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Tariff to increase over 300%
Entire Nation expected to have electric access by 2037
Even though EEPCo’s main focus is hydroelectricity that may change in the future. Its new 25 year plan, ratified after a two-day meeting with stakeholders this week, calls for nuclear power, increased reliance on renewable resources and lighting up the entire nation by 2037. All this will come at a high price, however as the expansion is expected to cost over USD 150 billion and a 300 percent rate increase may be in the works for consumers.
In the new plan, hydropower will remain the chief energy producer but other resources like wind, solar, geothermal, biomass and combined cycle gas will be tapped. This is because Ethiopia actually has the potential to generate 45,000 MW from hydro resources but it is only generating 2,000 MW right now.
EEPCo plans to construct 24 hydroelectric projects with a capacity of generating 12,406MW, until 2023. This will cost USD 38.477 billion and, except for Beko Abo, Upper Mendaya, and Karadobi, should all be finished by 2020. Karadobi should finish in 2021, Beko Abo will finish in 2022 and Upper Mendaya in 2023.
These figures do not include current major endeavours like the Grand Ethiopian Renaissance Dam (GERD) and Gibe III.
In the plan, EEPCo and the Ministry of Water, Irrigation and Energy addressed 28 schemes with the potential to generate over 12.4GW.
Most were at the pre-feasibility or feasibility stage although some were closer to inception.
The CEO said that even though it was not incorporated into the final plan nuclear power plants were examined as a possible option that could be put into effect by 2021.
According to the study, the potential power generated from uranium could be as high as, 1,200MW by 2021.
However the plan says nuclear power is not cost effective because they take longer to construct and are more expensive than other power plants.
Parsons Brinckerhoff, a UK based firm, is consulting for EEPCo on the 25 year plan.
“In addition to trying to get more power at a lower cost, the contract expects the consultant to provide EEPCo with the appropriate staff, skills, software, resources and a power system database for future updating of the study,” MihiretDebebe, CEO of EEPCo said.
Even though the original master plan was created in 2000, experts said it needed to be adjusted because Ethiopia has been growing so fast that the demand for power has been increasing dramatically.
“We revised the previous baseline so more projects could be completed in line with the current economic conditions,” EEPCo officials explained.
Energy sales are expected to grow from around 744 GWh in 2011 to 15,436 GWh in 2037.
Currently, approximately 3.68 million, out of 16.16 million households in the country, have access to electricity. Of these households, 1.493 million (40.6pct) are reported to have private connections, whereas the balance share meter connections.
Yet, these figures mean that only 22.8pct of households in Ethiopia have access to electricity.
Lighting up the Nation
However, according to the EEPCo plan, by 2018 the number of households that use electricity will double and the master plan calls for every house to be able to receive electricity if they want to.
When this factor is combined with export demands that are forecast to grow to 4,030MW by 2037 from 165MW in 2012, the best case scenario is for electric sales to be about 61 percent higher, with the highest growth coming in the next five years.
In fact for the next 10 years massive growth anticipated in industry, agriculture (irrigation) and the new railway is anticipated to create a huge demand.
The biggest challenge will be securing financing. According to the master plan, at least USD four billion is required every year to meet the target. In the future this could mean that the state monopoly begins to open up to private investment.
“The new law amended by parliament last week will allow the private sector to provide power. The proclamation permits the private sector to generate, distribute and transmit, while the national grid owner (the utility, which is EEPCo in Ethiopia) will be the operator,” the CEO said.
“A win-win situation has to be created to cover the expected cost,” he said. Exports will support some costs until local consumers can afford to pay the real price. The government said that it is subsidising power rather than passing on the full cost to customers. Although the study does recommend a price increase.
The current average flat tariff charged to customers in Ethiopia is just under three US cents per kilowatt hour. The tariff level has diminished in real terms and in recent years has been insufficient to generate profitability for EEPCo, particularly when rainfall is poor.
This means that consumer price increases for electricity are almost certainly in the works. There is significant growth in the export of power anticipated over the period of the expansion plan; therefore securing higher tariffs for exports will be critical to on-going financial viability. The master plan study recommended that without such an increase, a hike in domestic consumer tariffs from 2.8 US cents per kilowatt hour, to more than 14 US cents per kilowatt hour, are needed to afford the expansion especially when inflation is factored in.
Planning for Growth
In the new plan different regions and industries will receive power based on their projected demand.
According to the study, five industrial zones (Kilinto, Bole, Meleka Jebedu, Kombolcha, Awassa) will require 1,127.7MW of power until 2019. Of the stated industrial zones, Kombolcha and Melaka Jebedu will need 336.9 and 315.3 MW respectively. Industrial zones requiring power from 2019 onward are Bahirdar, Gonder, Mekele and Jimma, with a total demand of 1,200 MW.
Additional industries are projected to require 1,966MW. This includes: cement factories (729MW), steel and metal factories (691MW), general industry (530MW) and mining (16MW). The report added that the expected demand is scheduled to increase, hitting its maximum need in 2019.
Irrigation is expected to tax energy demand from around 80MW to 5,257MW by 2037 and the new railway will mean an increase from 101MW in 2015 to around 1,571MW in 2037. The Addis Ababa light railway will demand 15MW per 42,119 passengers across five trains. The report also added that sugar factories would demand 100.9MW of energy by 2014, up from 49.5MW in 2013, and 190MW by the end of the five year Growth and Transformation Plan.
According to the document, industrial, transportation, and irrigation requests for power supply connections received by EEPCo will be about 4,879MW of peak power demand until 2020.
The total electricity sales forecast for the industrial, commercial and domestic sectors are 7,013MW, 2,635 MW and 5,624MW respectively by 2037.
The short term expansion plan for substations and transmission lines states that 114 new transmission substations, 63 substation reinforcements and 13,560km of new 500kV transmission lines will be required at various stages up until 2020.
The plan includes extensive expansion of both the 250kV and 400kV system. The 500kV developments are limited to the GERD-Addis Ababa corridor and the international interconnection with Sudan.
On the other hand, the long-term expansion plan proposed a network comprising a 400kV super-grid that interconnects the main load centres with the major power plants by 2037.
The long-term plan includes 78 new transmission substations, 41 substations and 9,257km of new 400kV transmission lines required at various stages up to 2037.
The study indicated that USD 12.15 billion dollars would be needed for the short and long-term transmission and substation projects.