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presentation to EAZ load-shedding in Zambia: what should be the plan PRESENTED BY C CHITUNDU MANAGING DIRECTOR. Presentation Overview. 1.0 background 2.0 current status 3.0 zesco’s plans to end load-shedding 3 .1 generation projects 3 .2 transmission projects 3 .3 distribution projects

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slide1

presentation to EAZload-shedding in Zambia:what should be the planPRESENTED BY C CHITUNDUMANAGING DIRECTOR

presentation overview
Presentation Overview

1.0 background

2.0 current status

3.0 zesco’s plans to end load-shedding

3.1 generation projects

3.2 transmission projects

3.3 distribution projects

3.4 other initiatives to reduce load-shedding

4.0 conclusion

background
background
  • ELECTRICITY IS A KEY DRIVER OF ECONOMIC GROWTH & MAJOR INPUT IN ALL ECONOMIC SECTORS - AGRICULTURE, MINING, MANUFACTURING AND TOURISM
  • ZESCO’S ELECTRICITY GENERATING CAPACITY STANDS AT 2.2 GW (99% HYDRO)
  • NET EXPORTS ROUGHLY 5% OF TOTAL GENERATION (MOSTLY TO NAMIBIA, BOTSWANA AND CONGO D.R.)
  • CURRENT PEAK DEMAND FOR ELECTRICITY BARELY MEETS GENERATION CAPACITY ESPECIALLY DURING PEAK TIMES
background cont d
background CONT’D
  • ZAMBIA HAS EXPERIENCED A SUSTAINABLE ECONOMIC GROWTH OVER THE LAST FIVE YEARS DESPITE GLOBAL RECESSION, RESULTING IN:
    • INCREASED DEMAND FOR ELECTRICITY FROM ALL SECTORS
    • DEMAND OUTSTRIPPING AVAILABLE CAPACITY DURING PEAK HOURS
    • ZESCO MUST INVEST IN NEW INFRASTRUCTURE TO COPE WITH GROWING DEMAND
background cont d1
BACKGROUND CONT’D
  • HOWEVER DELAYED INVESTMENT IN GENERATION PLANTS HAS NOT MATCHED THE LOAD GROWTH
    • RESULTING IN DEFICIT IN POWER GENERATION CAPACITY
  • FURTHER, DELAYED INVESTMENTS IN TRANSMISSION & DISTRIBUTION SYSTEMS HAS ALSO LED TO DEPLETING POWER TRANSMISSION & DISTRIBUTION CAPACITY
  • ABOVE FACTORS LARGELY CONTRIBUTE TO LOAD-SHEDDING
  • LOAD-SHEDDING IS DONE TO SAFEGUARD THE ELECTRICITY INFRASTRUCTURE
generation status cont d
GENERATION STATUS CONT’D
  • THE TOTAL AVAILABLE CAPACITY IS 2,211 AGAINST A MAXIMUM NATIONAL DEMAND OF 1890.
  • ZESCO HAS ADEQUATE CAPACITY TO MEET THE DEMAND AT PRESENT. LOAD-SHEDDING IS THEREFORE DUE TO BOTTLENECKS IN THE TRANSMISSION AND DISTRIBUTION INFRASTRUCTURE.
projected demand
PROJECTED DEMAND

ELECTRICITY DEMAND

projected demand cont d
PROJECTED DEMAND CONT’D
  • FROM THE GRAPH IT CAN BE SEEN THAT UNLESS THE PLANNED GENERATION PROJECTS COME ON STREAM, THERE WILL BE A GENERATION DEFICIT IN THE COMING YEARS.
  • daily Connection rate: 300
  • Pending backlog in construction and new connections to date: 20,000
short term measures taken to reduce load shedding
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

GENERATION

  • rehabilitation and uprating of the three major hydropower stations, i.e. Kafue Gorge, KNBPS and Victoria Falls
  • VICTORIA FALLS POWER STATION – USD53.7MILLION
  • KAFUE GORGE POWER STATION - USD 85.5 MILLION
  • KARIBA NORTH BANK POWER STATION – USD81.4MILLION
  • Through the uprating of kariba and kafue gorge 210mw was gained

TOTAL COST OF the UPGRADE– USD 100 MILLION

  • ESTIMATED COST FOR A 210MW new hydro POWER STATION

– above us$600MILLION

generation projects
GENERATION PROJECTS

POWER REHABILITATION PROJECT (PRP)

