OPTIONS AND SCENARIOS

The previous chapters identified Angola’s main options with respect to thermal and hydropower generation and different alternatives and projects were selected in order to fulfil the renewable energy’s established targets. The present chapter identifies and evaluates a series of scenarios that combine those options in order to select the scenario which presents the most adequate energy mix for Angola in the 2025 horizon.

The generation capacity to be installed until 2025, independently of the technological choices and their location, should always guarantee security and redundancy levels high enough to face any possible contingencies. To accomplish this, it is important to understand which are the real needs in terms of generation for Angola by 2025 – needs that may vary depending on the amount of hydroelectric power considered.

Given expected requirements, different possible combinations of the future generation mix were defined, according to different guidelines, establishing for each alternative the projects and power capacity to be built in order to fulfill the security criteria. Those alternatives were evaluated as to optimize the investment and the associated costs – not only in what relates to the generation itself but also the implications in transmission and in the need of significant power flows between systems – as well as sustainability with respect to CO2 emissions.
The three most favorable scenarios were pondered and, in the end, the one that best met the expectations and objectives of the Strategy Angola 2025 was selected to integrate the vision of the power sector in the 2025 horizon.

SECURITY OF SUPPLY AND CAPACITY REQUIREMENTS

For the Angolan power system to work in a secure way, it is advisable that it disposes of at least a minimum backup power reserve - called the minimum required reserve – above the highest consumption load predicted for the system. This minimum required reserve should cover the accidental failure of the largest thermal generation set, of the largest hydropower generation set, of the lack of primary renewable and hydro energy as well as an increase in the consumption peak due to temperature effects. The guaranteed power capacity corresponds to the installed power minus the minimum required reserve.

The following map exemplifies the calculation of the guaranteed power capacity that should be available by 2017 – considering that Laúca only enters into service at the end of that year – and compares it with the estimated consumption peak.
In this scenario we obtain a cover ratio of 1,1 (ratio between guaranteed power and peak demand), which demonstrates that an adequate implementation of the 2013-2017 Action Plan will allow reaching sufficient levels of coverage by 2017.

ESTIMATED COVER RATIO IN 2017

The main contributor to the minimum required reserve is the potential lack of primary hydropower energy. The regime of the main rivers in Angola is quite irregular, presenting years with extremely high water flow levels followed by years of near drought. The existent and planned reservoirs, despite their enormous dimension, are only capable of regulating the rivers’ flow within the same year not on a year-on-year basis. Figure 46 shows the capacity
of each reservoir in regulating its river flow. None of these reservoirs is capable of storing all the water that flows throughout the year (which would correspond to a regulation ratio of 100%). In conclusion, the only way for the system to be prepared for a year with a severe drought is by investing
in reserve capacity.
Despite the fact that the available regulation capacity does not answer the problem of lack of energy during an extreme drought year, it does allow to significantly mitigate the need for power reserve due to two main factors:

• On the one hand, they allow to concentrate the usage of water during the hours of greater consumption throughout the year, thus avoiding the need to have thermal generation backup to face peak consumption;
• On the other hand, they allow to fully take advantage of the renewable energy sources, whose intermittent production can be “stored” in the reservoirs and used during hours of greater demand, and of imports of cheap energy from South Africa during low periods (when there is excess of coal production).

REGULARIZATION COEFFICIENT OF THE MAIN HYDROELECTRIC PLANTS WITH REGULARIZATION CAPACITY (Annual flow vs Dam storage capacity)

The graph below shows the minimum required reserve necessary in a scenario where only the power capacity expected for 2017 (discounted of the capacity to be discomissioned until 2025), Laúca and other investments already decided (Caculo Cabaça, Cacombo, Jamba Ya Mina, Jamba Ya Oma
and Hydrothermal project) would be operating in 2025. The significant increase in hydropower rises the risk of loss of primary energy to 1,1 GW. This value is however inferior to 20% of the installed hydro power as it benefits from Laúca’s capacity to concentrate water in peak hours.

The analysis demonstrates that such future power capacity (expected plus already decided projects) is clearly not sufficient, with a deficit of guaranteed  power of 1,3 GW with respect to the maximum load and of 1,7 GW if a cover ratio of 1,05 is intended (this value was selected as the cover ratio target in the present study for 2025 so as to safeguard eventual delays in the development of certain projects or a higher demand rate growth).

The need for additional capacity will be higher should it be decided to promote new additional hydropower projects which, although competitive, show lower guaranteed capacity relative to installed capacity and cannot benefit from a higher hour concentration of hydropower production as does Laúca. The need for power will also vary with the evolution of demand, hence it is important to adjust the system requirements to the evolution of project execution and consumption.

POWER REQUIREMENTS IN 2025 WITHOUT NEW PROJECTS

GUIDELINES AND GENERATION SCENARIOS

Angola has innumerous possibilities concerning supply options in order to face the needs of additional generation until 2025, in particular in what  concerns hydropower and natural gas – as explained in the previous chapters. Four main possible guidelines were developed, designated as “macro-scenarios” in order to select which projects to install until 2025, giving different weights and relevance to each of the main alternative power sources:

• Investment in Hydropower (H): Focus on competitiveness and greater national incorporation of Large Hydropower projects, limiting new generation based on natural gas to only an extra 0,6 GW. In this scenario, hydroelectric power would reach an installed capacity of around 7,2 GW (70%);
• Investment in Gas (G): Focus on having higher guaranteed power and minimizing investments in the 2025 horizon, maintaining only the construction of the Large Hydropower Projects already decided of Caculo Cabaça, Jamba Ya Mina, Jamba Ya Oma, Cacombo and Baynes. Natural gas would reach an installed power level of around 2,3 GW (24%);
• Hydropower and Gas Balance (HG): This scenario balances the focus on hydroelectric power with natural gas, reinforcing natural gas based power with an extra 1 GW and developing around 2,6 GW of additional hydropower projects to the hydro capacity already expected by 2017/2018;
• Diversification (D): Focus on a higher diversification of the Angolan energy mix taking advantage of the new refinery’s coke production in order to create a new primary energy source. The estimated potential mounts up to 300 MW. The remaining necessary power would also focus on diversification, with a balance between gas and hydropower.

