|A 3D view of the 4800 MW Medupi power plant, currently being built by Eskom in South Africa
The countries of southern Africa have much in common. Their people share many ancestors with individual national identities forged through migration, invasion and settlement in the region across the past two millennia. They also share a history of colonization and exploitation by European settlers from the fifteenth century onwards, creating linguistic, economic and governmental legacies that have often persisted after independence. They also share a legacy of under-development and most have high levels of poverty.
Since 1995 the majority have shared a regional electricity system, too – the Southern African Power Pool (SAPP) – that allows them to exchange power and maintain greater system stability than would be possible as individual, isolated nations. This goes some way to making up for the limited access to electricity in even the most highly developed of the countries such as South Africa. According to the South African Development Bank, the average national level of access to electricity in 2009 was only 30 per cent, leaving more than two thirds of the collective population to rely on traditional energy sources such as fuel wood for heating and cooking.
In spite of their shared heritage, there are some stark differences. South Africa is the most highly developed country in sub-Saharan Africa, with a large economy, nuclear power and the biggest power generation capacity on the continent. Swaziland, which is virtually enclosed by South Africa, is tiny, has a small economy and electricity sector and imports most of its power from its giant neighbour.
As a region, southern Africa has access to all the important types of energy resources. However these are spread unevenly across the region. Angola has large oil and natural gas reserves and has become a major oil producer, providing an income which is allowing the country’s infrastructure, devastated by 25 years of war, to be rebuilt using government resources. There is natural gas in Mozambique and some yet-to-be exploited reserves in Namibia. Mozambique supplies pipeline gas to South Africa, the main economic centre of the region, while in Angola the construction of a liquefaction plant should allow liquefied natural gas (LNG) to be exported, raising government revenues further.
Nuclear power is limited to one plant, Koeberg in South Africa. Meanwhile Namibia has valuable deposits of uranium with identified reserves amounting to 5 per cent of the global total. Its two mines are capable of supplying 10 per cent of world output, according to the World Nuclear Organization.
There are extensive reserves of coal in South Africa and these provide the country with most of its power, as well as supplying a feedstock for both liquid fuel and gasification plants. Zimbabwe has coal reserves too and a mining industry which supplies its own power stations. Elsewhere coal reserves are limited, but Zambia has some poor quality coal and there are deposits of better grade coal in Swaziland.
However, even with these various fossil fuel reserves, the region is a net importer of oil and refined petroleum products.
With access to electricity limited across the region, biomass is a major source of energy. In South Africa, it still provides 10 per cent of primary energy supply and in most other countries this rises to over 50 per cent, sometimes as high as 80 per cent. Only in Mauritius has the domestic use of biomass been virtually eradicated.
With agriculture an important economic activity across much of the region, there are large quantities of agricultural waste generated including commercial volumes of sugarcane bagasse which can be, and sometimes is, converted into power. Forests, which provide fuel wood in rural communities, could potentially provide a significant power generation resource too.
|Figure 1: National generating capacities in Southern Africa Source: Power Generation Research|
Potential for hydro
One of the most important and so far under-developed resources in Africa is hydropower. The exploitation of water resources for drinking, irrigation and power generation has formed the basis for modern economic development in many of the developed countries of the world and has the potential to do the same in Africa if developed sensitively. Most of the countries of southern Africa have some hydro potential and some have it in abundance. However its development is costly and few have the economic resources to fund the construction of hydro plants alone.
There are arguments for hydro to be considered a regional rather than a national resource and shared development would make funding easier. Rivers such as the Zambezi and the Limpopo have basins which straddle several countries and these rivers could provide power to be distributed across the region through the SAPP grid.
Further north, the Congo River has the potential to become a powerhouse for the whole of Africa. South Africa, through its utility Eskom, is already helping promote hydro in the Democratic Republic of Congo (DRC), a development that could provide additional power to South Africa.
While the major rivers of the region provide potential sites for large hydropower plants there are also many sites for small hydro developments that can provide local, often off-grid power today.
Other renewable resources are also ailable. Wind potential is variable but there are good wind regimes in coastal regions and in some of the higher regions of southern Africa. Solar energy is available in abundance across the region too but cost is usually the barrier which prevents its wide deployment. Most solar generation is via small solar photovoltaic installations funded by donor agencies and providing power to remote facilities such as hospitals, schools and clinics. Solar thermal development would be possible, particularly in the more arid regions, such as the Namib Desert in Namibia or the Kalahari Desert that covers large areas of Botswana, South Africa and Namibia.
