic expansion.177
Conversely, feed-in tariffs have the advantage that they create security for investors by allowing a guaranteed payment for electricity from renewable sources that are fed into the grid and therefore, encourage investments in RE. The guarantee stems from a fixed price set by the Government for each defined type of RE over a long period of time. Thus, granting investors the stable and predictable policy and legal frameworks they desire.178 Among economists, it is often argued that a properly set feed-in tariff is generally the most efficient and effective support scheme for promoting RE.179 Accordingly, as of 2012, 65 countries have implemented some form of a REFiT, driving 64% of global wind installations and 87% of the photovoltaic capacity that has been installed worldwide.180
Namibia is also in the process of adopting a REFiT system. The Renewable Energy Feed-in Tariff programme embarked upon by the power utility and the ECB will accommodate small to medium sized businesses in the generation of power from various RE sources up to the maximum of 5 MW per business, but not less than 500 kW.181 For those small systems net-metering rules will apply. REFiTs will be different for electricity generated by biomass, solar, and wind, whereby the price for solar will be the highest.
The REFiT programme is supposed to encourage small-scale on-grid renewable power generation. The new regime is also expected to promote the growth of local capacity through ownership as each investor is obliged to allocate at least 30% of the ownership of the IPP business to previously disadvantaged Namibians.182
So far, a total of 27 companies have been shortlisted for the interim REFiT programme and once licensed, they will fill the capacity of 70 MW reserved for this programme.183
In the tendering process, potential investors or producers of RE participate via a competitive bidding system. Generally, the target amount of generated capacity is laid out and the particular type of RE that is bid for is specified. The criteria for the evaluation of the bids are set before each bidding round.184 The Government decides on the desired level of electricity from each of the renewable sources, their growth rate over time, and the level of long-term price security offered to producers. The bidding is accompanied by an obligation on the part of electricity providers to purchase a certain amount of electricity from renewable sources at a premium price.185 Once a producer has a long-term contract, he has to pay a penalty in case of a later withdrawal.186
Tendering procedures require clear processes for application, approval of proposed projects and monitoring performance. From a regulatory perspective, it is important to develop transparent rules to minimise corruption, ensure the adequacy of information that is disseminated to bidders and to level the playing field. 187 This demands significant organisational efforts from the Government authorities and good cooperation between those parties involved as well as a high standard of know-how in the ministry to fulfil the duty of monitoring.
It used to be the ECB’s view when it launched the Renewable Energy Procurement Mechanism (REPM) that feed-in tariffs and tender systems have the best global record in terms of bringing renewables to the grid. Whilst the latter brings the benefit of intense price competition, the former have proven themselves as most effective in stimulating industrial and local development. According to the ECB, providing reassurance that differential costs for RE projects can be passed on to the end consumer and setting development targets can be effective supporting measures.188 In contrast to the ECB’s view, tendering has found disfavour in many countries throughout the world because it incentivises bidders into making low-cost offers that are unrealistic or cut corners, leaving questions concerning long-term effectiveness and safety.189 These disadvantages can surely be balanced, to a certain extent, by an excellent performance by Government authorities. Because of numerous problems involved with tendering, many countries have used tendering only to jump start RE development, though its success has been questioned.190 As far as it concerns Namibia, it has been pointed out that a country needs to have a sufficiently large market to effectively run tenders.191 Only few countries in Africa have such a market like for example South Africa where the RE IPP Procurement Programme has been implemented. It has therefore been suggested to explore the potential for Namibia to partner with South Africa in tendering renewable energy capacity.192
Prior to the implementation of the REPM, the ECB argued that given the complexity and lengthy process of implementing tendering procedures in order to realise the first reference projects in Namibia, a single project power purchase agreement (PPA), with an overall limited risk exposure, would have been the fastest tool.193 Meanwhile, the Ministry of Mines and Energy has implemented REPM allowing for transparent tendering for all renewable energy projects exceeding 5 MW. Accordingly, NamPower is now in the process of acquiring an additional 30 MW of IPP capacity – three projects of 10 MW each – via this tendering route.194
During the tendering process eight companies were short listed for detailed bidding. All pre-qualified bidders agreed to waive the requirement for an Implementation Agreement, i.e. no Government guarantees will be required as a condition for the implementation of the project. Bidders also had to accept to have a local content of at least 26% of the total project value in the form of ownership, sub-contracting and creating employment opportunities for Namibians.195
5.3 Power Purchase Agreements
Guaranteed long-term PPAs at fixed prices also assist in financing new technologies. PPAs are usually attached to other incentive designs, normally feed-in tariffs, but are also possible outside other procurement schemes. In such a case, PPAs are agreements between parties, rather than rates set by regulators, though the regulatory entity may approve such contracts and issue standard model agreements for consideration to the parties.196 In Namibia, after a licence is issued to an RE producer, a PPA has to be negotiated with NamPower, which acts as the buyer and Namibian grid operator.
