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POWER UTILITY DEVELOPMENT IN

AFRICA.
WITH LESSONS FOR KENYA POWER

GROUP 1
ADRIAN ONSARE.
HUSNI MUBARAK.
JAMES WASULA.
JOSHUA OTIENO.
STEPHEN MUSUNGU.
OBJECTIVES

DEFINITIONS.
ENERGY & DEVELOPMENT BRIEF.
ELECTRICITY IN SSA-A BRIEF.
INTRODUCTION TO THE ENERGY VALUE CHAIN.
CASE STUDIES: STUDY OF UTILITIES IN THE FOLLOWING
COUNTRIES & RELEVANT LESSONS.
DEMOCRATIC REPUBLIC OF THE CONGO.
NIGERIA.
SOUTH AFRICA.
DEFINITIONS.

Energy: Power Derived From The Utilization Of Physical Or Chemical Resources, Especially To
Provide Light And Heat Or To Work Machines.
Spinning Reserve: The Extra Generating Capacity That Is Available By Increasing The Power
Output Of Generators That Are Already Connected To The Power System.
SSA: Sub-Saharan Africa.
Value Chain: Process Of Linking Functions From Input Through Output To Delivery, Enhancing
Economic Value Of Product.
THE ENERGY & DEVELOPMENT
ENERGY &DEVELOPMENT CTD.. Generally, countries with high energy consumption per capita
tend to have high GDP.
Energy consumption cannot be decoupled from GDP.
African Countries generally have low GDP per capita and
associated low energy use in Tonnes of oil equivalent per
Capita.
Countries with high populations, but with relatively low
energy consumption also have comparatively low GDP per
Capita, as compared to countries wit high population and
high energy consumption per capita. E.g. India vs USA.

Source: https://www.eea.europa.eu
Source:http:WWW.euanmearns.com
ELECTRICITY IN SSA-BRIEF
All economies are anchored on two primary infrastructure developments, namely
power and transport.
Without proper development of these two industries, further investment into
secondary infrastructure (education, health, housing etc.) ALWAYS struggle to
materialise.
Power one of main areas of concern for the sub-Saharan region across all aspects of
the economic value chain.
Despite SSA installed capacity of approximately 70GW, at least 25% of this is
unavailable due to poor infrastructure and maintenance.
Challenges, trends and developments in SSA region

The energy trilemma: Electricity supply should be secure, sustainable &


affordable.
Upgrading, refurbishing and process optimisation of existing power infrastructure
assets i.e. Cathedral s/s upgrade, Juja s/s upgrade to gis.
Building of new power infrastructure assets i.e. 400KV Suswa-Embakasi
line,500KV HVDC Ethiopia link, GIS substations in Kenya.
South Africa's Renewable Energy Independent Power Producer Procurement
Programme (REIPPPP) , Kenya renewable energy PPA programme.
Nigerian electricity industry privatisation .
World bank estimate of short-term need for power is in the region of a
further 70GW.
Investment of between USD120 billion and USD160 billion required per
annum in order to provide electricity access to the entire Sub-Saharan region
by 2030.
The lack of power infrastructure is a bottleneck to growth in the region and is
an urgent problem which needs to be addressed.
More than 30 African countries experiencing power shortages leading to
either expensive short-term fixes or power blackouts.
The economic cost of such power shortages can amount to more than two
percent of GDP. (Scott Et Al,2016).
THE ENERGY VALUE CHAIN.
ENERGY VALUE CHAIN ELEMENTS.
Energy sources: first element of energy value chain.
Diversified energy resource base enhances energy security.
Kenya has sough to reduce overreliance on hydro, with significant investment in
geothermal & wind so as to diversify energy mix.

