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“Challenges and Possible Solutions in the Power Sector”

ZESCO LIMITED. “Challenges and Possible Solutions in the Power Sector” A PRESENTATION TO THE ECONOMICS ASSOCIATION OF ZAMBIA R P SISALA MANAGING DIRECTOR 10 TH JULY 2008. PRESENTATION LAYOUT. Overview of Zambian Power Sector Outline of ZESCO Power System The Power Supply Challenge

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“Challenges and Possible Solutions in the Power Sector”

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  1. ZESCO LIMITED “Challenges and Possible Solutions in the Power Sector” A PRESENTATION TO THE ECONOMICS ASSOCIATION OF ZAMBIA R P SISALA MANAGING DIRECTOR 10TH JULY 2008

  2. PRESENTATION LAYOUT • Overview of Zambian Power Sector • Outline of ZESCO Power System • The Power Supply Challenge • ZESCO System Status • Strategies to Overcome the Deficit • Conclusion

  3. 1. OVERVIEW OF ZAMBIAN POWER SECTOR

  4. I. MAJOR ECONOMIC ACTIVITIES • Mining • Agriculture • Tourism • Industry & Commerce • Construction And Housing

  5. II. POWER SECTOR PLAYERS ZESCO-PUBLIC UTILITY • Public Utility • Generation, Transmission, Distribution and Supply COPPERBELT ENERGY CORPORATION • Privately Owned • Transmission & Distribution to Mines • BSA with ZESCO to Purchase Power and Sell to Copperbelt Mines (Ex-ZCCM) • 80MW Gas Turbines LUNSEMFWA HYDRO POWER COMPANY • Privately Owned • Generation Capacity-37MW • Some transmission lines into Kabwe • PSA with ZESCO for Sale of Bulk Power

  6. 2. OUTLINE OF ZESCO POWER SYSTEM

  7. I. ZESCO FACT SHEET • Vertically integrated utility • Annual turnover: US$$300million • Assets in excess of US$3.0billion • Customer base: over 300,000 • Employees: 3,900 • Sales: 9,450GWh • National maximum demand: +1,500MW • Customer/employee ratio: 80 • Approx. 50% sales to CEC & other mining customers • 5% exports to regional markets • Access rates-27%

  8. GENERATION ASSETS • Kafue Gorge - 900MW (990MW) • Kariba North Bank - 600MW (720MW) • Victoria Falls - 108MW • Small Hydros - 24MW TOTAL INSTALLED CAPACITY 1,640MW (1850MW)

  9. III. TRANSMISSION ASSETS • 330KV - 2,008km • 220KV - 548km • 132KV - 85km • 88KV - 704km • 66KV - 3,014km • High Voltage Substations - 27 • National Control Centre - 01 • Regional Control Centres - 03

  10. IV. DISTRIBUTION ASSETS • 66kV +3,000km • 33kV & 11KV +6,500km • MV lines +20,000km • In excess of 5,000 substations • 6 Diesel fired power stations 8MW

