Mozambique Regional Transmission
Backbone Project (“CESUL”):
Technical & Economic Feasibility Study
Presentation of Feasibility Study Report
CESUL Launch Workshop
Centro de Conferências Joaquim Chissano
Maputo, 24 November 2011
1
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Presentation outline
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Feasibility study objective & goals
Feasibility study highlights
Power market assessment
Mozambique generation options considered
CESUL technical feasibility
Economic & financial feasibility
CESUL project timelines
Institutional and operational arrangements
Conclusions & Recommendations
2
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Feasibility Study objective & goals
Objective:
• Provide technical and economic determination of least
cost option for transfer of 3,100 MW north-south in
Klicka här för att ändra format på underrubrik i bakgrunden
Mozambique
CESUL Project Goals:
• Contribute to Mozambique’s economic and social
development through facilitating improved access to
electricity by:
– Interconnecting the Mozambique power systems north-south,
i.e. creating a Backbone Transmission System
– Supply electricity at affordable prices to load centres and
consumers along the transmission system corridor
• Facilitate realisation of Mozambique’s large power
development potential, with particular focus on
hydropower, for domestic and industrial use and bulk
export of cost-competitive renewable energy to South
Africa and Southern Africa
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
3
Feasibility Study scope of work
Review and update all information in previous studies and undertake:
• Load forecasts (Mozambique / Southern Africa region)
• Regional generation
scenarios
(for Mozambique
Klicka här förexpansion
att ändra format
på underrubrik
i bakgrunden candidate projects)
• Power system studies
– Minimum one (1) AC link north-south as a premise for acceptability of any alternative
•
•
•
•
•
•
•
Determination of substation locations
Line routes – HVAC and HVDC (incl. electrode locations)
Preliminary engineering designs (lines & substations) and costing
Project packaging and implementation programme
Operational and control centre requirements, including organisation & training
Economic and financial feasibility analysis
Liaise with CESUL ESIA/RPF Consultant (separately appointed)
The CESUL Feasibility Study builds on previous pre-feasibility study (2008) by Vattenfall
Power Consultants and subsequent technical Optimisation Study (2009)
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
4
Feasibility Study deliverables
The Technical and Economic Feasibility Study report consists of the
following documents:
för attReport
ändra format på underrubrik i bakgrunden
• VolumeKlicka
I-A: härMain
• Volume I-B:
Appendices to Main Report
• Volume II:
Economic Impact Study (still being completed)
• Volume III-A: Preliminary Design Report – HVAC and HVDC
Transmission Lines
• Volume III-B: Preliminary Design Report – HVAC and HVDC
Substations
• Volume IV:
Line Route Report – HVDC Line
• Volume V:
Line Route Report – HVAC Line
5
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Key challenges encountered
• Challenges to successful realisation of CESUL and the associated large
(hydropower) generation developments include:
– Project size and remoteness / distances involved
Klicka här för att ändra format på underrubrik i bakgrunden
– Technical requirements (to ensure high availability & reliability)
– Cost competitiveness compared to alternative regional options
– Amount of financing and commercial frameworks required
– Integrated nature of generation and transmission developments, requiring
alignment of stakeholder interests and high degree of coordination
• Other key considerations include:
– Devising transmission solutions in support of initial generation developments
while facilitating long-term expansion to tap Mozambique’s energy potential
– Ensuring sustainability and tangible benefits to local (Mozambican) economy
from recommended technical and economic solutions
– Minimising environmental & social impacts through line route selection
– Dynamic and iterative nature of planning, analysis, structuring and financing
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
6
Findings and Conclusions
• Feasibility Study confirms technical viability of combined HVAC and HVDC
transmission backbone solution for 3,100 MW (and more) power transfer capability
• CESUL Phase 1 investment costs (excl. financing costs and IDC) are estimated at
US$ 2,119Klicka
million
US$
1,800
for Stage
1)
här(of
förwhich
att ändra
format
på million
underrubrik
i bakgrunden
– Phase 1 financing requirement of ~US$2,780 million incl. IDC & price contingency
• Economic viability of combined hydropower and transmission backbone is robust
• Financial viability and competitiveness of delivering electricity at Mozambique / South
Africa border in southern Mozambique appears promising
– Timely realisation of Mphanda Nkuwa project is key to commence CESUL development
– Realising Cahora Bassa North Bank will allow complete CESUL Phase 1 development
– Cost of debt financing to be tested with market participants
• HVAC solution will ensure interconnection of Mozambique’s national transmission
grid, with increased access to electricity along line route
• HVDC portion of transmission backbone is scalable – for initial CESUL Phase 1
solution and beyond