Each of these guidelines or macro-scenarios can be implemented in many different ways, through various combinations of projects or scenarios. For each guideline the capacity requirements between scenarios tend to be equivalent, although some slight variations can exist due to the different characteristics and dimensions of the selected hydropower plants. Figure 47 exemplifies one of the simulated scenarios for each macro-scenario, giving a notion of the estimated weight of each energy source in the country’s power generation mix and of the level of installed capacity required, depending on which guideline is selected.

Figure 47 – Generation mix associated with each macro-scenario or guideline

20 EVALUATED SCENARIOS

A total of 20 alternative scenarios were constructed and evaluated. These scenarios were obtained through different combinations of the different priorities identified for each primary power source as illustrated in figure 48. To be noted that all of the scenarios respect the cover ratio objective.

The 20 scenarios were sorted so as to minimize the weighted global cost – which reflects and ponders the following four factors:

• Levelized Cost of Energy Production: represents the weighted average cost of one kWh produced in 2025, taking into account not only the operation costs but also the annual revenue associated to the investment and interest.
• Investment Level: represents the total level of investment needed and additional to the 2017 forecast in terms of generation. This factor weighs eventual budget restrictions or the eventual possibility of allocating funds from the annual budget to other national priorities.
• Energy Flow between Systems or Incremental Cost of Transmission: represents the sum of the power deficits (difference between installed power and load) for each system when considered individually. It reflects in a simplified way the impact of each scenario in the needs for investment in transmission lines between systems and equipment for system regulation.
• CO2 Emissions or Environmental Cost: represents the total CO2 emissions associated with each scenario, reflecting the significant weight of the electric sector in emissions and in the fight against climate change.

 The Levelized Cost was the main factor considered. All the other factors were considered with an equivalent weight amongst themselves. The three scenarios with the lowest global average cost were selected so as to maximize alignment with the expectations and targets of the Strategy Angola 2025.

The significant difference in CO2 emissions between the different scenarios resulted in a lower score for both the scenarios of diversification – due to the high emission levels associated with coke – and of natural gas. On the other hand, the lower investment needed for natural gas resulted in two scenarios of Hydropower and Gas Balance being considered.

Following, the 3 lower overall cost scenarios are presented.

OPTION FOR 2025

Figure 49 summarizes the three scenarios with the highest global scores. All of these scenarios present competitive costs and challenging levels of investment. They also present the same level of energy deficit for the Southern and Eastern Systems and enough installed capacity to face the required
loads in the Northern and Central Systems.
The scenario with the lowest global cost is the one that focuses on Hydropower and Competitiveness (H.1), privileging the total usage of the Cuanza fall through the construction of Túmulo do Caçador and Zenzo 1, as well as the most competitive run-of-river projects in Catumbela and Queve. Despite the lower impact in terms of emissions and climate change, the focus on hydropower implies a greater investment until 2025 (around $13,0b between 2018 and 2025) and an even higher concentration of generation assets in the northern system. Although hydropower represents a higher benefit in terms of national incorporation and for future generations, focus in run-of-river projects and concentration in the Cuanza basin limits the impact in terms of regional development.

The remaining two scenarios balance hydropower with natural gas and favor some regional diversification, but with different approaches: Scenario HG.3 privileges on the one hand the regional diversification in hydropower, limiting the Cuanza projects to Caculo Cabaça and developing Cafula (in the river Queve) with high benefits for Cuanza Sul’s agriculture, but on the other hand focuses in maximizing gas-based generation in the northern system. Scenario HG.2 privileges on the one hand regional diversification in gas through the construction of a large size combined cycle in Benguela and on the other hand concentrates the hydropower in the Cuanza basin with the construction of Túmulo do Caçador - while postponing investments in the Queve river. Both scenarios present similar values of levelized cost, investment and emissions.

Amongst the 3 scenarios the one that best accomplishes the goals and expectations of the Strategy Angola 2025 and of the country, and that should therefore guide the sector’s development is scenario HG.3, since it focuses on the balance between Hydropower and Gas and in the regional diversification of hydropower projects. Also, the maximization of Soyo will allow Angola to profit the most from its investment in the LNG terminal.
The creation of a new large generation area associated with the Queve river – having storage and regulation capacity - is strategic for the reinforcement of the interconnection between north and center, for the stimulation of agriculture in Cuanza Sul and for the creation of a new transmission line at 400 kV closer to the coastline that could be used in the future to transport power coming from the recent discovery of new gas fields.

The new hydropower projects of the Cuanza river, although highly competitive, should only be developed by 2025 if associated with new structuring projects that imply a significant increase of the forecasted demand.

SUMMARY OF THE 3 SELECTED SCENARIOS