PPAs carry the further problem for the power producer in as much as market conditions might change once feed-in legislation is implemented while the RE producer is further bound to the conditions of the long term PPA.197 When using PPAs, other procurement mechanisms should be offered in stages, so that while PPAs are useful to provide security, the purchase and sale process should be staggered to allow for market changes and so as not to bind the market in one or a few large deals.198 It always has to be kept in mind that as RE technologies mature, they will become more efficient and less costly.
If there is one issue with regard to the shaping of Namibia’s future energy sector, it is that of as to how to establish a conducive environment for IPPs. Despite many uncertainties, there is beyond doubt an overwhelming private interest in investing in RE projects. However, the key sticking point in the negotiations between the Government and IPPs appear to be a lack of agreement on risk allocation, especially as it pertains to Government risks. The Government appears unwilling to assume these risks, arguing that these are risks private investors should be willing and able to assume.199 Private developers and particularly banks that are supposed to provide credits for these projects, object and claim that these are risks outside their control that cannot be managed effectively by the private sector in a project finance setting.200 This argument becomes especially important against the backdrop that the Government has effectively changed bulk tariffs in the past by direct subsidisation, thereby increasing the commercial risks for IPPs.201
The Government of Namibia in collaboration with NamPower has undertaken some steps in the past to open the national market for IPPs with the result that today 27 licences are issued related to proposed power plants based on wind, solar, biomass, water and coal. However, it must be taken into account that these are conditional licences that will not necessarily lead to the establishment of a power plant. In order to apply for a conditional licence it is not necessary to negotiate a PPA with NamPower. It is rather sufficient to submit a statement of intent to develop the particular side the applicant applies for. Like in the mining sector, where some applicants only intend to secure special areas by applying for an EPL without getting engaged in exploration activities, but rather waiting for an opportunity to sell the EPL profitably, it is possible to keep a conditional licence until this particular site has become attractive for serious developers. Once a site has been secured by a conditional licence and is going to be developed, the applicant must enter into negotiations with NamPower and be issued with a PPA which regulates the amount of electricity fed in the grid as well as the purchase price.
So far, only one project has been commissioned, namely the Omburu solar plant, while one other is currently under construction.202 In order not to worsen Namibia’s current energy crisis, it has become imperative to ensure the swift construction of solar PV power plants for which conditional licences have been issued under the independent power producer platform, at least until the adoption of a feed-in tariff law.203 However, PPA negotiations with other than IPPs of PV power plants, such as Diaz wind power, have been put on hold due to the fact that the implementation agreements which would outline Government guarantees to be provided have not been concluded.204 For wind energy producers in particular, there are, in practice, some difficulties in successfully negotiating PPAs. This is because they are confronted with the argument whereby they have to be responsible for an unpredictable capacity factor and an unstable grid in case wind energy contributes more than 10% of the local generation capacity.205
5.4 Quota Systems and Green Certificates
A quota system is one where the Government sets the percentage or amount of energy, usually annually, that comes from renewable sources and then allows the market place to determine the cost.206 The idea is that a certain amount of energy from RE is mandated, but how this is done and at what cost is left to the market to decide. The underlying theory is that competition will drive down the costs of supplying renewable electricity and thus minimise the costs to the consumer.207 Such a system involves the issuance of a certificate for each MWh of electricity produced to a RE producer. In turn, certificates provide a vehicle for measuring whether the quota has been met, and for trading to meet the quota or to trade when RE rises above quota requirements.208
A quota system has the advantage that it is not only efficient but also very successful in terms of energy security aspects which is of great importance in the Namibian context.209 Apart from that, the quota system usually involves no or only limited governmental subsidisation.210
However, the quota-certificate system usually supports the development of least expensive RE resources because the highest demand is normally for the cheapest resource. This means, in turn, that cheaper technologies are incentivised over others that could be better for long-term development.211
International comparative studies came to the conclusion that quota systems normally fit the more developed economies better than transitional or developing economies where energy markets are less mature.212 According to this result, quota systems are currently not discussed for Namibia.
