Renewable Energy And Regional Connectivity A1

African Development Bank Funds US$530 Million Project to Expand Renewable Energy

March 18, 2021
A 343-km, 400-kV central-south transmission line to connect the north and south transmission grids in Angola.

The African Development Bank has committed US$530 million to finance the construction of a 343-km, 400-kV central-south transmission line that will connect the north and south transmission grids in Angola. The line will allow for the distribution of clean energy between the two regions.

The north of Angola has a surplus of more than 1000 MW of mostly renewable power, whereas the south relies on expensive diesel generators, supported by government subsidies.

The project, once operational in 2023, will avert the consumption of 46.8 billion liters of diesel per year in the south, cutting 80 Mt of CO2 emissions. Transmission capacity will increase by 2250 MW and eliminate the need for polluting, diesel-powered generators in southern provinces. The government of Angola will save more than US$130 million per year in diesel subsidies.

The finance package, approved in December 2019 by the board of directors of the African Development Bank, consists of US$480 million in financing from the Bank, along with US$50 million from the Africa Growing Together Fund — a US$2 billion facility sponsored by the People’s Bank of China and administered by the African Development Bank.

The funding covers the first phase of the Energy Sector Efficiency and Expansion Program (ESEEP) in Angola, which will assist the government to connect the country's transmission grids and tackle limited operational capacity within the Angolan power distribution utility (ENDE).

Around 80% of residential customers in Angola are not metered, resulting in financial losses and reliance on government subsidies. As part of the ESEEP, 860,000 prepaid meters will be installed and 400,000 new customers will be connected to the grid and effectively metered.

At the regional level, the ESEEP will be the first step to enabling a connection to the Southern Africa Power Pool (SAPP). The new transmission line will become the backbone for the distribution of power to the southern provinces of Angola and Namibia and will enable further power trading between countries in the region.

The funding follows two other recent Bank contributions to Angola's energy sector strategy. In 2015, the Bank approved a US$1 billion power sector reform loan for Angola, which resulted in the creation of an independent regulator and the unbundling of the sector into generation, transmission, and distribution companies. The program encourages ownership of the reforms by the government and enhanced donor coordination through project implementation and procurement support for power utilities, provided in cooperation with Power Africa/USAID.

Angola has significantly improved capacity, operational efficiency, and sustainability of the electricity sector. In the period 2015 to 2019, Angola's total installed capacity in renewable energy rose from 1017 MW to 2763 MW, mainly through improved exploitation of the country's abundant hydropower.

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