Renewable Energy Policy boon for investment in power sector

Renewable energy sources are those which can be used and get replenished without causing any damage to the environment or ecosystem.

ZIMBABWE has faced power outages, with various companies now turning to diesel generators as an alternative to remain operational. Our business reporter Freeman Makopa (FM) caught up with the permanent secretary in the Ministry of Energy and Power Development Gloria Magombo (GM), for an update on developments in the sector. Below are the excerpts of the interview:

FM: Do we have any new investments in renewables, if there are, please tell us a bit about them and how much has been invested? How much has been invested in oil and gas? GM: Renewable energy sources are those which can be used and get replenished without causing any damage to the environment or ecosystem. Oil and gas are non-renewable energy sources. However, to respond to your question on investments in oil and gas, the Government of Zimbabwe through its investment drive has engaged the private sector to invest in the exploration of the oil and gas resources in the Muzarabani area, which is in progress.

Further explorations are also expected to be conducted along the Lupane-Hwange basin, which is known to have significant coal bed methane gas deposits. Oil and gas are considered as mineral resources and as such the explorations are coordinated under the Ministry of Mines and Mining Development which also issues special grants to investors.

The Ministry has ongoing investments through National Oil Infrastructure Company (Noic) in the construction of LPG storage facilities with a capacity of 2 000 metric tonnes (mt) in Ruwa. The liquefied petroleum gas (LPG) storage and handling project was initiated to handle strategic reserves to ensure security of supply of LPG and stabilise prices on the market.

The project is being done in phases with the first phase of 500mt being expected to be commissioned by the first quarter of 2023 at an estimated cost of US$10,5 million. This facility will provide additional storage that will be adequate to supply the local market requirements and create buffer stocks to avoid intermittent price shocks as well as shortages.

FM: What about the infrastructure development in the sector? GM: Other infrastructure projects that the government is embarking on include the expansion of the existing pipeline to increase its throughput from 2,19 billion to three billion litres per annum under Phase 1. The Phase I project is expected to be completed next year at an estimated cost of US$15 million for the Zimbabwe portion of the line.

The pipeline expansion project will help implement the strategy to convert Msasa Depot into a regional inland hub for fuel distribution with other Sadc countries, including Zambia, Democratic Republic of Congo (DRC) and Botswana. The initial phase will enable trucks and rail wagons to pick fuel products from Ferruka or Harare and in the long term have pipelines constructed to Chirundu and Bulawayo.

In order to allow for consistent blending of petrol with ethanol, Noic is constructing two storage tanks with a combined capacity of six million litres at its Mabvuku depot which is expected to be completed soon. The cost for this project is estimated at US$9,5 million.

Through private and public sector investments, a number of fuel retail outlets have been constructed throughout the country. The number of service stations has increased from 229 in 2012 to 882 in 2021. A number of sites have also been established this year improving access and competition within the sector.

FM: How much power is Zimbabwe seeking to import this year? GM: Zimbabwe imports electricity from regional utilities (Eskom of South Africa, EDM and HCB of Mozambique and Zesco of Zambia) to augment its internal generation capacity. With a maximum demand of between 1 700MW to 1 850MW against an internal generation capacity of 1 400MW, the country imports between 200MW and 450MW to meet this deficit.

The imports are, however, on a firm and non-firm basis and also depend on the level of internal systems demand and status/availability of generation units especially at Hwange Power Station.

During off-peak periods when demand is low, some units at Kariba Power Station (peaking power plant) are shut down and at this time no imports will be required.

Currently, Zimbabwe has existing Power Purchase Agreements (PPA), which are as follows: Zesco, 100MW firm; Eskom, 50MW firm; and HCB, 50MW firm capacity and EDM, 50MW. The utility also has non-firm contracts which go up to 450MW mainly during off peak and when excess capacity is available from the likes of Eskom.

Outside the existing PPAs, additional power is obtained through the SAPP Energy Market namely the intra-day market, day-ahead-market, forward physical markets, weekly/monthly markets where utilities place advance bids indicating their power requirements whilst those with excess also indicate capacity they will have available to offer.

Given that Zimbabwe has ongoing generation expansion projects, which are expected to be commissioned before the end of 2022, the level of imports are expected to go down initially upon commissioning of such projects, which include Hwange Expansion and various IPP projects under construction.

