Renewable energy: Investing in Africa

Transcription

1 1. Who is responsible for energy policy? 2. To what extent have generation, transmission and distribution activities been unbundled? 3. Who owns and operates the (grid-connected) generation, transmission and distribution assets? 4. Who is responsible for supplying electricity to consumers? 5. Who is the power purchaser under IPPs? The Ministry of Energy and Power Development (MEPD) has overall responsibility for energy in. The responsibilities include energy policy formulation, performance and monitoring under four directorates, Policy and Planning (which manages the policy making and planning process); Power Development (electricity sector policies and plans); Petroleum (petroleum sector policies and plans); and Energy Conservation and Renewable Energy. The sector is primarily controlled by the state-owned company, Electricity Supply Authority Holdings (ZESA Holdings (Pvt) Ltd (ZESA)), which, through its one subsidiary Power Company (ZPC) generates, and through its other subsidiary the Electricity Transmission and Distribution Company (ZETDC) imports, transmits and distributes all electrical energy in the country. ZPC/ZETDC/ ZESA ZETDC The website of the regulator (the Energy Regulatory Authority (ZERA)) states that some IPPs exist and are operational. Local press reports refer to a pipeline of IPPs of various sizes and various technologies (including small hydro and solar (both PV and CSP)), at various stages of development, involving Chinese contractors. Whilst generation, transmission and distribution were corporatized, and a regulator established, pursuant to the Electricity Act 2002, the full legal/regulatory/accounting framework for IPPs is not yet in place. Section 68(1) of the Electricity Act 2002 suggests that the purchaser under any IPP should be ZETDC. 6. Is the consumer tariff costreflective? No. It is reported that last year ZETDC proposed a 49% increase in the tariff in order to make it cost reflective (an increase from $0,0986 per kwh h to $0,1469 per kw). This was rejected by ZERA. is known for under-pricing electricity.

2 7. Is there an independent regulator? If so, which activities are subject to economic regulation? 8. Does the country belong to a regional power pool and are any interconnectors in place? 9. Who is responsible for planning and procuring additional capacity to meet demand? 10. What is the installed generating capacity? Is it adequate to meet existing demand? What is the energy generation mix? (In the case of renewables, please identify the technologies) 11. What is the projected demand and what additional capacity is planned to meet it? What is the proposed energy mix? (In the case of renewables, please identify the technologies) Yes, ZERA, established pursuant to the Energy Regulatory Authority Act It regulates the tariffs for licenced activities. i.e. generation, transmission and distribution. is connected with neighbouring countries through SAPP (Southern African Power Pool (SAPP) (its other operating members comprise Botswana, DRC, Lesotho, Mozambique, Namibia, South Africa, Swaziland and Zambia). In theory it can use the pool to import electricity from neighbouring countries. However in practice demand in those countries far outstrips supply. The amount which can be imported is relatively limited. MEPD together with ZESA. Total installed capacity is around 2000MW. Suppressed demand is at least 300MW. Operating capacity has recently been as low as 1000MW due to hydrological conditions. The large electricity shortage has resulted in signing an agreement with Mozambique s EDM for 500 MW worth of imported electricity capacity. In 2016, also signed an agreement with the South African national utility, Eskom, to import 300 MW of electricity. No electricity is currently exported from to any neighbouring countries. ZPC's assets consist of one hydroelectric power station (750 MW at Kariba) and four coal fired thermal power stations of which Hwange (920MW) is the largest. The combined capacity of the other three is around 270MW. Kariba's operating capacity is affected by drought. Thermal plants have exceeded their design life and are subject to frequent breakdowns. The National Energy Policy (2012) recognises the need for additional generation capacity, investment in transmission and distribution infrastructure and rural electrification. It also acknowledges the need to access private investment and facilitate IPPs. The main technologies are large hydro, small hydro, thermal (coal), solar, biomass, coal bed methane and potentially geothermal. The detailed programmes required to give effect to these aspirations appear to be in all cases work in progress. These

