Title of paper

4.1 People and wealth in Namibia

This pyramid shows the structure of income in the Namibian population. 87% earn 4,600 Nam$ or less. Given the fact that inflation is eating away from this amount every year, and wage increases can hardly keep pace, while electricity prices are rising in double-digit steps, the limit, at which people cannot afford electricity any longer, has been achieved already. The number of houses that are being auctioned due to unpaid municipal bills is reaching dramatic proportions. Municipalities are doing what they can to recover the cost for electricity because the profit in that is one of their major sources of income. However, also the cost of recovery is dramatic, which reduces of course their surplus drastically. If prices per kWh are rising as predicted, the number of customers for electricity usage is going to decline to such an extent that those, who are remaining, will face exponential price increases or also back out of the system.

Those in the upper 13% of this pyramid are opting out, because nowadays it is actually cheaper in many cases to generate electricity from photovoltaic-cells than to buy it from the grid. Depending on which financing model the small private investor uses, and depending on the exchange rate as well as actual prices for panels and other components, prices from 0.80 to 1.20 Nam$ per kWh are not unrealistic. This does not include storage in batteries or in other ways, since storage roughly doubles the price per kWh. However, an increasing number of house owners and shops produce an increasing portion of their electricity by themselves; as long as there is no nationwide regulation of net-metering (= same price in as out) they can dimension their systems in such a way that they produce as many kWh on an average day as they consume.
Various workshops have been held to work out a formula, which would be suitable to regulate remuneration small-scale for investors. The two opposite viewpoints are: net-metering versus ‘avoided cost’, meaning the distributors pay to the investor as much per kWh as they have to pay to NamPower otherwise.

Only roundabout one third of Namibians are using electricity from the grid on a regular basis.

4.2 The grid

This slide depicts the national grid

as it is now.

This slide depicts the grid as it could be, provided we follow a de-centralised, renewable concept.

The drawing shows how it could be, if Namibia had a consequent policy of decentralisation.

Allowing people to generate and trade electricity from decentrally installed plants of various sizes would not only increase the national generation capacity tremendously; it would – provided that a fair system of compensation is implemented – also keep billions of Nam$ in the country, which are currently invested elsewhere.

A fair system of compensation would also bring some profits in the pockets of the Namibian middle-class and keep the major part of the >1.2 billion Nam$, which NamPower pays every year to its foreign suppliers, circulating among Namibians.

Furthermore, such fair compensation would secure long-term stable supply of clean power to the Namibian grid at long-term stable prices, because solar power does not increase in price over time such as all fossil and nuclear sources. Depending on the source of finance, decentralised renewable energies are therefore cheaper in the long-term than any fossil or nuclear option.

This calculation is indeed rough and simple and thus a price per kWh might turn out to become 10% more or even 20%, but it will be a stable price that can be guaranteed for up to 25-30 years, which in itself is a strong argument in favour of solar generation. Whatever time span one chooses to pay off the initial investment – after that time electricity comes for free because modern solar panels keep on producing also after two decades.

4.3 How to finance power in Namibia?

Despite the fact that renewable sources will be cheaper in the long run than any fossil or nuclear option, the new system will need some incentives and some security for new investors. The following slide shows, how this can be done:


Since the running cost for most renewable generation option is negligible, they will outcompete any other way of generating electrical power. As an investor repays his/her initial investment, the generation (=production) cost per kWh is actually declining, while this is the other way round with fossil options, since the price for fuel, be it coal, oil, gas or nuclear will most probably increase over time, and will have to be purchased for international currency, which exposes the owner of any power station to an incalculable risk, because exchange rates can not be predicted reliably for more than a few months if not weeks. Unlike a car, a power station can not be switched off or left in the garage when the running cost is becoming too high. Levellised price increases have to be passed on to the consumer in one way or another because there is no other source of finance. Therefore the decision that is taken now is so fundamental. Namibia is running the risk to be trapped with an expensive, unsustainable solution, which will drain resources out of the national economy because international loans need to be serviced, irrespective of the viability of the investment, the exchange rate and other factors beyond control of Namibians.
1.5 billion - that is roughly 5% of the amount NamPower requires for its vision - can lay the basis for a sustainable solution, if placed in a fund and used to protect investors from losses when they invest their own money in renewable electricity generation in Namibia. An investor should have to produce at least 85% of the technical capacity of his/her system and run the generation plant prudently and efficiently to benefit from this fund. The fund would guarantee him/her a price per kWh that covers generation cost including interest for a loan he/she eventually had to take – no profit. Since generation cost will be declining as capital is being repaid, a point will come, when profits are being made. From this point in time, the investor will have to pay back 50% of the profit made to the fund, which can then use this money for other projects, or for bursaries to help Namibians to learn how to manage renewable energy and energy efficiency, or research and development to optimise technology for Namibian needs. Also marketing and information campaigns could be supported by the profits generated in order to promote the process of Namibia to become the first country in Africa that is running a modern industrialised society on 100% renewable resources. Given the low rate of efficiency of the past international conferences, it might even be an option to ask for the initial 1.5 billion from the international community and promise them that these funds will be put to good use to show and proof that – unlike 1974. With today’s modern technology an entire country can be empowered from renewable energy sources. There is no other country in the world that has better conditions for this endeavour.