Africa Australia Conference - Zimbabwe Renewable ... ([LVWLQJ 'DP VLWHV ZLWK 0LQL +\GUR 3RWHQWLDO...
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• Energy sector structure in Zimbabwe • Overview of renewable energy sector • On-going renewable energy projects • Investment opportunities in RE sector • Market entry licensing • Regulatory criteria for new investors • Next steps for investors
1. Overview of the Energy Sector
•The Zimbabwe Energy Regulatory Authority (ZERA) is a body corporate established in terms of the Energy Regulatory Authority Act [Chapter 13:23] of 2011.
•Mandated to regulate the entire energy sector in Zimbabwe in a fair, transparent, efficient and cost effective manner for the benefit of the consumers and energy suppliers.
•Derives its mandate from the Energy Regulatory Authority Act [Chapter 13:23] of 2011 read together with the Electricity Act no 4 of 2002 [Chapter 13:19], the Petroleum Act [Chapter 13:22] of 2006 and subsequent amendments
• Government- development of energy policies
• ZERA- independent energy regulator (Technical audits, Compliance audit, tariff determination and PPA approval for IPPs, mmaintenance of register of licensees and monitoring progress
• Public and Private sector- licensed entities in the power generation (ZPC, IPPs), transmission and distribution of energy (ZETDC, IDC (Triangle)) and petroleum importation, blending, wholesale and retail license
• Community projects (off-grid projects)-light handed regulation(below 100kW)
Electrification is estimated to be >40% at over 792,095 customers (pop ~13mill).
Urban electrification >80%
Power Station Dependable Capacity MW
Supply Average Capacity 22 August 2018 (MW)
Kariba Hydro 1050 394 -823
Hwange Thermal 750 657
Small Thermals 170 35
Total Internal Generation 1970 1,545 + 11 MW (IPPs)
Imports (ESKOM + HCB+ SAPP market)
Up to 345 +40MW (DAM)
System Maximum Demand 1,710 (22Aug 18)
Community off-grids (solar and mini hydros)
2011 2016 2021 2026 2031
2011 2016 2021 2026 2031
W ) Manufacturing
•Petroleum sub-sector was deregulated in 2003 – procurement companies procure fuels from traders.
•Traders can bring fuel in-bond to Ferruka &Msasa. •Comprises of private and state owned companies •Pipeline available to all operators. •Prices of fuels are market driven but regulated through a pricing formula provided in SI 80, 20 and 100.
•Mandatory ethanol blending since 2013 to improve security of supply, reduce fuel import bill.
•Procurement of fuels – purchasing and supplying fuel in bulk;
•Wholesale of fuels – purchase of bulk fuel and selling it to retail sub-sector;
•Retailing of fuels – purchasing of fuel and supplying the fuel to final consumers;
•Production of fuels – construction, own, operate and maintain production facilities – currently biofuels producers (ethanol and biodiesel)
2. OVERVIEW OF THE COUNTRY’S POTENTIAL
• Coal- 12 billion metric tons calorific value 20 to 32 MJ/kg • Biomass, bagasse and bio-waste – forest residue, sugarcane waste
(co-generation and energy banking/exporting excess) • Hydro- potential to generate more than 5000MW along Zambezi
River and mini-hydro sites and dams. • Solar- irradiation averaging 20MJ per square metre and 3,000 hours of
sunshine per year. • Uranium- energy mineral in Zambezi basin • Coal bed methane (CBM) Approximately 40 terra cubic feet (1.132 terra
cubic meters) of CBM • Urban waste (Local authorities’ energy from landfills/sewer/dump sites) • Wind resource potential • Geothermal potential – not fully established
3. INVESTMENT OPPORTUNITIES INCLUDING BOT, PPP AND FUNDED PROJECTS IN SECTOR
The “Zimbabwe is Open for Business” drive
Unsatisfied local market – only 40% of the Zimbabwe population has access to electric power;
Wood fuel provides the bulk (61%) of the total energy supply;
Energy can easily be suppled into the regional markets (Zimbabwe at centre of SAPP);
Zimbabwe is a potential hub for fuel distribution in SADC;
Project PPP Structure Contract
Kariba Extension Brownfield EPC + Finance BTO
