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Zimbabwe poised for more mega power projects

by Staff reporter
28 Nov 2023 at 05:16hrs | Views
ZESA Holdings says the energy sector is poised for a turning point following proposals by some independent power producers (IPPs) to build two thermal power stations with a combined output of 1 600 megawatts (MW).

The power stations would be nearly three times the size of Hwange Power Station units 7 and 8, which have a combined output of 600MW.

ESA executive chairman Dr Sydney Gata, in an interview after touring the Dinson Iron and Steel plant in Manhize on Friday, said the projects were part of ZESA's contingency plans, which have been made possible now that the utility has been awarded a cost-reflective tariff.

"In light of this development, which is the turning point in the energy economy in Zimbabwe, we have already received two power station proposals from IPP companies that want to entirely finance their own power stations, coal power base load plants, and deliver them to their plants, most of them to Zesa. They will aggregate to about 1600 MW, almost three times the size of Hwange 7 and 8, and we have received four more proposals immediately after the tariff review," he said.

The Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a subsidiary of ZESA Holdings, received regulatory approval for a new tariff adjustment of US$0,02/kWh in October of this year, making the new tariff US$0,12/kWh.

ZETDC had applied for approval for an adjustment of US$0,02/kWh and to stagger the tariff to a level of cost reflectivity.

Prior to the application, ZETDC had been charging an average tariff of US$0,10/kWh approved in October 2019 and maintained the value of that tariff through indexation.

Zimbabwe's demand for energy is likely to reach 2 350MW by 2025, especially amid high demand from the mining sector and steel industry.

According to Dr Gata, ZESA was aware of these projects for a long time and parked them because there was no cost-reflective tariff.

He said the policy transition in energy pricing had immediately unlocked phenomenal interest in IPP power plants.

"In addition to these two very large coal power plants, which are private sector initiatives, we are also sitting on over 100 licenses for small renewable energy IPPs.

"The Government is going to introduce guarantee capacity to some of them, but the ones who have been shortlisted and accepted as eligible for integration with our power system come to 800MW," said Dr Gata.

He added that if the projects being supported by the Government came on board, ZESA would have the capacity to offset all power imports and load shedding.

Dr Gata said the power utility had arrangements with the ferrochrome industry, which consumes between 300MW and 400MW and has been a very heavy burden on the demand side of the power supply situation in the country.

"We have persuaded them or motivated them to build their own solar plants. We have signed up agreements to put up solar projects, which will supply them during the day, and at night, we support them with Kariba.

"These developments are very significant, not only because they leave Zimbabwe capable of energising its projected vast industrialisation but also to get capacity so much in excess that within the next 3 to 4 years, Zimbabwe will be a net exporter of electricity in the region," he said.

However, Dr Gata said power supply in the short to medium term would continue to be a challenge, with the major issue being the hydrology issue of the Zambezi River, whose flow has been affected by climate change.

"Given the impression that we have 1050MW of installed capacity at Kariba South, we have been directed to use only 300MW of capacity, which means we have lost 750 MW, which is 50 percent of the base dependable ZESA capacity.

"That is a very huge diminishing power supply system. However, we have had contingency plans, which have been made possible now that ZESA has a cost-reflective tariff," he said.

He noted that dealing with the situation at Kariba had been a nightmare, while the utility also had to decommission some of the old thermals because they were uneconomic to operate.

"These are units 72 years old. Kariba 1-6, one might say it has been a disappointment, but even that plant is 42 years old and we have a project to repower it, that project did not move as fast as we hoped, but I expect that next year it will move with a defined programme to completion," said Dr Gata.

Source - the herald