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Regional Electricity Market More Appetising Than Domestic Supply … Low commercial incentives cited for limited interest


By: Nghiinomenwa-vali Erastus and Hertha Ekandjo
Many electricity producers under the Modified Single Buyer Market have raised strong interest to sell their locally produced electricity to outside markets, notably through the Southern Africa Power Pool.
This was revealed by Nampower at the Southern Africa Power Pool (SAPP) and Modified Single Buyer Market (MSB) Market Access Conference in Windhoek on Monday.
In a statement read on his behalf, the company’s Managing DirectorKahenge Simson Haulofu indicated that there is over 1GW in electricity export licences and more than 600MW of export transmission connection applications applied for or issued.
Haulofu said this has created the proverbial “burning platform” with which everyone (from the regulator, the Energy Ministry, and NamPower to SAPP) “is grappling as we navigate the evolving landscape of Namibia’s energy market reform”.
This is despite Namibia’s power deficit of 395MW.
“There has been a decline in interest in the local energy market, the Modified Single buyer (MSB Market), while at the same time, there is a strong interest to export locally produced energy, especially to the SAPP,” the Managing Director said.
The revelation also comes at the time when about 45% of Namibians have no access to electricity, according to the Ministry of Mines of Energy, which could also increase the demand as they get connected.
Furthermore, as described in the National Integrated Resource Plan (NIRP), the country set itself the goal of bringing the current rate of electricity imports down from 70% to 30% by 2028.
In responding to why the independent power producers are opting for the regional market through the SAPP, Electricity Control Board (ECB) manager for regulation, the General Manager for Economic Regulation at Electricity Control Board, Pineas Mutota attributed it to commercial incentives.
Mutota said the huge demand at the regional level has pushed prices at the regional exchange board compared to the local small market.
He added that the government has given the green light for the utilisation of local renewable energy for the benefit of the region as it implements its own NIRP.
Nampower has also highlighted that despite the evolving space, as a key player in the generation, transmission, and trading space, “we have to transition responsibly”.
The Nampower MD said, “The need for additional and local generation capacity cannot be overstated”.
The utility’s chief added that while the energy market now welcomes bilateral transactions and exports from new market participants, NamPower will continue to play a critical role in the electricity sector.
The company assured that they will champion the introduction and procurement of new supply sources and steadfastly act as the Supplier of the Last Resort.
The MSB Market Model is a paradigm shift, within the electricity supply industry not only in Namibia but the whole of the Southern Africa region.
The MSB Market Model opened the electricity supply industry to establish a level playing field for various industry players.
The main purpose of opening the market is to allow competition in the market which is believed will lead to lower tariffs, increase local generation capacity, encourage private sector investment in generation, and reduce the funding burden from the government, amongst others.
The model is now in Phase 1 B of implementation.
The Chief Executive Officer of the Electricity Control Board (ECB)Roberth Kahimise, at the same event, stated that they are convinced that an increased role and level playing field for the market participants is precisely what will help drive the competition.
Consequently, the competition in the sector will deliver better value for consumers and businesses as the shift towards the MSB will result in an increased number of market participants, and subsequently the increased market complexity, he said.
Kahimise stated that the country is presented with a unique opportunity to not only meet its energy demands but to revolutionise its approach, while at the same time exporting much-needed power to the region.
He said the ripple effects of a robust electricity market extend beyond industry-specific domains.
“A reliable power supply facilitates infrastructure development, paving the way for government, public and private sector industries to expand services,” Kahimise said.
He said this, in turn, attracts foreign investment, as well as domestic entrepreneurs, who see Namibia as a land of opportunity, a conducive environment to establish and expand their businesses.
The Minister of Mines and Energy Tom Alweendo, who is heading the policymaking in the sector, has also supported the liberalisation of the sector, saying the goal is to increase access to electricity.
Alweendo also acknowledged the country’s electrification backlog.
“With a present electricity rate of 72% in urban areas but merely 35% in rural parts of our country, we still have a way ahead of us to reach universal access in Namibia by 2040,” he stated.
He explained that the country’s vast natural resources for renewable energy generation will be key in providing not only Namibia but also other Southern African countries with reliable, affordable and environmentally sound electricity.
Alweendo assured that it is his ministry’s mission to develop policies and legislation that unlock the electricity industry’s potential ensuring the smooth operation of the system.
The Minister said liberalisation and cross-border expansion of the country’s power market will pave the way for a greater share of decentralised renewable energy in our mix.
Locally, the MSB allows certain electricity consumers and Independent Power Producers to transact with each other directly for the supply of a certain portion of their electricity requirements.
Under the MSB, all transmission-connected customers such as Regional Electricity Distributors (REDs), local authorities in non-REDs areas, mines, and large distribution-connected customers are allowed to buy a portion of their electricity from local IPPs.
At a cross-border level, the MSB also allows for IPPs to be set up in Namibia specifically for electricity export purposes.
So far there are 22 IPPs with a total of 162MW installed capacity and 70MW of Net Metering installations, who are already generating renewable energy through wind and solar in Namibia today.
This highlights a growth of 80% over the last five years.
The widened access to both the MSB and SAPP markets is expected to trigger even steeper growth. Email:

Nghiinomenwa-vali Erastus

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