31:T806,

Introduction

The Ngonye Falls project will be a 180MW run-of-river hydroelectric plant on the Zambezi River in the Western Province of Zambia. The project site is approximately 170km south of Mongu, the provincial capital, 100km north of the town of Sesheke and 300km northwest of Livingstone (Victoria Falls).

The Western Province, where the project is being constructed, is currently very poorly served by transmisison infrastructure which has significantly retarded the province's social and industrial development. The amount of power which can currently be supplied to the entire province and its 1 million people is no more than 10MW. This is only 0.3% of Zambia's total electricity generation capacity of 3,500MW.

All of the power that will be generated by the Ngonye Falls project can be evacuated by construction of 110km of new transmission line south from the project site to Sesheke and this 110km stretch is integral to the project. However, the project could also be a catalyst for the construction of additional transmission infrastructure that would have a transformative impact on the Western Province.

Zambian Transmission Network

Two firms own and operate the Zambian transmission and distribution system, ZESCO the state owned vertically integrated power utility and CEC a private transmission company. CEC currently only owns transmission lines supplying a number of large mining customers in the Copperbelt province.

Around 50% of Zambia's electricity is consumed by mines and the transmission network is dominated by the north-south corridor which connects the major hydroelectric power stations at Kariba - 1,000MW and on the Kafue River (Kafue Gorge – 900MW, Itezhi-Tezhi – 120MW and the new Kafue Gorge Lower station – 750MW) with the Zambian Copperbelt mines in the north and into the DRC Copperbelt.

Power also flows south west to the load centers in the south and for export into Namibia under a 180MW firm PPA and the rest of the southern African region. 32:T4ab,A new transmission line (2 x 330kV) from Lusaka northwest via Mumbwa and Kasempa connects to the ‘new Copperbelt’ mines west of Solwezi including the First Quantum Sentinel mine. A 330kV line runs southwest from Lusaka to Livingstone - 108MW via the 300MW Maamba coal-fired power station at Sinazongwe.

There are currently interconnections with DRC in the north and Zimbabwe (at Kariba) and Namibia (at Sesheke) in the south. At the Sesheke substation there is a 220kV interconnect to the Zambezi converter station, one end of the 300MW 350kV Caprivi Link DC line which stretches 900km into central Namibia. This was funded by EIB, KfW and AFD to allow import of power into Namibia and RSA from Zambia. The current and proposed interconnectors connect Zambia to the Southern Africa Power Pool (SAPP).

Exports of electricity by Zambia into Namibia and the southern SAPP region are currently constrained by the capacity of the Livingstone – Sesheke 220kV transmission line at around 200MW. All the additional 180MW generation at the new Ngonye Falls power station will be available as additional export capacity directly into Namibia at Sesheke bypassing this constraint. 33:T8aa,html`

The 66kV transmission line on steel lattice towers near Sesheke. The line follows the Zambezi river and passes through settlements. It is not suitable for restringing to a higher capacity or voltage. It was constructed in 1973.

The Western Province, which has a population of around 1 million people, is the least developed province in Zambia in terms of infrastructure including the electricity transmission and distribution network. The entire province is currently served by a single 66kV transmission line built in 1973 which runs for 300km from the Sesheke substation – and interconnection to Namibia - in the south to Mongu, the provincial capital, in the north.

Because of the low voltage level and length of the 66kV transmission line the amount of power which can be supplied to Mongu and the other connected load centers (currently Senanga, Kaoma and Kalabo) is no more than 10MW or only enough to supply two large shopping malls. This is only 0.3% of Zambia's total electricity generation capacity of 3,500MW.

The length of this low capacity transmission line also leads to high power losses and difficulty in maintaining voltage levels and frequency which has required the installation of capacitor banks in Mongu.

As the 66kV line is used as a transmission line it cannot also serve as a distribution line and this restricts the areas that can be served to Mongu and only three other towns in the province. If a new transmission line is constructed to replace it then the 66kV line could be given over to distribution with customer connections along its entire length. This would significantly improve access to electricity in the province.

The undercapacity and age of the transmission network and the absence of a distribution network are now the single biggest impediments to the social and economic development of the province.

` 34:T81c,In the western region the ZIZABONA project to build a 330kV transmission ring through Zambia, Namibia, Botswana and Zimbabwe is being spearheaded by the Southern Africa Power Pool (SAPP). There is currently no firm timeline for this project.

In Western Province ZESCO has a plan to construct a single circuit 330kV line (initially energised at 220kV) from Sesheke north for 260km to Mongu. This line would pass within 3km of the Ngonye Falls project around 110km north of Sesheke. From Mongu a 132kV line would be constructed 160km north to Lukulu which would close the loop of the transmission system into the north-western region and the ‘new copperbelt’ around Solwezi.

