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Load Shedding in Zambia: What Should be the Plan

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. Outline. Introduction

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Load Shedding in Zambia: What Should be the Plan

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  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

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

  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

  4. Demand/PowerBalance Projections

  5. Demand/PowerBalance 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.

  6. km KEY PROPOSED LINES 330 kV 330 kV 1941 220 kV 220 kV 348 132 kV 132 kV 77 717 88 kV 88 kV 66 kV 2791 66 kV POWER STATIONS PROPOSED POWER STATIONS SUBSTATIONS PROPOSED SUBSTATIONS DIESEL STATIONS Proposed Investments in Zambian Power System To Sumbuwanga 8o TANZANIA MPULUNGU MBALA LUNZUA MBEYA KALUNGWISHI MPOROKOSO KASHIKISHI NAKONDE CHISHIMBA FALLS CONGO (DR) KALUNGWISHI RIVER KASAMA MAMBILIMA LUWINGU ISOKA MUSONDA FALLS CHAMBESHI RIVER MANSA CHINSALI MALAWI MICHELO SAMFYA WEST LUNGA RIVER AT MWINILUNGA (3.5MW) MOMBUTUTA LUAPULA RIVER ANGOLA SOLWEZI LUANO KANSUSWA LUAPULA RIVER LUSIWASI LUAPULA RIVER LUNDAZI MPIKA KITWE CHAVUMA FALLS (20MW) PENSULO KABOMPO RIVER AT KABOMPO-MANYINGA BRIDGE (0.10MW) SERENJE MAPOSA CHIKATA FALLS (10MW) MFUE LUFUBU RIVER AT KASEMPA BRIDGE (0.23MW) MKUSHI MPONGWE ZAMBEZI KAPIRI CHIPATA MSORO LUNSEMFWA KABWE AZELE LUKULU KAFUE RIVER PETAUKE KALABO MUMBWA MULUNGUSHI LUSAKA WEST 33.5o East KAOMA MOZAMBIQUE MONGU LEOPARDS HILL KAFUE TOWN KAFUE LOWER LUANGWA KAFUE WEST CHIRUNDU ITEZHI - TEZHI KAFUE GORGE ZAMBEZI RIVER SENANGA MAZABUKA km KEY KARIBA NORTH (120MW) KARIBA SOUTH LAKE KARIBA MUZUMA SESHEKE 22o East VICTORIA FALLS KATIMA MULILO 18o NAMIBIA ZIMBABWE BOTSWANA DIESEL STATIONS

  7. Public Vs. Private Investments Private/IPP PPP/Shared River Course Itezhi-tezhi 120 MW 2014 Kafue Gorge Lower 600 MW 2017 Mumbotutu + Mambilima I and II 326 MW 2018-2019 Devils Gorge 500 MW 2023 Mpata Gorge 543 MW 2024 • 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

  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?

  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?

  10. SAPPAverage Electricity Tariff, US$c/kWh 2012/13

  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

  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.

  13. THE END THANK YOUFOR YOUR KIND ATTENTION

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