Power policy

Construction of solar PV is expanding in Namibia, having roughly doubled in capacity each year between 2014 and 2018. The technology currently represents 13% of installed capacity. Solar PV’s relatively low cost and high capacity factors have meant that it has eclipsed investment in wind energy, which is now comprised of two projects. Most of the equity investment in energy projects built after 2015 has been provided by foreign companies such as Spanish power producer Alten Energias Renovables and Canadian Solar. Pipeline projects are owned by other international stakeholders such as EDF and Innosun. The government recently introduced ownership share rules to limit foreign equity ownership. For example, to qualify for Refit, each project must allocate at least 30% ownership to disadvantaged local groups. Debt has been provided by local Namibian banks as well as a diverse set of international development banks, such as the African Development Bank, France’s Association of Fundraising Professionals, and the Green Climate Fund.

Unlike many neighboring countries, retail power prices in Namibia are cost reflective and unsubsidized. Therefore, their prices are among the highest in sub-Saharan Africa, and have increased more than 5% annually for the last six years. Retail tariffs vary by season and time of use (peak versus non-peak) and contain high capacity charges for industrial and commercial consumers. These retail-rate structures are prime for battery development, which could reduce a site’s peak load and shift consumption from high-priced to low-priced times of the day.

The country is burdened by its inability to meet demand with domestic power. About 60% of electricity needs are met with electricity imports from South Africa, the costs of which are substantially higher than power from local plants.

High electricity prices are driving investments in off-grid solar-plus-battery systems, even in areas where the grid is available. In Namibia’s capital Windhoek, there is an estimated 20MW of off-grid capacity.

The country has done much to incentivize solar generation. However, it lacks the highly flexible generation sources that would minimize electricity imports during the most costly peak hours.

Power prices and costs

The Ruacana hydro plant dominates Namibia’s power fleet, accounting for 58% of installed capacity. Namibia has some of the strongest solar resources in the world, thanks to its proximity to the equator and arid climate. Single-axis tracking solar PV projects have achieved an annual capacity factor exceeding 30.2%. High capacity factors and advances in solar technology have contributed to a fast decline in the levelized cost of solar. BloombergNEF’s levelized cost estimates suggest a halving of costs for solar in sub-Saharan Africa between 2015 and 2021 (from $107/MWh to $54/MWh).

Low costs and high output have contributed to solar PV’s rapid growth in Namibia, which has seen a doubling of solar capacity each year between 2014 and 2020. Solar PV currently represents 31% of installed capacity. Nampower is currently the only offtaker with which IPPs can sign power-purchase agreements. However, regulator, the Electricity Control Board, plans to switch from a single-buyer model to a modified single-buyer model, where IPPs can sell directly to local distributors and large consumers, and potentially also export power.

Power market

In 2015, Namibia introduced its feed-in tariff program (Refit), which opened up its previously vertically integrated power sector to privately owned renewables projects. Under Refit, Nampower (Namibia’s state-owned utility) signed contracts for 60MW of solar capacity between 12 counterparties and an additional 5MW of wind capacity. Nambia’s power sector regulator has stopped awarding Refit contracts, and instead switched to tenders to procure additional capacity. Four solar PV projects totaling 59MW have been commissioned so far through tenders. Five unsolicited independent power producers (IPPs) have signed PPAs with Nampower. In its 2019-‘23 business plan, Nampower pledged to spend an additional $338 million to add 220MW of renewable power to the grid, and another 70MW that will be procured from IPPs.

Doing business and barriers

Providing access to the rural population has historically been a challenge in Namibia, as it is the least densely populated country in Africa and the rural population is extremely dispersed. In some areas, grid extensions are not financially feasible. So far, minigrids have been developed top-down by the government, although it is keen to discuss public-private partnership arrangements with investors.

Infrastructure limitations pose the biggest challenge for capacity additions, particularly for projects of more than 30MW in size. Nampower recently announced that the transmission system is reaching the limits of how much intermittent generation it can sustain. The transmission system frequently experiences congestion. A new transmission line is currently under construction. No smart-grid management systems are in place, which would help with a rise in intermittent generation.

EV market

The government has yet to implement any substantial policy support in this sector and the EV market remains at an early stage. Fuel economy standards are under development but have not been published. Minimal to no vehicle manufacturing capacity in the country and taxes on imported vehicles means that EVs are at a cost disadvantage to internal combustion vehicles.

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

The Namibia national program for the promotion of energy efficiency aims to create a culture of energy consciousness, to improve framework conditions for energy efficiency technologies and to create dialogue platforms for the advancement of energy efficiency. The Green Building Council and the Namibia Energy Efficiency Programme in Buildings (NEEP) promote energy efficiency, although there are no official mandates.

Buildings policy

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