Power policy

In 2020, hydro accounted for 71% of Angola’s total generation and 55% of the 6.1GW installed capacity. The country aims to add 800MW of renewables capacity (500MW of biomass, 100MW of solar, 100MW of wind and 100MW of mini hydro) by 2025. The $23-billion strategy aims to reach 9.9GW of total capacity and boost electricity-access rates from around 34% in 2018 to 60% in 2025. By that time, natural gas is to meet 20% of generation, hydro will account for 64%, while 8% will come from other renewables. Of the 9.9GW of new build, just under a third will be developed through public-private partnerships.

Angola has a feed-in tariff for renewable energy projects up to 10MW in size and offers net metering for projects that size or larger. While the country has no further incentives to promote renewables deployment, it has signaled plans to expand support via its "Bet on Solar Energy Program", which aims to tender a total of 200MW of solar, divided into five 40MW lots, by 2022.

Power prices and costs

The government set current quotas in 2019, after previously leaving them level since 2013. The higher retail tariffs for electricity were expected and were a consequence of electricity sector reform started in 2014. Still, Angola has some of the lowest tariffs in the world thanks in part to heavy subsidies. Commercial prices went from $6/MWh in 2018 to $11.5/MWh in 2019. Residential prices spiked 61% to reach a still modest high of just $7.3/MWh in 2019.

Extensive fossil-fuel subsidies significantly affect the price at which electricity is offered by the state generation company, reducing the potential incentive for consumers to install small-scale PV. Empresa Nacional de Distribuição de Electricidade (ENDE), Angola’s national electricity company, cannot charge cost-reflective tariffs and is dependent on government subsidy. Higher rates are expected to improve the utility’s financial position and potentially attract independent producers.

Through power sector reform, the government has sought to strengthen the role of independent regulator Instituto Regulador do Sector Electrico (IRSEA). It has also sought to unbundle the power market, creating PRODEL-EP on the generation side, together with RNT and ENDE as the transmission- and distribution-system operators. Generation and distribution/retail are technically open to private participation, but private players have not entered either market yet.

State-owned PRODEL-EP owns most grid-connected generation assets. Two independent power producers, Aggreko Angola and CIF, also participate on the market.

With an energy sector dominated by large hydro, Angola has not received significant investment in other forms of utility-scale clean energy in recent years. However, its 2025 energy strategy will require substantial investment in renewables, much of which is likely to come in the form of concessional financing.

Power market

Much of Angola's infrastructure was destroyed during its 27-year civil war, which ended in 2002. The power network is fragmented across three regional grids and some isolated systems. In March 2020 Angola received a multimillion-dollar loan from the African Development Bank (AfDB) to fund the North-Central-South backbone connection. This transmission project, which was under construction as of the end of 2020, is part of the government’s Energy Sector Efficiency and Expansion Program (ESEEP).

Significant investment expanded Angola’s power-generating capacity from just 700MW in 2002 to around 13.8GW in 2020. The country saw capacity grow 27% alone in 2017 with the commissioning of the 750MW Soyo natural gas-fired plant and the completion of additional phases of the Lauca hydroelectric dam totaling over 1.6GW. When fully commissioned, the $4.3 billion Lauca will become the largest hydropower plant in southern Africa, alongside Mozambique’s CahoraBassa.

The Angola government hopes to reach a 60% electrification rate by 2025. As of 2020, the rate was 45.6%, with much lower rates in rural areas. Angola has an ambitious, if unsupported, near-term plans to develop renewable energy. It seeks to connect over 500MW to the grid by 2022, and 800MW by 2025.

Doing business and barriers

Angola’s economy contracted in 2020 for the fifth straight year, as a slower-than-expected economic recovery unfolds for its large petroleum sector. Declining crude production, falling oil exports and high inflation create a challenging outlook. Investments in power-generating capacity in the form of new large hydro facilities have improved the reliability of power supply in the capital region in recent years, though soaring demand and population growth means progress on electrification will be challenging.

The government highly stimulates the development of mini-grids and small-scale PV projects to expand electricity access in rural areas. The mapping of resources has been carried out to some extent across all technologies and several solar hybridization projects are underway, but no concrete steps have yet been taken to advance a planned solar auction program or to develop the country's wind resources.

State-run utility ENDE is currently prohibited from charging cost-reflective tariffs and is fully dependent on government subsidies, although a subsidy supporting fossil fuel use is planned to end very soon. The grid regularly experiences significant technical and commercial losses. The country is aggressively modernizing its power plant fleet, growing generation capacity with a focus on constructing new large hydroelectric facilities, as well as expanding and modernizing existing facilities.

Angola's average cost of importing in terms of border and documentary compliance far exceed those of Sub-Saharan Africa averages, according to the World Bank's Doing Business 2020 survey.

The sector suffers from several inefficiencies: non-payment from customers as over 80% do not even have meters. Electricity production and distribution costs are high but average consumer tariffs are low. Official estimates of total sector losses are over 60%. ENDE, PRODEL and RNT, the country’s main offtakers, are all heavily indebted.

EV market

Angola’s EV market is extremely immature as the country has just recently allowed such cars on the road. Prior to that approval, startup company T'Leva introduced 1,000 EVs to Angola’s roads, and initially encountering resistance due to lack of legal framework for EV circulation.

EV policy

The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.

Buildings market

Angola does not have a developed low-carbon heating market given its geographical conditions as a sub-Saharan country.

Buildings policy

Angola has stated on its most recent NDC that its target by 2030 on energy efficiency is the installation of 4,000 efficient LED lamps in public buildings and another 4,000 in public spaces. In partnership with the African Development Bank (ADB), Angola is in the process of implementing the Energy Sector Efficiency and Expansion Programme Phase 1 (ESEEP I). The program focuses on reducing non-technical losses and decreasing dependence on state-subsidies for fuel.