Finding Reliable Power Supply

for the

Erongo Region

Arandis Investment Conference

PI Shilamba

MD: NamPower

4 November 2011

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Content

1. Supply and Demand in Namibia

2. Challenges

3. Update on Projects

Successfully Concluded

Under Construction

In Feasibility

4. NamPower’s focus

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Supply & Demand Situation

Installed generation capacity of 414 MW (Including Anixas)

increase with 92 MW by March 2012 (Ruacana Unit 4)

Transmission Network connected to

Botswana and RSA

Zambia connected via Caprivi Link and providing alternative route to Zimbabwe, DRC

and Mozambique

Maximum Demand of 511 MW (incl. Skorpion 580 MW) – Jun 2011

Imports up to 80% of energy requirements in some periods

Demand growth 2011

Energy (MWh) = 3.7% (forecast 2012 : 4.4%)

Peak demand (MW) = 3.5% (forecast 2012 : 4.6%)

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4

SAPP Trading Partners

Utility Agreements Duration Capacity

ESKOM Supplementary Power Supply Agreement

Year on year Varies according to requirements

ESKOM Bilateral PS Agreement 15 yrs (signed 2006) Varies according to availability

EDM (Mozambique)

Power Supply Agreement Renewable (non-firm) 40 MW

ZESA (Zimbabwe)

Power Supply Agreement 5 years (commencing 2008) 150 MW (firm)

ZESCO (Zambia)

Power Purchase Agreement 10 years (signed 2009) 100 MW (50 MW firm)

SNEL (DRC)

Power Purchase Agreement(Head of Terms signed)

5 years (signed 2008) 50 MW

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Challenges for the next 5-7 years

Same as SAPP Challenges

General energy shortage

High Demand growth & step loads

Rural Electrification (New connections)

Shortage of resources (HR and Financial)

Struggle to agree electricity pricing path to reflect cost of new build requirements

Little private investment into the Power Sector

The process of ensuring security of supply has been getting steadily harder

for several years, but it has not been obvious because NamPower has been

effective in dealing with it up to now.

Approaches used successfully to date must now be augmented by new activities

Short Term Critical Supply Project (STCS)

Any base load power station for commissioning only by 2015/2016 Power supply deficit of 80 MW as from the 2012 winter, increasing to 300 MW by

2015.

Worsened by expiry of ZESA agreement in 2013

A dedicated team appointed to the project Solutions will include one or a combination of the following:

New power purchase agreements with SAPP trading partners

New renewable and PPA with renewable IPP’s

Increased DSM programs

Upgrading of existing plants

PPA’s with other IPP (Arandis Power)

Final project plan expected by Dec 2011

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Critical to implement base load power plant

Capacity constraint due to absence of any new base-load plant

A base-load power station is essential by January 2016

Not many indigenous large plant option available Guidelines: Energy White Paper => Serve 75% of energy and 100% peak

All base-load plants have Forex components that need to be accounted for

Electricity Tariffs Recent average tariffs increase of 18.28%

Upcoming capital investment of up to N$14 billion over the next 4 to 5 years

It is estimated that the cost of supply to NamPower in 2015/16 can double to

N$1,00/kwh compared to the current levels of 45c/kwh

Need for GRN, ECB and NamPower to agree on a smooth upward pricing path with

the view to avoid future price shocks, especially when a base-load power station will

be commissioned by 2016

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Operation:Hwange, DSM, Caprivi Link,

Anixas

Feasibility:LOHEPS, Recycled fuel,

Erongo Coal, Baynes, Kudu Gas, Wind, Solar PV, Zizabona, Biomass, Van Eck Rehabilitation

Implementation:4th Unit Ruacana

Conceptualization:Nuclear,

Municipal Waste, CSP

Investigation:Wave EnergyP

ROJECT

FUNNEL

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Hwange Investment

PPA (150 MW) effective as from 2008

A good example of regional cooperation

Project declared “Power Deal of the Year“ - 2010 Africa Investors: Infrastructure

Investment Awards

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Caprivi Link Interconnector

Second largest investment in Namibia (NAD 3,2 billion) Project completed below budget 300 MW transfer capacity: completed June 2010 with official commissioning on

12 November 2010 Opportunity to implement phase 2 (additional 300 MW) Africa Energy Award for “Best Fast Track Energy Project”

