Title of paper

1. Introduction

This paper¹² examines the regulatory and legal framework of the energy sector with regard to renewable energies. As most renewable energy technologies in today’s market are not yet able to withstand competition from fossil fuels, there is a need for the Namibian government to create a support system that is not in place at the time of writing. There are different so-called procurement mechanisms that are used in other countries throughout the world to enhance renewable energies. The most successful are described in this paper.
Why is it so important that the government comes up as soon as possible with a new legal framework within which the role that renewable energies will play in Namibia’s energy mix is defined?
The challenge faced by Namibia today is that domestic generation is not adequate to meet current and future demands. Furthermore, the demand for electricity still continues to grow, especially in the Erongo Region, where due to the rising number of uranium mines, there is significant economic growth.
Currently, the major proportion of Namibia’s electricity requirements is imported from the Southern African Power Pool (SAPP). To complicate Namibia’s situation, supply constraints in South Africa are resulting in Eskom not being able to meet South African electricity needs, much less those of Namibia.
Renewable energy sources – from solar, wind, biomass and the as yet unquantified indigenous resources that include geothermal, wave and tidal energies – could provide viable alternatives to conventional sources such as oil, coal, gas and nuclear power and might help diminish the Namibian electricity shortage as many renewable energy sources are available without the necessity to initially build large-scale power plants.

The following table depicts Namibia’s energy demand:

73% of electricity used in Namibia is not produced locally but is imported from other SADC countries with by far the biggest percentage coming from Zimbabwe. Only 27% of electricity demand is produced in the country. Almost all locally produced electricity comes from the Ruacana hydropower station and thus, most of Namibia’s locally produced electricity already comes from renewables as hydropower is considered a renewable energy source.¹³ The remaining 1.4% comes from conventional energy sources. They are produced by the Van-Eck coal power station in Windhoek, the Anixas diesel power station in Walvis Bay and the Paratus diesel power station, also located in Walvis Bay.
Thus, it is high time to find ways to produce more electricity in an environmental friendly way locally.

2. Regulatory framework

The Ministry of Mines and Energy, in cooperation with the Electricity Control Board (ECB), serve as the regulatory bodies of the electricity sector.
The Ministry of Mines and Energy is the custodian of the country’s energy sector. Since 1993, the Ministry has had a department responsible for promotion of renewable energies. The power to regulate the renewable energy market is conferred on the Minister through the Electricity Act.
The Electricity Control Board (ECB) is a statutory regulatory authority established in 2000. The core mandates of the ECB are according to section 3 of the Electricity Act:

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  to exercise control over and regulate the provision, use and consumption of electricity in Namibia,
  
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  to oversee the efficient functioning and development of the electricity industry and security of electricity provision,
  
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  to ensure the efficient provision of electricity,
  
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  to ensure a competitive environment in the electricity industry,
  
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  to promote private sector investment.
  

As an independent regulatory body, the ECB is thus in charge of regulating electricity generation, transmission, distribution, supply, import and export to Namibia. It has the sole mandate to approve electricity tariffs.

The ECB is also involved in the development of a new legal framework for renewable energies and investigations to find the best procurement mechanism for promoting renewable energy technologies in Namibia.

Other activities of the ECB were to develop a pro-poor tariff and the establishing of the Revolving Fund on renewables that provides guarantees to people who would otherwise not be able to have access to loans from commercial banks for investing in renewable energy systems. Beneficiaries are families and individuals not connected to the grid that want to buy solar home systems.

The ECB executes its statutory functions through the technical secretariat headed by the Chief Executive Officer. Since 2002, the ECB has been led by Siseho Simasiku, a trained engineer with a special qualification in nuclear power plant construction.

Changes in the role of the ECB are expected in the near future. The Commonwealth’s Secretariat Advisory Division is assisting the ECB to become the overarching energy regulator that oversees gas, renewable energies and other energy resources. It will be renamed the Namibian Energy Regulatory Authority.
The sector’s other main market actors are NamPower and the Regional Electricity Distributors (REDs). Namibia’s electricity generating utility, the Namibian Power Corporation, is the bulk supplier to mainly REDs, mines and local authorities, where REDs are not operational. NamPower is wholly owned by the government of Namibia and is made up of three core businesses, i.e. generation, trading and transmission. The utility also fulfils the role of system administrator. Electricity imports and exports using the Namibian grid are controlled by NamPower. All independent power producers (IPPs) that wish to input electricity from renewable energy technologies into the grid have to initially negotiate power purchase agreements with NamPower who acts as the single buyer. As NamPower is the sole buyer of electricity, it has the potential to be an obstacle for independent power producers as they can only negotiate with NamPower in order to sell their independently generated electricity.

In 2010, NamPower created a new department for renewable energies to spearhead renewable energy projects and facilitate their implementation.

Where Regional Electricity Distributors (REDs) exist, they are responsible for supply and distribution of electricity to consumers. REDs were introduced in the course of the restructuring of the electricity market in 2000. Currently there are only three REDs operating in Namibia – Erongo Red, Nored and Cenored. Where REDs do not exist, electricity is either provided by NamPower itself or by other government institutions like City of Windhoek for Windhoek residents.
The Renewable Energy and Energy Efficiency Institute (REEEI) does not primarily act as a market actor but its practical role in supporting renewable energy technologies should not be underestimated and is therefore, mentioned here. REEEI is a national energy institute at the Polytechnic of Namibia. It has a mandate to facilitate and conduct research into renewable energies and energy efficiency, to develop standards, to disseminate information and materials on renewable energies and energy efficiency, and to facilitate the cooperation between the Ministry of Mines and Energy and the Polytechnic and also other stakeholders. Thus, it serves as a national information hub, rendering knowledge and expertise. It is planned to transform it in 2014 into an institute with a broader scope accommodating not only renewable energy technologies.