Regulation of electricity utilities – power generation

Authorisation to construct and operate generation facilities

What authorisations are required to construct and operate generation facilities?

The authorisation to develop generation (without prejudice to the exemption applicable to non-tied producers) activities is granted through concession agreements, entered into with the Angolan government, or through licences granted by the local authority, depending on the circumstances.

On the other hand, construction of electric facilities is subject to the licensing procedures prescribed in Decree No. 41/04 of 2 July, the Regulation for the Licensing and Security of Electric Facilities.

Under this Regulation, any entity interested in developing new electricity facilities is required to obtain an establishment licence (which grants the authorisation for the construction of the facility) and, subsequently, an exploration licence, which grants the necessary authorisation to start operating the facility.

The request for these licences is made to the licensing entity (the entity within the energy sector ministry that is competent to conduct the licensing process), with full details of the project and all other elements necessary to understand the project as a whole.

The licensing entity may impose any modifications it deems essential to ensure the safety of the population and assets as well as compliance with the applicable security regulations. In certain situations, the project may be subject to various consultation procedures, namely with affected populations or official departments in charge of activities that are affected by the project in question.

After all the foregoing formalities are successfully concluded, an establishment licence is granted after the payment of the fee, allowing the commencement of construction. Usually, the project developer is obliged to finish the construction works within two years of the establishment licence being granted, although this may be extended depending on the circumstances.

Following the completion of the construction works, the project developer should request an inspection to ensure compliance of the facility with all applicable rules. If it complies, the exploration licence is granted (no later than 15 days after the inspection) and the facility may enter into operation.

In certain cases - mostly construction of small facilities that do not interfere with public domain terrains or assets - there may be an exemption from obtaining the establishment licence, or both the establishment and exploration licences.

Grid connection policies

What are the policies with respect to connection of generation to the transmission grid?

Network access of generators is made under the terms of the Network Access Regulation, approved by Presidential Decree 19/11 of 17 January.

Access to networks must be done in a non-discriminatory fashion by the Rede Nacional de Transporte de Electricidade, EP (RNT) concessionaire (see question 9) and tied distributors in high voltage and low voltage, as long as they have, as applicable, transmission or distribution capacity in the respective network and such access does not affect the standards of quality of service and security of supply.

Technical and commercial terms and conditions to use PES networks and interconnections vary in accordance with the type of user and network and must be agreed upon by the relevant agents.

Alternative energy sources

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

Presidential Decree No. 88/13 of 14 June established the Strategic Plan for New Environmental Technologies, which is divided into two perspectives: a transversal and a sectorial perspective. The governmental body in charge of implementing this project is the General Directorate for Environmental Technologies.

The transversal perspective aims essentially to promote, disseminate, foster and raise public awareness towards the use of environmental technologies in Angola, mainly by:

  • developing information campaigns using the existent social media;
  • implementing information campaigns in schools and local communities;
  • creating a platform to share information between entities related to the environmental technologies industries; and
  • promoting the country’s adherence to an international sustainability index.

The sectorial perspective focuses on promoting and implementing tailored measures and actions by economic sector, including specific programmes for the following sectors:

  • real estate and construction;
  • agriculture and forestry;
  • industry;
  • energy and water;
  • oil; and
  • transportation.

Recently the government has also announced the ‘Atlas for the New and Renewable Energies’ whereby it has committed, until 2025, to install 800MW of renewable energy generation facilities, and further, to a target of 7.5 per cent of electricity generated to come from renewable energies.

Climate change

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

Angola is a party to the United Nations Framework Convention on Climate Change, although currently assuming no binding targets for emissions reduction.

The main instrument of government policy addressing climate change and the non-binding commitments assumed is Presidential Decree No. 88/13 of 14 June (see question 5).

Storage

Does the regulatory framework support electricity storage including research and development of storage solutions?

There is no specific governmental policy or legislation concerning energy storage.

Government policy

Does government policy encourage or discourage development of new nuclear power plants? How?

Angola does not have any nuclear power generation facilities in its territory and there is no specific governmental policy concerning the promotion of nuclear power.

Regulation of electricity utilities – transmission

Authorisations to construct and operate transmission networks

What authorisations are required to construct and operate transmission networks?

Transmission activities and more generally the operation of the NTN is granted through a concession system. Currently, the transmission system operator (TSO) is RNT, a state-owned enterprise.