Generation:
In many ssa countries, generation does not meet demand, hence there is more
investment in generation projects.
Investment is meant to address current shortfall and projected growth in demand.
In many ssa countries, increased installed capacities do not necessarily translate to
increased actual generation mostly due to deployment of inefficient technologies.
In isolation, bumping up generation does not solve all problems in the power
sector
Energy storage: not popular in large scale in ssa since reserve margin is still very low. E.G.
Kenya is approx. 28-30%.
However, with uptake of renewable energy technologies, storage may be necessary to mitigate
intermittency of solar/wind.
Energy trading:
As mentioned, lack of diversified generation mix is major challenge in ssa.
Energy trading would open up opportunities for generation resource sharing.
Generation resource sharing would result in a diversity in the energy mix & reduce reserve
requirements.
Europe has the European energy exchange; this is an avenue for trading of physical energy
commodities and derivatives trading.
SSA however, only has power pools, which are a series of bilateral agreements between countries.
I.E. East African power pool(EAPP), west African power pool(WAPP), southern Africa power
pool(SAPP),Central African power pool(CAPP).
SAPP most advanced.
Main shortcomings of power pools are conflicting national policies & need for significant
investment in transmission infrastructure.
Trade on power pools currently minimal- less than 1% for EAPP, less than 7% for SAPP.
ENERGY VALUE CHAIN CTD..
TRANSMISSION:
Has to be developed along with generation and load growth.
Increasing demand in Kenya & other SSA countries has necessitated.
Increased development of high capacity transmission line infrastructure to
evacuate power from large generation, improve reliability, enhance power trade
in power pools, and reduce overloading of exiting transmission lines.
DISTRIBUTION:
Distribution infrastructure direct correlation to electrification rates.
Most affected by faults, breakdowns, vandalism.
Most ssa countries have high aggregate technical, commercial & collection losses.
In ssa countries, distribution losses exceed north American & European average of 8%.
Kenya currently undertaking intensive rural electrification programed through expanding distribution network.
Tariff structure a key comment in distribution
High tariffs can lead to cost push inflation.
Low power tariffs can make it difficult for utility companies to maintain infrastructure.

SMART TECHNOLOGIES:
Mainly smart grids and smart metering.
Important in determining accurate consumer energy consumption & to find optimum deployment of generation sources.
Issues non-cost reflective tariffs, billing errors and tampering of prepaid electricity meters
DEMOCRATIC REPUBLIC OF THE CONGO
Power Sector Regulatory Environment

Ministry of Mines,Energy and Hydrocarbons


Organizations Responsible Regulation Authrority(ARE)
for Energy Policy

National National Renewable Energies Service(SENEN).
National Electrification Agency(AGENA).

Energy regulator The National Energy Commission.


The General Atomic Energy Commission(CGEA).

Main entities in the Electricity Societe Nationale delecricite(SNEL.


Generation Market

Main entities in the Electricity Societe Nationale delecricite(SNEL).


Transmission Market

Main entities in the Electricity Societe Nationale delecricite(SNEL).


Distribution Market
POWER SECTOR BRIEF- DRC

SOCIT NATIONALE DLECTRICIT (SNEL) IS THE ONLY POWER UTILITY


Highest Hydro Potential In The SSA Region :
Accounts For 35% Of The Potential In Africa And 8% In The World.
Hydropower Currently 99% Of The Countrys Total Generation Mix.
Due To High Hydro Potential Significant Focus On Developing Hydroelectric Power
Facilities Going Forward In Order To Make The Country One Of The Major Hydropower
Exporters In The SSA Region.

Utilizes About 2% Of Its Significant Hydroelectric Resources From The Congo River;
Whose Estimated Capacity Is 100GW.
Project underway to build USD80B Grand Hydroelectric Power Plant Inga dam; at
40GW, will be largest hydro power facility in the world.
ENERGY VALUE CHAIN CHALLENGES.

