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Namibia to De-Risk CSP with Permitted Siting and BOOT Finance

2022.02.17     From: solarPaces



Talk of a Namibian Concentrated Solar Power (CSP) project seems to have been in the works for several years, and at last year’s conference; appeared to be moving forward. This week SolarPACES contacted NamPower head of generation projects, Dr Grant Muller, to see where things stand now for CSP; the “hot solar” in a region with some of highest Direct Normal Irradiation (DNI) in the world.


“Since 2015 there has been a lot of work that has been done.” Muller said, nothing that NamPower has been working for several years on preparation. NamPower is creating a fully permitted de-risked site that’s in an area they have been assessing for its outstanding solar resource west of Windhoek, about half-way between there and the coast that has DNI over 3,000 kWh/m2 annually.


As Namibia’s electricity provider, NamPower is now in the process of finalizing a site purchase, as part of a plan to reduce uncertainty for any potential CSP developer in Namibia.


De-risking site purchase, solar assessment, environmental permits


“The big issue for the developer is risk,“ he said. “So we feel that to try and bring the cost down for the project, and to also make the timeline quicker, we want to provide a fully permitted site to the developer, with as much of the preliminary preparation work done as possible; so they can pretty much just come in and do what they do best – that is build a plant.”


NamPower’s de-risking approach would follow that pioneered by Morocco’s energy agency MASEN with pre-approved siting, permitting and financing for the 700MW NOOR I, II and III CSP project. The Chinese pilot projects also had pre-approved land set aside in high solar resource regions.


By contrast, developers competing for US CSP contracts first had to find and buy or lease sites, perform multiyear solar resource assessments and environmental permitting, and had no guarantee of securing timely financing to meet off-takers’ milestones. About half of the projects fell through after multimillion-dollar investments in preparation.


So NamPower’s investment in this time-consuming preliminary assessment, land purchase and permits has been shown in Morocco to lower risk and thus prices, and would also speed up delivery, because developers could start with shovel-ready sites. Renewed momentum in the wake of recent CSP cost reductions and performance records met or exceeded in Morocco and elsewhere was noted, where lower costs for CSP plants are a key factor.


“One of the things that we’ve been looking at is what’s been happening in CSP globally. That has been quite encouraging; the good results of these newer projects like Noor III. So, I see the costs are coming down and I think also with the new technologies now, that’s also been encouraging and so things are moving now,” he noted.


“We’ve showed the NamPower board that CSP is the right technology because of our great DNI, but we needed to look at the price point – we couldn’t get into CSP at a high price point. And now the price and the technology is showing better pricing and good learning rates.”


Planning to fill a gap 25 years out


“There is a lot of solar PV that’s coming on board and so I think supply during the day will eventually be taken up by solar PV,” Muller commented. “So if you’re looking into the future, at a 25 year horizon, it might make more sense, have more value for us to target the CSP for the early morning and evening peak.”


Namibia’s installed capacity for its population of 2.5 million totals 579.5 MW excluding net metering. Nearly all of this (579.5 MW) is supplied by renewables (hydropower, solar PV and wind) but a small percentage is still supplied by coal (30 MW) and HFO (22.5MW) technologies. For now, Namibia also receives electricity from neighboring South Africa’s coal-heavy grid as well as Zimbabwe, Zambia and the SAPP. In the long term, Namibia would be well placed to export solar to its neighboring nations of Botswana, Zambia, and Angola.


The addition of dispatchable renewable technology (in addition to the hydropower) would support the Namibian government’s objectives in lessening dependence on imports and coal, and increasing resilience in its renewable grid, as it would include low cost thermal energy storage like all new CSP; enabling generation on demand. NamPower is agnostic on the core CSP technology, Trough or Tower, except that it will require dry cooling.


A Build, Own, Operate, Transfer (BOOT) model


NamPower envisions some form of a “build, own, operate, transfer” plan for the CSP plant that would transfer to NamPower after the PPA term of 25 years, procured through a public-private partnership process under Namibia’s new Public Private Partnership Act (PPPA). NamPower is in the process of hiring a transaction advisor to assist in developing the feasibility assessment for the project as well as to develop the most optimal bidding documents.


“One of the options we want to look at is that when the 25-year term is up, the plant would transfer to NamPower. to operate it and include into our fleet,” he explained. “The developer would build this arrangement into the costs and electricity tariff during the bidding phase and so the developer would not necessarily be out of pocket. It would come down to residual value of the plant at the end of the 25-year term. How much value is in the plant after 25 years? I think of CSP as more like a hydropower station, that gets paid off in 20 years but there’s still so much value remaining. So, we need to see if that makes sense because we have to maximize value for the country.”


Muller showcased NamPower’s planning at the SolarPACES Conference last year. Since then, there’s been renewed interest.


“In the last couple of months, there has been more interest in CSP” he said. “It was quiet for a long time but firms are now beginning to approach us. At the conference we shared the fact that we have these sites that have over 3,000 kWh/m2 annually and delegates were amazed at the potential that Namibia has to offer.


By Susan Kreamer

Source: SolarPaces.


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