5.5 Net Metering
Net Metering is a consumer based RE incentive for those consumers connected to the grid who own RE facilities. In its typical form, the mechanism allows for the flow of electricity both to and from the customer. With net metering, during times when a customer’s generation exceeds the customer’s use, excess electricity flows back into the grid, offsetting electricity consumed at a different time. In such a way, when the consumer produces more electricity than he can use, the utility company has to purchase the excess energy that is then fed into the grid. This means that a unit of electricity can go forward or backward at the same rate. By using net metering, a consumer can utilise RE to offset the total energy provided by the utility company as long as he produces enough to satisfy personal requirements. Normally, those electricity units produced by the customer and fed into the grid will only be credited. No equivalent price shall be disbursed to the consumer. Additionally, no premium for taking part in the scheme is paid. Therefore, net metering will be most economically beneficial when the RE facility is adjusted to produce slightly beneath personal requirements. The payments for deficits then require payments to the utility company through the normal electricity bill. Apart from that, the utility company receives a monthly connection fee from the owner of the RE facility.
Net metering does not require long-term contracts nor does it produce additional costs for customers, thus, it gives consumers the opportunity to remain flexible. On the other hand, this form of RE incentive places the burden for pioneering RE primarily upon consumers. It does not become economically viable before grid parity is reached which is currently the case for photovoltaics. Additionally, net metering does not help to secure a stable energy supply.
In 2012, the ECB initiated the development of net metering rules for small renewable energy systems. Namibia had witnessed many homes, farms and business owners opting for the installation of alternative forms of electricity generation facilities and connecting them to their utility’s electrical network.213 Therefore, it became necessary to work on clear net metering rules for Namibia. The purpose of these net metering rules is to allow electricity users with roof located PV and wind energy systems, to primarily offset part of their conventional electricity requirements. Furthermore, the rules are intended to encourage private investment in RE resources, stimulate economic growth in the country, contribute to energy security, and enhance diversification on Namibia’s energy resources in line with the objective of the White Paper on Energy Policy.214 The first phase of the project entailed the development of the draft rules. In March 2015, the ECB published its Met Metering Rules that are now for promulgation at the Ministry of Justice.
Once Net Metering Rules will be in force, all distribution utilities will have to offer net metering to their customers according to rule 2.2. Thus far, only ErongoRed and Cenored offer types of net metering to their customers. The Windhoek municipality started piloting net metering on a small scale at the end of 2014 for those customers having smart meters installed, which measure electricity units consumed, and units fed into the network.215
When Cenored decided a year ago to consider electricity approved customers feed-in to the network from the surplus generated by renewable energy systems at their homes and businesses, it has been the second distributor after ErongoRed paying for electricity it receives from customers who have their own solar systems.216 The trade-offs were approved by the ECB and based on the average avoided cost by the distributors for not having to buy electricity from NamPower, whereby ErongoRed pays slightly more than Cenored. The main difference between the two net metering systems is that Cenored does not pay in cash, but ‘trades off’ the kWhs fed into the distribution network against electricity usage as a credit. Any number of exported energy units that exceeds the imported energy units and cannot be traded off, will be carried forward to the next month’s exported energy units for renewed consideration. The electricity units cannot be carried forward at the last month of the financial year to the next financial year. In addition, the amount of exported electricity units, being kWh that can be considered for energy trade-off may not exceed the energy units a customer buys from the distributor.217
The soon to be expected nationwide net metering rules provide for similar regulations. While according to rule 3.1 generally all renewable energy technologies are eligible for net metering, individual generation is limited according to rule 4.1 to the lesser of the main circuit breaker current rating (converted to kVA) and 500 kVA. Physical, monetary compensation is according to rule 7.2 not allowed. However, net exports will be set off for future imports within a twelve months cycle at the avoided cost. In no case compensation is paid for net exports, which means when generation is above imports.
The ECB supports the idea of net metering consumers being exempted from the requirement to obtain a generation licence and currently determines how this exemption can be implemented legally.218
6 RE Projects in Namibia
Presently, in Namibia, RE technologies are being widely used mostly for off-grid energisation as well as domestic water heating and domestic electricity production. The Renewable Energy Industry Association of Namibia estimates that in Windhoek alone an aggregated 6 to 7 MW of grid connected PV solar systems are in place.219
Successful bigger RE projects are found scattered in isolation all over the country. However, the number of large PV plants both off- and on-grid is increasing in Namibia. Examples are the National Breweries that installed a 1.1 MW grid-connected rooftop PV system capable of supplying 34% of its electricity demand, which was then Africa’s largest rooftop PV system.220 NamPower itself installed a 640 kW grid-connected system, 221 as did the Ministry of Environment and Tourism.