CHALLENGES:
Challenges across the entire value chain. These include:
Lack Of Power Supply To Meet Current Power Demands- Despite underutilized hydo resource.
Lack Of Funding And Financial Support From The Government.
Access To Electricity In The DRC Is Extremely Low At 9% Per Year.
The DRC has one of the longest transmission line sin the world-The 1,700km Inga- Kolwezi Transmission Line.
In 2014 There Was A Refurbishment Of The Transmission Line To Improve Its Operating Capacity From Its
Previous Level of 25%.
Low Per Capita Energy consumption.
DRC CHALLENGES & LESSONS FOR KENYA

Billing collection rates around 40% mark in recent years and the hidden costs in power generation
for the company stand at nearly 600%, due to gross financial inefficiencies.
Inadequate specialized labor force.
LESSONS.
KENYA Power would need to restructure revenue protection methods so as to secure turnover.
Kenya Power should speed up power distribution; energy consumption leads to economic growth, which
in turn leads to increased revenues for the utility.
Kenya Power to retain sharp focus on training & development in order to avoid a skills gap.
Kenya Power to lobby so that tariffs are cost reflective and to improve the rate of recovery of electricity
invoices.
NIGERIA
THE POWER SECTOR STORY

NIGERIA KENYA
Power Sector Regulatory Environment

Federal Ministry of Power


Organizations Responsible Rural Electrification Agency.
for Energy Policy

Energy Commission of Nigeria.
Nigeria Electricity Liability Management Company Limited.

Energy regulator Nigerian Electricity Regulatory Commission.(NERC)

Main entities in the Electricity National Integrated Power Project(NIPP).


Generation Market

Main entities in the Electricity Transmission Company of Nigeria(TCN), National Integrated Power Projects.
Transmission Market

Main entities in the Electricity Nigerian Bulk Trading Agency(NBET).


Distribution Market
PRIVATISATION POLICY

GENERATION TRANSMISSION DISTRIBUTION


6 privatised generation companies 100% Government owned by the Privatised.
Transmission Company of Nigeria (TCN) 11 distribution companies situated across
10 National Integrated Power Project Management contract awarded to a utility the country.
(NIPP) generation companies 40 and asset management company
independent power producers. Allocation of national power to distribution
companies is proportionate to the customer
base served.
THE PRIVATISATION STORY.
Privatization of the sectors assets was meant to attract funding.
However capital investment by stakeholders in the sector has been limited by:
The size of the local banks which are the dominant lenders to the sector;
The low tariff approved by the regulators resulting in lower than expect projected cash flows for the
assets new owners;
New corporations encumbered by inherited liabilities.
Formed NELMCO to manage liabilities and stranded assets in the transitional Nigerian electricity market.
The lack of liquidity due to high receivables by the distribution companies; and
The crash in crude oil revenue to the government which acts as the lender of last resort.
NIGERIAN ENERGY VALUE CHAIN-CHALLENGES
1. High Value Chain Losses.
CHALLENGES CTD

Limited transmission coverage:


Only government owned segment of power chain.
TCN has final word on infrastructure development & expansion, but it it managed & operated by a private
contractor
Mostly 300kv circuits.
Covers about 40% of country.

Supply disruptions.
Mostly due to activities by militant groups such as MEND, Boko Haram.

Theft & corruption.


No sophisticated tracking systems to pinpoint illegal connections
Electricity theft reduces profits for discos and limits available electricity for paying customers.
Rampant corruption in revenue collections, which are largely manual..
NIGERIAS GAPS AND LESSONS FOR KENYA
Installed capacity improvement-
Nigeria: 32.6gw of projects underway.
Gaps still prominent.
Kenya: should be keen on boosting generation thro PPP projects i.e. Coal power project, distributed
generation projects, onshore wind, geothermal ; to meet expected demand in kwh/capita.

Capacity utilization improvement:-


A more diversified generation mix improves capacity utilization.
Nigerias generation is mostly thermal based. It needs to diversify to other sources and increase
interconnection to power pools with better diversification.
Kenya: generation mix is more elaborate, but room for improvement.
GAPS & LESSONS CTD.

August 2016,Kenya power and Toshiba Transmission & Distribution Systems (India) pvt ltd (TTDI),
MOU for implementation pilot project aimed at decreasing distribution losses in the national grid.
Supply of gas Insulated Transformers to fight vandalism.
Supply of environment-friendly Solid Insulated Switchgear.
SOUTH AFRICA
SOUTH AFRICA

KENYA
Power Sector Regulatory Environment

Organizations Responsible Department of Energy.


for Energy Policy

National Energy Regulator of South Africa.


Energy regulator National Nuclear Regulator.

