Namibia moving toward embracing IPPs

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Timo Shihepo

Windhoek - The stumbling block, which has been preventing many Independent Power Producers (IPPs) from entering the Namibian electricity market, appears to have been moved after the country’s power utility, NamPower, signed power purchase agreements with 18 IPPs.

Like in many SADC countries, IPPs have for years struggled to penetrate the Namibian electricity sector despite the country’s Electricity Control Board (ECB) having issued more than 35 IPP licences.

To date, only 11 are operational. The majority of IPP licence holders failed to start generating electricity because efforts to conclude power purchase agreements with NamPower amounted to nothing.

“The whole process of getting an IPP licence and the power purchase agreement is rather complex,” Director of HopSol Africa, Robert Hopperdietzel, told The Southern Times

Hopperdietzel added that apart from the cumbersome IPP licence application process, the process of securing a power purchase agreement is equally lengthy and strenuous.

Hopperdietzel whose company also has power plants in Zambia, Zimbabwe and Mozambique added that it is definitely a no-brainer that SADC does not have a lot of solar IPPs when the region has among the highest radiations worldwide.

NamPower, on the other hand, says it welcomes IPPs in the country as long as they do not pass their risks onto NamPower.

The IPPs’ demands and conditions for power purchase agreements are considered extreme by the utility. 

The Southern Times has learned that some have even put up conditions compelling NamPower to be responsible for rebuilding the IPPs power plant should it be destroyed by disasters, natural or man-made.

The power utility is reluctant to sign such agreements and it engaged government for years to come up with a solution.

A solution appears to have been found, as NamPower’s managing director, Simson Haulofu confirmed to The Southern Times this week that the utility did really sign agreements with about 18 IPPs.

It is the first time in the company’s history that it has so many IPPs on its books.

“Yes, we have concluded power purchase agreements with a number of IPPs. We are not fighting anyone but what we will not do is take on guarantees for IPPs. We currently have 11 IPPs producing a combined 117MW and for a country of our size that is a lot,” said Haulofu.

Asked if it is true that NamPower is preventing IPPs from supplying power directly to mines or an entire town without necessarily having to go through the power utility, Haulofu said this is not true and that decision rests with the government.

Currently, Namibia’s electricity model system is designed in a way that any independent power producer has to sell the power to NamPower, which will then sell it to regional electricity distributors that then sells to end consumers.

“Government is busy modifying the single buyer model system that would perhaps enable IPPs to supply electricity to a town or directly to a mine,” said Haulofu.

Haulofu added that electricity storage is a complex and a very expensive process that is why IPPs in Namibia cannot have a project that is producing 100MW because should 100 MW leave an IPP plant at once without it being replaced it could create system instability.

Furthermore, Haulofu said it is okay to accommodate IPPs that are producing small amounts of electricity because Namibia runs a system of about 500 MW compared to South Africa, which runs a national system of 40,000 MW.

“Maybe I am wrong, but I don’t think there is a country with 20% of electricity from IPPs on their (grid) system,” Haulofu said on their relationship with IPPs before adding that “what we did last year is remarkable.

“We have the mandate to not put the country into darkness and unless it’s a broken line or transformer we will never put Namibia into darkness because of mismanagement.

 

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