  • Scope included rehabilitation and uprating of the three major hydropower stations, i.e. Kafue Gorge, KNBPS and Victoria Falls
  • Other works included reinforcement and rehabilitation of some transmission and distribution infrastructure
  • The major achievements of the PRP has been the uprating of the Kafue Gorge Power Station from 900 to 990 MW, the reinstating of the Victoria Falls Power Station to its full generating capacity of 108 MW as well as the up-rating of Kariba North Bank power station from 600 MW to 720 MW. The total generation capacity yielded from the PRP is 210 MW
short term measures taken to reduce load shedding1
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

GENERATION

  • Constructing & COMISSIONING OF THE 360 MW KARIBA NORTH BANK EXTENSION plant.
  • LOAD-SHEDDING USUALLY DONE AT PEAK TIMES, KNBE CONSTRUCTED AS A PEAKING STATION TO MEET THE PEAK CAPACITY SHORTFALLS
new generation projects small hydros
New Generation projects-SMALL HYDROS
  • SHIWANG’ANDU 1 MW – USD4.15 MILLION completed in 2012
new generation projects small hydros1
New Generation projects-SMALL HYDROS
  • LUNZUA-15MW-US$52M- COMMISSIONING OF UNIT 1 SCHEDULED FOR END august 2014.
lunzua project
LUNZUA PROJECT
  • LUNZUA-15MW-US$52M- COMMISSIONING OF UNIT 1 SCHEDULED FOR END august 2014.
new generation projects small hydros2
New Generation projects-SMALL HYDROS
  • LUSIWASI UPPER -15MW-US$47M
      • AWAITS SITE INVESTIGATIONS, AWARD OF CONTRACT, PROJECT FINANCING
  • REHABILITATION AND UPRATING OF CHISHIMBA FALLS: 6 -14.8MW – US$46M
      • PREPARATION BID DOCUMENTS IN PROGRESS, AWARD OF CONTRACT, PROJECT FINANCING
  • REHABILITATION AND UPRATING OF MUSONDA FALLS: 5-10MW – US$32M
      • CONTRACT AWARDED, ADVANCE PAYMENT MADE TO EPC CONTRACTOR, PROJECT FINANCING. WORKS TO CONCLUDE IN 2016
new generation projects small hydros3
New Generation projects-SMALL HYDROS
  • MUJILA FALLS 1.4MW-US$25M
      • 75% OF PREPARATORY WORKS DONE. PROJECT COMPLETION EXPECTED 2017.
  • LUSIWASI LOWER -86MW-US$164
      • EPC CONTRACT AWARDED but cancelled due to poor performance record
new generation projects1
New Generation projects

Kafue Gorge Lower Hydropower Project (750 MW)

      • OWNER:PPP (ZESCO/SINOHYDRO)
      • COST:USD 2 BILLION
      • DURATION: 6 YEARS
      • OPERATION: 2019
      • STATUS: PROJECT PREPARATORY ACTIVITIES UNDERWAY. CONSULTANTS ARE BEING HIRED. DISCUSSIONS WITH FINANCIERS UNDERWAY.
  • GRZ HAS ALLOCATED US$ 186 M (ZMK930 TR) FROM THE EURO BOND FOR THE KGL PROJECT AS PARTIAL EQUITY CONTRIBUTION
other short term measures taken to reduce load shedding
Other SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

GENERATION

  • CONTRACTING OF THE 50MW FROM NDOLA ENERGY. COMMERCIALLY AVAILABLE.
  • CONTRACTING OF THE 300mw FROM Maamba collieries to be available in 2015
new generation projects potential sites
NEW GENERATION PROJECTS – POTENTIAL SITES
  • MPATA GORGE – 540 MW
  • DEVIL’S GORGE – 500 MW
  • BATOKA GORGE – 800 MW
  • MUMBOTUTA FALLS - 300 MW
  • MAMBILIMA FALLS SITE I – 202 MW
  • MAMBILIMA FALLS SITE I – 124 MW
  • KABWELUME FALLS - 62 MW
  • KUNDABWIKA FALLS – 101 MW
  • MUTINONDO - 40 MW
  • LUCHENENE – 30 MW
  • MKUSHI – 65 MW
transmission projects ongoing
TRANSMISSION PROJECTS ongoing

CONNECTION OF NORTH WESTERN PROVINCE TO NATIONAL GRID

  • The objective is to support the increased access to electricity and improved quality of service by displacing the expensive diesel generators
  • Cost: appx. USD150 million
  • Funding: Secured from Nordea Bank (Sweden)
  • Status: Contract awarded to EL TEL, now mobilizing to site. Design works in progress.
  • Construction period 24 months. Commissioning April 2016
transmission projects ongoing1
TRANSMISSION PROJECTS ongoing
  • KARIBA NORTH BANK EXTENSION POWER EVACUATION PROJECT
  • The objective is to increase transmission capacity from KNBPS to the grid for the evacuation of power from KNBE project
  • Cost: USD62 million
  • Status: EPC contractor is Sinohydro, tower erection and conductor stringing are in progress.
  • Construction Period: 18 months, project has however been delayed.
transmission projects ongoing2
TRANSMISSION PROJECTS ongoing

