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Load Shedding in Zambia: What Should be the Plan Presentation to the EAZ July 2014 Monthly Discussion Forum Mulungushi International Conference Centre.

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Presentation on theme: "Load Shedding in Zambia: What Should be the Plan Presentation to the EAZ July 2014 Monthly Discussion Forum Mulungushi International Conference Centre."— Presentation transcript:

1 Load Shedding in Zambia: What Should be the Plan Presentation to the EAZ July 2014 Monthly Discussion Forum Mulungushi International Conference Centre 24 July 2014 Mushiba Nyamazana (PhD) Research Fellow Institute of Economic and Social Research, UNZA 1

2 Outline Introduction Demand Projections Meeting Demand: Investment Implications Public vs. Private Investments SAPP Tariff Comparisons The Solar Power Option Conclusion 2

3 Introduction 1990s SAPP projects SADC power deficit if capacity not increased. SADC Governments take no action – “business as usual” approach. From 2005/6 massive load shedding Lots of talk of more investment but load shedding continues 3

4 Demand/Power Balance Projections Total Energy Demand (GWh) Maximum Demand (MW) Total Net Energy Generation (GWh) Installed Generation Capacity (MW) Energy Balance (GWh) Capacity Balance (MW)

5 Demand/Power Balance Projections II 2014 comparison of actual vs. projected capacity = adverse gap of 76% (i.e., 2,309.5 actual vs. 3,045 MW projected). ZESCO/Ministry of Energy not announced remedial measures to catch up through accelerating generating/transmission/ distribution projects implementation. Knock-on effect on rest of forecast period likely. 5

6 CONGO (DR) TANZANIA MALAWI MOZAMBIQUE ZIMBABWE NAKONDE KASAMA ISOKA CHINSALI MPOROKOSO LUWINGU MPIKA PENSULO SERENJE CHIPATA CHIRUNDU LEOPARDS HILL KARIBA SOUTH MUSONDA FALLS LUSIWASI MKUSHI MULUNGUSHI MSORO LUNDAZI MFUE AZELE LUNSEMFWA CHISHIMBA FALLS LUNZUA MBALA SAMFYA KASHIKISHI PETAUKE MOMBUTUTA KALUNGWISHI LUAPULA RIVER To Sumbuwanga KEY KALUNGWISHI RIVER MPULUNGU NAMIBIA BOTSWANA ANGOLA KALABO MONGU SENANGA SESHEKE SOLWEZI ITEZHI - TEZHI VICTORIA FALLS MUZUMA MICHELO LUANO KITWE MAPOSA KANSUSWA KABWE KAPIRI MPONGWE LUSAKA WEST KAFUE WEST KAFUE TOWN KAFUE LOWER KAFUE GORGE KARIBA NORTH LAKE KARIBA MAZABUKA MUMBWA MANSA MAMBILIMA KAFUE RIVER ZAMBEZI RIVER CHAMBESHI RIVER CHAVUMA FALLS (20MW) WEST LUNGA RIVER AT MWINILUNGA (3.5MW) LUFUBU RIVER AT KASEMPA BRIDGE (0.23MW) CHIKATA FALLS (10MW) KABOMPO RIVER AT KABOMPO-MANYINGA BRIDGE (0.10MW) (120MW) LUKULU KAOMA DIESEL STATIONS 22 o East 33.5 o East 8o8o 18 o KATIMA MULILO km ZAMBEZI LUANGWA Proposed Investments in Zambian Power System PROPOSED POWER STATIONS POWER STATIONS KEY 330 kV 220 kV 132 kV 88 kV 66 kV PROPOSED SUBSTATIONS SUBSTATIONS 330 kV 220 kV 132 kV 88 kV 66 kV PROPOSED LINES DIESEL STATIONS km MBEYA LUAPULA RIVER 6

7 Public Vs. Private Investments Private/IPP Maamba (Coal) 300 MW 2013 Kabompo (34 MW) Kabwelume + Kundabwika (210 combined MW) 2014 Lusenfwa/Muchinga 120 MW 2016 EMCO (Coal) 300 MW 2016 Muchinondo/Luchenene 70 MW 2017 PPP/Shared River Course Itezhi-tezhi 120 MW 2014 Kafue Gorge Lower 600 MW 2017 Mumbotutu + Mambilima I and II 326 MW Devils Gorge 500 MW 2023 Mpata Gorge 543 MW

8 Public Vs. Private Investments II Both IPP and PPP projects implementation depends on Government Single buyer model not efficient to resolve load shedding/universal electrification: Each IPP or PPP wants PPA with ZESCO (including ZESCO SPVs) Each wants ZESCO to provide security and pay upfront Each wants cost recovery tariff rate but ZESCO average tariffs sub- economic Unbundling ESI may unlock private sector investments Restricting legacy hydro power + Open Access regime = increase private sector participation via market creation? 8

9 Public Vs. Private Investments III ESI Governance/institutional capacity weaknesses a binding constraint to private investment Zambia’s evolutionary approach to ESI market reforms not delivering quickly: The steep rise in non-mining tariffs since 2008 not reflected in significant outcome improvements. ZESCO KPIs regime not entirely providing incentive for efficiency. Would adopting Finnish Mankala principle to Zambia ESI help? Does tariff review that take 2 years to complete help ESI? 9

10 SAPP Average Electricity Tariff, US$c/kWh 2012/13 10

11 Solar Power Option Hybrid with hydrocarbons Universal/rural electrification – off grid Water conservation: solar generation daytime; hydro at night Voltage/frequency regulation at end of radio lines Serve newly created districts that cannot be served by national grid 11

12 Conclusion Take another look: is plan for resolving load shedding on course? Work on regulator/utility governance systems. Market restructuring/unbundling an imperative Limit legacy hydro in bulk supply contracts Inject adequate capital in ESI “Business as usual” will not help Zambia achieve the 2030 Vision. 12

13 THE END THANK YOU FOR YOUR KIND ATTENTION 13


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