The plan also includes a 110km spur to Shangombo on the western border of Zambia with Angola. Two new substations would be built, at Nangweshi (45km north of Ngonye) and at Namukashende south east of Mongu. The existing 66kV power line would be connected at Nangweshi shortening its effective length to two 150km stretches and converting it to a distribution line. The 132kV line to Lukulu would connect to Namukashende.

This grid expansion project would have the following benefits:

Significant new transmission capacity to supply new and existing customers in Western Province
Grid strengthening and reduction in transmission power losses.
Facilitate power evacuation for new generation projects including Ngonye Falls and the Africa GreenCo pilot solar PV project at Sesheke.
Close the transmission ring into north-western Zambia providing redundancy and an additional offtake route for additional generation in Western Province of 50-100MW.
Allow the existing 66kV line to become a distribution line facilitating new customer connections along a ~300km north-south corridor.
Connection of Shangombo to the grid
Possible export sales to eastern Angola

The whole project would consist of 370km of 330kV line (initially energised at 220kV) and 160km of 132km line. 35:T81b,

History of the Ngonye to Sesheke 220kV Project

In the early years of the Ngonye Falls project, WPC assumed that it would be financing and constructing the required power evacuation line from Ngonye south to Sesheke. This changed when ZESCO advised of their plan to construct the 220kV line from Sesheke to Mongu with a spur to Shangombo (370km of line in total). However, due to financing constraints, ZESCO were unable to progress the project and in 2018 WPC requested that it should finance and construct the 220kV line from Ngonye Falls to Sesheke themselves as part of the hydro station project.

In November 2020, ZESCO confirmed to WPC that they had no objections to WPC financing, procuring, and constructing the section of planned transmission line from Sesheke to Sioma (Ngonye Falls HPP). ZESCO advised that this should now be constructed as a 330kV line but initially energised at 220kV. ZESCO stated that they would complete the remainder of the line from Ngonye north to Mongu and west to Shangombo when they could find financing for this.

In 2020 ZESCO advised that they had already completed much of the work required for the Scoping Report required by the Zambia Environmental Management Agency (ZEMA) prior to completion of the full Environmental and Social Impact Assessment (ESIA) for the full line. WPC agreed with ZESCO that ZESCO would continue to lead the ESIA project with WPC providing assistance where necessary and in particular to ensure that the ESIA was completed to IFC Performance Standards.

The Scoping Report was completed and submitted to ZEMA in early 2022 and agreed by ZEMA in May 2022. During 2022 and 2023 WPC have been supporting ZESCO with finance and technical assistance to complete the ESIA to IFC Performance Standards.

The ESIA is for the full scope of the line (Sesheke – Mongu – Shangombo) but, should there be a significant delay in ZESCO financing the portion north of Ngonye, then the ESIA may be split and only completed at that time for the Sesheke – Ngonye portion.36:T57c,

Financing and Contractural Structure

To ensure evacuation of power from the Ngonye Falls power station at COD, WPC has agreed with ZESCO that it will fincnace, procure and construct the 110km of 330kV transmission line (initially energised at 220kV) from the power station switchyard to the existing Sesheke substation. WPC's technical advisors (Mott MacDonald) are currently (Q1 2023) working with ZESCO to agree a scope of works for this line to be included in (and be an integral part of) the power station EPC RfP Specification due for release end March 2023.

WPC is also assisting ZESCO with money and technical support to ensure the ESIA for the transmission line (being undertaken for the whole line including to Mongu and Shangombo) will be completed on time to allow construciton to start under the power station EPC contract.

Integrating the transmission line construction with the power station EPC contract ensures that delay LDs are linked and removes the risk of the power station not being able to evacuate all its power at COD.

A 2014 study for Western Power found that the least cost power evacuation option of 110km of single-circuit 220kV transmission line (bison conductor) to Sesheke would cost $24.5m including all necessary costs at the Sesheke substation. The current estimated capital cost for the 330kV line (energised at 220kV) is $30 - 35m.37:T8e4,

Scope	330kV T-Line (energized at 220kV) from Sioma (Ngonye Falls HPP) to Sesheke substation. Including associated works at the Sesheke substation and ZESCO switchyard facilities at Ngonye Falls Sub Station.
Model	Finance - Build - Lease – Transfer
Agreement	T-Line Agreement (or as part of the Connection Agreement) between WPC and ZESCO governing construction and commissioning, lease payments, operational handover, ownership, early repayment
Project Cost	$35m +/- $5m
EPC	Combined as an integral part of the HPP EPC contract to mitigate any integration risk between the HPP and the T-Line works in terms of completion dates and delay LD’s.
Construction Time	18 months
Debt Finance	Same debt pool as for the power station but a separate facility with specific terms
Equity Finance	Not necessarily the same as the power station equity investors
Ownership	Transferred to ZESCO at end of lease period or earlier as the case may be should ZESCO secure alternative funding (as per below).
System Operation	ZESCO as TSO
O&M	ZESCO's risk
Payment model	ZESCO will pay a fixed periodic (monthly) lease payment for a fixed period until the project is fully paid. Plus inbuilt wheeling right for WPC.
Refinance and prepayment	If ZESCO (or GRZ) can secure finance at beneficial rates post commissioning, then they can immediately pay the outstanding balance to secure early transfer
Security package	Access to the same security mechanics as the PPA including the escrow accounts and nominated receivables.

