Kudu’s light flickers bright

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Kudu’s light flickers bright

Keeping the lights on during 2023 and beyond has become an increasing cause of concern for Namibian industries and households. 

This is as all the countries, where Namibia imports power from, Zambia, South Africa and Zimbabwe, are load shedding, making electricity imports increasingly unreliable, with serious implications for domestic energy security. Zambia last week announced it will be curtailing power exports due to low power generation. 

Currently, South Africa is suffering through various stages of load shedding. 

Recently, Eskom, that country’s power utility, introduced a record high stage six load shedding for a few days, meaning some 6 000MW was unavailable. South Africa is also facing a roughly 20% generation shortfall, with more than nine hours of power cuts per day. 

Meanwhile, Zimbabwe still implements daily load shedding, but it has stated it will not stop exporting in order to maintain existing power markets and ensure much-needed foreign currency.

However, as Namibia awaits the full benefits of renewable energy options, such as green hydrogen, wind and solar, the Kudu Gas to Power project remains a viable solution on the table. 

“We anticipate that the project will be formally sanctioned in mid-2024 at which point a final investment decision would have been taken. Construction will follow shortly and achieve commercial operations by late 2026,” said Klaus Endresen, general manager of BW Kudu, a subsidiary of BW Energy, which is an oil and gas company involved in the acquisition, development and production of proven oil and natural gas fields. 

BW Energy is an affiliate of the BW Group, a global maritime energy transportation and floating gas infrastructure company with an 80-year history.

According to Endresen, several activities will need to be undertaken to support the Kudu Gas investment decision. 

Key among these include finalising power purchase agreements with customers, finalising the location of the power plant, securing environmental approvals for the entire development as well as finalising the engineering design and costs for the full project layout. 

“Whilst we have worked hard to reduce the full project costs, first by reducing the size of the planned power plant capacity, integrating both upstream and downstream aspects into the project, the projected costs are significant and a big investment into the Namibian economy. The project costs will run into several billion Namibian dollars,” Endresen told New Era

He added BW Kudu will fund the entire project itself, meaning no capital inflow will be required from the Namibian government. 

He noted financing arrangements for the project are progressing well, with no funding gaps anticipated.

Said Endresen: “First of all, Kudu will support that the person in the street experiences a safe and secure quality electricity supply entirely, dependent on domestic resources… We are aware of the local content requirements, and we intend to meet them as prescribed in our agreements with the government and the draft local content policy currently in circulation for review. The project will create jobs (direct and indirect) and generate an income stream for the State via royalties and taxes”.

He continued that Kudu-based power generation would complement and not be at odds with the country’s green initiatives. 

This is because Kudu’s flexible gas-fired power generation will allow NamPower to expand intermittent renewable (solar and wind) power generation with the assurance of thermal power backup to ensure system reliability. 

Endresen explained that Kudu’s first phase is expected to be some 420MW, of which about half will be used to replace all imported electricity, and the remaining power will be exported. 

“Kudu electricity will supplement solar and wind power in the national energy mix, enabling 24/7/365 electricity security, entirely based on domestic resources. Solar power is productive for 30% of the time (but does not operate in the early mornings and late afternoons when the demand is at peak – and of course, not during at night). Wind is intermittent, and it produces at most some 50% of the time. In addition to covering the periods when solar and wind are not producing power, Kudu is also required to provide quality to the renewable sources when they do produce to have quality of supply,” Endresen stated. 

The Kudu gas field in the northern Orange sub-basin, approximately 130km offshore, was discovered in 1974, and it is delineated by seven subsequent wells.

In 2017, BW Energy entered into a farm-in agreement for a 56% operated interest, with the National Petroleum Corporation of Namibia (Namcor) holding a 44% joint venture interest. 

In 2021, BW Energy signed a farm-up agreement with Namcor, increasing the corporation’s interest to 95% in the license, and closed the transaction in 2021.

According to its website, BW Energy is progressing with a revised development plan for the gas-to-power project to utilise a repurposed semi-submersible drilling rig as a floating production unit. 

Repurposing is expected to enable an optimisation of the project timeline and significantly reduce capital investments, compared to previous development concepts.

For the last financial year ending 30 June 2022, Namibia’s total energy demand was 3 983GWh. 

The highest peak time demand (between 07h00-10h00 and 17h00-19h00) was 624MW, with average off-peak demand (between 22h00-05h00 weekdays and most of the weekends) at 420MW.

For the last financial year ending 30 June 2022, Namibia’s total imports were 71% of the total energy demand, of which 256GWh was sourced from the Southern African Power Pool (SAPP), the remainder from bilateral agreements with ZESCO (Zambia), ZPC (Zimbabwe) and Eskom (South Africa).

One of Namibia’s biggest energy contributors remains the Ruacana Hydro Power Station, which has an installed capacity of 347 MW. 

Meanwhile, Namibia is in the process of finalising its National Integrated Resource Plan (NIRP), and NamPower has embarked on its integrated system plan to inform future project allocations and investments in serving the national demand. 

In addition, Namibia’s active modified single buyer (MSB) market allows for private generation facilities to supply customers up to a threshold of 30% of annual energy requirements. 

NamPower foresees that the role of solar PV, battery energy storage and wind power will all increase due to the attractive lower cost of energy, compared to conventional sources.