• Due to magnitude of project costs, a staged Phase 1 realisation should be considered
• CESUL development needs to continue without delay from early 2012 to align with
planned timeframe for commissioning of hydropower project(s)
•
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
7
Recommended CESUL Phase 1 solution
• CESUL Phase 1 includes combined HVAC & HVDC solution
• HVAC solution includes:
•
•
1,340 km 400 kV AC line for 900 MW continuous power
transferKlicka
at 400här
kV,för
butattwith
550format
kV design
of equipment
ändra
på underrubrik
i bakgrunden
50% series compensation of AC line
• HVDC solution (Phase 1) includes:
•
1,275 km ±500 kV DC bipolar transmission line and converter
stations with 2,650 MW capacity
•
90 km transmission lines to Cataxa and Maputo electrodes
• Implementation of HVDC solution is proposed staged:
•
Stage 1: ±500 kV DC line with 1,325 MW converter capacity
•
Stage 2: Additional 1,325 MW converter capacity
• Project is proposed packaged and tendered as a limited
number of contracts (indicatively 7)
• Timeframe to implement Phase 1 / Stage 1 is 59 months:
© Vattenfall AB
•
Design, tendering and contracting period: 17 months
•
Construction period: 42 months
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
8
CESUL Feasibility Study –
Power Market Assessment
9
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Mozambique demand forecast - recent electricity
demand growth trajectory (excluding Mozal)
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10
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Mozambique demand forecast (cont. I)
• Forecast period is 2010 – 2030:
– Energy supplied (before losses) (in GWh) and Peak demand (MW)
– Natural growth + Large consumer demand
– Medium
forecast
case (+
high på
and
low forecast)
Klicka
här =
förbase
att ändra
format
underrubrik
i bakgrunden
• General electricity demand drivers:
– Annual GDP growth:
• 2010 - 2015: 6.5% - 7.9% (IMF estimates)
• 2016 - 2030: initially 7.0%, tapering off to 4.0%
• GDP elasticity: 1.2, tapering off to 1.1 (except large loads)
– Electricity tariffs – current tariffs do not cover costs:
• 7% real increase assumed over next 5 years
• Assumptions applied will contribute to dampen future demand growth
• Large user loads:
– Defined as > 5 MW initial loads, identified based on information from EdM,
Ministry, developers and consultant estimates
– Cost-reflective tariffs assumed, with consequences for energy intensive projects
that rely on low tariffs (e.g. Mozal expansion)
– Uncertainty with respect to loads and timing dealt with by estimating probability
and applying loads to medium forecast, high forecast and low forecast respectively
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
11
Mozambique demand forecast (cont. II) –
Base Case national demand forecast (GWh)
National Energy Demand (GWh): Medium Case Forecast
GWh
14000
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12000
10000
8000
6000
4000
Northern
Central
2000
Southern
0
2009
2014
2019
2024
2029
12
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Mozambique demand forecast (cont. III)
Peak Demand – Base Case, High and
Low forecasts (MW)
Base Case forecast – natural growth and
large loads (MW)
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13
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Southern African power demand
Importance of South Africa’s IRP2010
• South Africa approved an IRP2010 in
April 2011, being a 20-year indicative
generation
expansion plan
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i bakgrunden
• Strong focus on clean, renewable energy
• Plan assumes 2,600 MW of hydropower
import, mainly from Mozambique, to
commence in 2022 (earlier if possible)
• Preference is for base load / mid-merit
energy (not peaking)
• IRP2010 includes long-term indicative
electricity price forecast
• Forecast average cost of new (base-load)
generation is >10.0 USc/kWh
• Represents benchmark for Mozambique
• Southern Africa needs additional
hydropower at South Africa border
generation capacity – quickly!
• Current reserve margins are insufficient
• Actual price will however be subject to
14
• South Africa is by far the dominant market
commercial negotiations
SAPP power demand and supply:
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL Feasibility Study –
Mozambique Generation Options and
Regional Generation Expansion Scenarios
15
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Generation Option Assessment –
Mozambique candidate generation projects
• Potential generation projects were reviewed, focused
on hydropower, coal, gas-fired projects
• Gas-fired plant with a total capacity of up to 600 MW
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are assumed
built in Southern Mozambique, as well
as 100 MW of local generation injected into Tete part
of system
• Based on regional market assessment, hydropower
projects are considered priority:
• Mphanda Nkuwa (“MPNK”)
• 1,500 MW base-load / mid-merit plant
• 8,600 GWh of annual energy (850 MW firm power)
• Feasibility study complete / Concession Agreement exists
• Cahora Bassa North Bank (“CBNB”)
• 1,245 MW estimated mid-merit/peaking capacity
• 2,983 GWh of gross annual energy (but only 854 GWh
increase in overall Cahora Bassa annual energy)
• Studies ongoing / data & information to be firmed up
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
16
Generation Scenarios and associated
Transmission Solutions
No.