However, it is important to note that as the economy is growing, the demand will continue to grow and plans are in place to build new capacity, including large hydro on the Zambezi basin and more solar and wind which will include storage in future.

FM: Do you have any policies in place to attract investors into power generation? GM: Yes, we do. Zimbabwe through the Electricity Act (13:19) of 2002, allows for the private sector participation in electricity generation and also provides for the establishment of the electricity regulator, now Zera.

As a result of the law, the number of private companies venturing into electricity generation has increased and the regulator (Zera) has since licenced a total capacity of more than 5 000MW. There are currently a number of solar projects, which have been commissioned and others are at various stages of development as either independent power producers or for own consumption with excess being sent to the grid.

In order to boost investment in the electricity generation, the ministry developed the Renewable Energy Policy, which has its own milestones and timelines. To this end, government adopted several incentives, including the following:

National project status and tax incentives for renewable projects;

Development of the Government Implementation Agreement (GIA);

Prescribed Asset Status;

Viability gap funding for off-grid projects with Ministry of Finance and Economic Development;

Third party grid access;

Reduced licensing fees and requirements for developers of renewable energy projects; and

Duty rebate on renewable energy equipment.

Through the Zimbabwe Investment and Development Agency (Zida), the country’s one-stop investment centre, several investment incentives have also been adopted to encourage investment in the sector.

The targeted investments include partnerships with locals to build new plants, assemble and or manufacture of renewable energy equipment, battery storage systems, solar water heaters and other new technologies locally. This will help create new industries and technology transfer.

Our innovation hubs are also looking into this area and through continuous collaboration and research. We believe that apart from new capacity being built in Zimbabwe in the long-term, we are looking at manufacturing and assembly plants which will supply the region.

FM: Zimbabwe is a signatory to the Paris Agreement and has promised to reduce its greenhouse emissions by 33% by 2030, how far are you with that and is the target feasible? GM: Zimbabwe’s revised NDC target is at 40% per capita emissions reduction across all sectors of the economy below the projected business as usual scenario by 2030 relative to the baseline emission figure of 2017.

The energy sector contributes about 37,71% of the total GHG emissions through thermal power generation, followed by residential (19,08%), road transportation (15,48%) and agriculture (13,84%).

In line with the sect targets the sector has managed to introduce two key policies to drive the implementation of renewable energy projects and programmes, namely the Renewable Energy Policy and biofuels policy documents of 2019. These policies have clear targets, including the contribution of renewable energy in the energy mix to 16,5% (1 100MW) by 2025.

To this end, the following are part of the initiatives that have been adopted towards meeting the NDC targets in the energy sector:

Reduced transmission and distribution losses from 18% in 2020 to 14% in 2025 — ZETDC has embarked on the process of constructing new substations and upgrading existing ones to reduce system losses. Further to this a grid re-enforcement programme is being carried out including the resuscitation of the compensation equipment, including Static Var Compensators, capacitors and reactors to improve system efficiencies.

Grid expansion projects are also being carried out at various sites including the Tokwe–Bikita line.

Expansion of solar: 300MW by 2025 to date a total capacity of more than 20MW has been installed from the following projects: Centra-grid 2MW, Solgas 5MW, Padenga 1,2MW, Tanganda 1,8MW and Riverside 2,5MW.

Over 83 customer connections, including Kefalos, Econet, Blue Swallows Lodges, Luxaflow, Schweppes, Braiden Primary School, among other customers with a combined capacity of 2,1278MW, have been commissioned under the net-metering programme.

The net metering programme is meant to connect to the grid all private and public sector consumers who have installed large systems and have excess to feed the grid during the high production periods.

Other ongoing projects which are at various stages of construction include Power Ventures, 5MW; Guruve solar, 1,3MW; Blanket Mine, 12MW; Richaw Solar, 1MW initially with capacity to supply up to 5MW; Centragrid, 23MW; Harava, 6MW, CentraWest PPC, 10MW in Bulawayo and 20MW in Gwanda.

The target of 300MW is set to be met from selected sites which will be implemented under the competitive procurement framework and other Zera-licenced projects. The World Bank study has also shown that the current grid network can accommodate more than 850MW of solar energy without special reinforcement. This could increase as more base load is commissioned at Hwange.

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