Background and legal framework

The Angola Strategy 2025 (AE2025) sets out a longterm vision for the country’s power sector. The Strategy identifies investment in the electricity sector as crucial, and in order to achieve the fairly ambitious targets set, the Government has set out an equally ambitious infrastructure plan. The Ministry of Energy and Water (MINEA) estimates that by the end of 2018, the country’s power generation will consist of 64 percent hydropower (4 GW), 12 percent natural gas (750 MW) and 24 percent other fossil fuels (1.5 GW). The plan also envisages a strong investment in transmission, with the interconnection of the north, central and south systems and the creation of a new system in the east, interconnecting the capitals of Lunda Norte, Lunda Sul and Moxico. In total, two million customers were expected to gain access to electricity by the end of 2017, mostly through usage of pre-paid meters, representing an electrification rate of more than 40 percent.

The Transformation Program for the Electricity Sector is intended to ensure the economic and financial sustainability of the sector; promote the entry of private capital and know-how through an attractive compensation regime based in power purchase agreements (PPAs) with different feed-in tariffs for specific cases and the creation of the unique buyer, who will acquire all the energy produced in the public system; the creation of unique public entities for each of the sector’s domains; and to reinforce the role of the Regulatory Authority for Electricity and Water Supply and Wastewater Sanitation (IRSEA), in the new market model.

The General Electricity Law of 1996, as amended in 2015, codified the sector and established a legal framework for independent power generation that is complemented by additional legal rules.

Under the Private Investment Law of 2015 (PIL), foreign investment in the Angolan electricity sector is only allowed in case of partnership with Angolan citizens, with public capital companies or Angolan companies in which they hold at least 35 percent of the capital and participate in company management. Under the PIL, an Angolan company must have its head office in Angola and 51 percent of the share capital must belong to Angolan citizens. Legal entities that are covered by the PIL will benefit from tax incentives and benefits, however, these incentives are not automatic or unlimited in duration. The granting of such incentives and tax benefits is examined on a case by case basis according to the criteria provided by the PIL, and any concession granted depends on the size of the investment the number of jobs to be created for Angolan nationals, and the zones in which the project will be implemented.

Renewable energy production

Angola offers great potential for renewable energy production. It also has a high solar resource potential, with the photovoltaic systems being the most appropriate technology to harness this resource in Angola. The AE2025 notes that, in addition to the high potential offered by the Kwanza, Queve, Catumbela and Cunene basins, various other rivers throughout the territory would be suitable sites for smaller projects. Small hydro plants are the most economical alternative, and the Strategy sets a target of 100 MW for small hydropower plants up to 10 MW. The Office for Administration of the Cunene, Cubango and Cuvelai river basins (GABHIC) aims to ensure the integrated and sustainable management of water resources, aiming to increase social, environmental and economic benefits for people living in these areas, thus creating conditions for the sustainable development of the region.

Additionally, Angola has a wind potential of 3.9 GW, of which 604 MW, or 13 projects, have conditions for grid connection by 2017. The sites were chosen on the basis that they all had average wind speeds greater that 6.0 m/s, were situated close to a potential power grid interconnection point, had good access roads, and did not cover natural or protected land.

Emergent renewable technologies are cogeneration and biomass. Cogeneration is the simultaneous production of thermal energy and electric energy from a single fuel and a single set of equipment. This simultaneity guarantees a significant increase in yield and efficiency compared to traditional energy production processes. In comparison, in traditional processes of producing electricity from fuel, gas or biomass, at least 60 percent of the primary energy contained in the fuel is converted into heat and lost to the atmosphere. In classical thermoelectric power plants the average efficiency is between 35 percent and 40 percent. In the cogeneration systems, with the use of waste heat from the otherwise wasteful electrical energy production process, very significant environmental and economic benefits are obtained, due to the increase in efficiency of the process.

Biomass consitute the organic sources that, through the use of their chemical energy, are used for the production of electric energy, heat or fuel. According to the AE2025, Angola has a potential for electricity generation based on biomass and municipal solid waste (MSW) of 3.7 GW spread across 42 projects.

Major players in Angola's energy sector

Ereda is the company responsible for installing 12 weather stations all over Angola and, following a public tender process, has been selected to draft the national Wind and Solar Atlas. The company has also completed construction of a 100 MW wind farm and is responsible for the conceptual design, engineering and technical specifications for a large-scale (30 MW) hybrid system to electrify Baía dos Tigres in Namibe.

ERA works with thermal power plants, renewable energy, cogeneration and infrastructure. With 40 MW of installed power, the Morro da Luz thermal power station in Luanda has been providing 24-hour electricity since December 2012 and with 8 MW of installed capacity, the Tombwa thermal power station in Namibe has been providing the same to the people of Tombwa since 2009. ERA is also part of a design team looking at how to implement solar projects in 23 different villages (to be called solar villages) in Huambo.

The construction of seven power plants, totaling around 200 MW is being carried out by a consortium formed by WinPower, Zagope and Grupo Gema.

WinPower contributes to the solar villages project noted above with the supply and the installation of 42 small-scale photovoltaic systems with inverter batteries, totaling 185 kWp.

The challenges to companies adopting green energy can be overcome with the creation of more incentives and benefits; streamlining the process of importing materials; and easy access to finance for the equipment needed to implement the projects. Provincial governments should also play a role in carefully assessing the needs of their citizens and creating incentives for companies that are implemented outside the larger cities. This would create local employment and facilitate the relationship between businesses and citizens, and result in a greater acceptance of new green technologies by the rural population.

ADCA Advogados Angola is a member of DLA Piper Africa, an alliance of leading independent law firms working together across Africa.