Scenario:
0
Reference
1
2
CESUL capacity
CESUL transmission alternative
Not applicable (new 400kV line Songo-MatamboInchope + reinforcement in south required)
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i bakgrunden
Single circuit
400 kV line (4 x Tern) with 550 kV
CBNB
1,245 MW
equipment rating, 70% series compensation
0 MW
Double circuit 400 kV line (4 x Tern) with 550 kV
equipment rating, 50% series compensation
MPNK
1,500 MW
MPNK + CBNB
Single circuit 400 kV line (4 x Tern) with 550 kV
2,745 MW equipment rating, 50% series compensation, plus
Bi-pole DC line (4 x Martin), 2,650 MW capacity
4
Add. Hydro Energy
Same as Scenario 3 (2nd bi-pole may be required
3,536 MW
if all generation projects implemented early)
5
Extended Hydro
4,486 MW Scenario 3 plus 2nd bi-pole (5,300 MW capacity)
6
Large Hydro & Coal
7,545 MW
3
Scenario 3 plus 2nd bi-pole to Maputo and 3rd bipole terminated in South Africa
Candidate generation projects and associated transmission alternatives were studied
through scenarios, with grid injection of 600 MW gas-fired generation in south and 100 MW
generation in Tete common to all scenarios
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
17
Regional generation expansion modelling
• Southern Africa needs ~1,500 MW of additional (base-load) capacity per annum
• Future generation and transmission developments in Mozambique will depend on
competitiveness of Mozambique projects compared to alternative regional projects
Klicka här förfor
att Mozambique
ändra format på
underrubrik
bakgrunden projects were
• Cost characteristics
and
regionali generation
developed and analysed
– January 2011 used as reference year for prices and cost estimates
– Investment, (fixed and variable) O&M costs, and fuel costs considered
– Analysis covered thermal (coal and gas-fired) and renewable generation projects
(including hydropower, wind and solar)
– Cost data were sourced from EPRI, Nexant and Consultant’s own data bases
– Particular focus on generation expansion as envisaged by South Africa’s IRP2010
• Generation expansion simulations were undertaken to demonstrate economic
viability of large-scale power export from Mozambique
– Total generation costs, including energy not served (“ENS”) and spinning reserve
costs, as well as generation related transmission costs (including losses) considered
– Mozambique options substituted for ‘generic’ options in IRP2010
– Overall NVP of total generation costs in regional generation simulations was
calculated, using feasibility study Generation Scenarios 1 to 6 as previously presented
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
18
Generation expansion scenario results
Sc. 0
Reference
Sc. 1
CBNB
Sc. 2
MPNK
Sc. 3
MPNK
&
CBNB
Sc. 4
3,500
MW
Hydro
Sc. 5
4,600
MW
Hydro
Sc. 6
Large
Hydro
& Coal
132.481
131.357
130.635
129.903
129.616
129.751
129.252
-
1.124
1.846
2.579
2.866
2.731
3.230
0.233
0.685
0.983
1.384
1.422
1.748
2.368
132.714
132.042
131.618
131.287
131.038
131.499
131.620
Total Savings (relative to
Reference Scenario)
-
0.672
1.096
1.427
1.676
1.215
1.094
Tentative value of reduced CO2
emissions (using US$20 per ton)
-
0.255
0.752
0.884
1.104
1.198
0.937
Savings incl. emission reduction
(relative to Reference Scenario)
-
0.927
1.848
2.311
2.780
2.413
2.031
Generation Expansion
Simulations 2011 - 2030
(NPV in US$ billion)
Total Generation System Costs
(capital, O&M, fuel, ENS)
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Generation System Savings
(relative to Reference Scenario)
Transmission System Costs
(related to generation options)
Total Costs
Some observations:
• All generation scenarios with inclusion of Mozambique hydropower projects appear merited
• Despite significant transmission costs, both MPNK and CBNB are economically viable projects
• While Scenario 4 shows the highest potential saving, this scenario may trigger additional investments
in transmission infrastructure at an early stage
• On balance, therefore, Scenario 3 (MPNK and CBNB) appears to be most robust, with scope for
future expansion by additional hydropower resource developments
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
19
CESUL Feasibility Study –
Technical Feasibility Assessment
20
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Planning methodology & criteria
• Transmission
– Planning assumptions document prepared and discussed with Eskom (ref.
