MIGA helps Secure Long-term Finance for Solar Energy Development
PUBLISHED 17 APR 2018
MIGA, part of the World Bank Group, recently announced that it is willing to provide Namibia with guarantees of up to $18 million to help secure financing for the construction of two 5 megawatt solar power plants, together with the associated operation and maintenances costs. The Ejuva One and Two solar energy plants will have the capacity to generate 25.8 gigawatt hours of energy per year.
Solar Power Plant near Keetmanshoop, (Aerial view 2017) | Hp.Baumeler
The guarantees offer protection against risks such as breach of contract, expropriation, transfer restriction and incovertibility, and civil disturbance and war for a period of up to 15 years.
According to ESI Africa - Africa's Power Journal: "Some $15 million of coverage is being provided for non-shareholder loans being provided by South Africa's Investec Bank Ltd., and an additional $3 million of cover is being provided for an equity investment by CIGENCO SA. Around 90% of the equity, and 95% of the loans – both provided in South African Rand, are covered by the guarantees."
The two PV plants form part of fourteen winning bids under the Interim Renewable Feed-in Tariff (REFIT) programme. The electricity generated from the solar plants will be sold to the national power utility, NamPower, under two separate 25-year Power Purchasing Agreements at a rate of NAD1.37 ($0.11)/ kilowatt hour.
MIGA's guarantees provide breach of contract cover on the above power purchasing agreements between the Project Enterprises and NamPower.
"Namibia's large geographic area, compared to a small and widespread population poses an electricity distribution challenge," said Keiko Honda, Executive Vice President and CEO of MIGA. "Small power plants such as Ejuva One and Two can meet this challenge by bringing power generation and distribution closer to the end users."
A part of the „Demonstration Project at Gobabeb of Renewable Energy and Energy Efficiency“ (DeGREEE): The solar panels
The goal of the REFIT programme is to promote and develop an Independent Power Producer market within the country. It also strives to promote small-to-medium renewable energy projects, as well as to build local capacity by stipulating that 30% of Independent Power Producers are owned by previously disadvantaged Namibian citizens.
These two solar plants — the first privately-developed PV plants in Namibia — meet the above objectives and are expected to pave the way for larger renewable projects in Namibia in the future.
Namibia's Current Power Status
While Namibia is currently able to generate around 514 megawatts of power through locally installed power plants, it is estimated that peak demand for power is just over 660 megawatts. It is estimated that over the next few years the power deficit will exceed 300 megawatts.
Even though Namibia has a coal fired power station, two liquid fuel plants and a hydroelectric power plant, 68% of the country's 2016 energy consumption was imported, most of it from neighbouring South Africa.
In a country such as Namibia, which is large in terms of its geographic size, yet has a comparatively small and widespread population, having small solar PV power plants located in close proximity to consumers can help to reduce the cost associated with inefficient energy generation and transmission over long distances in order to supply end users.