Power policy

Solar capacity roughly doubled each year between 2014 and 2018 and currently represents 30% of installed power capacity. Solar photovoltaic’s relatively low cost and high capacity have seen it eclipse investment in wind energy, which is limited to two projects. Most of the equity investment in energy projects built since 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 has now introduced ownership share rules to limit foreign equity ownership. For example, to qualify for the country’s feed-in tariff program, 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 lenders, 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. 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 estimates suggest a halving of costs for solar in sub-Saharan Africa between 2015 and 2021 (from $107 per megawatt-hour to $54 per megawatt-hour).

Solar PV currently represents 30% of installed capacity. Nampower is the only offtaker with which independent power producers can sign power purchase agreements (PPAs). However, the Electricity Control Board, the country’s regulator, plans to switch from a single-buyer model to a modified single-buyer model, where independent power producers 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 60 megawatts (MW) 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. Five unsolicited independent power producers have signed PPAs with Nampower. In its 2019-2023 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 power producers.

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, mini-grids 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 has announced that the transmission system is reaching the limits of how much intermittent generation it can sustain. A new transmission line is currently under construction but 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 electric vehicle market remains at an early stage. Fuel economy standards are under development but have not been published. With minimal to no vehicle manufacturing capacity in the country, or taxes on imported vehicles, EVs are at a cost disadvantage to internal combustion engine vehicles.

EV policy

The government has yet to implement any substantive policy support in this sector.

Buildings market

Namibia’s national program for promoting energy efficiency aims to create a culture of energy consciousness, to improve rules for technologies and to advance policy. 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.