Pre-feasibility study into solar energy rollout in Namibia
12. Impact of proposed solution
Without the ANE plant, Namibia faces sustained electricity shortages. As the entire sub-region faces electricity shortages, they need to build capacity in their own country. If they use Kudu gas (where they will need to use 70% of proven reserves over the life of the proposed plant) or a more expensive coal-fired power station – which is estimated to cost 50% more per KWh than Kudu, based on ANE’s models – neither will be able to be built before 2016, so they face shortages of 25% of demand by 2015.
Short-term supply options for this shortfall are not appealing:
- Load-shedding – which will have a negative impact on economic growth – based on the unserved cost of electricity in Uganda and Kenya, 25% load-shedding will reduce growth from +4% to – 7%, a net 11% contraction of the economy
- Delays in mining investment until sufficient local power capacity is built – delaying the opening of the four major mining projects in the next three years will also have a disastrous impact on the benign country rating for mining investment and tourism, on which it is pinning its national development strategy.
- Emergency supply options:
- Running the van Eck Power station at full capacity for the 120 MW needed which is so expensive it will wipe out NamPower’s healthy cash balance in 2010 – marginal costs, due to the low efficiency are over 5 times the average generation cost of NamPower’s baseload supply.
- Diesel power from Aggreko – this is extremely expensive and will require NamPower to be bailed out by the government. Costs are 20USc per KWh, double the marginal cost of van Eck.