In an effort to enhance off-grid electrification, the Government commenced in 2013 the off-grid Containerises Solar System Initiative. The first off-grid containerised solar system electrified six remote schools including hostels in the Okahao Constituency in the Omusati Region. This initiative allows the Government to easily move these systems to other off-grid public institutions once the grid network reaches the schools which are now being powered by the solar system.222
Furthermore, an initiative by the Austrian Government, which ran until May 2012, aptly named Southern African Solar Thermal Training and Demonstration Initiative (SolTrain), assisted Southern African countries, including Namibia, to switch from a fossil fuel based energy supply to sustainable energy supply systems based on RE by setting up RE demonstration units at social institutions such as hospitals, orphanages and old peoples homes.223 Due to its success the second phase of the project, called SolTrain II, was launched at the end of 2012 and will run until 2016.224
Only wind power still does not enjoy the attention it deserves. The wind park close to Lüderitz that was expected to be completed in 2013 was not realised to date.225 In fact, there is currently only one wind turbine of 220 kW installed in Namibia, which feeds the grid in the Erongo region.226 After all, almost all farms use wind pump installations for water that are in turn forming small PV-wind hybrid islands all over the country.
Generally, there is strong interest from development organisations and NGOs in promoting RE projects in Namibia also. Many already have projects in place, among these are: UNDP, USAID, GIZ, KfW and GEF. They mainly focus on supporting the Government in the essential restructuring of Namibia’s legal framework, together with assisting in studies to investigate suitable procurement mechanisms for Namibia. Engagement in all forms of education of stakeholders and the public with the aim of raising awareness is also supported.
Slowly Namibia is also undertaking the first careful steps into international carbon trading.227 Four projects have already attempted to register for carbon credits as contained in the Clean Development Mechanism (CDM) under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC). Two of them were successful. The City of Windhoek registered a project to generate electricity from methane gas expelled from the Gammans sewage reticulation plant for carbon credit to offset the high costs associated with refurbishment.228 The second project, for which the City of Windhoek is also responsible, involves methane recovery and power generation at the Kupferberg Landfill in Windhoek. The registered operating period for both projects began in January 2014. The projects are classified as small-scale activities and recorded as ‘methane avoidance projects’ with a ‘renewable energy project’ component. Two measures were implemented: recovery of methane which escapes during the process of waste(water) treatment and feeding thermally generated electricity into the grid. 229 In contrast, the application of Ohorongo cement who uses woodchips made from invader bush and sourced from Energy for Future for the manufacture of cement at its Otavi plant, was rejected, after national approval, on the international level.230 Similarly, the !Aimab Super Diary Farm north of Mariental that is owned by Ohlthaver and List failed in registering using manure of cows to generate power.231
6.1 Tsumkwe and Gam Energy Projects
Finally, two smaller but nonetheless promising RE projects are described in more detail that show the exemplary potential RE can have, especially in the Namibian context as the only purpose these projects serve is not to purely produce energy in an environmentally-friendly way but also to combat urgent problems such as poverty in rural areas and bush encroachment at the same time. One of these projects was even presented at “Rio+20” as a successful example for sustainability.232
The Tsumkwe Energy Project233 is a small-scale pilot project aimed at improving access to modern energy services for poor, marginalised, indigenous people in remote rural settlements. The N$ 26 million project was implemented by the Desert Research Foundation of Namibia (DRFN). It is operated by NamPower and mainly co-funded by the European Union. The Tsumkwe Energy Project is not only Namibia’s largest RE off-grid hybrid electricity supply system, it is also believed to be one of Africa’s largest off-grid solar systems. It came on line in August 2011. Over seventy households, twenty different institutions and over fifteen businesses are direct beneficiaries. These include a hospital and a police station. More than 700 residents and the business community in the settlement now have access to modern and affordable energy services. The solar hybrid system is designed to be a fulltime off-grid power station with an overall electrical output of 410 kW, whereas the solar portion of the system produces over 200 kW. The electricity is transferred via a transformer station to two 11 kV mini-grids.
