Botswana Power Corporation
Project Information Memorandum (PIM) For
Integration Of Morupule B AND MMAMABULA Power stations Into The Transmission Grid
TABLE OF CONTENTS
1. 2. 3. 4. 5. 6. 7. 8. 9.
Background............................................................................................................. 3 Botswana’s System Development Plan (Generation Expansion)............................ 4 Measures to Address the Supply Gap of 2008 – 2012 ........................................... 6 Transmission Infrastructure Requirements ............................................................. 7 Integration of Morupule B Power Station to the BPC power Grid............................ 8 Technical Assistance ............................................................................................ 10 Transmission Investments Cost Estimate ............................................................. 11 Transmission Projects Implementation Plan ......................................................... 12 Transmission Investments Financing Plan........................................................... 13
10. Conclusion ............................................................................................................ 14
Background The Botswana Power Corporation (BPC) was established as a statutory corporation under the Botswana Power Corporation Act CAP 74:01 (the “Act”) on 30 June 1970 and is wholly-owned by the Government of the Republic of Botswana. It has the responsibility for the generation, transmission, distribution and supply of electricity throughout the country. In its 37 years of existence, BPC’s generation assets developed from a small, oil-fired power station in Gaborone, which was commissioned in 1970 and dismantled in 1989, to better and more efficient thermal power stations in Selebi-Phikwe and Morupule using locally mined coal. The Selebi-Phikwe power station has also been decommissioned, leaving only the then more technologically advanced Morupule Power Station, which is adjacent to the colliery. The Morupule Power Station provides approximately 20% of the country's power requirements, while the remainder is imported, mostly from Eskom, the South African power utility. The Corporation is a vertically integrated organisation structured into five Strategic Business Units (SBUs) responsible for electricity generation, transmission, distribution and supply functions, Rural Electrification and Corporate Services. BPC presently owns all of the electricity generation, transmission and distribution assets in Botswana comprising of:
The Existing Morupule Power Station; and A power network consisting of 400kV/220kV/132kV/66kV/33kV/19.1/11kV transmission/distribution lines and substations as set out in Map 1.
BPC currently has about 160,000 customers as compared to about 54,440 in March 1997. A significant portion of this growth has come from various Government-funded rural electrification projects, particularly over the past five years. Some of the projects are in remote areas throughout the country. Major rural electrification targets have been set under the National Development Plant which will see most of the villages electrified within the next few years. Botswana’s electrical energy requirements are driven by the prevailing high economic growth virtually across all sectors of the economy. The mining sector in particular is growing rapidly due to increased demand for base metals resulting in high metal prices on the world market. A number of new mining companies will be established within the next three to five years. Botswana’s annual electricity consumption is forecasted (high case) to grow from 2 626 GWh in 2006 to 7 144 GWh in 2026 representing an average annual growth rate of 5.1%. The generating plant capacity required to deliver this energy is 1 160 MW in 2026 compared to the current 500 MW. Botswana has been reliant on electricity imports from South Africa for up to 80% of its internal electrical energy requirements over the past years. The whole Southern African Region is, however, now facing a challenge of the growing supply deficit. This is exerting significant pressure on BPC to meet the growing electricity requirements considering that its main supplier of electricity in the region has limited ability to trade electricity on firm power purchase agreements.
