Comments on the Epupa Hydropower Project Feasibility Study
Summary
Contrary to assertions in the Feasibility Study, the Epupa hydropower
scheme is not the "least cost" power alternative for
Namibia. The cost of electricity produced by a combined-cycle
gas-fired power plant would be 40% less than Epupa electricity.
The consultant inappropriately uses assumptions in the analysis
that underestimate the viability of alternative energy sources.
Some assumptions are unnecessarily pessimistic, while in other
cases the consultant ignored or misapplied relevant information
from other continents. For example, using conventional assumptions
about Solar Electric Generating Systems (SEGS) would result in
50 percent lower estimated costs than what the Feasibility Study
indicates. Global experience with wind power demonstrates that
the consultant’s assumption that developing wind power would require
20 years is greatly exaggerated. Wind power could make a substantial
contribution to Namibia’s energy portfolio by the year 2005. The
pessimistic prognosis on energy efficiency is unwarranted. Contrary
to the consultant’s analysis, energy efficiency programs around
the world demonstrate that all sectors of energy consumers can
easily achieve modest efficiency improvements and that such improvements
can improve economic performance of industry, not stifle it. Using
more realistic and fact-based assumptions, the evaluation would
demonstrate the competitiveness of alternative energy when compared
to conventional sources and the Epupa hydropower scheme.
Detailed Comments
Section 8.2
The expected growth path for Namibian grid electricity demand
from the 1994-95 figure of 1,639 GWh with 277 MW peak to 7000
GWh with 1,300MW at peak in 2025. This assumption may be reasonable
given that a large segment of future growth will be in the area
of rural electrification, with some 70% of the population currently
without electricity. If it is assumed that the grid will only
be able to reach a small portion of this population, then this
5% per annum growth will be expected to be consumed by urban households
and industries increasing their consumption as incomes rise, as
well as some demand increase due to the growth of the urban areas.
Major efficiency improvements and revised electricity tariffs
could reduce peak urban demand significantly.
Environmental factors are not included in cost estimates in this
section. Assuming Namibia and South Africa make binding commitments
to reducing greenhouse gas emissions after 2010 or 2020, the cost
of imported or locally produced electricity from coal and natural
gas would increase in those countries. The cost of power from
hydropower, solar, and wind generating systems would not be expected
to increase.
Section 8.3.5
The analysis for the gas-solar thermal plant includes numerous
assumptions which, when combined, dramatically raise the cost
of power. Because renewable energy systems tend to have very high
capital costs and very low operating costs, it is desirable to
maximize the amount of time the systems produce power. The consultant
uses extremely conservative estimates of system availability in
this example. Changing the assumptions as described in the following
points would reduce the cost of power from a 160 MW Solar Electric
Generating System (SEGS) by about 50%, to just under 4 cents/kWh.
This would make the cost of power generation using the SEGS nearly
the same as using a combined-cycle gas turbine, with significantly
less fewer emissions of CO2 and other pollutants.
Inclusion of the solar- only analysis is unrealistic and superfluous,
as such a facility could only produce power during daylight hours
and would therefore not be cost-competitive against 24-hour alternatives.
No such solar trough system has ever been built.
The rated lifetime for SEGS facilities in the United States is
30 years, not the 20 years indicated in the FS for a new SEGS
in Namibia. Changing this factor lowers the cost of generation
50% by increasing the amount of time over which the system’s capital
costs can be amortized, from 7 cents/kWh to approximately 6.0
cents/kWh.
The consultant’s assumed 25% operating time of the solar component
of the gas-solar plant is abnormally low, implying only six hours
of solar power production per day. Page 5-11 states that Namibia
receives an average of 3300 hours of sunshine per year, which
is equal to approximately 8 hours each day. Yet the FS assumes
only 2250 hours (or 6 hours a day) will be available for operation.
In the US SEGS, the gas turbine is limited to 25% of operating
time, while the solar system operates at least 50% on average.
If the solar operating time assumption for the Namibia project
is increased to 50%, the amount of "subsidy" required
from the gas generator decreases and the per kilowatt-hour capital
cost of the system drops by one-third or more.
