DEMAND FORECAST

Background

Between 2008 and 2014 the energy consumption recorded an annual average growth rate of 15.5%. As a result the Angolan energy consumption referred to production reached 9.48 TWh in 2014, without considering suppressed demand and self-generation.
The strong growth of the energy consumption along the past years is associated with i) a great effort from the Government of Angola in order to extend electricity coverage; ii) an improvement of the population’s living conditions, which results in higher electricity consumption and iii) an increase of the available generation capacity.
Although available generation capacity has grown significantly over the past years, power demand is still suppressed. Suppressed demand results in frequent power supply cuts along with a widespread use of generators for auto-consumption, with a greater incidence in the humid months due to the use of air conditioning.
Geographically, in 2014 the energy consumption was still highly concentrated in the northern system, representing roughly 78% of the country’s energy consumption. The weight of the northern system is mainly due to the consumption associated with the province and city of Luanda where, according to the 2014 census, there are over 6 million inhabitants and where the highest density of industries and services is observed within the country.

The energy consumption in Angola is mostly urban and residential. It is estimated that the residential sector demand accounts for 45% of total generation, followed by services (roughly 32%) and industry (approximately 9%).
Technical losses of energy are believed to reach 14% due to the conservation conditions of the electric grid (figure below).

CONSUMPTION PER TYPE OF CUSTOMER AND ELECTRIC SYSTEM (2014)

Demand forecast

Until 2025 demand is expected to grow at a strong pace, with the overall system load reaching 7.2 GW – more than four times the current level. An average annual growth of 15% is expected to take place until 2017, slightly decreasing to12.5% between 2017 and 2025 (see Trend of the maximum annual energy load of the system until 2025 chart). The highest rate of growth until 2017 is associated with the implementation of the Action Plan 2013-2017 and with the significant level of investment considered in the Action Plan.
On power sector load, the possibility of additional energy-intensive industries with a capacity up to 800 MW and the possibility of exports totaling a capacity of 800 MW towards the SADC market were both considered. The pace of electrification and industrialization of the country
will require adjustments to the power sector investment calendar in order to adequately meet demand growth.
The energy demand referred to generation is expected to reach 39.1 TWh (see Consumption per type of customer and region chart below) in 2025 with a considerable influence of the residential sector (37%) and a significant contribution from services (28%) and industry (25%).
Angola will thus see a sharp growth in energy consumption, meaning that the average energy consumption per inhabitant will increase from 375 kWh per capita in 2013 to 1230 kWh in 2025.

TREND OF THE MAXIMUM ANNUAL EMERGY LOAD OF THE SYSTEM UNTIL 2025

CONSUMPTION PER TYPE OF CUSTOMER - 2014

This growth is mainly due to three factors:

THE COUNTRY'S ELECTRIFICATION AND THE GROWTH OF POPULATION
The Angola 2025 strategy’s main goal is to provide access to basic energy services to the population. Therefore, given the high dispersion of the  population and the extent of the territory, this document considers two parallel approaches: i) on one hand, the electrification of the main populated centers through electricity grid extension - which include every provincial and municipal capitals and part of the commune townships - and ii) on the other hand, the provision of energy services based on decentralized solutions for rural and dispersed populations over the country.
Regarding energy supply from interconnected systems, it is established a goal for increasing the electricity coverage from 30% to 60% by 2025. With this target it is expected a total of 3.7 million customers in 2025 (more than three times the present number), meaning that more than 18 million people will benefit from energy supply.
The population living in remote areas will be supplied by small hydro, solar panels or even diesel solutions, depending on the best technical and cost/benefit solution, considering that the target population has mainly low-income.

GROWTH OF THE AVAILABLE WEALTH AND POWER CONSUMPTION OF ELECTRIFIED CUSTOMERS
The increase in national wealth will result in families using their income to improve comfort, which will increase residential energy consumption. Also, the increase in families’ income will in turn enhance the provision of services, namely those related with leisure and tourism.
For example, the investment in the provision of touristic services for the national market will lead to an increase in international tourism coming to Angola.
Regarding the forecast of energy demand, a direct correlation between the increase of the national wealth (GDP) and the increase of energy consumption is observed. Given the expected continued growth of national income, a strong pressure for increasing available generation is expected in order to meet the energy demand.