3 12. Is there a history of IPPs (excluding the renewable energy sector (other than large hydro))? If so, what procurement method was used? How have they performed? 13. Is there a specific programme for procurement of grid-connected renewable energy? If so please provide details (including who will manage the include a renewable energy policy, feed-in tariffs, an integrated resources master plan, a rural energy masterplan, a rural energy policy, a procurement framework for IPPs etc. According to the National Energy Policy (2012), the enactment of an Energy Management Act will be a key step in this process. In the meantime, it is reported that a number of projects are still proceeding at various rates of progress. These fall into three groups: small and decentralised hydro with the ability to feed surplus into the grid; large projects involving Chinese contractors; utility scale solar projects. The procurement process which has been followed for each of these projects is unclear. In particular it is unclear whether any of them were competitively tendered, although it seems more likely that they were directly negotiated. It is reported that at least one of the Chinese projects has stalled, in effect due to the country's current financial situation. It is likely that the utility scale solar projects will also have been affected. No, but see above. Commentators have referred to the fact that involvement with Chinese contractors has had "mixed results". Concerns have been expressed over the lack of industry standards in the solar sector. It is reported that the Standards Association of and the Energy Regulatory Authority (ZERA) are in the process of drafting industry standards, including regulations for solar water heaters, lighting products, the solar PV industry and energy management. ZERA s director of renewable energy has stated that the ZERA is building a dedicated solar PV equipment testing laboratory which will be able to check components such as solar modules, batteries, charge controllers and inverters. It is also funding the establishment of a test centre for solar thermal systems. Currently no. The National Energy Policy (2012) acknowledges that one is required. It is reported that the Renewable Energy Policy formulation process is being financed by Energy Regulatory Authority, Practical Action, ZERO and Hivos. The tasks in the

4 process, the procurement method, criteria to be applied, process efficiency tools such as standardised documentation, the PPA term offered, incentives/comfort for investors including government guarantees and multilateral support instruments, responsibility for grid connection, other assistance e.g. in obtaining finance or with bid costs, the scale and structure of the programme, the status of the programme). 14. Please outline the legal framework applying to any programme. Is it reasonably clear? 15. Have any specific issues or concerns been expressed regarding the procurement programme? policy development work include a background analysis on the current status and identification of current barriers to the uptake of renewable energy technologies, stakeholder consultations, review of international best practices and preparation of a Draft Renewable Energy and Implementation Plan. Any IPP requires a licence from ZERA. The licencing regime is set out in primary and secondary legislation and is reasonably clear. Licenses are granted for a 30 year period. Procurement regulation is governed by the Constitution, the Procurement Act 2001 and secondary legislation made under it. It prescribes transparency but is unclear on the principles or their application. The State Procurement Board is involved either as procurer on behalf of governmental entities or as supervisor. The State Procurement Board reports to the President and is considered by some commentators to be insufficiently independent. It is unclear how the regime would apply in the case of renewable energy IPP procurement programme. Any developer will need to take into consideration the requirements of the Indigenization and Economic Empowerment Act 2007 (the Indigenization Act). The National Energy Policy (2012) refers to the fact that the prevailing institutional arrangements need to be clarified and strengthened. At present there are overlaps and potential for conflicts of interest, including between the Minister, ZERA and the Competition and Tariff Commission. N/A as there is no clear programme at present. In addition to the challenges which are generic across the region, in the case of the challenges which any programme will need to overcome include: the critical shortage of available hard currency within at present; the Indigenization Act and its implications.

5 16. Is investment in transmission and distribution required in order to increase the capacity of the system? If so, is there an effective programme in place? 17. Is there a specific programme for the procurement of/facilitation of off-grid renewable energy? If so please provide key details. Yes. A significant proportion of the investment required is rehabilitation. Relative to many other countries in the region the grid is well developed following efforts beginning in the 1980s to extend supplies to rural areas. A rural energy policy and a rural energy master plan are currently being formulated by MEPD. A Rural Electrification Agency (REA) was established in 2002 which is financed from the Rural Electrification Fund established by the Rural Electrification Fund Act It has installed around 427 solar mini-grids at rural schools and clinics. Home solar systems for charging electrical appliances have been installed through the national telecommunications company, NetOne. It is reported that ZERA is considering the regulatory regime relating to mini-grids with a view to developing a strategy to catalyse investment. Other reports state that as ZETDC reduces collection losses through the use of prepaid meters the savings can be applied to fund a further roll out by the REA. Further advice should be taken before relying on the contents of this summary. Clyde & Co LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co LLP. Clyde & Co LLP is a limited liability partnership registered in England and Wales. Authorised and regulated by the Solicitors Regulation Authority. Clyde & Co LLP 2016