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Power Evacuation

Ngonye Falls Hydroelectric Project

\n${book_index('powerevacuation')}\n\nThe Ngonye Falls Hydroelectric Project is a run-of-river electricity generation project on the Zambezi River currently under development by Western Power Company. It seeks to utilise the potential of the Ngonye Falls by diverting water from above the falls and passing it through hydropower turbines before returning water to the river four kilometres downstream.\n","pinned":false,"hidden":false,"mode":"html"},{"id":1483,"value":"$31","pinned":false,"hidden":false,"mode":"html"},{"id":1607,"value":"{\nlet div = container(html`Schematic of the current Zambian transmission network and location of the Ngonye Falls project in Western Province.`)\n div.prepend(html`\n \n`)\n return div\n}","pinned":false,"hidden":false,"mode":"ojs"},{"id":1615,"value":"$32","pinned":false,"hidden":false,"mode":"html"},{"id":1623,"value":"

Western Province Power Supply

\n\n","pinned":false,"hidden":false,"mode":"html"},{"id":1626,"value":"$33","pinned":false,"hidden":false,"mode":"ojs"},{"id":1651,"value":"

Grid Upgrade Plan

\nZESCO currently has plans for a number of transmission upgrade and expansion projects in central and western Zambia including strengthening of the main north-south corridor and new interconnectors into DRC – both designed to allow for additional export to the growing mining loads in the Katanga copperbelt of DRC.","pinned":false,"hidden":false,"mode":"html"},{"id":1709,"value":"{\nlet div = container(html`Current and planned transmission infrastructure (schematic) in southern and western Zambia.`)\n div.prepend(html`\n \n`)\n return div\n}","pinned":false,"hidden":false,"mode":"ojs"},{"id":1669,"value":"$34","pinned":false,"hidden":false,"mode":"html"},{"id":1681,"value":"

Ngonye Falls Power Evacuation Requirements

\nA technical study has been completed to determine the optimum power evacuation arangements for the 180MW Ngonye Falls project. This concluded that the least cost option is to evacuate power south 110km to the Sesheke substation via a single-circuit 220kV transmission line.\n

\nThe project only requires this 110km stretch of new transmission line to evacuate all of the power that will be produced over the life of the project.\n

\nA separate study determined that it would be possible to evacuate up to 23MW from the power station south over the existing 66kV transmission line but, at this power, losses would be substantial at 3.9MW and the installed capacity of the station would be unnecessariy and severely limited.\n","pinned":false,"hidden":false,"mode":"html"},{"id":1691,"value":"$35","pinned":false,"hidden":false,"mode":"html"},{"id":1699,"value":"

Power Station Connection Arrangements

","pinned":false,"hidden":false,"mode":"html"},{"id":1688,"value":"A Grid Integration Study (GIS) has been drafted for the power station and is currently (Q1 2023) being completed following comments and feedback from ZESCO.\n

\nThe power house with two generator transformers (one per two generator units) is on the north bank of the Zambezi river. A double circuit 220kV transmission line crosses the river and road to a 220kV (later 220/330) switchyard south of the river. Two 330kV (initially energised at 220kV) transmission lines exit the switchyard to the south, one turn northwest to the proposed Nangweshi substation and one turns southeast to the existing Sesheke substation.","pinned":false,"hidden":false,"mode":"html"},{"id":1718,"value":"{\nlet div = container(html`Proposed connection arrangement for the Ngonye Falls power station.`)\n div.prepend(html`\n \n`)\n return div\n}","pinned":false,"hidden":false,"mode":"ojs"},{"id":1728,"value":"To accommodate the future uprating by ZESCO of the transmission lines to Sesheke and Nangweshi from 220kV to 330kV the switchyard has a large area set aside on its southern end for future 220/330kV transformers and associated switchgear and protection equipment. In the initial configuration this area is not used.","pinned":false,"hidden":false,"mode":"html"},{"id":1734,"value":"html`1100?1100:width}px\" src=\"${await FileAttachment(\"Screenshot 2024-07-29 095956.png\").url()}\">`\n","pinned":false,"hidden":false,"mode":"ojs"},{"id":1732,"value":"$36","pinned":false,"hidden":false,"mode":"html"},{"id":1756,"value":"$37","pinned":false,"hidden":false,"mode":"html"},{"id":1030,"value":"

\n

Setup

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Import Libraries

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