Ongoing projects in Africa.
Even with such massive offshore investment, any deterioration in the security situation in the Niger Delta could see Angola overtake Nigeria as the continent's biggest oil producer. It briefly held this title for a few months three years ago and a massive 1,025m b/d of new production capacity is scheduled to come on stream by the end of 2016. Angola too has the potential to produce 3m b/d.
Ghana, Uganda, Congo-Brazzaville and Tanzania will all benefit from upstream investment over the next few years but the only country to match the tens of billions of dollars being pumped into Nigeria and Angola is Mozambique. Vale and Rio Tinto are both developing coal projects with production capacity in excess of mm tonnes a year and Tete Province should yield 50-loom tonnes a year within a decade if sufficient transport capacity is put in place.
Similarly, US firm Anadarko and Eni of Italy are leading consortia that are jointly developing a liquefied natural gas hub in the far north of the country. Each consortium will supply gas from their respective fields in the Rovuma Basin to the plant. Four liquefaction trains--or production lines--are planned in the first instance, with total production capacity of 20M tonnes a year and required investment estimated at $20bn. However, eventual expansion to 50m tonnes a year has been mooted.
Securing the finance from international banks for such schemes should be straightforward, given that the LNG will be marketed to Asian buyers under long-term contacts, probably of about 20 years.
The water tower of Africa
Ethiopia is currently in the middle of the biggest hydro construction programme ever seen in Africa. National generating capacity has already jumped from 745 MW in 2009 to 1,886 MW thanks to the completion of the Gilgel Gibe II and Tana Beles schemes. This will be doubled by the $1.8bn Gilgel Gibe III scheme in the Omo-Gibe Basin, which is nearing completion.
Most funding for Gilgel Gibe III has been provided by the Industrial and Commercial Bank of China, the African Development Bank (AfDB) and the government of Italy. One innovation in project finance on the scheme is that contractors are to be paid in a mixture of Euro and Birr in order to support the local currency. Construction costs are put at [euro]1,47om, of which [euro]448m will be paid in birr and [euro]1,022M in euro.
Other similarly ambitious projects have already been planned but all are dwarfed by the 5,250 MW Renaissance Millennium Darn Project, which is being built on the Blue Nile, 73.0km kilometres west of Addis Ababa. Much of the power produced will be exported and an agreement has already been signed with Kenya's KenGen. The most unusual element in the venture is how it is being funded. Although total construction costs are put at $4.i.bn and the government does not appear to have raised anything like this sum, international construction and engineering companies have already begun work.
In April 2011, the government awarded a [euro]3.35bn engineering, procurement and construction contract on the project to Salini Costruttori, which is already working on other dam schemes in the country. Alstom has been awarded a [euro]25om contract to oversee the power engineering element of the scheme, while the project will be owned
and operated by the Ethiopian Electric Power Corporation (EEPCo). Officials have stated that construction is already 25% complete. The state-owned Ethiopian Development Bank has been given the task of raising the money and is seeking to generate as much as possible though a bond issue, which is available to Ethiopians or those of Ethiopian descent. However, it seems likely that some form of payment guarantee must have been granted to the project contractors. Nevertheless, Addis Ababa is displaying the kind of optimism that has been rare on the continent since the early days of independence.
The Desertec vision
By far the most ambitious renewable energy project in Africa is also the most nebulous. The Desertec Industrial Initiative (Dii) hopes to oversee the construction of a massive transmission grid between North Africa and Southern Europe that would allow Europe to source up to 20% of its electricity from wind, PV and solar thermal schemes in North Africa.
Several key participants, including Bosch and Siemens, have pulled out of the venture recently, partly because of a lack of progress but also as a result of instability in North Africa. However, the State Grid Corporation of China (SGCC), which is the world's biggest power company, has now joined Dii in the form of its China Electric Power Research Institute (CEPRI) offshoot.
The vice president of CEPRI, Liang Zhong Yao, said: "We regard Dii as a unique alliance with a strong reputation for the integration of renewable energy from the deserts into interconnected power systems. One of the strategic focus areas of SGCC is the global allocation of renewable energy. In this framework, SGCC is very keen to find options for contributing effectively to future transmission extension projects connecting countries and continents."
Morocco's enthusiasm for renewables appears to stem from its position as the only North African country without significant oil and gas production. It relies on the import of expensive oil and gas feedstock to satisfy most of its energy needs, yet has some of the best solar and wind power resources on the continent. Four solar thermal power plants are being constructed in the country. The biggest is a 500 MW solar park that is being developed by a consortium led by Saudi firm ACWA.
