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The Future of SAPP, WAPP, CAPP, and EAPP – With Inga

The Future of SAPP, WAPP, CAPP, and EAPP – With Inga. IEEE GM 2005 San Francisco June 15, 2005 PURDUE UNIVERSITY F. T. Sparrow Brian H. Bowen Zuwei Yu. Establishment of Africa’s Power Pools. Sub-Sahara Regional MW Totals. Southern African Power Pool. SAPP – well along

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The Future of SAPP, WAPP, CAPP, and EAPP – With Inga

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  1. The Future of SAPP, WAPP, CAPP, and EAPP – With Inga IEEE GM 2005 San Francisco June 15, 2005 PURDUE UNIVERSITY F. T. Sparrow Brian H. Bowen Zuwei Yu

  2. Establishment of Africa’s Power Pools

  3. Sub-Sahara Regional MW Totals

  4. Southern African Power Pool SAPP – well along in their Operation (1995) SAPP Major new lines for increased trading

  5. West African Power Pool WAPP – moving into Operational phase (2000) WAPP Major new lines for increased trading

  6. Central African Power Pool EAPP now in the process of identifying needed HV lines (2005) DRC-Inga with future exports to SAPP, WAPP, EAPP, Egypt

  7. East African Power Pool EAPP Just getting organized expecting a launch late 2005

  8. Proposed Future Africa Grid • International transmission • links within power pools • International transmission • links between pools • During next 10 years • development of lines • CAPP to SAPP &WAPP • CAPP to Egypt & EAPP • CAPP becomes central link • with vital role for Inga site

  9. North American Trading Between Interconnects • System designed for reliability, not economy trades • Result – very little load carrying capability • between regions Pacific DC HV Inter-Tie 3,100MW, 800miles

  10. Total Gross Transactions Between 4 NERC Regions Trade represents 8.8% of total U.S. peak demand

  11. The Feasibility of Grand Inga • The underlying question – is there enough • demand in Africa to justify the enormous • up-front dam construction cost? • The average historic demand growth has • averaged about 2% per year over the last • ten years • Is there enough suppressed demand to • justify the much higher growth rates • projected by member nations?

  12. Forecast Growth in Electricity Demand 1993-2002 Average Historical Growth for:- Egypt = 2.6% Nigeria = 2.4% S. Africa = 1.4% Forecasting 5% + What are low and high scenarios?

  13. Assumptions for Inga Feasibility Analysis • All demand growth in likely export markets for • Inga (SAPP, WAPP, EAPP, Egypt) will be met by • Inga power, not local construction • Growth rates in the range of 2% to 4% per year • Electricity will be sold at 3.5 cents/kWh (otherwise • markets will generate their own electricity) • Inga construction and transmission line costs are • $16 Billion • The cost of capital is 10%

  14. Demand Values & Export Revenues 58,556MW + Egypt capacity 18,000MW = 76,556MW total Assume base year demand with 80% capacity factor = (76,556 x 0.8 x 8,760) MWh Year 1 revenues resulting from increase in demand growth of 2%, electricity price of $30/MWh = $(76,556 x 0.8 x 8,760 x 0.02 x 30.0) = $322M

  15. Inga – Question & Answer Q: When will the annual net revenues from export sales cover the annual capitalized cost of the Inga project? A1: Never if the growth rate is 2% A2: In 19 years if the growth rate is 4% Does this mean Inga should be abandoned? NO – Just broken down into smaller pieces

  16. Inga Annual Net Revenue Stream

  17. Growth in Demand & Cost of Capital With economies of scale in construction and a given growth rate in demand, “the higher the cost of capital, then the smaller will become the optimal size of each installation” Alan Manne Stanford University

  18. Low & High Demand Growth Rates Demand & Capacity Demand & Capacity Time Time High Growth Low Interest Rates Low Growth High Interest Rates

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