“Memorandum of Transmission Planning Assumptions”)
• Complies
general
withformat
Southpå
Africa’s
Grid Code
Klicka härinför
att ändra
underrubrik
i bakgrunden
– Deterministic N-1 planning criteria, but with agreement that up to 2,000 MW of
generation can be tripped in Tete area for an outage of a line on CESUL
transmission backbone (effectively a “N-½ criteria”)
• Will normally not affect customers in South Africa due to size of South Africa system
– Series compensation facilities and Static VAr Compensators (SVC) along AC
backbone planned with redundancy
– All transmission alternatives considered include at least one 400 kV AC line from
Tete area to Maputo, to provide supply to areas in between
– Recognised that wheeling capacity through Zimbabwe may be limited
• Generation characteristics recognised
– Production profiles
– Forced and Scheduled outages
– Minimum 15% reserve requirement for South Africa, with maximum 19% import
share (of peak load)
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
21
Transmission system studies undertaken
• Load flow, voltage stability and losses
• Simulation of normal ‘steady state’ operation
Klicka
här för att ändra format på underrubrik i bakgrunden
• Contingency
analyses
• Transient and dynamic stability
• Fault levels
• Sub-synchronous resonance studies
• Switching studies
• Optimisation of conductor configuration
• Optimisation of reactive power compensation facilities:
– Line and bus shunt reactors
– AC line series compensation
– Static VAr Compensation (SVC)
22
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Transmission system studies (cont.)
• Key assumptions:
– Generation at Benga and Moatize developed basically to
cover own demand, with 100 MW surplus generation sold
Klicka här för att ändra format på underrubrik i bakgrunden
to EdM
– HVDC Songo - Apollo transfer capacity of 1,920 MW
– SAPP grid support during contingencies
– Wheeling via Zimbabwe attempted kept at low level as full
capacity of interconnection Songo - Bindura may not be
available in future
• Under normal operations, wheeling may possibly be avoided
once CESUL HVDC line is in service
– Comparison of alternatives based on unit cost estimates
• Detailed cost estimates based on supplier quotations
developed for recommended CESUL scheme
– CESUL O&M costs estimated at 2.0% p.a.
– Marginal cost of losses priced at 6.0 USc/kWh (for
equivalent capacity and energy cost)
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
23
Transmission solutions considered
• HVDC
• 500 kV and 600 kV bi-pole schemes - bi-pole
lines
• 800 kV mono-pole
Phase
1 ändra format på underrubrik i bakgrunden
Klicka här
för att
• 2nd 800 kV mono-pole in Phase 2, forming bi-pole
with DC in Phase 1
• HVAC
• 400 kV operation (but heavier equipment design)
• Quadruple line configuration to limit reactance
• Compact line / expanded bundle design
considered for high transfer levels
• Series compensation up to 70% to achieve
transient stability
• Line and bus shunts to handle energization / load
rejection
• SVCs for voltage & stability control measures
Both HVAC and HVDC technology
solutions were examined in the
Feasibility Study, under a number of
design considerations
• Intermediate substations required for voltage
control combined with supply to local area
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
24
Transmission studies – considerations
• Characteristics of existing transmission
system
• Defining a base case (without CESUL
Klicka här för att ändra format på underrubrik i bakgrunden
backbone)
• Specific technical challenges (line lengths,
fault levels, compensation, energization)
• Substation locations (AC + DC)
• Interaction with HVDC system Songo – Apollo
(RSA)
• Integration with neighbouring SAPP countries
and wheeling over SAPP networks
• System expansion in Southern Mozambique
• Interfacing with Motraco system
• New Master Power Controller (MPC)
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
25
Line routings (HVDC and HVAC)
Key considerations:
General
• Utilize existing and planned "energy" corridors
(transmission
lines,
roads,
Klicka
här
för attrailways)
ändra format på underrubrik i bakgrunden
• Minimise social and environmental impact
• Access and maintenance conditions
• Utilise reliable low cost design
• Least cost
HVAC Line Routing
• Support for development of Mozambique
• Interconnection of EDM grid
• Selection of substations considering reactive
compensation requirements
HVDC Line Routing
• Bulk power transfer (aligned to generation scenarios)
• Minimise social and environmental impact
• Utilise reliable low cost design
26
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Conclusions from transmission studies
For AC line(s), the following is noted:
• Distance from Tete to Maputo (~1,340 km along chosen route) presents
technical challenges:
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Voltage control (for energisation and normal and contingency operation)
–
– Transient and dynamic stability
– (Note: 53 km of 400 kV line Songo – Cataxa will be required, not currently
defined as part of CESUL Phase 1)
• Low reactance is required, implying:
– Four bundle conductor configuration
– Compact line design with expanded bundle would be required for high
transfers (>1,400 MW)
• Low reactance leads to high capacitance, causing:
– Higher switching surges
– Increased insulation level
– Higher investment costs
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
27
Conclusions from transmission studies (cont. I)
• AC line requires extensive reactive power control
for energisation and voltage regulation during
normal and contingency operation:
för be
att ändra
på underrubrik i bakgrunden
– LongKlicka