With a view to mitigating the increase of the required energy generation capacity and to ensure energy security, mitigation measures should be taken, such as:

• Installation of prepaid meters (customers pay what they consume, which is an inhibitor of over-consumption and the company receives in advance with better service performance).
• Higher tariffs (the increased share of electricity in the family monthly income fosters the need to lower consumption);
• Commercial effectiveness of companies (installation of prepaid meters for all customers, installation of reliable meters for all Medium and High Voltage customers, alternative methods of payment for electricity consumption - net/online, ATM, shops, etc.)
• Energy efficiency (introduction of mitigation measures such as energy-saving bulbs, efficient electronic equipments and house appliances, solar thermal panels for public and private water heating, education for the efficient use of electricity).

The modeling of these effects results in a rise in residential and services’ energy consumption per electrified inhabitant, from 1.2 MWh/person to 1.5 MWh/person in 2025 (with a 2.3 % annual average growth rate). The following graph depicts the considerable impact of both the mitigation effects with impact on cost and cash disbursements (tariffs, prepaid meters and commercial effectiveness) and the mitigation effect of energy efficiency in the evolution of energy demand. Without these mitigation effects the consumption of the residential and services’ sectors would be 42% higher, increasing the system energy load in 2025 to roughly 9.5 GW (figure below). 

TREND OF THE RESIDENTIAL AND SERVICES CONSUMPTION PER ELECTRIFIED INHABITANT

INDUSTRIALIZATION OF THE COUNTRY
The strong commitment of the long-term Angola 2025 strategy in the country’s industrialization is achieved not only by the 2013-2017 National Development Plan, which establishes a set of priority “structural” projects, but also by the recent sectorial planning instruments, in particular the New Plan for the country’s Industrialization and the Tourism Master Plan. This commitment is further enhanced by the Diversification Acceleration Programme, which aims to diversify the country’s sources of  wealth.
The historical weight that industry plays in the total electricity generation - around 8% - is the lowest among the major countries of the SADC.
The strong outlook for the industrial sector’s growth is supported by the existence of a wide range of more than 160 specific “structural” and priority  projects, in different stages of development. These projects are grouped in different clusters whose energy needs and estimated future growth supports the estimated 25% target for energy consumption from the industrial sector. The Industrial Development Hubs (PDI) and the mining activities - especially iron exploration – are the main growth drivers, immediately followed by the agro-industry cluster, the construction sector (with a strong weight of the cement industry) and other industries.

The possibility of a large energy-intensive industry, with a load of at least 0.8 GW, was independently accounted for and specific contingency measures (in terms of new generation projects to satisfy its demand) have been developed. Additionally, the possibility of large scale exports was also considered autonomously.

WEIGHT OF THE INDUSTRY'S ENERGY CONSUMPTION ON THE TOTAL ENERGY PRODUCTION OF SADC COUNTRIES (IEA, 2009)

LOCATION AND ESTIMATIVE OF THE PRIORITY CLUSTERS' CONSUMPTION BY 2025
POWER CONSUMPTION FORECAST AND INTERNATIONAL COMPARISON

The average power consumption per inhabitant may be explained by three main effects (electrification rate, residential and services’ consumption per electrified inhabitant and weight of the industry). The indicator and the explaining effects can be compared with other countries based on available international statistics. Figure 9 compares the historical and projected energy consumption of Angola with South Africa, Nigeria, Brazil, Portugal and the United States.
The Angolan data herein presented was adjusted to take into account the effect of the suppressed and non-registered demand. According to available international statistics and considering the selected countries, the current Angolan consumption per capita is only higher than the one of Nigeria – although Nigeria has higher rate of electrification and industrialization than Angola, the average consumption of electrified customers or inhabitants is very low due to high levels of suppressed demand and individual use of energy generators.

The following chart shows that the forecasts for Angola in 2025, in spite of the high annual growth rates, are realistic:

• The electrification rate will mainly depend on the country’s investment and deployment capacity. Most developed countries already have fully electrified their territories;
• In terms of residential and services’ consumption per electrified inhabitant, the estimated rise from 1.2 MWh/inhabitant to 1.5 MWh/inhabitant in 2025 is still considerably below the 2.1 MWh/inhabitant recorded in South Africa in 2009, and also bellow the consumption recorded in Portugal or in the United States.
• The 25% target for industry reflects the strong prospects for mining and industrial projects. For example, in South Africa the industry represents 59% of the total energy consumption and 46% in Brazil.

DISAGGREGATION AND COMPARISON OF THE INTERNATIONAL CONSUMPTION PER INHABITANT