KAFUE TOWN MUZUMA VICTORIA FALLS TRANSMISSION LINE UPGRADE

  • The objective is to increase transmission capacity southwards for export to and from SAPP and provide evacuation path for new generation projects
  • Scope: Upgrade 348 km of 220 kV line to 330 kV
  • Cost: USD100 million
  • Status: Procurement process almost complete
  • Funding: World Bank and European Investment Bank
  • Construction Period: 18 months
other transmission projects ongoing
Other TRANSMISSION PROJECTS ongoing
  • PENSULO KASAMA AND PENSULO CHIPATA 330 KV PROJECT
    • The objective is to improve power quality in Eastern, Muchinga, Northern and Luapula provinces and to increase transmission capacity to these areas
    • Cost: USD335 million
    • Construction Period: 30 months from August 2012
transmission projects ongoing3
TRANSMISSION PROJECTS ongoing

ITT MUMBWA LUSAKA WEST TRANSMISSION LINE PROJECT

  • The objective is to provide power evacuation for the ITT power station
  • Cost: USD133 million
  • Funding: EIB, AfDB and AFD
  • Status: EPC procurement process for substation and transmission line complete.
  • Construction period: 18 months
transmission projects ongoing4
TRANSMISSION PROJECTS ongoing

SUPPLY TO KALUMBILA MINE

  • The objective is to supply power to the proposed FQM Kalumbila mine
  • Scope: 400km of 330 kV double circuit line and 66 km of 330 kV single circuit line and associated substation at Kalumbila
  • Cost: USD300 million
  • Status: Transmission line and substation works in progress
  • Construction period: commissioning is expected end of 2015
other transmission projects ongoing1
Other TRANSMISSION PROJECTS ongoing

CONNECTION OF LUANGWA DISTRICT TO THE GRID

  • The objective is to support the increased access to electricity and improved quality of service by displacing the expensive diesel generators
  • Cost; USD63million
  • Status: Construction works are in progress.
  • Construction period: commissioning is expected December 2014
transmission projects ongoing5
TRANSMISSION PROJECTS ongoing

LUSAKA TRANSMISSION & DISTRIBUTION REHABILITATION and upgrading PROJECT

  • The objective is to increase the transmission capacity of the Lusaka Transmission and Distribution Network
  • Cost: USD210million
  • Funding: World Bank, European Investment Bank and ZESCO Limited
  • Status: Financing by WB, EIB. going through the process.
  • Construction period: completion expected by 2018
future transmission projects
future transmission PROJECTS

ZIZABONA

  • The objective is to increase regional trade in power by increasing transmission capacity for north to south and east to west power trading
  • Project promoted by Zimbabwe, Zambia, Botswana and Namibia
  • Cost: USD230million
  • Funding: Discussions ongoing with potential financiers. DBSA, AFDB, KfW
  • Status: technical and market studies completed, project governance documents prepared
  • IUMOU, IGMOU signed. Joint Development Agreement to be signed by BPC. Will lead to signing of Shareholders Agreement
  • Consultant engaged and SPV registration is underway
  • Construction period: commissioning is expected by 2017
short term measures taken to reduce load shedding transmission projects
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING transmission projects
  • UPGRADING (RE-CONDUCTORING) OF LUSAKA 132 KV
short term measures taken to reduce load shedding2
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING
  • MEASURES TO INCREASE TRANSMISSION CAPACITies:
    • INSTALLATION OF A SECOND 125 MVA 330/132 KV TRANSFORMER AT LUSAKA WEST TO SUPPORT 132 KV SYSTEM. (Completed in 2012)
    • UPGRADE OF MAZABUKA SUBSTATION COMPLETED IN 2012
    • INSTALLATION OF COMPENSATION EQUIPMENT IN THE COPPERBELT
short term measures taken to reduce load shedding distribution projects
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING –DISTRIBUTION PROJECTS

Distribution projects under increased access to electricity services.