line - här
must
split informat
sections
– Intermediate substations at Inchope,
Vilanculos and Chibuto are required and will
feed into local grids
– Line shunt reactors required at either end of
each line section in combination with switched
bus shunt reactors
– Large SVCs required at intermediate
substations, with two units at each of Inchope
and Vilanculos to maintain operability during
outages of SVCs
• New substation proposed at Moamba to act as
feeding point for Maputo area (and suitable
connection point for gas-fired plant and potential
future 3rd 400 kV line to South Africa)
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
28
Conclusions from transmission studies (cont. II)
For DC line(s) the following is noted:
• 500 kV HVDC bi-pole solution with bipole DC line estimated to present
här för
ändra format
på underrubrik i bakgrunden
least-costKlicka
solution
foratt
CESUL
DC link
– 600 kV HVDC bi-pole and 800 kV monopole also evaluated, but considered to
imply slightly higher overall costs
• Bi-pole solution will provide higher
overall availability (than mono-pole),
although loss of 500 kV bi-pole will
require tripping of generation as for a
800 kV mono-pole solution
• 500 kV bi-pole solution will also limit
environmental impacts through
reduced width of right-of-way, lower
line towers (about 3.5 m lower) and
less time of operation with electrodes
29
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL Phase 1 – combined HVAC / HVDC solution
Klicka här för att ändra format på underrubrik i bakgrunden
•
•
© Vattenfall AB
HVAC operated at 400 kV (equipment designed for 550 kV) – 900 MW transfer capacity
HVDC operated at ±500 kV – 2,650 MW transfer capacity, implemented in two stages , each with
1,325 MW converter capacity
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
30
Staged implementation of HVDC for CESUL Phase 1
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Stage 1: 1,325 MW
Stage 2: 1,325 MW
31
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL connections to Mozambique power system
Connection to ‘regional’ power systems
Connection to load centres and
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här för
att ändra
format på underrubrik i bakgrunden
consumers
along
CESUL
HVAC
Transmission
transmission line route
Voltage levels
lines
Transformer
capacity
Matambo
400/220 kV
-
2 x 250 MVA
Inchope
400/220 kV
220 kV in-out
1 x 400 MVA
Vilanculos
400/110 kV
External project
(not CESUL)
1 x 125 MVA
Chibuto
400/110 kV
110/33 kV
External project
(not CESUL)
1 x 125 MVA
1 x 40 MVA
Moamba
400/275 kV
275/110 kV
110/33 kV
External project
(not CESUL)
1 x 500 MVA
1 x 125 MVA
1 x 63 MVA
32
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL Project cost estimates
• General approach
– Unit costs used for comparison, drawn from Consultant’s databases and
external cost statistics (e.g. CIGRE)
– Supplier
quotations
used
for actual
Project icosting
and economic/financial
Klicka här
för att ändra
format
på underrubrik
bakgrunden
analysis, based on EPC delivery, "CIF to port“
• Project costing includes Engineering & Owner’s Costs and Contingencies
(added to suppliers’ EPC cost quotations):
– Engineering & Owners Cost: 10% of EPC quotations
• Considered conservative
– Physical Contingencies: 10% of EPC quotations
– Price Contingencies: not included in Project cost estimates
• 10% price contingency on EPC quotations recommended included when
finalising Project financing requirements
• Relocation / compensation payments:
– Included in Project costs with value equal to 2% of estimated transmission
line cost (HVAC and HVDC)
– CESUL RPF Report recommendations will be used in Final Report, with
latest indication is 3% of transmission line costs
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
33
Phase 1 HVAC costing
Foreign
Local
HVAC - Cost Components
underrubrik
USD
(‘000) i bakgrunden
USD (‘000)
400 kV Klicka här för att ändra format på
Total
USD (‘000)
HVAC Transmission Line
339 641
81%
79 672
19%
419 313
HVAC Substations
336 736
92%
29 281
8%
366 017
0
0%
8 386
100%
8 386
Engineering & Owner's Cost (10%)
47 120
60%
31 413
40%
78 533
Physical Contingencies (10%)
62 826
80%
15 707
20%
78 533
786 323
83%
164 459
17%
950 782
Compensation (2% of line)
Total HVAC Phase 1
34
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Phase 1 HVDC costing
HVDC - Cost Components
Stage 1, ± 500 kV 1325 MW
Foreign
Local
Total
USD (‘000)
USD(‘000)
USD (‘000)
308 258 81% 72 308
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HVDC Stations
294 685 92% 25 625
19%
380 566
8%
320 310
7 611 100%
7 611
HVDC Transmission Line
0
0%
Engineering & Owner's Cost (10%)
42 053
60%
28 035
40%
70 088
Physical Contingencies (10%)
56 070
80%
14 018
20%
70 088
83% 147 597
17%
848 663
Compensation (2% of line)
Total HVDC: Stage 1 of Phase 1
HVDC - Cost Components
Foreign
Local
Total
Stage 2, Additional 1325 MW
USD (‘000)
USD (‘000)
USD (‘000)
244 720
92%
21 280
8%
266 000
Engineering & Owner's Cost (10%)
15 960
60%
10 640
40%
26 600
Physical Contingencies (10%)
23 940
90%
2 660
10%
26 600
284 620
89%
34 580
11%
319 200
HVDC Stations
Total HVDC: Stage 2 of Phase 1
© Vattenfall AB
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
35
CESUL Phase 1 – total investment costs
Summary CESUL Phase 1:
400 kV 900 MW HVAC Transmission and
± 500 kV 2,650 MW HVDC Transmission
USD (’000)
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Total HVAC Phase 1
950 782
Total HVDC Stage 1 of Phase 1
848 663
Total HVAC + HVDC Stage 1 of Phase 1
Total HVDC Stage 2 of Phase 1
Total CESUL Phase 1
1 799 445
319 200
2 118 645
(excl. IDC, Financing costs/fees and Price Contingencies)
Interest During Construction (IDC) & Financing Costs / Fees (est.)