Tsumkwe is a remote San settlement close to the Botswana border that was identified as the largest off-grid area. By definition, this means that no grid connection is expected to be there within the next twenty years. With rising fuel costs, the community previously had limited electricity supply, down to three hours per day, while now it receives a round-the-clock electricity supply. According to cost estimates, connecting Tsumkwe to the grid, which is over two hundred kilometres away, would have cost more than twice the amount the hybrid solar system had cost to implement. The realisation of the energy project did not intend to implement technical improvements only, rather it is also a chance to investigate what additional economic opportunities can be pursued under improved energy supply conditions. Increased access to electricity is meant to improve SME development and diversification of income generating activities. Improved energy supply conditions will, in return, ensure that Tsumkwe will be able to reach a level of economic prosperity that will support the financial sustainability of the hybrid system. As a result of the new power plant, there is no longer the need for Tsumkwe residents to contemplate migrating to urban areas for better living conditions. The Tsumkwe energy project is also intended to protect the direct environment around the settlement as the overdependence on firewood will be reduced.
Due to the success of the Tsumkwe Project, REDMP identified Gam as another off-grid area which may not receive grid electricity in the foreseeable future and embarked therefore on the second large scale mini-grid project after Tsumkwe. The Gam solar project provides electricity for about 2,000 inhabitants.234 Like the Tsumkwe off-grid electrification project, the Gam solar plant is expected to boost economic activities in the settlement.
6.2 Biomass Power Plants from Encroacher Bush
Energy for Future pioneered in bringing the bush encroachment issue to the attention of a broader public. Since then, through intensive research and the adoption of similar projects, encroacher bush has been recognised as a biomass resource that can contribute to solving Namibia’s energy crisis.
It is commonly accepted that Namibian bush encroachment affects some 26 million hectares of farmland.235 Substantial areas in northern Namibia are covered by so-called invader bush. Thorny bush and shrub species grow in such abundance that they have a significant effect on the growth of grasses and less prevalent species of bushes and shrubs. Such vegetation also dramatically reduces the essential recharge of underground water resources.236
Against this backdrop, Ohorongo Cement, which went into production in early 2011, developed a method to produce woodchips made from invader bush and sourced from Energy for Future, for the manufacture of cement at its Otavi plant. Energy for Future harvests the invader bush with a harvester on nearby farms that immediately converts the cut wood into woodchips ready for use at the cement plant.237
This is an example of a win-win situation for both livestock farmers and Ohorongo Cement. The livestock farmers get their grazing areas that prior to these clearing operations could only be used to a limited extend due to bush encroachment while Ohorongo Cement is able to reduce carbon dioxide emissions released into the atmosphere by substituting most of the coal with woodchips for energy.238 Studies conducted in the planning phase of the plant came to the conclusion that if sufficient encroacher bush can be harvested, it can be used to fire the oven to such an extent that only 20% of the fuel required will consist of coal and that the remainder will consist of alternative fuels, mainly, the encroacher bush.239 In addition, the de-bushing might increase the biodiversity and the groundwater level.
While the scale of the project was a first of its kind in Namibia,240 there are now numerous biomass projects utilising invader bush to generate electricity.
The project, known as C-Bend – Combating Bush Encroachment for Namibia’s Development – is a bush-to-electricity power plant of 250 kW installed on a commercial farm.241 It was also the first PPA signed by NamPower with an IPP. However, the power plant does not feed electricity to the grid yet, owing to the low power factor of the connecting line.242 The project is run by the Desert Research Foundation of Namibia (DRFN).
At the end of 2013, Ecologs began with bush clearing. The manufacturing process takes for steps: the bush is harvested, then it is allowed to dry, and later turned into ships, while finally the ships are formed into logs.243 Furthermore, the Windhoek-based Namibia Breweries is planning to exchange its heavy oil-fuelled boiler with a modern biomass boiler, while MeatCo is exploring options for future biomass utilisation in its industrial boilers at the abattoirs in Windhoek and Okahandja.244
The remarkable interest in this technology shows the exemplary opportunities that lie in bush clearing in order to generate electricity from invader bush. This was also the reason for MAMF/GIZ to run in collaboration with the Directorate of Forestry a national de-bushing programme to substantially upscale current de-bushing efforts.245
Nevertheless, there are no industrial-scale electricity generation activities based on biomass in Namibia yet, although a pre-feasibility study for biomass power plants, conducted by NamPower, revealed that the re-growth of encroacher bush would allow for the operation of forty-five 20 MW plants, totalling a capacity that is 1.5 times today’s national power consumption. 246 This is mainly due to the fact that there have been no value addition opportunities. The absence of value addition opportunities has been identified as a main factor hampering previous efforts to initiate large-scale de-bushing programmes.247
7 Concluding Remarks
As Namibia battles to cope with rising demand for energy, the exploration of RE sources is being encouraged by the Government in partnership with the private sector. Therefore, the industry must be opened to the private sector for the purpose of developing a competitive market. This is only possible with a sound legal framework in place, where the postulation for facilitating RE technologies made in the White Paper is implemented. Thus, the outdated framework consisting of numerous programmes and plans that often interfere with each other have to be substituted by an Act of Parliament that regulates the sector comprehensively. The most suitable methods of procurement for Namibia have to be selected and implemented in the new Act to give RE producers long-term security. To achieve this ambitious aim, initial steps have to be taken to create some key policy decisions regarding what Namibia’s energy mix will look like in the future and to which resource preference is given as not all generation options can be developed further with equal intensity.