  11. ZESCO GRID (66 – 330kV) To Sumbuwanga KAPUTA 8o TANZANIA CHIENGI MPULUNGU MBALA LUNZUA (0.75MW) KUNDABWIKA (101MW) D RCONGO KASHIKISHI MPOROKOSO NAKONDE NCHELENGE KABWELUME (62MW) Kawambwa Town KALUNGWISHIRIVER MBERESHI KAWAMBWA TEA CHISHIMBAFALLS MAMBILIMA ISOKA KASAMA Chambasitu LUWINGU MUSONDAFALLS (5MW) MUYOMBE CHAMBESHIRIVER CHINSALI MWINILUNGA MANSA CHAMA MALAWI MICHELO SAMFYA WESTLUNGA at West Lunga River (2.5MW) KANSANSHI MPIKA MOMBUTUTA LUAPULARIVER ANGOLA SOLWEZI LUMWANA (Mine) LUANO KANSUSWA KABOMPOGorge (34MW) PENSULO LUNDAZI BWANA MKUBWA KITWE LUSIWASI (12MW) CHAVUMA MUFUMBWE SERENJE MFUE MAPOSA LUSIWASI EXTENSION (40MW) CHIKATAFALLS (3.5MW) Mkushi KASEMPA Mkushi Central ZAMBEZI KAPIRI MPOSHI Mkushi Farm Block KABOMPO MPONGWE MSORO CHIPATA LUNSEMFWA (18MW) AZELE KABWE MUMBWA MULUNGUSHI (20MW) PETAUKE KAFUERIVER LUKULU ROMA LUSAKA WEST Luangwa Bridge 33.5o East KAOMA NAMPUNDWE CHONGWE MOZAMBIQUE COV. LEOPARDS HILL KALABO MONGU LUANGWA KAFUE WEST KAFUE TOWN KAFUELOWER (750MW) KAFUE GORGE 900MW(1080MW) ZAMBEZIRIVER EXISTING POWER\SUBSTATIONS AND POWER LINES PROPOSED POWER\SUBSTATIONS AND POWER LINES KARIBANORTH (600MW(750MW) CHIRUNDU MAZABUKA SENANGA KARIBANORTH EXTENSION (600MW(750MW) ITEZHI – TEZHI (120MW) SHANGOMBO 330kV 330kV KARIBASOUTH LAKE KARIBA MUZUMA 220kV 220kV 132kV 132kV MAAMBA 88kV 88kV KATIMA MULILO SESHEKE VICTORIA FALLS (108MW) 22o East 66kV 66kV DEVILS GORGE (800MW) HYDROPOWERSTATION PROPOSEDHYDROPOWERSTATION KATIMA MULILO SUBSTATION 18o PROPOSED SUBSTATION NAMIBIA ZIMBABWE BATOKA GORGE (800MW) DIESELSTATION BOTSWANA PROPOSEDDIESELSTATION

  12. 3. THE POWER SUPPLY CHALLENGE - REGIONAL AND ZAMBIAN PERSPECTIVE

  13. I. MAIN DRIVERS OF ELECTRICTY DEMANDAND THE DEFICIT • Economic Growth of more than 5% in most of the SADC member countries resulting in unprecedented growth in electricity consumption and demand • Driven by increased demand for base metals resulting in high metals prices on world market • New mining companies established and others expanded • Growth in other sectors such as industry, commerce, agriculture, housing, etc • Country electrification programmes – rural and urban • Inadequate investment in generation and transmission infrastructure over the last 20 – 30 years

  14. II. ENERGY DEMAND PROJECTIONS • EXISTING CAPACITY TO BE EXHAUSTED AROUND 2007/08 • BOTH NATIONAL AND REGIONAL DEMAND TO SURPASS CURRENT CAPACITY • NEED FOR NEW POWER PLANTS • ELECTRICITY IS KEY TO NATIONAL ECONOMIC DEVELOPMENT

  15. 2007 1998 2000 2010 Installed Capacity Future demand SAPP DEMAND PROJECTIONS 1998 TO 2010

  16. THE CHALLENGE WAS IDENTIFIED AND COMMUNICATED BUT NOT ADEQUATELY ADDRESSED

  17. III. CHALLENGES NOT ADEQUATELY ADDRESSED • CAPITAL INVESTMENT REQUIREMENTS -Power projects have long gestation periods - Pre-feasibility & feasibility studies plus EIA - Project packaging and mobilisation of finance - Plus project implementation 5 – 7years - Power sector investments require huge capital outlay - Characterised by long payback periods - But private sector requires short term returns - Power projects compete for capital with more lucrative projects with short term returns

  18. CHALLENGES NOT ADEQUATELY ADDRESSED Cont’d • SUB-ECONOMIC TARIFFS - Tariffs in Zambia too low & not cost reflective - Cannot meet typical investment requirements - Legacy of socialist economy - Topic flavoured by socio-political issues

