Namibia’s bet on solar plants to argument the country’s existing power generation deficit could prove costly as it emerges the cost of electricity generated by Independent Power Producers (IPPs), is expensive compared to the cost of imports and power generated by NamPower’s power plants.
This comes as power utility, NamPower has concluded 18 power purchase agreements with IPPs, with installed capacity of 171MW over the past 36 months as part of efforts to reduce its power import requirements.
Although the agreements were meant to be a game changer for the country which imports at least 60 percent of its power requirements from the region, the costs of power from IPPs has become of concern, with their average cost of generation averaging N$1,40 kWh in 2016/17 compared to N$1,20 kWh for imports and as low as N$0,60 kWh for local generation.
In 2017/18, while local generation remained flat, IPPs average cost of generation remained more expensive.
“If you go through our annual report, it will show you. If you look at what we import and generate locally and the costs of IPP’s, it will give you the whole picture that IPP’s are not necessarily cheaper. The sun is for free until it hits the panels and hits the transmission and distributions lines,” Electricity Control Board (ECB) Chief Executive Officer Foibe Namene said.
“Those panels have been bought with either loans or with capital that they will have to have a return on investment. The people that are maintaining those IPPs need to be paid, so those are costs that are coming through. So, the sun is just for free when it’s not hitting anything.”
When quizzed if the cost of power will come down factoring the contribution by IPPs in the future, Namene said an electricity tariff increased is projected.
“We have projected a five percent or inflation related increase and that has also taken into consideration the cost of the IPPs, I think that will give you the sort of a picture that you are looking for will,” she said.
An expert in the electricity sector, known to the Windhoek Observer, but preferred not to be named said the focus on solar to meet demand was unrealistic considering the high costs of the energy source and unreliability.
“For solar to be effective, you need batteries and the technology if fairly new and very expensive. The cost of using a solar battery ranges from US cents 11-12 kWh even if your generating costs are at US$0,4-5 cents, this drives up the total production cost to about US$0,15-16 kWH about N$2,5 kw/h making it a very expensive alternative,” the expert said.
He said the country needed to invested in a base load solution, thus a reliable energy source if its to solve its power needs and become self-reliant.
“Namibia needs a base load supplier, which solar or wind in our case are not because their production is influenced by weather elements. Even Raucana cannot be base load because its production is affected by the flow of the river,” the power expert said.
Namibia has in the past touted various baseload solutions with the Kudu project having been identified, with country spending over N$2 billion on imports annually.