1 Etango Magazine (2015e:17).
2 MME (1998a:44).
3 Etango Magazine (2015a:7).
4 Etango Magazine (2015b:9).
5 Hydropower needs specific mention as a renewable source of energy. Though, normally the only contribution to greenhouse gasses by hydropower projects are from plants decaying within the dam basin, the damage done to the surrounding environment by such large-scale projects like the Ruacana hydropower plant for instance should not be underestimated.
6 (von Oertzen (2015:96).
7 Etango Magazine (2015c:19).
8 It is interesting to compare these with the aim laid down in the White Paper where one can read that it is the Government’s aim to supply 100% of the peak demand and at least 75% of the electric energy demand from internal sources by 2010. See GRN (1998a:24).
9 Von Oertzen (2014:103).
10 GRN (2008a:ii).
11 Simasiku (2011:6).
12 Ndhlukula (2009:7).
13 ECB (2015).
14 GRN (2012c:48).
15 Simasiku (2011:4).
16 GRN (2012c:48).
17 Mischo / Ellmies (2011:7).
18 Etango Magazine (2011b:17).
19 GRN (2012c:47).
20 GTZ (2007:1).
21 Allgemeine Zeitung (2012a).
22 GRN (2012c:47).
23 Etango Magazine (2011b:16).
24 GTZ (2007:1).
25 Etango Magazine (2011b:17).
26 GRN (2012c:47).
27 Renkhoff (2014b:78).
28 The new power purchase agreements with Eskom run until March 2017, however, the contract was changed from “firm” to “off peak” and “supplementary”. The re-negotiated contracts with Zesco and ZPC run until January 2020 and March 2025 respectively.
30 Etango Magazine (2015b:8f.).
31 Schlettwein in “No cash for Kudu!“, Confidénte, 03-09 September 2015.
32 The Namibian, 7 February 2014.
33 GRN (2012:47).
34 GRN (2012:48).
35 Etango Magazine (2015d:13).
36 Ndhlukula (2009:9).
37 Chiguvare, Paper Presented on the 2nd Energy Security Conference, 12 August 2015, Windhoek.
38 See SADC Press Release on the 34th Meeting of SADC Energy Ministers on 4 July 2015, at http://www.sadc.int/files/5714/3809/4355/34th_Meeting_ofSADC_Energy_Ministers.pdf; accessed 13 October 2015.
39 Etango Magazine (2015g:11).
40 Oshakati, for instance, plans a 10 MW solar park not connected to the national grid, but merely to power the town of Oshakati.
41 Electricity Act No. 4 of 2007.
42 GRN (2000c).
43 Electricity Act No. 2 of 2000.
44 Renkhoff (2014c:96).
45 Available at http://www.ecb.org.na/pdf/Draft_Namibian_Energy_Regulatory_Authority_Bill.pdf; accessed 10 September 2015.
46 Section 3 of the Electricity Act.
47 Simasiku (2011:2).
48 ECB (2012:1).
49 Simasiku (2011:3).
51 The issuance of licences comprises also licences for RE projects that are measured by the same parameters as all other licences, too. In 2003 for instance, the ECB refused to grant a three MW licence for a wind park in Lüderitz that NamPower had applied for on economic grounds.
52 Simasiku (2011:3).
53 Duddy (2012).
54 Simasiku (2011:3).
55 Etango Magazine (2008b:7).
56 Bjork et al. (2011: 45).
57 The National Energy Fund was established to provide a safety cushion to absorb oil price fluctuations instead of passing them on the consumer.