  19. COMPARISON OF REGIONAL TARIFFS (2007)

  20. COMPARISON OF REGIONAL TARIFFS (2007)

  21. CHALLENGES NOT ADEQUATELY ADDRESSED Cont’d • SURPLUS CAPACITY - Zambia was an energy surplus nation - Economy went through period of stagnation - Did not anticipate high rate of economic recovery -

  22. CHALLENGES NOT ADEQUATELY ADDRESSED Cont’d • STAKEHOLDERS AND LOBBY GROUPS - Sector opened to private investment through Electricity Act CAP 433 of 1995 - Govt. established OPPI in 1999 - Package of incentives for private sector investment in power projects put in place - Future generation projects to be private sector driven - Endless debates on privatisation and/or restructuring of ZESCO but no new Megawatts - Private sector was seen as panacea for future energy requirements but none came to invest - Generation projects taken away from ZESCO -

  23. ZESCO’S RESPONSE TO CHALLENGES ZESCO’S RESPONSE - ZESCO recognised that time was being lost in privatisation and other debates about the structure of the industry - Not permitted to invest in new generation projects - Saw that the nation would one day wake up to a power deficit - Need for quick intervention at least to delay day of reckoning - Took the option of changing scope of its Power Rehabilitation Project to include uprating - Uprating of Kafue Gorge and Kariba North Bank to add 210MW of additional capacity at minimal cost - This action delayed project completion but it was worthwhile

  24. 4. ZESCO SYSTEM STATUS

  25. ZAMBIA: CURRENT DEFICIT - PRP in progress at Kafue Gorge and Kariba North Bank power stations - Total 450MW not available - Available capacity 1,170MW - Current national demand 1,450MW - The deficit is a peak period phenomenon, sufficient capacity during off-peak periods - Load management otherwise known as load shedding required in order to maintain balance of supply and demand during peak periods

  26. 5. STRATEGIES TO OVERCOME THE DEFICIT

  27. I. SHORT TERM STRATEGIES • DEMAND SIDE MANAGEMENT • Reduction in peak demand by voluntary load reduction - otherwise power rationing and load shedding by ZESCO • Process efficiencies • Use energy efficient appliances equipment e.g. - replace incandescent lamps with Compact Fluorescent Lamps (CFLs) • Shifting of load away from peak periods - switch off unnecessary appliances during peak periods e.g. electric geysers, swimming pool pumps, borehole pumps - business houses can shift (some) production processes to off-peak and benefit from off-peak tariffs • Power factor improvements - large consumers such as mines, industry and agriculture - carefully selected process equipment - retro-fitting capacitor units on inductive equipment such as electric motors

  28. SHORT TERM STRATEGIES cont’d • UPRATING OF EXISTING POWER STATIONS • Kafue Gorge - 900MW TO 990MW • Kariba North Bank - 600MW TO 720MW • Additional capacity: - 210MW ZESCO to accelerate PRP • complete Kafue Gorge December 2008 • complete Kariba North Bank March 2009 • Similar projects being undertaken at regional level

  29. PROMOTING ENERGY EFFICIENCY STRATEGIES - USE OF CFL’s • Suspension of duty and VAT • Partnerships with retailers • Encourage use by consumers

  30. INDOOR LIGHTING:Hotels, Homes • Save 80% • USE OF ENERGY SAVING lamps – Compact Flourescent Lamps (CFLs).. • Dimmer Switchers

  31. INCANDESCENT VS ENERGY SAVER BULB

  32. METER INSTALLATION PROGRAMME • Prepaid meter installed in Lusaka-22,000 • Further 60,000 in Phase 2 of Lusaka • 65,000 in Copperbelt • 70,000 in other urban areas by 2010 • Reduction in non-technical losses • Increased Energy savings

  33. ENERGY MANAGEMENT RESIDENTIAL • SWITCHING OFF APPLIANCES e.g GEYSERS,SWIMMING POOL PUMPS, SECURITY LIGHTING,DEEP FREEZERS, BOREHOLE PUMPS etc.. DURING PEAK LOAD TIMES • SET GEYSER THERMOSTART @ 60 DEG. • CORRECT INSULATION