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Anixas

22.5 MW Diesel Generators at Walvis Bay

Project cost N$ 375 million

NAD 250 million grant from GRN

NAD 125 million from NamPower balance sheet

Additional land adjacent to Paratus to build Anixas

and new Transmission Station

Design Philosophy to allow for future extensions

COD - 21 July 2011

Official inauguration 03 November 2011

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Installation of a 4th unit at Ruacana Hydro Power Station

Increase capacity with 92 MW

Project Cost NAD 750 million

Project Dates:

Commencement date was 27 March 2009

Work on site commenced during July 2010

Commercial operation is expected first quarter of 2012

4th Unit Ruacana

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Erongo Coal Power Station

Establishment of a coal fired power station in the Erongo region has

been identified as part of NamPower’s Security of Supply plan

NamPower seriously in consideration of this option as it can be fast

tracked

Medium sized capacity (150 to 300) MW)

Modular development

allowing phased developments

up to 800 MW

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Progress and timelines required

Project definition to be confirmed by Jan 2012

EIA Scoping to be concluded and Technical concept confirmed (including

environmental mitigation requirements)

Coal options confirmed and Coal value chain optimised

Land procurement started

Water supply solution determined

Indicative costing (+- 25%) of complete project (power station, transmission, other

infrastructure)

Indicative project schedule to implement complete project

Ready to start Tender/procurement process – April 2012

Final investment decision - June 2012

With good governance support Commercial Operation possible by 2015

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NamPower 16

Critical Considerations

Fast track options

Clean Coal Technology selection to allow fuel flexibility

Coal sourcing options and cost

Coal handling capacity at Walvis Bay port

Land Availability and timing to procure

Water availability and supply options

Proximity to existing infrastructure necessary to keep cost down

Infrastructure (road, rail, transmission grid, water supply etc)

Economic environment (incl. tourism and sustainable development plans of region/towns)

Environmental issues such as protected areas and biodiversity

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Environment and Site Selection

ESEIA study completed in June 2009, now update of study required: Sites considered and evaluated through a comparative Multi Decision

Making Criteria Model considering technical, biophysical and socio-economic issues: Close to Walvis behind Dune 7

North of Swakop

Site East of Arandis

Site West of Arandis

Outcome of evaluation: Site East of Arandis ranked as most preferred

Other Generation Projects

Kudu Gas NamPower mandated to develop power station in terms of

the 2004 Cabinet resolution

Promising,cooperation with upstream parties, favourable

gas price

Strong interest from Eskom and CEC

Well researched data available

FID expected by middle 2012

Baynes Hydro 500 MW mid-merit/peaking Power Station on Kunene River

Techno-economic and EIA studies underway, to be

completed by the end of 2011

Political will from both parties to expedite project

Coordinated by the governments of Angola and Namibia

through the PJTC

Could be commissioning by 2018

Renewable Power

Wind Diaz Power - +/-44MW at Luderitz

Innowind – +/-50MW at Walvis Bay

Large Solar PV 3 x +/-10MW throughout Namibia

Small Solar PV connected to grid (Net-metering) Discussions ongoing with ECB on integration of such systems

Medium Solar PV Hybrid Systems Tsumkwe recently commissioned

Lessons learned will be implemented on next project

Biomass (Invader Bush) Draft Feasibility study to be concluded end 2011

Harvesting of woodchips

Transport and/or on-site processing e.g. Torrefaction process

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West Coast Developments

Concluded Add capacitor banks at Omburu Substation as required during certain operating

conditions

2nd Omburu-Khan 220kV required for contingency constraint

220kV Khan-Trekkopje and 132kV Trekkopje-Wlotzka Baken development

Planned Kuiseb Substation upgrade to 220/132kV (current 220/66kV)

Provide for upgrades to customers in area (Walvis Bay, mining, wind farms)

Timing determined by first customer upgrade (Walvis Bay 2012/3)

220kV Khan-Kuiseb link

System strengthening and supply to proposed uranium mines Timing determined by customer development (Husab 2014)

In Tendering Phase Replace old 220kV line between Rössing and Walmund with 220kV double circuit

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NamPower’s Objectives and priorities

Next 4 years

Commissioning of a base load power station

Successful management of the short term critical power supply situation

Increased contribution to rural electrification

Improvement of Corporate social responsibility

Continuation of internal productivity and efficiency measures

This financial year (2011/12)

Keep lights on through out the year (no load shedding)

Investment decision on a base load power plant

PPA with IPP’s (wind, solar PV, HFO/slop)

Tariffs to reflect Cost of Supply

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NAMPOWER

Thank you

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