450 000
Price Contingency (10% of Project Costs excl. IDC & fees)
211 865
Total Phase 1 Funding Requirement
2 780 510
36
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL Feasibility Study –
Economic & Financial Feasibility
37
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Economic feasibility – objective & approach
• Objective of economic analysis:
– Establish least-cost Project option (for each generation scenario)
– Ensure that benefits of least-cost Project option exceeds Project costs
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– Demonstrate
that
efficient use
of scarce economic resources
• Approach:
– Project benefits and costs are compared to a situation without the Project
– Analysis is based on discounted cash flow (“DCF”) modelling
– Required Internal Rate of Return (“IRR”) of 10% in real terms (equal to assumed
economic opportunity cost of capital)
– Calculation of Economic IRR (“EIRR”), Net Present Value (“NPV)” and Economic
Unit Energy Cost (“EUEC”) of electricity generated and transported
– Analysis focused primarily on assessment of Generation Scenarios 1, 2 and 3:
• Scenario 1: CBNB only (1,245 MW)
• Scenario 2: MPNK only (1,500 MW)
• Scenario 3: MPNK + CBNB (1,500 MW + 1,245 MW), with CBNB implemented 2 years
after MPNK
• Scenario 3: MPNK only + Stage 1 of CESUL Phase 1 only
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
38
Economic feasibility – assumptions
• Main assumptions:
– 45 years Project life
– All power from MPNK and CBNB assumed contractually transmitted over
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CESUL
infrastructure
– Transmission losses assumed as 4.5% in recommended alternative
– Electricity valued at 10.5 USc/kWh at SA border
• Equal to estimated alternative cost of base-load supply (assuming
Combined Cycle Gas-Fired plant using imported LNG)
– Operating costs of CESUL infrastructure: 2.0% p.a. of investment
– Energy transmitted from:
• MPNK: 8,548 GWh/year
• CBNB: 2,983 GWh/year
– Total net increase of production at Cahora Bassa complex is 854 GWh/year,
including a decrease at CBSB of 2,129 GWh/year
– Loss of generation at CBSB takes place at night, and such lost generation is
priced at 2.6 USc/kWh (assumed as variable cost of coal-fired plant)
39
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Economic feasibility - results
Total Economic Value
Scenario 3
Scenario 2
(Generation + CESUL) Scenario 1
Phase 1
in USD million
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Total Economic NPV
132
1 565
1 962
(at 10% economic discount rate)
Scenario 3
Phase 1
Stage 1 only
1 416
Scenario 3
Phase 1
Stage 1 only
Scenario 1
Scenario 2
Scenario 3
Phase 1
12.5 %
12.5 %
12.7 %
12.6 %
NPV (USD mill) @ 10%
184
268
402
332
Break even tariff
(USc/kWh)
4.60
2.35
2.56
2.89
CESUL Project
Economic Feasibility Results
Project IRR
Note: IRR and NPV calculations are based on financial transmission tariff
40
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Economic feasibility – results (cont.)