  34. MANAGING GEYSERS • Switching off 2kw geysers between 07-21hrs • 24hrs operation-864kWh/Month @ K170,000 • 10hrs operation-360kWh/Month@K49,000 Savings-K121,000 • Switching off 3kw geysers between 07-21hrs • 24hrs operation-1296kWh@K276,000 • 10hrs operation-540kWh@K138,000 • Savings-K138,000

  35. SECURITY/OUTDOOR LIGHTINGHOMES, HOTELS, INDUSTRYSave 80% by replacing ML 160w with Master Ecotone 45w/65w lamps

  36. COMMERCIAL • INSTALL ROOM OCCUPANCY SENSORS – to switch off lights & air-conditioning in unoccupied rooms • INSTALL POWER FACTOR CORRECTION EQUIPMENT (where lots of electric motor are in use) • REPLACE ORDINARY BULBS WITH ENERGY SAVERS (CFLs) • REPLACE MERCURY VAPOUR LAMPS WITH METAL HALIDE LAMPS (45W/60W FOR 160W) FOR OUTDOOR LIGHTING

  37. INSTALL IN EACH ROOM SWITCHES OFF LIGHTS & AIRCONS IN UNOCCUPIED ROOMS ROOM OCCUPANCY SENSORS

  38. INDUSTRIAL • INSTALL ELECTRIC MOTOR OPTMISERS ON BIG MOTORS • USE Variable Speed Drives (VSDs) for pulley coupled drives • INSTALL POWER FACTOR CORRECTION EQUIPMENT(CAPACITOR BANKS) • DO NOT START ALL YOUR MACHINES AT THE SAME TIME TO AVOID CREATING LOCAL PEAK LOADS • ARREST ALL COMPRESSED AIR LEAKS • INSULATE ALL STEAM PIPES CORRECTLY

  39. Intelligent because it matches power input to shaft load Saves up to 40% energy Has inbuilt soft start/stop Reduces inrush currents INTELLIGENT MOTOR CONTROLLERS

  40. Power factor correction Reduces KVA input Save up to 15% energy Floor mounted Capacitor Bank

  41. SAVE UP TO 15% ERNEGY VARIABLE SPEED DRIVES (VSD)

  42. STREET LIGHTING:USE METAL HALIDE LAMPS • REPLACE THE INEFFICIENT MERCURY VAPOUR LAMPS WITH METAL HALIDE LAMPS • 400W/250W MV LAMPS WITH 160W METAL HALIDES • METAL HALIDES HAVE INBUILT SENSORS TO RUN DIM WHEN NO TRAFFIC ON ROAD • ENHANCED BRIGHTNESS

  43. REVISED SAPP PROJECTIONS 2005 TO 2020

  44. II. MEDIUM TO LONG TERM STRATEGIES • INCREASE GENERATION CAPACITY BY BUILDING NEW PLANT Zambia has an estimated hydro power potential of 6,000MW of which less than 2,000MW has been harnessed. Sites yet to be developed include Kafue Gorge Lower, Itezhi Tezhi, Kalungwishi, Mambilima, Batoka Gorge, Devil’s Gorge, Kabompo, etc

  45. MEDIUM TO LONG TERM STRATEGIES cont’d • In Zambia planned projects include the following ZESCO projects: • ItezhiTezhi - Capacity120MW - Cost US$250Million - Implementation 2008 – 2012 • Kariba North Bank Extension - Capacity: 360MW - Cost: US$300Million - Implementation: 2008 – 2012

  46. MEDIUM TO LONG TERM STRATEGIES cont’d • INCREASE GENERATION CAPACITY BY BUILDING NEW PLANT • Other planned projects in Zambia include: • Kafue Gorge Lower 600 – 750MW • Maamba (Coal fired) 300 – 450MW • Similar projects planned or in progress at regional level

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