NOIC Pipeline JV 50/50 BOO
Storage Facilities Brownfield JPG BOO
Hwange Extension Brownfield JV (SPV) BOO
Batoka Greenfield PPP/IPP BOO, BOOT, Other
Zizabona ITP, PPP or JV BTO
Distribution PPP BOT
LICENSEE #s AND TECHNOLOGY CAPACITY (MW)
a. 12 x Hydro 50.31
b. 22 x Solar PV 696.366
c. 5 x Coal Fired Thermal 3 250
d. 1 x Gas Fired 100
SUB TOTAL 4 96.676
• Estimated cost of projects is about USD10 billion • Partners can come in as EPC or funders/IPP
o $ 1,5 billion (rehabilitation - $300mil for small thermals), o $ 2,2 billion (new build ZPC(govt/PPP)), already committed o $1.5 billion in Tx infrastructure o >$9 billion - IPPs through private sector or PPPs o Target new capacity 5 500MW by 2030
Licensee #s and technology Capacity (MW)
(a) Mini hydro projects X 8 31.475
(b) Solar PV x 3 2.5+1.5+0.4
(c) Biomass (wood waste) x 1 0.50
(d) Bagasse x 3 96.3
Existing Dam sites with Mini Hydro Potential
Proposed Dam sites with Mini Hydro Potential
Existing Large Hydro Site
Exiting Large Hydro Potential Site
Proposed Mini Hydro Runoff river schemes Potential
Area with Micro hydro potential (Runoff river schemes)
• Located on the Zambezi River across the boundary between Zambia and Zimbabwe
• Potential to make Zambia and Zimbabwe net exporters of power across the SADC region.
• Worth an estimated US$4 billion and expected to produce 2 400 MW of power
• Involves the construction of a dam wall and two power plants
a. Legal and regulatory framework developed to support PPPs e.g. Energy Act, Electricity Act, Petroleum Act, and various Statutory Instruments including the Joint Venture Act.
b. Policies that support PPP in the Energy Sector e.g. Energy Policy, IPP Policy, Renewable Energy Policy; Biofuels Policy, and the establishment of an independent regulator (ZERA).
c. National Integrated Energy Resources Plan and IPP Policy being developed to promote competitive procurement framework in order to attract more private players by Dec 2018.
d. Regulator promoting cost reflective tariffs to ensure adequate revenue and credit enhancements of offtaker
e. Incentives put up by government for investors in the energy sector – tax holidays, national project status (duty exemption)- Finance act amended
f. Local, regional and international institutions welcome to provide long term finance for infrastructure projects – new interest by local banks , IDBZ, insurance
•Increased demand of liquid fuels • Growing vehicular population • Urbanisation and mechanisation of productive sectors • Construction of Beit-Bridge Chirundu highway as
North-South Corridor •Increased uptake of LPG as clean fuel •Biofuels production- ethanol(2) & biodiesel •Potential to be a regional hub for fuel distribution [refinery, pipeline, bulk storage]
•Coal or CBM – potential for gas to liquid fuel production
•Lithium – energy storage battery (electric vehicles)
OPPORTUNITIES IN THE FUEL SECTOR
4. MARKET ENTRY LICENSING AND REGULATORY CRITERIA FOR NEW INVESTORS
• Unsolicited Bids-still being accepted with development of Competitive Bidding Framework in progress
• Project developer obtains letter of no objection from Government and approvals from ZIA
• ZERA issues a licence on submission of : • Pre-feasibility • Grid Impact Assessment • EIA prospectus report • Evidence of water/land use/fuel source/rights • Background check of developer/EPC/Funding partner
Licence issued based on conditions: •EIA completion •Full bankable feasibility study •Approved Off taker/PPA by ZERA •Financial closure •Full project implementation to commissioning
•Monitoring of implementation by regulatory authority
5. NEXT STEP FOR INVESTORS
• Zimbabwe’s primary energy demand is projected to reach 5500MW by 2030 - in response to economic growth projection (3.4%) even higher as Zimbabwe works towards reaching middle income status by same period – agriculture and mining value chains
• Energy related laws and regulatory framework- • Energy Regulatory Authority Act; • Electricity Act and; • Petroleum Act and • related regulatio