Planning and construction of transmission networks is subject to a rolling six-year network investment plan prepared every two years by the TSO. The plan is subject to the approval of IRSEA.

The investment plan shall contemplate:

  • demand forecast and scenario for the development of generation facilities considered in the expansion plans for electricity generation; and
  • requests for connection of non-tied generators, self-generators, private supply generators, clients in very HV and tied distributors in HV and MV.

For each project, the transmission network investment plan must present:

  • list of works to be executed;
  • budgeted amount; and
  • partitioning of costs, for projects involving other entities.

To construct the national transmission network the TSO, as concessionaire, has powers under the Electricity Act to create rights of way and expropriate immovable assets and associated rights thereof.

Finally, licensing of transmission facilities follows the rules set out under the Regulation for the Licensing and Security of Electric Facilities outlined in question 3.

Eligibility to obtain transmission services

Who is eligible to obtain transmission services and what requirements must be met to obtain access?

The Network Access Regulation grants the right of access to the networks of the PES (RNT and tied distribution networks) to the following entities:

  • holders of a tied concession or licence for the generation of electricity;
  • holders of a non-tied concession or licence for the generation of electricity;
  • tied clients;
  • non-tied clients; and
  • ‘self-suppliers’ or private suppliers.

Requirements needed to obtain access to the network are established under a network access agreement (the draft of which is approved by IRSEA) which sets out technical and commercial conditions governing such access as well as the information to be provided by the network user.

Government transmission policy

Are there any government measures to encourage or otherwise require the expansion of the transmission grid?

Increasing the expansion of the Angolan transmission networks and ensuring intra-national interconnection between the various networks has been a priority of government energy policy. The length of the network and number of substations are expected to almost double between 2017 and 2025 in accordance with the Angolan Strategy for Energy (Angola Energia 2025).

The high volume of investment needed and the technical difficulties to be surmounted will, however, pose challenges to achieving this target.

Rates and terms for transmission services

Who determines the rates and terms for the provision of transmission services and what legal standard does that entity apply?

The tariff system of the electricity sector in Angola has, since 2011, with the approval of the Tariff Regulation, general rules and criteria for the setting of tariffs and electricity prices to be practised and complied with by the entities that undertake activities of generation, transmission, distribution and use of electricity (regardless of whether or not they are connected to the PES) as well as for the setting out of costs to be transferred to the tariffs and the fixing of the allowed revenues to be attributed to the entities that undertake activities of transmission and distribution.

Setting of tariffs in the electricity sector is oriented by principles of:

  • sustainability of the sector;
  • general electrification of the country;
  • support for economic efficiency;
  • existence of a maximum tariff;
  • existence of minimum cost tariffs that are compatible with the quality of service;
  • economic and financial equilibria of companies that operate efficiently;
  • transparency in the attribution of subsidies to consumers;
  • support for energy efficiency;
  • existence of a single tariff for the entire country; and
  • transparency in the setting of tariffs.

The tariff structure is established by the competent body of the government, under the proposal of IRSEA and is applied by the RNT concessionaire and by the distribution companies to the users connected to their grids. The actual value of the tariffs is calculated from the formulas established in the Tariff Regulation.

Pursuant to the provisions of this regulation, the costs that may be transferred to the tariffs are based on the costs of the TSO, accrued of a reasonable rate of return, calculated in accordance with widely accepted valuation methodologies.

In relation to the calculation of the revenues of the transmission network concessionaire, these include:

  • efficient investment costs;
  • efficient operation and maintenance costs;
  • other costs necessary to develop the activity in an efficient fashion; and
  • a fair profitability over their efficient investments.
Entities responsible for grid reliability

Which entities are responsible for the reliability of the transmission grid and what are their powers and responsibilities?

The TSO is the entity responsible for the reliability of the transmission grid.

It has the powers and responsibilities outlined in the Dispatch Regulation, approved by Presidential Decree No. 3/11 of 5 January, including:

  • coordinate the functioning of the NTN;
  • monitor output of generation facilities subject to centralised dispatch in accordance with a daily production schedule and merit order;
  • coordinate unavailability of the NTN and generators subject to dispatch;
  • receive information on the physical quantification of the existing bilateral agreements;
  • manage system services necessary for the equilibrium of generation and consumption and the safe operation of the electric system; and
  • identify needs of service systems.

For these purposes, the TSO prepares a ‘system operation handbook’, which is approved by IRSEA and further must be made available to all entities to which the handbook applies (and which are bound by its provisions).