Namibia to end NamPower monopoly
By Lahja Nashuuta
WINDHOEK–NAMIBIA is endowed with ample energy resources, with one of the highest solar radiation levels in the world which presents endless investment opportunities.
But to unlock that potential, the country must first break the monopolistic structure of energy supply to a free market system where independent power producers are empowered and financed to generate their own energy, says energy expert Herald Schutt.
Schutt says until laws are changed, power utility NamPower’s will continue to dive deep into the pockets of consumers while electricity tariffs continue to soar.
“The utility’s monopoly over electricity supply in Namibia must be dismantled for our energy crisis to be resolved,” Schutt told The Southern Times this week.
“To achieve that, there is a need for private power utilities to produce electricity specifically for industrial energy and sell directly to companies and industry without needing NamPower’s services at all.”
Schutt told The Southern Times that although Namibia has significant renewable energy potential such as the abundant solar, wind and biomass resources, their uptake and use for mainstream electricity generation remains slow.
Schutt, who is the General Manager for Renewable Energy Association of Namibia, blamed this on the monopolistic structure of energy supply, “where the country’s economy is forced to rely on one power supplier.
“Holding monopoly over power plants and transmission, NamPower is the sole generator and seller of electricity in the country. The utility has failed to meet electricity demands, with various problems plaguing its ability to do so,” Schutt said.
The country’s current generation capacity is no longer able to meet the rising demand for electrical energy, and Namibia’s neighbours are not always able to export electricity as and when required.
He said currently, Namibia only produces 40 percent of its own electricity while 60 percent is imported from neighbouring countries such as Zimbabwe, Zambia and South Africa.
“The money spent in importing energy from neighbouring countries can be invested in developing the renewable energy sector. For instance, we can invest in renewable energy technologies that convert the country’s abundant solar, wind and biomass resources into electrical energy,” he said.
Unless deliberate and decisive action is taken to tap into renewable energy, the Namibian economy will be continually dogged by power shortages, he warned.
The single buyer electricity market model was adopted by Cabinet in 2000 and NamPower was issued a trading licence as a single buyer in the country.
Mines and Energy Minister Obeth Kandjoze, in a presentation during the Invest in Namibia Conference on Wednesday, said the government is working to modify the single buyer market model.
“To accommodate the ever changing environment, a modified single buyer model is being discussed to allow independent power producers to sell directly to off takers other than the single buyer such as regional electricity distributors, mines and other larger power consumers,” he said.
Kandjoze said the process of reviewing and updating the market model is expected to be finalised by the last quarter of 2017.
The wide-scale adoption of energy efficient technologies can significantly contribute to address short-term electricity supply gaps, while offering outstanding opportunities for the country’s long-term development.
“Investments in the use of local resources create local value chains generating local jobs, which are desperately needed. Investments that merely perpetuate import dependencies do not have such advantages,” added Schutt.
“There is no compelling reason why the use of renewable energies and energy efficient technologies cannot be dramatically accelerated to contribute to Namibia’s development.
“The country just needs to restructure its energy strategic plans and divert money spent on buying electricity abroad into development of renewable energy.”
The Mines and Energy Minister said the government has taken deliberate steps to reform and develop the country’s energy sector.
For instance, works are under way to update the current electricity Act No. 4 of 2007 to reflect developments in the industry, with the process set to be completed in March 2017.
Plans are also afoot to transform the Electricity Control Board into the Namibia Energy Regulatory Authority, a process that is expected to be completed by the first quarter of 2017.
And to further allay Schutt’s concerns, Minister Kandjoze said a review process of the current IPP investor framework is under way. He said the aim is to develop an Independent Power Producer Policy to guide and promote private investment, with the process expected to be completed by March next year.
The Director of Namibia Energy Institute, Zivayi Chiguvare, said the IPP Policy will help to address energy security and improve Electronic Supplementary Information (ESI) efficiency through competition among the buyers and suppliers.
The policy also seeks to reduce Namibia’s dependence on energy imports, increase access to reliable and affordable electricity for all consumers as well as support Namibia’s economic growth and employment enhancement targets.
Chiguvare said Namibia currently does not have an IPP Policy in place, but has an IPP Market and Investment Framework, which facilitated the entry of private players in the power generation sector.
He said the availability of the required electricity supply is critical to Namibia’s development goals and that there will be more opportunities for independent players once the Independent Power Producers policy is finalised.
Meanwhile, Schutt has advised that Namibia can only attract international investors, especially in the energy sector, if it takes an interest in biomass and energy storage systems.
“Energy storage systems are growing in importance as renewable energy sources like wind power, wave power and solar are being commissioned and connected to the grid at an ever-increasing rate,” he said.
Energy storage is already a market by itself that needs to be developed, he said.
Schutt said the local renewable energy sector has taken off with around 35 megawatts connected to the national grid, which is expected to grow by 5.3 megawatts in 2017.