58 Substitution of Section 19 of Act No. 13 of 1990.
59 Etango Magazine (2015a:7).
60 GRN (2012c:47).
60 von Oertzen (2010:1).
62 Etango Magazine (2010a:9).
63 von Oertzen (2010:2).
64 GTZ (2007:4).
65 Etango Magazine (2014d:5).
66 The Villager, 24 August 2015.
67 Ruppel / Ruppel-Schlichting (2015:117).
68 Etango Magazine (2014d:5).
70 Duddy (2012).
71 Energy governance is not only on the national level a challenge, the energy issue is also an example of diffuse global governance. Only one UN agency has an exclusive focus on energy, namely the International Atomic Energy Agency, while at least 16 others work on energy issues every day. While there is no global treaty on energy, there are more than 150 agreements between countries on energy and each of the UN agencies pushes its own agenda. See Gupta (2011:313).
72 Etango Magazine (2012f:5).
73 In 1995, the Namibian Government launched its first National Development Plan. The NDP1 superseded the Transitional National Development Plan which focused on consolidating democracy.
74 GRN (1998a:1).
75 GRN (1998a:ii).
76 Etango Magazine (2012f:5).
77 GRN (1998a:ii).
78 Ndhlukula (2009:1).
79 GRN (1998a:2).
82 See for more details GRN (2008a).
83 GRN (2008a:x).
84 GRN (1998a:43).
92 The total population enumerated in Namibia during the 2011 census was 2,133.077, of which 903,434 were in urban and another 1,209,643 people in rural areas, constituting 57% rural, and 43% urban. It is estimated that 70% in the urban areas, equalling 632,404 persons, and about 25% in rural areas, equalling 302,411 persons, have access to electricity. Altogether, the population with access to electricity is about 44%.
93 Nakale (2012).
99 Nakale (2012).
101 Utonih / Dlamini (2001:4).
104 GRN (2005a).
105 Utonih / Dlamini (2001:7).
106 Nakale (2012).
107 Utonih / Dlamini (2001:6).
108 GRN (2007c).
109 Etango Magazine (2008a:5).
110 Etango Magazine (2012f:5).
111 Etango Magazine (2012d:7).
112 Nakale (2012).
113 Etango Magazine (2012d:7).
114 Etango Magazine (2012f:5).
115 Etango Magazine (2012d:7).
116 Etango Magazine (2015f:13).
118 Etango Magazine (2012f:5).
119 Nakale (2012).
120 Etango Magazine (2012f:5).
121 Ndhlukula (2009:5).
122 Etango Magazine (2011g:8).
123 Etango Magazine (2011d:22).
124 Etango Magazine (2014a:20).
125 Etango Magazine (2011b:17).
126 Etango Magazine (2012b:8).
127 Etango Magazine (2012a:9).
128 Etango Magazine (2013a:10f.).
129 Etango Magazine (2008a:5).
130 Etango Magazine (2008c:15).
131 von Oertzen (2015:86).
132 Chiguvare / Ileka (2015:31).
133 Ndhlukula (2009:7).
134 Second National Development Plan covering the years 2001 to 2005.
135 GRN (2008a).
141 GRN (2008a:xi).
142 Simasiku (2011:4).
143 National Integrated Resource Plan for Namibia’s Electricity Sector, available at https://www.hatch.ca/News_Publications/Energy_Innovations/June2013/namibia.php; accessed 13 October 2015.
144 ECB (2015).
145 Etango Magazine (2015a:6f.).
146 Etango Magazine (2014e:17).
147 Etango Magazine (2015h:7).
148 Bjork et al. (2011:3).
150 von Oertzen (2011:1).
151 Etango Magazine (2011f:12).
152 At this stage it is impossible to make predictions for Namibia. In Germany for example there are currently more than 370,000 people employed in the RE sector.
153 von Oertzen (2011: 3).