The construction of the first 16o MW parabolic trough plant, which will have three hours of thermal storage, is already well under way and is expected to come on stream by 2015. Tenders for the Ouarzazate solar-power complex have been launched by the state-owned Moroccan Agency for Solar Energy (MASEN): one for too MW capacity CSP tower project; and another for a 200 MW CSP parabolic trough.
Rabat originally set a target of boosting the proportion of renewables in the production mix to 10% by 2020 but the success of the first projects has seen this goal steadily increased and it now stands at an incredible 42% by 2020: by far the most ambitious renewables target on the African continent.
South Africa's renewables strategy
In 2011, Pretoria introduced the Renewable Energy Power Purchase Agreement (REIPPP), which aims to increase national renewable energy generating capacity from virtually nothing to 8,000 MW by 2020.
A series of project tenders are being held, with the selected bidders given long term power purchase agreements with Es-kom. Funding is being shared by developers, multilateral and bilateral lenders and the South African government.
An energy and environmental research analyst for consultants Frost & Sullivan, Joanita Roos, said: "In the light of electricity and water scarcity, as well as rising coal prices, RE [renewable energy] is becoming a preferred choice of energy generation technology in South Africa. Additionally, South Africa is the twelfth-highest carbon emitting nation, and the need to diversify industries and incorporate lower carbon emitting technologies will spur RE development."
In 2011, Agence Francaise de Devel-oppement (AfD) agreed to lend cloom to Eskom for the development of the too MW Sere wind farm. Construction on the project, which is located near Vreden-dal in the Western Cape, is now under way and is due for completion by the end of this year. Other wind farms will be developed by both Eskom and private sector investors. Eskom has long had a particular interest in developing solar thermal power projects and hopes that it can create an export business by pioneering the development of the technology, in much the same way as Vestas became a wind power market leader by driving wind farm development in Denmark.
In October, the South African company signed an agreement with AID regarding a Eloom credit facility to help fund its planned 100 MW CSP plant near Uping-ton, in the Northern Cape.
Eskom chief executive Brian Dames said: "Concentrated Solar Thermal Power is one of Eskom's first utility scale projects outside the existing hydro portfolio and places the company on a path towards reducing its carbon footprint and investing in a sustainable energy future."
Additional funding is being provided by the African Development Bank, Germany's Kreditanstalt far Wiederaufbau (KfW), the Clean Technology Fund, the European Investment Bank and the World Bank.
Enel Green Power is in the process of developing six renewable energy projects in South Africa, all of which are scheduled to come on stream by 2016. They include four PV projects, Aurora, Paleisheweul, Pulida and Tom Burke, which will have combined generating capacity of 199 MW and which will require total investment of [euro]630m.
The company's head of business development Antonio Cammisecra said: "Due to the significant increase of electricity demand, the country is politically and economically engaged in diversifying its energy mix, focusing in particular on renewable energy. We are also studying the possibility of taking part in new public tenders with solar and wind power projects. We also consider it useful to continue our growth in other African countries and to look into further development opportunities."
One of the biggest signs of confidence in South Africa's renewables strategy is Corporacion Gestamp's decision to set up a wind tower manufacturing plant at Atlantis in the Western Cape at a cost of [euro]22m.
The factory, which will have production capacity of 150 towers a year, will employ more than zoo people and is expected to produce its first tower by June this year.
It will be operated by Corporacion Gestamp subsidiary GRI-Renewable Industries. GRI chief executive, Javier Imaz, commented: "With this new facility, GRI consolidates its position in the South African market, factor that will enable the business to deploy and share its know-how to the local market". The Spanish firm will also operate wind farms in the country and has already been awarded a contract to develop the 75 MW Noblesfontein project at a cost of [euro]160m.
Given the government's eagerness to develop the country's hydro potential, it is perhaps surprising that Ethiopia is the biggest wind power producer in sub-Saharan Africa. The 120 MW Ashegoda wind farm was completed at a cost of [euro]210M in November just outside Addis Ababa by French firm Vergnet SA with low interest loans from Aft) and BNP Paribas, plus a 9% contribution from the government of Ethiopia. Its 84 turbines are expected to produce an average of 400 GWh a year.
Prime Minister Hailemariam Desalegn said "Various studies have proved that there is potential to harness abundant wind energy resources in every region of Ethiopia. We cannot maintain growth without utilising the energy sector."
Mihret Debebe, chief executive of the Ethiopian Electric Power Corporation, added: "It complements hydropower, which is seasonal. When you have a dry water season we have higher wind speed. There is harmony between the two sources of energy."
It would be fair to say that the government is banking on power sector development to drive economic growth over the next decade. A combination of rapidly growing generating capacity and a massive rural electrification programme should provide power to a far greater proportion of rural inhabitants, as well as generating significant export revenues from supplying neighbouring states.
