11 Jun 2016 11:00am
WINDHOEK, 11 JUN (NAMPA) Namibia has issued about 35 licences with varying capacities and technologies to Independent Power Producers (IPP) for various projects across the country.
This was announced at a one-day national stakeholder workshop on the review and update of Namibia's IPP and investment market framework in the capital on Friday.
In a statement read on her behalf, Electricity Control Board (ECB) Chief Executive Officer (CEO) Foibe Namene said only two of these IPP projects managed to reach commercial operation, and these are the 4.5megawatt (MW) Omburu Sun Energy near Omaruru and the 5MW Hopsol Power Generation solar plant at Otjiwarongo.
An IPP is an entity which owns facilities to generate electric power for sale to utilities and end users.
Namene however noted that IPPs in Namibia face several challenges, including the absence of a viable off-take market; grid connection issues; wheeling arrangements; market readiness to equitably allocate risk; and favourable funding mechanisms.
She added that the objectives of the workshop are to develop recommendations for a national policy and to establish an operational framework to facilitate investments by IPPs in Namibia.
This policy aims to address some of these challenges and to ensure creation of a conducive environment in which IPPs can operate, Namene said.
As part of the project execution, the CEO said a broad stakeholder consultation process was conducted between 22 February and 03 March 2016 to engage stakeholders in order to have a complete understanding of the challenges and opportunities faced by the industry.
In November 2000, the government approved a number of recommendations for the restructuring of Namibia's Electricity Supply Industry (ESI) that include the establishment of a single-buyer market framework and the restructuring of the ESI.
The single buyer market refers to a basic market structure for the Namibian electricity supply industry reform in the medium term.
A modified single buyer model permits small power producers (less than 2.5MW) to sell electricity directly to regional electricity distribution companies.
In 2001 when Cabinet approved the ESI reform agenda, Namene said the single buyer market was seen as an obstacle to the establishment of a more competitive wholesale electricity market, not only in Namibia, but in the southern African region as a whole.
The government was cognisant of the fact that infrastructure development also required private sector involvement, hence the importance of creating an enabling environment, she said.
In 2006, Government directed the ECB to develop an IPP and investment market framework to ensure an equitable market model for Namibia that would address the concerns of investors and mitigate risk for the national utility, NamPower and the government.
Namene noted that the ECB was mandated with the responsibility to develop the electricity market framework of Namibia and concurrently, ECB initiated a process to develop and implement a comprehensive grid code for participants in Namibian ESI.
The Ministry of Mines and Energy, ECB and NamPower recognised that the facilitation of new investments into expanding Namibia's generation capacity was an urgent and crucial ESI reform priority.
The ECB thus facilitated the workshop to enhance investments in power projects by IPPs, utilities and transmission system operators in Namibia.