Rated capacity factor for the newest 80 MW gas-solar SEGS in California
routinely exceeds 100% on days where solar insolation exceeds
design assumptions. Solar insolation in Namibia is higher than
that in most places on earth, so higher power output would be
expected using similar technology. Raising the total capacity
factor of the Namibia SEGS from 80% to 90% would lower the total
cost to 6.2 cents/kWh, even if all other assumptions are taken
at face value. Recalculating the cost of the SEGS option using
the more appropriate assumptions described above yields the much
more competitive price of $0.06/kWh.
The newest 80 MW SEGS in California had levelized costs of approximately
$0.07/kWh, and the 1993 feasibility study for a new 80 MW SEGS
in Nevada put costs at $0.06/kWh to $0.07/kWh, even though the
new facility would rely on a very high cost gas source for backup
power 25% of the time and included habitat remediation for the
endangered Desert Tortoise. If the 160 MW system proposed for
Namibia exploits economies of scale and uses cheap Kudu gas for
backup power, costs would be expected to be considerably lower
than the $0.07/kWh described by the consultant.
The consultant describes the area covered by the 80 MW Mojave
Desert SEGS installation as "huge" at 46 hectares; however,
Epupa is expected to inundate 16,000 hectares at the low-water
level and 38,000 hectares at high-water level.
Section 8.3.6
The economic analysis of a hypothetical wind installation in Namibia
is somewhat conservative, but reasonable. However, the assumption
of a twenty-year lead time for substantial investment in wind
power is unrealistic. Wind can make a substantial contribution
to Namibia’s energy portfolio by the year 2005.
The 112.5 MW wind project being constructed in Buena Vista County,
Iowa by Zond Corporation and MidAmerican Utilities will produce
power at about $0.05/kWh by 1999. A 60MW project in Brazil is
producing power at $0.045/kWh, but received very low cost financing
and used some locally produced equipment.
It is unrealistic to study a 5 MW pilot Namibian wind farm for
a decade before making an investment decision, only to wait another
decade before bringing wind power online. This assumption assumes
that NAMPOWER would not rely on past experience with coastal wind
generation around the world, and would not have investment partners
in this venture. The Zond project in the United States has gone
from resource assessment to regulatory approval in only five years.
Northern States Power Co. of Minnesota has added 25 MW of wind
power to its grid in the last five years, and will install another
129.9 MW by the end of 1998.
Section 8.3.7
The summary table in this section should give a range of conventional
generation costs from $0.02/kWh to $0.0355/kWh, as described in
sections 8.3.2 and 8.3.3 of the FS. If no solar thermal station
would be built without gas backup, then the cost of power for
such a stand-alone station should not be listed. Instead the cost
should be $0.07/kWh using the consultant’s assumptions, or approximately
$0.035/kWh using the revised assumptions indicated above. If environmental
costs (e.g., from a carbon tax) are taken into consideration,
both solar thermal and wind generation would become cost competitive
with conventional sources of power.
Section 8.3.8
The pessimistic prognosis on energy efficiency is unwarranted.
The consultant makes a jump from the observation that per capita
energy use is low to the conclusion that there are no opportunities
to save energy. In fact, energy efficiency measures can limit
the growth of per capita and total energy consumption without
stifling new economic activity. The consultant assumes that Namibia’s
population growth rate will remain constant at 3.1% per annum
(population doubling every 23 years!) through the year 2025. This
conclusion comes even though birth rates are falling throughout
Africa, and are falling worldwide faster than at any time in history.
New energy efficient homes in South Africa have reduced heating
costs by 90%. These homes are low-cost, with construction expenses
of about USD1,500. If, as the consultant maintains, the residential
sector is a primary consumer of electricity in Namibia, energy
efficiency measures will dramatic reduce the need for new power
generation. These gains will accrue in both high income and low
income urban households.
About the Author
Mr. Gore received his Master’s degree from the Energy and Resources
Group at the University of California at Berkeley, with an emphasis
on alternative energy in rural development. He has served as Africa
Project Committee Representative with the International Development
Exchange, and worked with International Rivers to evaluate
and promote village-scale hydropower projects in Nepal. Mr. Gore
has also worked with the U.S. Environmental Protection Agency’s
Climate Change Division on energy efficiency and renewable energy
programs, and with a number of environmental and social justice
organizations. Mr. Gore is currently the director of a nonprofit
renewable energy organization in Washington, DC. The opinions
expressed herein are those of the author, and not of Renewable
Energy for African Development.
Chapter 8, "Alternative Energy Evaluation"
Email: jamal@usecre.org
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