154 Etango Magazine (2011f:13).
155 Ndhlukula (2009:2).
156 Etango Magazine (2011h:3).
157 GRN (1998a:44).
158 Etango Magazine (2008b:7).
159 For more information about grid parity, see Roedern (2009:6).
160 Schütt (2014:120).
161 There are predictions that Germany for instance will meet its demand entirely from renewables by 2050.
162 Der Spiegel (2012).
163 GRN (1998a:44).
164 Etango Magazine (2009a:17).
165 GRN (1998a:21).
167 Ndhlukula (2009:12).
169 Hinz (2011:86).
170 Ndhlukula (2009:12).
172 Bjork et al. pointed out the importance of proper resource mapping before investigating the right procurement mechanism. Because renewable resources vary considerably from one geographic location to another, within a country as well as across regions, RE development requires a good understanding of optimal sitting. This, in turn, requires knowledge of the specific resource characteristics like availability, variability and size or magnitude. Without this information, the ability of a Government to set national policy that correctly targets production of RE from specific indigenous resources is limited and informed analysis is not possible. See Bjork et al. (2011: 45). This resource mapping has taken place in Namibia. See for instance the TERNA (Technical Expertise for Renewable Energy Application) programme of the GTZ. In the framework of this programme, which was already launched in the early nineties, it was decided to evaluate the potential of wind energy for electricity generation. In 2011, REEEI, together with NamPower, began a thorough evaluation of wind potential at eighteen different sites throughout Namibia. There is also a hydropower Master Plan in place, for which a study on all perennial rivers had been performed. The aim of the study was to identify and estimate costs and production options for all potential hydropower projects in the Lower Kunene, Kavango and Lower Orange rivers.
173 Bjork et al. (2011:36).
175 Gachenga (2015:143).
176 Ruppel / Ruppel-Schlichting (2015:90).
177 Bjork et al. (2011:38).
179 COM (2008:57).
180 Etango Magazine (2013b:21).
181 Etango Magazine (2015d:12).
183 Ngatjiheue (2015b).
184 Bjork et al. (2011: 41).
186 Ndhlukula (2010:14).
187 Bjork et al. (2011:42).
188 Etango Magazine (2011e:17).
189 Bjork et al. (2011:42).
191 Witte (2015:156).
193 Etango Magazine (2011e:17).
195 Etango Magazine (2015d:12).
196 Bjork et al. (2011:42).
197 Roedern (2012:2).
198 Bjork et al. (2011:43).
199 Witte (2015:159).
201 von Oertzen (2015:118).
202 HopSol-Cenored 5 MW solar plant at Otjiwarongo.
203 Kinne, paper presented on the 2nd Energy Security Conference, 12 August 2015, Windhoek.
204 Etango Magazine (2015d:13).
205 See Roedern (2012:1).
206 Bjork et al. (2011:40).
208 Bjork et al. (2011:40).
209 Ndhlukula (2010:15).
210 Bjork et al. (2011:41).
212 Bjork et al. (2011:40).
213 Etango Magazine (2013c:4).
215 Etango Magazine (2014f:4).
218 ECB, Net Metering Rules, rule 5.1 at 8 and fn. 1.
219 Roedern (2014:15).
220 Etango Magazine (2013d:12f.).
221 Chiguvare / Ileka (2015:26f.).
222 Etango Magazine (2013e:7).
223 Etango Magazine (2010b:4). SolTrain also encourages training among installers and suppliers of solar equipment. These efforts are aimed at developing and implementing a sense of technical standard among previously disadvantaged installers and suppliers of solar thermal systems, of whom most have received initial training within the NAMREP II project. See Etango Magazine (2009b:4).
224 Etango Magazine (2013f:6).
225 Allgemeine Zeitung (2012b).
226 Chiguvare / Ileka (2015:27).
227 Renkhoff (2014a:46).
228 However, it is highly disputed whether projects like this should be able to qualify for CDM. Article 12(5)(c) requires reductions in emissions that are additional to any that would occur in the absence of the certified project activity. Apart from that, article 12(5)(b) requires that there must be real, measurable, and long-term benefits related to the mitigation of climate change. If these objectives are reached through simple gas flaring is doubtful.
229 Krause (2014:54f.).
230 It was not made public for which reasons the application was rejected. It can be assumed that harvesting of invader bush might have been considered as deforestation.
231 Krause (2014:56).
232 Allgemeine Zeitung (2012c).
233 Information taken from Tsumkwe Energy. Etango Magazine (2012c:11); Etango Magazine (2012e:16); and Etango Magazine (2011c:7).
234 Etango Magazine (2014c:4).
235 von Oertzen (2014:83).
237 For more details see Koep / van den Berg (2011:112ff.).
238 Etango Magazine (2011a:14).
239 Koep / van den Berg (2011:112).
240 Koep / van den Berg (2011:113).
241 See for more details GRN (2012c:48).
242 Chiguvare / Ileka (2015:28).
243 Etango Magazine (2014b:24).
244 Mlunga / Gschwender (2015:198).
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