As a result, Botswana can no longer import sufficient electricity to meet its internal consumption requirements and needs to invest in new generation facilities as a matter of urgency. Several years ago, in response to the projected shortage of generation capacity in the region, BPC embarked on feasibility studies for the expansion of the Morupule Power Station (Morupule B). Phase 1 of this expansion is now under way with the first unit scheduled for commissioning in the last quarter of 2010 or first quarter of 2011. Phase 1 consists of 4 x 150MW units which, along with the existing Morupule Power Station, will be just sufficient to meet the projected national demand in Botswana at that time. It is, therefore, clear that additional generation capacity will be required subsequent to 2011. To meet this additional requirement from 2012 onwards the BPC has commissioned a further feasibility study for Morupule B Phase 2 which consists of an additional 4 x 150MW units, bringing the total capacity of Morupule B to 1,200MW. The Government of Botswana, has given consent to the development of a 2 400 MW coalfired power station by the private sector, the Mmamabula project. The development of this power plant, through an Independent Power Producer (IPP) structure, is well underway, with the first unit scheduled for commissioning in the first quarter of 2013. The Corporation is negotiating a power purchase agreement with the sponsors for 25% offtake (600 MW) from this power plant. 2. Botswana’s System Development Plan (Generation Expansion) The Botswana Power Corporation, supported by the Government of Botswana, has embarked on a comprehensive electrical power system development plan which will see the expansion of the existing power station at Morupule with an installed capacity of 132 MW by an additional 1 200 MW within the next ten years. Half of this additional capacity (600 MW) is scheduled to come on line in 2011 under Phase 1 of the Morupule expansion project. The plan is to develop Phase 2, incorporating another 600 MW, of this project seamlessly with Phase 1. The system development plan also includes access to 600 MW from the Mmamabula IPP power station whose first unit is scheduled for commissioning in the first quarter of 2013. The above outlined system development plan is driven by the diminished surplus generation capacity in the region and the growing electrical energy requirements in Botswana. This system development plan ensures adequate and secure energy provision to the country’s developing economy. Table 1a below indicates the generation expansion programme and the Supply – Demand balance outlook over the next ten years with Table 1b indicating the projected energy consumption for the same period.
Table 1a: System Development Plan (10 Yr Supply – Demand Balance) Megawatts (MW)
Source 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Morupule A Imports Morupule B 1 Morupule B 2 Mmamabula Total Supply Peak Demand Margin
470 530 -60
470 610 -140
370 670 -300
540 720 -180
660 750 -90
860 790 +70
1 260 830 +430
1 260 860 +400
1 260 880 +380
1 260 930 +330
Assumptions 1. Imports from Eskom under a Five Year Supply Agreement have been considered 2. Imports from HCB currently at 75 MW to the end of 2008 have been excluded as supply post 2008 is under discussion. 3. A possible planned 250 MW IPP Power Plant to bridge the Supply Gap has not been considered as the project is at bid evaluation phase. 4. Demand Side Management (DSM) has not been factored in the Demand Projection. 5. Morupule B Phase II project (600 MW) has not been factored into the Supply Demand Balance as the project is at feasibility study stage. 6. The surplus power from year 2013 onwards would be exported to the SAPP market under firm and non firm power export arrangements.
Table 1b: Projected Energy Consumption by Sector (2008 – 2017) MWh
Sector Domestic Mining Commercial Government Total Sales Losses Required Available 2008
695 1 429 700 249 3 073 396 3 469 3 083
753 1 787 735 266 3 542 469 4 011 3 083
814 2 027 772 284
877 2 150 809 302
942 2 181 847 321 4 292 587 4 878 4 523
1 009 2 286 886 341 4 522 603 5 125 5 943
1 078 2 393 926 362 4 758 619 5 377 8 784
1 149 2 402 967 383 4 900 621 5 521 8 784
1 222 2 375 1 009 405 5 010 618 5 627 8 784
1 296 2 548 1 051 427 5 323 639 5 962 8 784
3 897 4 138 531 579
4 428 4 717 2 599 3 747
Measures to Address the Supply Gap of 2008 – 2012
The following outlines the measures being put in place to address the projected supply deficit from the current year 2008 through to 2011 after which period domestic generation expansion projects are expected to have come to fruition. 3.1 Demand Side Management The Corporation has embarked on a Demand Management Program comprising of the following strategies. 30 MW load reduction through replacement of 1 million Incandescent light bulbs with Compact Fluorescent Lamps (CFLs). Remote control of 63 000 Water Heaters will yield 35 MW load shifting capability. An on going National Electricity Efficiency Campaign (NEEC) and a Power Alert System for public awareness is expected to yield further consumption reduction.
Consideration is being given to launch a Power Conservation Program (PCP) through the Energy Affairs Division (EAD) of the Ministry of Minerals, Energy and Water Development. This program essentially comprises of the introduction of policy and legislation aimed at encouraging efficient utilization and conservation of electrical energy. Penalties will be applied for inefficient utilization of electricity. Tariff restructuring with a view to introduce Time of Use (TOU) and KVA Charges and to attain cost reflective tariff levels. A comprehensive tariff study is planned for the first quarter of financial year 2008/09.