Main entities in the Electricity Eskom, with IPPS becoming more prominent.
Generation Market

Main entities in the Electricity Eskom.


Transmission Market

Main entities in the Electricity Eskom


Distribution Market Local Municipalities.
GENERATION TRANSMISSION DISTRIBUTION
Eskom Eskom Eskom
Local Municipalities.
SOUTH AFRICA POWER SECTOR-BRIEF.
Dominant Player is Eskom, a public utility Company which generates 93% of the countrys energy,
transmits it a& Shares distribution with local municipalities.
Eskom is 7th largest Power utility company in the world in terms of installed capacity.
With installed capacity of 48.8GW makes up approx. 70% of SSAs total installed capacity.
Energy Sources: Coal is the dominant resource.

2%
5%
1%
Coal
Nuclear
Hydro
Renewables

92%
ENERGY VALUE CHAIN CHALLENGES & SOLUTIONS
GENERATION:
PROBLEM
A botched privatization plan of Eskom by SA government; policy framework
prevented Eskom building new power plants.
Resulted in In 2007, reserve margin fell to less than 8% of installed capacity
Peak Demand at times overshot available generation, therefore causing rolling
blackouts and scheduled load shedding
Load shedding intense from 2008-2015
Recall Energy trilemma( Security, affordability, sustainability).
Overreliance on coal-A non Renewable Resource.
SOLUTION.
Amid Funding, labour & Technical Challenges, South Africa had to rapidly increase generation
while also improving generation mix.
Key Projects : Medupi Coal Fired 4,764mW,Kusile Coal Fired Plant 4,800mW
This change in generation mix is largely driven by IPPS; especially renewable energy thro
Renewable Energy Independent Power Power Producers(REIPPs) together with Coal, Gas, Cogen &
Nuclear IPP programmes.
LESSONS FOR KENYA.

Need for accurate power system planning.


Kenya should prioritize power regeneration technologies with bulk power capabilities and
good economies of scale. E.g Nuclear, Coal.
Kenya Power must push for stringent capacity utilization by KenGen & IPPs to ensure peak
availability as new generation projects are ongoing.
There should be schedule refurbishment of old power plants, to prevent total collapse.
Policy framework for unbundling of Kenya Power Utilities should keep pace with growing
demand considerations.
Proper tariff control: To ensure healthy balance sheets for Kenyan Utility companies; money
needed for new projects.
An effective labour relations framework should be in place to avoid labour crises during
critical times.
LESSONS FOR KENYA-TRANSMISSION & DISTRIBUTION.
CHALLENGES.
South Africa current electrification rate is 85%.
Rural Electrification is however far lower.
There also has been significant load shedding mainly due to ageing transmission & distribution
Infrastructure.
Peak Power shortages have also been a challenge in the past.
SOLUTIONS.
Pumped Storage Plant at Ingula (1332mW), to take care of peak loads.
Major inter-regional transmission project i.e. Mozambique-Zimbabwe-South Africa (MOZISA)
transmission project.
Securing of a USD180 million loan to fund power lines that can transmit 670mW and transform 500mw
of renewable energy generation.
TRANSMISSION & DISTRIBUTION-LESSONS FOR KENYA.

Reviewing of plans to uprate major transmission lines.


Faster consolidation of EAPP projects.
SA Aggregated Financial & Technical Losses are at 9%, well below
Kenyas average 18%-19%
Better distribution of generation plants closer to major load centers to reduce
technical losses.

R&D in bulk power storage to address peak loads as demand grows. E.g.
pumped storage, compressed air storage etc.
Stringent quality control in rural electrification initiatives.
THE END
Resources
KPMG-Sub-Saharan-Africa-Power-Outlook- Scott, Lindfeld, Martin, Pitso & Engelbrecht,2016
Powering Nigeria for the future (PWC report)- Wijeratne ,Jaswal,Sircar & Pasemann,July 2016.
Http://www.Fin24.Com/economy/eskom/eskoms-new-challenge-is-distribution-koko-20170207
Http://www.Infrastructurene.Ws/2013/09/17/the-lessons-eskom-learnt-the-hard-way/