• MPNK + CESUL are economic
viable and robust solution
• With MPNK only, cost ‘penalty’
Construction cost + 20%
7.30
7.41
7.73
of developing CESUL with
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Construction cost + 10%
6.94
7.06
7.38
combined HVAC and HVDC
Base case
has marginal impact only
6.58
6.71
7.03
(unit cost at SA border)
• Staged CESUL Phase 1
Construction cost - 10%
6.22
6.35
6.68
development is viable solution
Sensitivities –
Economic Unit costs
(USc/kWh) – MPNK
Construction cost - 20%
Scenario 2
Scenario 3
Phase 1
Scenario 3
Phase 1
Stage 1 only
5.86
6.00
6.33
• CBNB + CESUL represent an
economic viable solution based on
HVAC transmission solution
• CBNB economics improve
substantially when developed with
MPNK and ‘complete’ CESUL
solution (HVAC + HVDC)
• CBNB economics appear robust in
combination with MPNK, based on
recommended CESUL Phase 1
© Vattenfall AB
Sensitivities –
Economic Unit costs
(USc/kWh) – CBNB
Construction cost + 40%
Construction cost + 30%
Construction cost + 20%
Construction cost + 10%
Base case
(unit cost at SA border)
Construction cost - 10%
Construction cost - 20%
Scenario 1
Scenario 3
Phase 1
10.37
10.13
9.89
9.65
8.01
7.78
7.54
7.31
9.41
7.07
9.17
8.93
6.84
6.60
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
41
Financial viability – objective & approach
• Objective of financial analysis:
– Takes the view of prospective investors in CESUL
– Establishes
whether
can be expected
to achieve a
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satisfactory equity return
• Approach:
– Project financial income and costs are compared to situation without
the Project
– Analysis is based on discounted cash flow (“DCF”) modelling
– Required USD based equity IRR of 16% after tax in nominal terms for
CESUL, 17% for generation investments
– Calculation of Project and Equity IRR, NPV and Financial Unit Energy
Cost (“FUEC”) of electricity generated and transported
– Same Generation scenarios as in Economic Analysis, i.e. Scenarios 1
to 3, including alternative with Scenario 3 Stage 1 only
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
42
Financial viability – assumptions
• Main assumptions:
– 30 years concession period
– Electricity
selling
at 10.5
USc/kWh
at SA border
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• Based on estimated alternative cost of base-load supply (assuming
Combined Cycle Gas-Fired plant using imported LNG)
• 10% of MPNK (and CBNB) energy sold with 40% discount to EdM (as per
term of Concession for MPNK)
– 70/30% debt/equity ratio assumed
– 8.0% - 8.5% interest rate on USD loans (including margin)
• Debt financing assumptions to be tested and confirmed by CESUL Financial
Adviser
– VAT and excise duty exemptions assumed for Generation and CESUL
– No income tax incentives assumed for CESUL
– Tax regime for Generation projects assumed as per MPNK Concession
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© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Financial viability - results
Scenario 1
MUSD NPV
Scenario 2
Scenario 3
Phase 1
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Total Financial NPV
-39
293
389
Total Government take
200
793
897
826
Scenario 1
Scenario 2
Scenario 3
Phase 1
Scenario 3
Phase 1
Stage 1 only
Project IRR
13.0%
13.0%
13.1%
13.0%
Equity IRR
16.0%
16.0%
16.0%
16.0%
5.78
2.95
3.26
3.64
CESUL Project
Financial Results
Break-even transmission tariff
(USc/kWh)
216
Scenario 3
Phase 1
Stage 1 only
44
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Financial viability – results (cont.)
• MPNK + CESUL is a
Sensitivities
Scenario 3
Scenario 3
financially viable and robust
Scenario 2
Financial Unit costs
Phase 1
Phase 1
solution
(USc/kWh) – MPNK
Stage 1 only
Construction cost + 20%
9.74
9.94
10.31
• Cost ‘penalty’ of CESUL
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Construction cost + 10%
9.25
9.45
9.82
with combined HVAC and
Base case
HVDC solution has
8.75
8.96
9.33
(Unit cost at SA border)
marginal impact only
Construction cost - 10%
8.25
8.47
8.85
• Staged CESUL Phase 1
Construction cost - 20%
7.75
7.98
8.36
development is viable
• CBNB financial viability uncertain
based on CESUL HVAC solution
• CBNB viability improves when
developed with MPNK and
‘complete’ CESUL solution with
HVAC + HVDC
• CBNB financial viability appears
robust in combination with
MPNK, based on recommended
CESUL Phase 1 solution
© Vattenfall AB
Sensitivities
Financial Unit costs
(USc/kWh) – CBNB
Construction cost + 40%
Construction cost + 30%
Construction cost + 20%
Construction cost + 10%
Base case
(Unit cost at SA border)
Construction cost - 10%
Construction cost - 20%
Scenario 1
Scenario 3
12.34
12.05
11.76
11.47
9.46
9.17
8.89
8.60
11.18
8.32
10.89
10.60
8.03
7.75
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
45
CESUL Feasibility Study –
Project Timelines
46
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Implementing CESUL – key steps
• Key Project development activities
–
–
–
–
–
Appoint Consultant for Design, Specifications & Tender documents - Feb 2012
Commencement of Procurement process - Mar 2012
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Approved tender evaluation - Mid Apr 2013
Approved contracts - Jun 2013
Financial Close of Project – Jul 2013
• Construction of Project Facilities
–
–
–
–
Commencement of OHTL Construction Contracts – Mid Jul 2013
Commencement of Converter Stations Construction Contract – Mid Jul 2013
Commencement of Substation Construction Contracts – Nov 2013
Taking-Over of Project Facilities – Jan 2017
• Assumed timeline for associated IPP projects
– Financial close MPNK – Mid-2013
– Commissioning of MPNK – 2nd half of 2017
– Commissioning CBNB ~ earliest mid-2017 (but could be later)
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
47
CESUL Phase 1 – Indicative Project Programme