Securing of Additional Supply In order to bridge the huge 2010 supply gap, the Corporation floated an Expression of Interest (EoI) tender at the end of Year 2007 for a 250 MW peaking to mid-merit power plant and subsequently called for Request for Proposals (RfP) from four short-listed potential investors. The RfP closed on 4th April, 2008 and evaluation is in progress. The plan is to develop a 250MW plant by the end of 2009 under an IPP structure. The Corporation intends to enter into a suitable Power Purchase Agreement with a suitable investor to purchase capacity and energy from the power plant. Other initiatives involve securing additional imports from neighbouring utilities through short term agreements where possible.
Transmission Infrastructure Requirements The above outlined generation expansion programme, which is driven by the rising electricity demand and the fundamental requirement of ensuring long term energy security, calls for the development of a robust and adequately dimensioned transmission system. The system is required to link the power generation sources to the various load centres located at various sites throughout the country. In this regard the Corporation commissioned a comprehensive transmission study for the development of a 10 Year – Transmission Development Plan to guide Transmission investments. The scope of the study, which was completed in September 2007, covered a review of the existing transmission network, integration of the new generation power plants (Morupule B and Mmamabula), a twenty year demand forecast and interconnection of the Botswana power grid with the Southern African Power Pool (SAPP) to cater for planned regional developments, namely the WestCor project and Kudu Gas project in Namibia. The 10 – Year Transmission Development Plan recommended 50 transmission projects aimed at removing the existing constrains in the transmission network, capacity upgrade to meet projected demand, extension of the transmission network for grid access by new
loads and evacuation of power from new power generation plants as stated in the above outlined system development plan. The focus of this Project Information Memorandum is to provide information in terms of the project scope and a project plan for the critical transmission investments required to integrate Morupule B power station to the transmission grid. The transmission lines and substations associated with the evacuation of power from the expanded Morupule Power Station and the Mmamabula IPP plant are a critical component of Botswana’s system development plan and to the energy security of the Nation. The section below details the scope of the project and its proposed implementation plan to implement the project in the desired time frame. 5. Integration of Morupule B Power Station to the BPC power Grid Figure 1 below indicates the recommended transmission configuration to evacuate power from Morupule B power station and Map 1 shows Botswana’s power system development plan.
Recommended Transmission configuration for integration of Morupule B (1 200MW) to the National Grid.
Map 1: Botswana System Development Plan
52km Proposed Existing
66kV 132kV 220kV 330kV 400kV HVDC Westcor
Technical Assistance Establishment of the Botswana Control Area The phasing out of electricity import Agreements by BPC in 2012 at which point Botswana would be meeting its electrical energy requirements from domestic power stations (Morupule and Mmamabula) and would also be hosting an Independent power generation plant (Mmamabula) requires that BPC establishes a Control Area, the fourth in the Sourhern African Power Pool, to meet the operational and trade requirements of the power pool. Establishment of a Control Area requires the Corporation to install Automatic Generation Control (AGC) function in the SCADA / EMS system and establish Morupule Power Station as an AGC Unit to enable Frequency and Tie-Line Control. The system operators would require additional skills to manage and operate the control the envisaged Control Area. Technical skills transfer would also be required for engineers and technicians who would be responsible for operation and maintenance of the Control system. System Harmonics Studies A comprehensive study is required to determine investment requirements in addressing the level of system harmonics in the BPC system. The 10 Year Transmission Development studies of 2007 recommended that the Corporation conducts a comprehensive Transmission System Harmonic Study to improve quality of Supply.
Transmission Investments Cost Estimate The estimated cost of the transmission investments are given in Table 2 below.