  • sponsored by WB, JICA and other financiers in progress.
  • Project cost us$75million
short term measures taken to reduce load shedding4
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING
  • WAYLEAVE ENCROACHMENT -NEW KANYAMA SUBSTATION
  • INCOMPLETE LINE
short term measures taken to reduce load shedding5
SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING
  • EUROBOND PROJECTS IN LUSAKA, KITWE AND NDOLA – COMMISSIONING TO START BY AUGUST 2014
  • Project cost USD 69 million
  • Over 60% of funds already committed
planned capital investment 2014
PLANNED CAPITAL INVESTMENT 2014

ZESCO PLANS TO SPEND ZMK 5,634BN ON ASSETS AND INFRASTRUCTURE development IN 2014

Over 45% already utilized

power purchase agreements with independent power producers
POWER PURCHASE AGREEMENTS WITH independent power producers
  • to ensure load shedding is minimized zesco has contracted power from Ipps at higher cost compared to the prevailing tariffs on the market.
  • Avearge tariff UsC/KwH -6.02
  • Annual loss of 367 million USD
reasons for limited investments in the electricity sector
REASONS FOR LIMITED INVESTMENTS IN THE ELECTRICITY SECTOR
  • THE ELECTRICITY ENERGY SECTOR IN ZAMBIA HAS SUFFEREED LITTLE OR NO INVESTMENT DESPITE GOVERNMENTS INITIATIVE TO HAVE THE INDUSTRY DEREGULATED DUE TO LARGELY:
    • NON COST REFLECTIVE TARIFF
    • LACK OF WILLINGNESS FROM CUSTOMERS TO PAY COST REFLECTIVE TARIFFS
  • ZAMBIA HAS THE LOWEST TARIFFS IN THE REGION.
power purchase agreements with independent power producers1
POWER PURCHASE AGREEMENTS WITH independent power producers

DUE TO THE UNATTRACTIVE TARIFFS, the ZAMBIAN ELECTRICITY SECTOR IS LARGELY DOMINATED BY ZESCO –SINGLE BUYER MODEL.

solar energy option
SOLAR ENERGY OPTION
  • Solar energy can only be harnessed when it is daytime and sunny.
  • Less efficient and costly equipment (Efficiency for most panels between 17-20%)
  • Reliability Depends On Location, climate, pollution e.t.c
  • Environmental Impact of PV Cell Production
  • Requires large tracts of land for solar panels and batteries
  • No feed-in tariff in place –must be developed by Memwd and ERB
solar energy option1
SOLAR ENERGY OPTION
  • Cost of solar energy very high
  • Example to PROCURE AND install a 25kwp it costed ZESCO ABOUT

usd 300,000

other initiatives to reduce load shedding
Other initiatives to reduce load-shedding
  • Power plants will take time to come on board
      • Therefore ZESCO Management stepped up DSM activities to accelerate energy efficiency initiatives
    • Energy saver lamp (CFLs) distribution
    • Power Alert System
    • Energy Audit and Power Factor Correction
    • Solar Power Technology
    • Time of Use Tariff (TOU)
    • Ripple control of electric geysers
    • Prepayment metering
demand side management dsm
Demand Side Management (DSM)
  • DSM is a utility program aiming to fine tune consumers energy consumption pattern according to utilities energy production and distribution capacity
    • To reduce load-shedding
    • To release system capacity
    • Make available additional power for new connections
    • Reduced energy bills for customers
    • Promote energy efficiency and save the environment
cfl distribution1
CFL DISTRIBUTION

An 87mw new power plant will cost not less than us$300million while zesco spent u$4.0million on the procurement and distribution of the cfls

power alert system
POWER ALERT SYSTEM
  • The Power Alert System is essentially a communication tool that utilizes the television and radio media as the channel to inform electricity consumers on the energy situation in the Power network thereby prompting Customer response.
  • The system therefore triggers voluntary participation of consumers in electricity demand reduction by switching off unnecessary loads in response to the broadcast power alert message.
solar power
SOLAR POWER
  • 305 out of 1,000 Solar Geysers installed mostly in Government Institutions and transit Homes (with 566KW power savings).
      • Remaining solar geysers to be installed in ZESCO Institutional Houses mostly at power stations & Service Camps
  • ZESCO HQ office lighting and Parliament Emergency supply already on Solar Power
  • At ZESCO HQ 1,850 LEDs retrofitted in fluorescent fittings
ripple control system
RIPPLE CONTROL SYSTEM
  • Means of load shaving (instead of load shedding)
  • Mainly targeted at electric geyser loads
      • Initially targeted at 100,000 Residential Customers in Lusaka
  • Projected load of about 135MW to be saved
  • Can be implemented even under system emergencies
  • Technical specifications drawn. Financing arrangements underway
conclusion
conclusion
  • Zesco limited has embarked on various projects from the production side through to distribution to reduce and ultimately stop load-shedding.
  • Government being the major shareholder has given support through provision of equity and guarantees for debts being contracted to finance the projects.
  • Load-shedding in Zambia, the plan is therefore to ensure cost reflective tariffs in order to attract invest in the generation, transmission and distribution electricity infrastructure.