Botswana electricity demand projected to grow strongly

05 Aug 2018

Botswana will need to add up to 500MW of committed, dispatchable electricity generating capacity by 2040, in order to keep pace with the demand.

A report by Tlou Energy in association with the Mott MacDonald Group has revealed.

The national power supplier, Botswana Power Corporation (BPC) recently vowed to reduce the power import to four percent beyond 2018, with Morupule B undergoing remediation works which commenced in of 2017 and will complete in mid-2020.

The 132MW Morupule A has been under refurbishment since 2015 and had experienced delays due to implementation of modifications in order to achieve high performance of the plant and stability of power generation.

The report has signaled that, if these projects slip in schedule, imports will increasingly be relied upon.

Information gathered by this publication reveal that 2016/17 imports were sitting at 32 percent whilst own generation was at 68 percent, currently for 2017/18 imports are at 19 percent, and own generation is at 81 percent.

Tlou Energy report has anticipated the supply demand balance to tighten across the region in coming years, in line with the historically cyclical nature of power market supply demand. Given the possibility of new wind and solar capacity in the region, backstop technologies such as gas Combined Cycle Gas Turbines (CCGT/OCGT) gave a role to play in the supply balance.

“Botswana has options to contribute to its own self sufficiency and exports into the region using quick start gas generation,” reads the Tlou Energy report.

REGIONAL OUTLOOK

Looking into the Southern African region, the report also show signs of a strong growth in demand over the next 20 years.

It revealed that, new industry in the region will be seeking reliable base load electricity supply, while the systenm is currently in surplus due mainly eskom. This situation is not expected to last and the supply demand balance is expected to tighten in the next five years.

“Regional governments expect to be able to roll out a wave of new generating capacity by 2030. If projects slip, another regional supply demand shortfall will emerge mid-decade,” further reads the report.

Historically, new power generation projects in the region have not been rolled out in a timely fashion, many are currently stalled and may not proceed.

Regional utilities remain heavily subsidised. Present tarrif structure across the region is unsustainbable and confers severe financial losses on regional utilities, and a disincentive to new investment.

BPC which become one of the most gold digging parastatal on the government’s coffers has been running operational losses for years, which amounted to P1,2bn in 2016/17,  P2bn in 2015/16, P1.3bn in 2014/15 and P1.6bn in 2013/14. However, when addressing the media over two months ago, BPC’s chief executive officer, Dr Stefan Schwarzfischer said, over the last 12 months (2017/18) the operational loss amounted to P1bn. This he said was supported by tariff increase and reliability of Morupule B, which further reduced imports.

Meanwhile, in South Africa according to the report, in June 2018 National Energy Regulator of South Africa (NERSA) advised that it will allow eskom to recover R32.69billion in non recovered costs from the three years 2014/16. The costs are to be recovered through tarrif increases to standard and international customers, and customers on special pricing agreements. Eskom had claimed R66.6bn of cost recovery and has achieved roughly half with the NERSA decision.

For Botswana, it is said that, BPC will require P10billion during 2017-2020 to run. Tarrifs would need to rise by up to 80 percent for BPC to recover costs. Currently they are low and unstainable.

Reliance on Eskom for long term supply security has been revealed to be unsustainable.

Supply deficit will emerge by mid next decade, even assuming all projects delivered. Should there be delays in the new capacity, this could lead to severe power shortages in the next decade.

“Power markets move in cycles of supply surplus, under investment and deficit. The current eskom supply overhang and cheap tarrifs will not last. Eskom was in major supply deficit in 2008 and again in 2014.”

Historically, new power generation projects in the region have not been rolled out in a timely fashion, many are currently stalled and may not proceed. USD80billion in new generation capacity is required across the region by 2030, to keep pace with the demand, but it however remains unclear how USD80billion of new power capacity in these countries will be financed.

Regional governments’ supply plans assume new projects will be rolled out on time, every 1-2 years in perpetuity, however this is not the case in past experience.

The SADC Secretariat in collaboration with its subsidiary organisation and energy implementing agency, Southern African Power Pool (SAPP) convened a SADC Energy (Electricity and Petroleum Gas) Subcommittees meeting in South Africa this May.

The objective of the meeting was to deliberate on security of energy supply in the SADC region with focus on implementation of national and regional programmes and projects aimed to facilitate availability of sufficient, reliable, least cost energy services in support of Regional Integration, Industrialization, Eradication of poverty and Economic Growth. The objectives were concurrent with the SADC Protocol on Energy of 1996, which promotes harmonious development of national energy policies and matters of common interest for the balanced and equitable development of energy throughout the Region.

Through the SAPP network, the regional objective is to ensure electricity connectivity for the entire mainland Member States. SADC has prioritized the interconnectors and national transmission projects associated with regional integration transmission projects to connect outstanding Member States namely Angola, Malawi and Tanzania through Angola-Namibia Interconnector, Mozambique-Malawi Interconnector and Zambia-Tanzania interconnector which will link the East Africa Power Pool (EAPP) and SAPP. These transmission interconnectors will further contribute towards continental integration through energy infrastructure by enhancing power trading along the East, Central and West corridors of the SAPP network.