Long-term power purchase agreements with other countries in the region should also encourage more general trade in a region where most states continue to trade more with the rest of the world than with each other. Addis Ababa has pledged to ensure that further solar and wind power projects are developed. The proportion of the population with access to electricity has already risen to 23% and the government hopes to boost this to 75% over the next decade. The remaining 25% include many people living in more remote parts of the country, where off-grid solar PV could be the most appropriate option.
Taking renewables further afield
The first signs of wider geographical development are at least emerging. In February, the government of Lesotho sanctioned the development of a wind farm by Power NET Developments, a joint venture set up by Powerdev Group of Lesotho and South African energy consultancy NET Group.
It is envisaged that 42 relatively low-capacity turbines would be erected, giving total generating capacity of 25-35 MW, with all output supplied to state owned Lesotho Electricity Company. The wind farm, which will be Lesotho's first, is to be developed near the Letseng La Terai diamond mine in the Maluti-Drakensberg region.
In December, Aeolus Kenya announced that it would develop the 61 MW Kinangop wind power project in Kenya. Iberdrola will construct the scheme, while GE will provide the 38 1.6-MW turbines.
A spokesperson for Iberdrola Engineering revealed: "The Kinangop wind farm project strengthens our presence in Africa and particularly in Kenya, where the expansion in power capacity needs to be balanced with the reliability of the supply. GE's 1.6-MW wind turbines are a great fit for Kenya's robust wind conditions and for the advancements in serviceability and grid integration."
Such schemes require more rapid development of the country's transmission and distribution infrastructure. The government of Kenya predicts that electricity demand will increase by an average of 12.8% a year over the period 2010-30, from 7.4 TWh in 2009 to 92 TWh in 2030. However, much will depend on the pace of electrification. At present, just 17% of the population has access to electricity.
As African Business was going to press, US geothermal energy specialist Ormat Technologies announced that it had completed the construction of Phase 3 of the Olkaria plant in Kenya, taking the facility's generating capacity up to Ito MW.
The project, completed three months ahead of schedule, will supply electricity to Kenya Power and Lighting Company Limited (KPLC) under a 20-year power purchase agreement. The US Overseas Private Investment Corporation (OPIC) financed the project with a $310m debt facility.
Ormat chief executive Dita Bronicki commented: "Olkaria III is a prime example of our multi-stage approach to project development generating higher investment returns and reducing risk. In less than one year, we've completed construction of two additional plants and, over the course of five years, more than doubled the facility's generating capacity. Kenya is an important market for our future growth due to its high geothermal potential and we are focusing our efforts on increasing our operation in Kenya."
In April 2011, the government awarded a [euro]3.35bn engineering, procurement and construction contract on the project to Salini Costruttori, which is already working on other dam schemes in the country
Table 6: Planned upstream projects in Nigeria Project Capacity ('000 b/d) Estimated Operator start-up Ehra North Phase 2 50 2013+ Exxon Mobil Bonga North, Northwest 50-150 2014+ Shell Bonga Southwest and Aparo 140 2014+ Shell Egina 150-200 2014+ Total Bosi 135 2015 Exxon Mobil Nsiko 100 2015+ Chevron Uge 110 2016 ExxonMobil Table 7: Planned upstream projects in Angola Project Capacity ('000 b/d) Estimated Operator start-up CLOV 160 2014 Total Cabaca Norte 1 40-200 2014 ExxonMobil Terra Miranda, 150 2014 BP Cordelia, Porti Mafumeira Sui 95-110 2014-15+ Chevron Negage 50-75 2014-15+ Chevron Lucapa 100-130 2014-15+ Chevron Chevron Gindungo, 120-200 2015-16+ Total Caneia, Gengibre, Mostarda Table 8: Ethiopian hydro schemes Date commisskoned Project Generating capacity (MW) 1973 Fincha 100 1989 Melka Wekena 153 2004 Gilgel Gibe 1 184 2009 Tekeze 310 2010 Gilgel Gibe II 420 2010 Tana Beles 435 2013 Gilgel Gibe III 1,870 2017 Millennium Dam 5,250 Feasibility study Tekeze II 450 Feasibility study Beko Abo 1,600 Feasibility study Mendeya 2,000 Feasibility study Gilgel Gibe VI 1,470 Feasibility study Gilgel Gibe V 660 Preliminary study Birbir 467 Preliminary study Lower Dedessa 613 Preliminary study Dabus 427 Preliminary study Beshilo 700 Preliminary study Tams 1,000 Preliminary study Genale Dawa V 100 Source: Grandmillenniumdam.net
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|Date:||Mar 1, 2014|
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