NAMIBIA'S NATIONAL INTEGRATED RESOURCE PLANTHE ECB ROLE

September 1, 2017

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DEFINITION: INTEGRATED RESOURCE PLAN (IRP)

❑ A plan to meet forecasted annual peak and commodity demand

❑ Plus an established reserve margin

❑ Combination of supply and demand side resources (existing and new)

❑ Over a specified period

❑ Objective: Evaluate and balance the expected cost and risk of alternative portfolios combined with long‐run public policy goals to choose the portfolio with the best cost‐risk combination

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THE IRP PROCESS

Source: Adapted from Regulatory Assistance Project, 2013

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IRP REQUIREMENTS

❑ Identify and evaluate all existing and new resource options to meet

policy objectives, including renewable portfolio standards, distributed

generation, energy efficiency requirements

❑ Address costs for compliance with current and projected environment regulations and electricity market conditions

❑ Lay out the method and assumptions for assessing potential resources

❑ Identify and assess risks of key drivers, such as load forecasts, costs of demand‐side management measures and power supply, and fuel prices

❑ Have a procedure for soliciting public comments

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TYPICAL CONTENTS OF AN IRP

❑ Load forecast

❑ Reserves and reliability

❑ DSM

❑ Supply options

❑ Fuel prices

❑ Environmental costs and constraints

❑ Evaluation of existing resources

❑ Time horizon

❑ Uncertainty analysis

❑ Selection of least cost plan

❑ Action Plan for implementation

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TYPICAL PROCESS FOR AN IRP

❑ Government establishes policy goals

- Fuel mix

- EE goals

- RE standards

- DG goals

- General environmental impacts (air emissions, solid waste, water needs

❑ “Responsible party/parties” develop IRP(s), engaging key stakeholders and public

❑ IRP reviewed and accepted by “responsible entity”

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THE NAMIBIA NATIONAL INTEGRATED RESOURCE PLAN (NIRP)

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RECENTLY-ADOPTED NIRP

❑ Responsibility delegated to ECB by Ministry under general provisions of Electricity Act of 2007

❑ ECB issued tender and procured consultant that resulted in IRP in late 2016

❑ IRP generally contains the elements of a typical (best practices) document

❑ Cabinet approved in mid-2017

❑ Implementation/Steering Committee recommended (in process of being established)

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NIRP BASE CASE SCENARIO (RECOMMENDATION)

❑ Secure access to short-term rental generation (120 MW diesel) by 2018 or, if available at better terms, guaranteed access to power markets for electricity imports (ESKOM).

❑ Install fossil-fuel base load generation by 2021 (about 300 MW).

❑ Continue programs to install solar PV and wind generation and further investigate the use of other renewable power technologies (about 120 MW of solar and wind in this scenario up to 2021)

Source: Namibia IRP, p. 137

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NAMIBIA NIRP – IMPLEMENTATION PLAN A AND SCHEDULE

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NIRP BASE CASE SCENARIO AS OF SEPTEMBER, 2017

❑ Some changed circumstances since NIRP drafted

❑ NamPower has decided upon Eskom purchase

❑ Base load generation addition (300 MW by 2021) still live option

❑ Additional solar and wind still viable based on NamPower grid study

- Grid can handle vRE equivalent to +/- 50% of baseload

- Committed projects currently bring NamPower to about 41%

❑ Kudu (included as an alternative under other scenarios)

- Would be a bonus

- However a longer term potential project

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TYPICAL REGULATORY ROLE

❑ Receive completed IRP

- Schedule public meeting(s)

- Review for reasonableness

❑ “Acknowledge” or reject IRP

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RECOMMENDED ECB REGULATORY ROLE –CURRENT NIRP

❑ Use seat(s) on Implementation/Steering Committee to exercise oversight

❑ ECB representative periodically reports to open meeting of the ECB to inform Board of Implementation/Steering Committee actions and to receive instructions from ECB Board for next Implementation/Steering Committee meeting

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RECOMMENDED FOCUS OF ECB OVERSIGHT

❑ Review power purchase terms from ESKOM

❑ At Implementation/Steering Committee meetings:

- Status/plans regarding the 300MW baseload plant in NIRP

- Upon completion of ECB Grid Study to discuss implications of findings

- NamPower plans for procuring additional solar and/or wind up to grid limitations

- NamPower status report on disputed 250 MW plant award (Xaris)

- Status report on Kudu

❑ ECB Board sets schedule to receive these updates from its Committee representative regularly (Committee will meet twice yearly)

❑ ECB also can give instructions to its representative for future meetings

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LONGER TERM ECB ROLE IN NIRP

❑ ECB should not be managing the development of the NIRP (conflict of interest)

- Ministry should be responsible party

- Expertise building in managing NIRP process probably needed

❑ Role of ECB should be changed regarding NIRP

- NIRP is developed by the Ministry

- ECB adopts rules regarding timeframes and content requirements for periodic (5 year?) updating of NIRP

- Empower ECB to receive IRP and “acknowledge” or reject IRP based on overall reasonableness and alignment with the government’s policies regarding EE, RE, DG, and other related items

❑ Would move ECB closer to the best practices model of an Independent Regulator

❑ If agreed these provisions might be inserted into bill making ECB an energy regulator

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OUTCOMES

❑ Namibia seen as having an enhanced investment environment due to gradually increasing independence of ECB

❑ Additional capacity may as a result be added faster

- Due to refinement of roles and responsibilities

- Due to enhanced investment environment in Namibia

❑ Some additional connections with additional capacity