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© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL Feasibility Study –
Institutional & Operational Aspects
49
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
Envisaged organisation of CESUL
• CESUL Project size, technical nature and complexity, as well as the very
large financing requirements, are all factors indicating that CESUL should
be established as a Special Purpose Vehicle (“SPV”)
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– SPVKlicka
model
recommended
structure
will i be
developed by CESUL Financial
& Legal Advisors
– EDM is expected to be lead Sponsor
– Additional equity participation may be sought from credible international
investors with relevant skills, experience and financial strength
• Organisation structure, staffing and training programme for CESUL SPV
should be clarified early to mitigate against operational risks
• CESUL SPV will be granted long-term Concession under Mozambique law
– Terms and conditions of the Concession need to be confirmed, including a
Transmission / Wheeling charge methodology supportive of limited recourse
project financing structures (part of mandate of Financial & Legal Adviser)
– Relationships to EDM (as National Power Transmission Grid Manager), HCB,
Motraco and other stakeholders must be clarified and formalised to ensure
timely implementation of CESUL
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
50
Skills and training requirements
Management of CESUL Transmission Company
• Maintenance Management System Training
Staff of new Dispatch Centres
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• Operator training
• Maintenance engineers and technicians: hardware, software and communication
equipment training
HVDC and SVC Staff
•
•
•
•
Project engineers, operation managers, control and protection specialists
Engineers responsible for HVDC and SVC control and protection
Technicians maintaining HVDC and SVC equipment
Operators for HVDC link, remote and local control
Maintenance staff of CESUL Transmission Company
• Maintenance engineers and technicians: fault tracing and preventive maintenance
of HVAC substations, as well as live-line maintenance
Key staff should be in place and be trained during Project construction phase
Complementary external maintenance support by suppliers is recommended
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
51
Control centre requirements
New Control Centres
• Generation and load growth in North/Central area
• System expansion, load growth and interface with
SAPP in South area
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• Hence, two (2) new National Control Centres are
proposed
Location
• New NCC in (or near) Maputo SS
• New SNCC in (or near) Matambo SS
• Each CC equally equipped to be able to act as full
back-up for the other
• Existing Maputo RCC gradually transformed to
Distribution CC for Maputo area
Manning
• Operation, each centre continuously manned with:
− One chief operator and two assistant operators
• Maintenance, each centre manned with:
− One chief and two assistant SCADA maintenance
engineers (in SNCC two assistant only) plus two
telecom technicians
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
52
CESUL Feasibility Study –
Conclusions & Recommendations
53
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
CESUL Feasibility Study – Conclusions
1. CESUL is found to be technically and economically viable
2. Recommended Phase 1 design is a combined HVAC (400 kV) and HVDC (500 kV
bi-pole) solution with high reliability, at a total cost of US$2,119m (funding
requirement of ~US$2,780m), providing a transmission capacity >3,000 MW
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3. HVAC solution will ensure interconnection of central and southern parts of national
grid, allowing for economic & social development along line route
4. Phase 1 solution is considered economically and financially robust, based on largescale export of hydropower to South Africa, with significant revenue to GoM
5. Phase 1 facilitates implementation of MPNK and CBNB, with both projects found to
be economically and financially viable in combination with CESUL solution
6. HVDC portion of CESUL Phase 1 can be implemented in two stages, allowing for
staggered realisation of MPNK and CBNB if required (with MPNK assumed to be
the first major hydropower development)
7. Phase 1 implementation is expected to take 59 months (of which 42 months
construction time)
8. Financing requirements for CESUL Phase 1 are significant, with need for close
coordination of generation and transmission developments to manage commercial
and timing risks
9. CESUL can be expanded by adding 2nd bi-pole with capacity of 2,650 MW
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
54
CESUL – Recommendations and Next Steps
i. Based on a targeted commercial operations date for MPNK by 2017,
CESUL project preparation work has to commence early 2012 by
progressing design, procurement and contracting arrangements
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ii. In parallel, recommended legal, financial and commercial structures
and arrangements need to be finalised
iii. Financial close of CESUL should be targeted for mid-2013 (to align
with generation project timeframes)
iv. Early confirmation of CESUL equity sponsors (in addition to EDM) will
be key to successful development
v. Timely and coordinated engagement with South Africa (Government
and Eskom) will also be essential
vi. Consideration may be given to creation of a Mozambique Joint
Coordination Committee for CESUL and associated hydropower
projects
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Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)
55
Obrigado / Thank you for your attention!
com energia construimos futuro………
56
© Vattenfall AB
Technical & Economic Feasibility Study for
Mozambique Regional Transmission Backbone Project (“CESUL”)