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Zimbabwe electricity imports down 57%

by Staff reporter
30 Jan 2024 at 04:22hrs | Views
ZIMBABWE has started reaping savings from reduced energy imports following improved domestic electricity generation mainly from the upgraded Hwange Thermal Power Station and the rising contribution by independent power producers (IPPs).

Despite the reduced output from the giant Kariba Hydro-Power Station due to low water levels linked to climate change, the commissioning of Hwange units 7 and 8 by President Mnangagwa last year in August added 600 megawatts to the national grid.

This has induced a huge impact on the monthly import bill, which was reduced from US$26 million to US$11 million by the end of the third quarter of 2023, according to brokerage firm, IH Securities.

Built at a cost of about US$1,5 billion, the Hwange Unit 7 and 8 expansion project has become a game-changer in Zimbabwe's energy production profile whose success has fulfilled one of the promises made by President Mnangagwa, which is to improve power supply in line with the key aspirations of the National Development Strategy (NDS1).

According to Zimbabwe Power Company's daily power production figures, yesterday Hwange Thermal was generating 819MW with Kariba standing at 492MW while IPPs contributed a combined 60MW with total output clocking 1 371MW.

Last week Friday Hwange alone pumped in 1 014MW with Kariba at 456MW as IPPs brought in 64MW to yield total output of 1 534MW. The coming on stream of IPPs, which are largely renewable modelled, has helped offset the adverse impacts of the decommissioning on small thermals (Bulawayo, Harare, Munyati), which had become costly to maintain as their equipment had become obsolete.

In its report, IH Securities noted that while electricity generation remained depressed last year on account of extreme weather events, which affected hydroelectric power, the Hwange 7 and 8 investments have cushioned the economy from crippling power shortages being experienced across the region.

"This saw the monthly import bill decrease from US$26 million down to US$11 million by the end of Q3. As per the MoFED (Finance, Economic Development and Investment Promotion), electricity imports are scheduled to ease 4.5 percent y/y to US$195, 2 million," reads part of the report.

The firms said that the expected improvements in electricity supply and continued investments are expected to aid industrial capacity utilisation to 60 percent this year. Average electricity generation, however, stood at 1,026MW against an average demand of 1,700MW in 2023, with costs of load-shedding on the economy estimated at 6,1 percent of gross domestic product. Zimbabwe is bridging the supply gap with imports from regional producers but hopes to achieve energy self-sufficiency in the medium to long term.

For 2024, growth for the energy sector is estimated at 17,4 percent despite generation at Kariba expected to come off owing to low water levels due to climate change effects.

IH Securities has also noted that although the supply gap is expected to widen by four percent as demand from the productive sector surges, the Government is accelerating reforms in the sector by promoting private-sector investment in renewable sources.

"In the medium term, the Government is accelerating reforms in the sector by promoting private sector investment in renewable sources such as solar and hydro, implementation of cost-reflective tariffs, and governance reforms at Zesa and its subsidiaries," reads the report.

"Notably, as per the MoFED, power generation from IPPs is expected to grow 142 percent in the year to an average of 80MW."

In recent weeks, IPPs have been increasing their contribution to the national grids from an average of 30MW in December to about 60MW this year. The highest contribution by IPPs this year was 68 MW on January 22.

The Zimbabwe Energy Regulatory Authority (Zera) is on record saying a total of 14 IPPs with a capacity of 95,99MW are contributing to the national grid, with several other projects at different levels of implementation, as Zimbabwe moves towards energy efficiency.

According to Zera, renewable energy technologies now dominate the licensed power projects in line with the country's quest for increased cleaner and sustainable power supplies by the year 2025.

The country's installed capacity of renewable energy, excluding large-scale hydro power, is expected to increase from about five percent in 2017 to about 27 percent in 2030.

Several companies have of late increased investment in renewable energy to offset the adverse impacts of erratic power supplies and also the projected El Nino weather phenomenon.

Companies such as Econet, Caledonia Mining Corporation Plc, Zimplats, Padenga, Ariston, and Tanganda have made efforts towards establishing alternative sources of energy such as solar to power their operations.

For instance, Caledonia Mining Corporation Plc constructed a 12,2MW solar plant at its Gwanda-based gold producer Blanket Mine in Matebeleland South.

The mining group has indicated the investment is now paying dividends as it is reducing electricity consumed from the national grid and has seen a decrease in month-on-month diesel usage, achieving efficiency throughout the mining and processing.

Platinum group-metals (PGMs) giant, Zimplats has spent over US$1 million on the first phase of its 35 MW solar project at the Selous Metallurgical Complex with the final phase scheduled for completion in 2027 at a total project cost estimate of US$201 million.

Energy expert, Mr Donald Ndimande, said there is a huge scope for a further reduction of the electricity import bill once all Hwange Power station units and registered IPPs start production.

"What is clear is that the country stands to reap huge dividends when all Hwange units are rehabilitated and operating at maximum capacity," he said.

"In the same vein, that dividend will be expanded when the bulk of IPPs start producing and feeding a certain portion to the national grid.

"When the import bill is reduced, the Government will have space to channel the saved funds to other productive sectors," said Mr Ndimande.

According to NDS1, energy is a key enabler of the acceleration of the country's modernisation and industrialisation agenda, as well as sustainable socio-economic growth.

To address perennial power shortages in the country, the Government is undertaking several electricity generation projects, most of which are financed by extra-budgetary funds, loans, and the private sector.

The Government intends to increase Zimbabwe's overall electricity supply from 2 317MW of installed capacity to 3 467MW by 2025.

Source - The Chronicle
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