Vinlah Management Solutions is at the forefront of catalyzing renewable energy projects developed by Independent Power Producers (IPPs) in Namibia, as the country seeks to increase domestic generation capacity and encourage private participation in the energy sector. Energy Capital & Power spoke with Managing Director Vinson Hailulu about the country’s current power system and how to enable further energy trade and development.
The NCF and TANDII solar PV plants were the first solar projects in which Vinlah Management Solutions was involved. What impact has small-scale renewable development had on Namibia’s energy matrix?
For the past 10 years, the government has championed deregulation of the energy sector in Namibia, which in turn has enabled Independent Power Producers (IPPs) to take part in the production of energy, especially renewables. Namibia is heavily endowed with solar, wind, and to some extent, biomass resources. They present the country with a great opportunity to increase the production of energy and reduce the country’s reliance on external energy from South Africa and other neighboring countries. Roughly 60% of what Namibia consumes is imported from South Africa, as well as from Zambia and Zimbabwe. This necessitated a process where the power utility acting in pursuance of such government deregulation objectives initiated and implemented a renewable energy feed-in tariff (REFIT) program in 2015. The NCF and TANDII solar projects are two of the 14 solar projects that the utility company commissioned, all of which have added close to 80 MW to the power grid. Namibia’s total consumption is about 650 MW. Therefore, adding 80 MW to energy production is quite significant in the Namibian context. The country should at least be able to rely on its internal energy production capacity, and eventually be able to export extra energy produced locally to the Southern African Power Pool (SAPP).
How can the structure of Namibia’s electricity sector support its goal to increase installed generation capacity?
We have a Modified Single Buyer (MSB) Model through which the government is implementing its market deregulation process, which has allowed IPPs to get on board. In addition, the government is reviewing the Electricity Act and the National Integrated Resource Plan, which captures the government policy objectives in terms of medium- to long-term energy production and requirements. The MSB Model furthermore allows the export of energy to SAPP. The construct of that policy is that at least 25-30% of what an IPP produces will be absorbed by the national power utility as the off-taker. The remaining 65-70% will then be exportable to SAPP. The market is already structured in a way that this energy trading approach is possible and feasible. The key policy consideration is energy security for the country.
What new projects is Vinlah Management Solutions actively pursuing?
Given our track record, the projects we find most immediately attractive are solar. Wind is another possibility. However, the cost structure for wind energy is a bit higher compared to solar alone. We are currently working on assessing a possible public-private partnership with NamPower for a nearly 35 MW project in the north. We should then be able to produce more energy from solar renewables and add to the grid accordingly.
Where do IPPs fall within the context of local content development?
The local content policy requirements speak to two issues. One is the minimum share percentages that every IPP is supposed to reserve for a local entity. In the context of REFIT projects, it was a minimum of 30%. In the revision of the regulatory and policy framework, the government is looking at increasing that requirement to 40-45%. The second aspect is the provision of services. The way this can be addressed from a policy standpoint is to organize and prepare locally-owned companies for service provision in the value chain of the energy industry. This, of course, requires capacity building and investment in locally owned entities so that they can serve as effective and efficient service providers to meet industry needs. .
Why should investors enter Namibia’s renewable energy market?
First, Namibia is heavily endowed with renewable energy – solar and wind, in particular. Our irradiation level is among the highest in the world. In addition, the discovery of oil in the country has opened up another great opportunity for investment in Namibia. As such, there couldn’t be a better time to invest in this country than now. As far as public policy is concerned, the government is busy reviewing the existing Petroleum Act and putting in place a policy and regulatory framework that provides for local content requirements and conditions, thereby opening up further opportunities for local businesses in the energy, oil and gas space. As for engaging investors, my company and other local entities are available and ready to tangle and to get deeper involved in the industry.
Energy Capital & Power is a strategic partner of the Namibia International Energy Conference (NIEC) – taking place in Windhoek on April 23-25, 2024. The 6th annual conference unites industry leaders, business executives and policymakers to engage in dialogue, exchange ideas, create new partnerships and identify strategies to foster a prosperous energy industry in Namibia and beyond. For more information, please visit https://www.nieconference.com/