Table 2: Estimated Transmission Investments Costs
No. Description Local 1 2 3 4 5 6 7 8 9 10 11 Isang 400 / 220 kV Substation Morupule – Phokoje 400 kV Transmission Line (102km) Isang – Morupule 400 kV Transmission Line (215km) Morupule – Mmamabula 400 kV Transmission Line (158 km) Mmamabula – Isang 400 kV Transmission Line ( 100 km) Morupule – Isang - Thamaga Tee In (220 kV) Morupule – Isang - Segodithsane Tee In (220 kV) Optic Fiber (OPGW) – on 575 km of 400 kV Trans. Lines Control Area Hardware and Software (AGC) Technical Assistance, Power System Harmonic Studies Technical Assistance , Control Area Establishment and Training Base Cost Physical Contingency 10% (Excluding Technical Assistance) Price Contingency (3% Foreign, 3% Local) Total Cost 2.5 0.6 1.3 0.9 0.6 0.1 0.1 0 0 0 0 6.1 0.6 0.2 6.9 Cost Estimate (USD Million) Foreign Total 22.7 29.5 62.2 45.7 28.9 2.4 2.4 4.5 1.0 0.5 1.0 200.8 19.9 6.0 226.8 25.2 30.1 63.4 46.6 29.5 2.5 2.5 4.5 1.0 0.5 1.0 206.9 20.5 6.2 233.6
Transmission Projects Implementation Plan The above outlined scope of works would be implemented on a turnkey basis. The required transmission infrastructure and services would be procured by means of Engineering, Procurement and Construction (EPC) contract(s). The EPC contractor(s) would be selected by means of international competitive tender(s) from transmission infrastructure contractors with the necessary technical capability, experience and financial strength to undertake the required scope of works. The Corporation has appointed an Owner’s Engineer (a consultant), from among the Corporation’s nominated (pre qualified) Generation and Transmission consultants, to execute detailed specifications, prepare tender documents, evaluate tenders, and undertake project management for the Morupule – Phokoje 400 kV transmission line. Owner’s Engineer(s) are being appointed for the remaining scope of works to ensure timely delivery of the investments within budget and specifications. The appointment of engineer(s) and contractor(s) is conducted under the Corporation’s procurement process, rules and procedures. The required Environmental and Social Impact Assessments (ESIA) have been conducted save for the Morupule – Isang 400 kV transmission and the 400/220 kV substation at Isang. The Corporation will take overall responsibility of the project to ensure adherence to the Corporation’s procurement and tender regulations, technical standards and compliance with the national occupational Health and Safety and Environmental standards. Table 3 below indicates the proposed project implementation plan.
Table 3: Project Implementation Plan
Item Activity 1 2 3 4 5 6 Appoint Owner’s Engineer (s) (Consultant) for full scope of Works Develop Terms of Reference for the ESIA and secure ESIA1 Source Project Financing – Loan Agreement Develop Specifications and Tender Documents for Competitive Bidding Appoint EPC contractor(s) Manage project implementation to Commissioning Responsible BPC Engineer BPC Engineer BPC / Engineer Engineer /BPC Timing June 2008 September 2008 August 2008 August 2008 December 2008 January2009 – Dec 2010
The ESIA have been conducted save for the Morupule – Isang 400 kv Line and Isang Substation.
400 / 220 kV
Transmission Investments Financing Plan The funding options considered for the transmission infrastructure projects are: Debt funding (BPC Balance Sheet) with Government Guarantee Bilateral Funding through Government of Botswana. On completion, this transmission system is expected to have an economic useful life of about 50 years. In view of this, and to minimise the effect on the electricity tariffs to the consumers, BPC will be seeking financing with as long a term as possible and at the most competitive rates. With this in mind, financing with a term of 20 years or more would be preferable. An indication of the timing of the funding required for the transmission infrastructure development is provided in Table 4 below:
Table 4: Project Cash Flow Forecasts
Estimated Total Cost (USD million)
25.2 30.1 63.4 46.6 29.5 2.5 2.5 4.5 1.0 1.5 206.8 20.5 6.2
Expenditure 2008/09 USD m
5.0 6.0 12.7 9.3 5.9 0.5 0.5 0.9 0.2 0.3 41.4 4.1 1.2
Expenditure Expenditure 2009/10 2010/11 USD m USD m
17.7 21.1 44.4 32.6 20.7 1.7 1.7 3.2 0.7 1.1 144.8 14.4 4.3 2.5 3.0 6.3 4.7 3.0 0.2 0.2 0.5 0.1 0.2 20.7 2.1 0.6
Isang 400/220 kV Substation Morupule - Phokoke Line Morupule - Isang Line Morupule - Mmamabula Line Mmamabula - Isang Line Thamaga - Tee In Segoditshane - Tee In Optic Fibre (OPGW) Automatic Gen. Control Technical Assitance Base Cost Physical Contingency Price Contingency
Conclusion The Botswana Power Corporation is keen to secure funding and commence execution of the required transmission investments as this infrastructure is critical to delivery of electricity from the new Morupule and Mmamabula power stations whose commercial operating dates are 2011 and 2014 respectively. The project delivery time frame is relatively tight given the lead times associated with primary power equipment manufacturing. In particular power transformers take as long as 15 months to produce due to the high demand for power equipment on the world market.
Appendix 2 Mmamabula Intergration Projects