IPPs needed to boost energy supply

20 August 2018 | Energy

Otis Finck

The electricity supply industry will have to evolve and change as a whole.

Reforms should be continued with a view to encourage more private sector investment in power generation.

More reform is needed and this process could be less than successful with the current structure which is characterised by a single buyer of electricity, says the minister of mines and energy, Tom Alweendo.

“A sustainable future must be a priority for the electricity sector in particular. In light of Namibia’s abundant resources ideal for renewable energy production, creating an environment that stimulates private investment into electricity distribution, should be prioritised,” the minister told delegates attending the Electricity Supply Forum (ESF) in Swakopmund on Thursday.

The forum provides a platform for key players in the electricity industry, government and other key stakeholders to engage on opportunities, trends and challenges faced by the industry in Namibia.

Alweendo added that there is no doubt that Independent Power Producers (IPPs) should continue to be a feature of the electricity supply industry without creating more reliance on extremely limited state investment funds.

“In this respect, the IPP policy which outlines key provisions of government’s commitment to encourage private investment in the power industry was drafted. The policy also outlines the electricity market model, pricing regime, procurement approach and requirements for IPPs to develop power generation projects and seek licenses.”

The minister further cautioned that any policy which aims to create an attractive investment destination into the industry should take into account the unique type of resource that electricity is.

“Keeping electricity affordable and preventing producers from building huge profits into tariffs are crucial to preserve electricity as a sustainable resource. A sustainable future will need to draw on new and innovative methods of power production. This means the electricity supply industry’s relevance should be based on ensuring the commodity is available on demand to all citizens at an affordable price without compromising the ability of future generations to do the same.”

Alweendo was adamant that urbanisation will continue to increase for as long as the rural areas remain un-electrified in part because employment opportunities generally follow electrification as it enhances productivity in all sectors.

He added that without sufficient electricity, sustainability in other sectors can be negatively affected. Manufacturing will be greatly hampered if electricity supply is not constant and sufficient.

He also pointed out that cost reflective tariffs have the potential to place a heavy burden on the final consumers especially the poor and the vulnerable.

“In attempting to ensure that customers are treated equitably, government through the ministry of mines and energy devised the National Electricity Support Tariff Mechanism which intends to make electricity more affordable through a subsidised tariff to household consumers on connection capacity below 15 Amps.”

Alweendo further highlighted that Namibia is in the process of becoming more self-sufficient in terms of electricity production.

“Eighteen independent Power Producers (IPPs) have signed Power Purchase agreements (PPAs) with NamPower to supply 171 MW of renewable energy generation projects. Cabinet has also approved the National Integrated Resource Plan which aims to find least-cost electricity generation options to meet the country’s needs over the next 20 years.”

Despite these efforts and others, the country remains over-reliant on importing electricity.

“Namibia imports about 70% of needed electricity and with regard to access to grid electricity, less than 50% of the population is connected. It is therefore clear that we need to find ways to generate more electricity locally and make the commodity more accessible.”

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