SBN to finance N$2b power projects

November 2, 2015, 8:06am

By Charmaine Ngatjiheue for The Villager Newspaper

Standard Bank will finance three renewable energy projects in Namibia for N$2billion under the auspices of the bank’s Renewable Energy Independent Power Producers’ Programme (REIPPP) next year, The Villager can reveal.

The envisaged power plants are the 3 x 10MW solar power plants which will sell power to the Namibia Power Corporation (NamPower), as well as further 14 x 5MW envisaged solar power plants as part of the interim REFIT program and an additional unsolicited 20MW solar power plant.

Standard Bank’s Head of Corporate and Investment Banking, Amit Mohan told The Villager this week that the solar technology tender process has seen multiple bidders having submitted documents and the evaluation process being underway.

“The amount estimated for the funding of the renewable sector may change, however, depending on bid awards and ultimately the financing pursued by the Independent Power Producers (IPPs).

IPPs which form part of the two bidding processes can be local or foreign, as long as they comply with the terms of reference of the relevant bids and can deliver the needed energy,” Mohan stressed.

The projects promise to set up generation capacity of 120MW as the Xaris Power Plant, which was supposed to generate 250MW, was put on hold indefinitely.

Standard Bank Namibia has also availed a N$500m loan to the Zimbabwe Power Corporation (ZPC) for the extension of the Kariba South Hydropower plant which will see to the generation of 300MW.

The plant is a Namibian priority as it supplies 80MW to Namibia as part of a Power-Purchase Agreement (PPA) between Nampower and ZPC.

Namibia is a net importer of power, as 60% to 80% of the country’s energy is imported from South Africa, Zimbabwe, Mozambique and Zambia. Mohan said the IPPs will partner with NamPower for powergeneration in the country, adding that the power will be sold in local currency.

“These projects will generally be beneficial for the country as the different IPPs will be paying tax, in addition to curbing any increasing power deficit. One of the bank’s core sectors is power and infrastructure, and we are thus involved with South Africa in terms of renewable projects, which has been well-received and acclaimed. We have seen great affordability with the different projects as tariffs decreased. The tariff prices have seen considerable decreases to firstly technological advances and secondly due to competition in the renewable market,” he noted.

He added that NamPower spends on an annual basis about N$2b on imports, and that the power plants to be constructed can thus assist with the power demands in the country and the retention of some of the monies locally.

“These plants can also help with the foreign reserves of the country, which would be beneficial for the country. Ideally, we would like to see these plants up and running in the third or fourth quarter of next year,” Mohan said.

Renewable energy projects financed by Standard Bank are currently producing more than 40% of the 1 760 Megawatts (MW) by Independent Power Producers (IPP’s) under the REIPPP, delivering roughly the same amount of power which is cut when phase one loadshedding occurs to South Africa’s national grid.

Standard Bank has provided financing to 14 active renewable energy projects delivering power to South Africa’s power grid, helping to alleviate a chronic energy shortage. The bank has also provided additional financing for more renewable energy projects which are yet to come on stream, but which are anticipated to add a further 800MW of power to South Africa’s power-generating capacity.

Electricity demand in South Africa is expected to double over the next 20 years, necessitating a greater need for alternative sources of power so as to reduce the country’s reliance on coal-fired power, which currently accounts for about 80% of Eskom’s 44 000MW of capacity.

The utility’s REIPPP, which was started threeand- a-half years ago, has resulted in the allocation of power-purchase agreements to 92 projects after four rounds of bidding, with the projects which have already been connected to the grid currently providing a total capacity of 1 760 MW to South Africa’s total generating capacity.

On the continent, key opportunities for power plants exist in countries like Tanzania for wind and solar projects, and for gas-to- power and hydro in Mozambique, while Nigeria, Namibia and Ghana have capacity for gas, wind and solar projects.

Solar projects could also find favour in Zambia, Zimbabwe, Botswana and Senegal, while hydro-power has potential in the Democratic Republic of Congo and Malawi.