The African Rift Valley which crosses part of southern Africa is geologically active and could provide some geothermal capacity but little surveying has been carried out, so the extent of the potential is not known. There is also scope for marine power generation with good wave regimes on the western coast of southern Africa generated by the winds blowing across vast open stretches of the southern Atlantic. Marine-current and ocean-thermal energy is also available but all these technologies are too expensive today for deployment in the region.
Evolving market structure
Electricity came early to southern Africa, brought by European settlers who wanted to light their homes and workplaces, and needed energy to drive mechanical machinery with electric motors. The colonial governments later established utilities to manage national electricity supply in the same way as it was being managed in Europe and the US, and this legacy can still be traced in the names of many of the utilities that operate in the different countries of the region.
Historically, all these utilities were government agencies and though most have now been converted into limited companies, in practice they are still controlled by their respective governments. The level of oversight varies, with some virtually autonomous while others are closely managed by the corresponding government agency.
Restructuring of the utilities has been attempted in some of the countries, too, to create independent generation, transmissioand distribution companies. However, the level of success has varied. In South Africa, Eskom was converted into a public company in 2002, and in 2003 distribution was unbundled with the intention of creating a series of regional distribution companies. This policy failed and in 2011 distribution was handed back to the government’s Department of Energy.
In Zimbabwe, the national utility was unbundled to create a generating company and a transmission and distribution entity. However, this has led to a cyclical problem of debt because the transmission and distribution firm cannot collect money efficiently from its customers and so cannot pay the generating company for the power it supplies, so both have serious debt burdens. From an open market perspective, restructuring has yet to have a significant impact in the region.
Hand in hand with unbundling, most of the countries have also created energy regulators that license operators across the market, establish and police standards and set tariffs. In a fully market-driven electricity model, such regulators would be autonomous but in many cases they are still overseen by a ministry and their independence is questionable.
While there are one or two independent system operators there are as yet no open electricity markets similar to those found in many developed countries. The national utility or national transmission system operator is essnetially the market, buying and selling power nationally, as well as importing and exporting.
The economic strength of the southern African nations varies but all are trying to lure independent power producers to their markets, with limited success. Even in South Africa, 95 per cent of power is generated by the national utility. In many cases the regulatory structures are not robust enough to create the certainty needed by foreign investors. Tariff structures can also cause problems, particularly where, as is still the case in some countries, the tariff does not cover the cost of production and delivery. Tariffs have been rising across the region and this is helping to improve the economics of generation and delivery but reforms are not complete.
Capacity needs to double
The generation of electricity in southern Africa is based on three main sources, coal, hydropower and liquid fuels such as diesel or other distillates. There is very little natural gas used for power generation. In most cases hydro and coal plants supply power to national grids and, where connected, to SAPP. Diesel generation is more usually used for off-grid generation although it also finds use for peak power generation in some countries. However the cost of liquid fuel usually makes this an expensive option. Natural gas generation based on gas turbines is rare with the only significant capacity of this type in Angola where natural gas is available. Capacity is planned in Mozambique too.
In terms of installed capacity, South Africa is dominant with 44,170 MW of generating capacity or close to 84 per cent of the total capacity of 52,582 MW in the region. The next largest capacity is found in Zimbabwe, 2045 MW. However much of this is aging and availability is much lower. Zambia with 1812 MW and Angola with 1515 MW are the only other countries with more than 1000 MW of generating capacity available. At the other end of the scale, Lesotho and Swaziland have only 72 MW of generating capacity each.
Most of the countries of southern Africa are members of SAPP through their national utilities. The two island nations, Madagascar and Mauritius, are not members because of their geographic locations. Meanwhile, Malawi, which is a member, is not, nevertheless, connected into the regional grid operated by SAPP. This means it cannot trade large volumes of power with neighbouring countries as the other nine can. However, small-scale trading takes place at borders where isolated rural communities in one country are supplied with electricity from a neighbouring community in another country that is connected to the national grid of that country. This takes place across the Malawi border, as well as elsewhere.
Across the region, coal provides the largest tranche of generating capacity, 40,359 MW. This is virtually all a result of the coal in South Africa, where most of the region’s coal plants are located. There is some coal capacity in Zimbabwe but elsewhere there is little, while hydropower provides a further 6701 MW.
The other major source of generating capacity is diesel generators burning liquid fuels of one type or another. They can be found all across the region, often supplying power to isolated grids. Many of these plants are old and inefficient. Diesel fuel is expensive and it would often be economical to replace or supplement these diesel plants with solar or wind generation. Financing such development is expensive and that has hindered wide spread introduction of these renewable technologies.
