Estimation of Drought Impact on the Electrical Sector

1. Estimation of Drought Impact on the Electrical Sector Case Study in the Horn of Africa

2. Drought in the Horn of Africa 2008 to 2011 RJ

3. Electricity generation by source RJ

4. Water Level Variations at Storage Dam RJ

5. Electrical sector performance during drought • Due to drought and beginning in mid-2008, water levels at storage dam began to decline • Electricity generation at hydropower stations began to decline, and thermal power units were used to supplement electricity production • When that became insufficient, load shedding was introduced as a way to force energy savings by consumers • In 2011 rainfall was nearly normal and water levels at the storage dam recovered, and hydropower production was restored • However, the electrical system sustained significant losses in revenues due to the lower sales of electricity to consumers, and production costs increased due to the use of fuel in thermal generation RJ

6. Scope of Case Study Using available information on the electrical sector, the case study requires that estimations be made of losses caused by the drought in the East African country • Losses in revenue due to load shedding • Higher costs of operation due to utilization of imported fuel to generate electricity in thermal power plants to substitute for hydropower plant production • Negative impact of the drought due to higher-than-normal imports of fuel for thermal power generation RJ

7. Procedure for Assessment For the estimation of revenue losses (in consumer categories of residential and commerce and industry only): • Set up an Excel sheet showing sales of electricity (in million KWh) to different consumer categories for the period between 2006 to 2011 • Determine the annual increase in sales for each consumer category under consideration in 2006 and 2007 • Take the average increase in sales of electricity for those years • Project the amount of sales for each consumer category under consideration that would have been made in years 2009 to 2011, using the average annual increase estimated in previous step • Compare the values thus obtained to the actual sales made in same years • To obtain the value of revenue losses, multiply the values obtained in previous step times the average rates paid by each consumer category RJ

8. Procedure for assessment .. To determine the increase in electricity generation costs that were incurred during the drought (assuming that generation in years 2008 and 2011 was normal in term of costs): • Prepare an Excel sheet showing the total cost of electricity generation for the system in the period 2008 to 2011 • Prepare a chart showing the time variation of average electricity generation costs (in LCU/KWh) • Drawing a straight line between the values for 2008 and 2011, estimate the theoretical average annual values that would have prevailed in the system if the drought had not occurred in the intermediate years • Multiply the theoretical average costs thus obtained times the annual amounts of electricity generated each year, to obtain the costs if the drought had not occurred • The higher costs of electricity generation due to the drought is equal to the difference between the values obtained in steps 1) and 4) RJ

9. Procedure for Assessment … Total Losses Impact on balance of payments Estimate the higher values of fuel imported for use in thermal power plants for electricity generation due to the drought in years 2009 and 2010 Provide these figures for the estimation of macro-economic impact of the drought as there will be a negative implication on the country’s balance of payment • Add the values of revenue losses to the values of higher cost of electricity generation to obtain total losses caused by the drought • Compare annual values of revenue losses to total value of revenues for each year • Compare higher costs of generation to total cost of generation for each year RJ

10. Thank You !! rjovel@jovel.org RJ