Other renewable sources are present, but capacities are small. There are small hydro plants, some solar PV installations and plants burning biomass to be found in many countries but they are generally not connected to the grid so their capacities often go unrecorded. One of the largest of these sources is plants burning sugarcane bagasse and wood waste, usually installed at industrial sites and providing energy for the industry. There may be as much as 200-300 MW of such capacity in southern Africa.
Across the region, the peak demand is around 45,000 MW. An installed capacity of around 53,000 MW would suggest a regional margin of 15 per cent but availability in several countries is low and the real margin is much smaller. In addition, in many countries peak demand is suppressed by the infrastructure so that in practice margins are probably negative. The SAPP estimated the actual suppressed peak demand across its region to be close to 54,000 MW in 2012; this does not reflect the numbers that are unable to buy power because they have no grid access.
Annual generation in the region was around 50,000 GWh in 2012. Of this, more than 70 per cent was produced by coal plants and between 15 per cent and 20 per cent by hydro plants. Across the SAPP region, less than 10 per cent of power was provided by other sources.
Consumption patterns in the countries of southern Africa vary from nation to nation. In the majority of the countries it is only major urban locations and manufacturing centres that are connected to a national supply system. Rural consumption is therefore extremely low. South Africa has the highest rural rate of connection, at 55 per cent. Elsewhere it is often below 10 per cent and can be less than 5 per cent. Many of the rural communities without power are extremely poor and rural electrification is a vital development issue.
Consumption by different sectors varies from nation to nation. Major industrial centres generally have privileged supplies since they are important for the economic well-being of the nations. Some, such as the Mozal aluminium smelter in Mozambique has a dedicated power supply from South Africa. However, with tariffs often subsidised, domestic consumption can account for a high proportion of total usage. In some countries, commercial agriculture is vital to the economy and this will account for high percentage of consumption too.
Tariffs in the countries of southern Africa are often low – too low in many cases to meet the cost of production and delivery. The lowest average national tariffs in the region are $0.057/kWh in Zambia and $0.059/kWh in Lesotho, with Angola at $0.060/kWh. Both Zambia and Lesotho have established hydro plants that account for a high proportion of electricity production and this is relatively cheap. In Angola, hydro is also an important source of electricity and the income from its oil also helps the government support tariffs, keeping them low.
In other countries, particularly those that rely on fossil fuels for their energy, tariffs tend to be higher. However, the highest tariffs in the region are found in the two island nations, Madagascar ($0.140/kWh) and Mauritius ($0.186/kWh). Both rely heavily on fossil fuel for their power and the fuel in both cases must be imported, pushing costs high. Swaziland also has a high average tariff of $0.115/kWh. The country has very little capacity of its own and must import most of its power from South Africa and Mozambique.
All the countries of southern Africa need additional generating capacity and to extend and strengthen their transmission and distribution systems. However, most are hampered by small economies that do not provide funds to invest in new infrastructure. Where there is reasonable political stability, countries can attract both donor agency investment and foreign private investment to help build stronger infrastructure. But several countries in the region suffer from poor governance and weak democratic structures that make securing outside finance difficult.
Peak demand on the SAPP grid in 2012 was around 51,000 MW. SAPP forecasts demand rising to 55,000 MW by 2015, 61,000 MW by 2020 and just under 67,000 MW by 2025.
While this only amounts to 30 per cent growth in 15 years, the fact that capacity can barely meet existing demand implies installed capacity across the region will probably need to at least double over the period if even this level of growth is to be met. If economies improve and electrification spreads, demand could potentially rise much higher.
Opportunities: Much to play for
The nations in southern Africa are all ambitious to improve their electricity infrastructures as a means of creating better conditions for their people and for their economies to expand. All have strategies in place – some over-ambitious – and there are a range of potential projects seeking investment. They include major hydro schemes, natural gas-fired combined-cycle plants, coal plants, wind, solar and biomass developments, and even new nuclear capacity.
Major transmission lines and national interconnections are needed to boost the capacity to trade power across the region and in every country there is a need for a major rural electrification programme to enable isolated communities to gain access to power. Not all of these will be able to attract funding today but there are many that do offer a sound basis for investment.
Africa remains the most under-developed continent of the world but it is becoming a focus for attention and major trading nations such as the US and China are already competing for markets and influence. Meanwhile, major donor agencies such as the United Nations are seeking ways to enhance and improve the lives of people across Africa. Electricity supply will form a key part element of these programmes. For all companies and organizations with interests in the electricity sector there is much to play for.
Power Generation Research in partnership with PennWell are publishing in depth surveys of all the countries of southern Africa. These will be available as individual country profiles and as a single regional report, Electricity in Southern Africa. For more information, visit http://ogjresearch.stores.yahoo.net/power-generation-research-company.html.
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