Mixing it up: Striking a balance between hydroelectricity and thermal power in the short and long term

With its many rivers – including the Ogooué River, the fourth-largest in Africa by volume – Gabon has a total estimated hydroelectricity potential of 6000 MW. Over the past two decades, however, hydropower has declined as the dominant source of electricity in Gabon; no major new dams have been built in more than 30 years, while the demand for power has grown substantially over the same period. Both the government and Société d’Electicité et d’Eau du Gabon (SEEG), a private utility, have turned to thermal power to fill the growing gap between supply and demand.

ENERGY MIX: Up until 1985, more than 75% of Gabon’s energy was generated from hydroelectric plants. With the exception of small, isolated communities and Port-Gentil, which is not connected to a larger grid, Gabon’s power supply consisted almost entirely of hydroelectric power until 1985, when the first heavy fuel power station was constructed at Owendo, near Libreville. Fuelled by economic growth and industrialisation, demand for electricity has risen substantially in recent years. A study conducted by the International Finance Corporation, the World Bank’s private sector arm, in 1996 predicted electricity demand would grow on average 2-3% a year over the next two decades. In fact, actual demand has been growing at around 6% to 8% a year and looks set to continue, fuelled by the country’s many industrialisation initiatives.

In recent years, thermal-generated electricity has steadily risen as a share of Gabon’s energy mix. Over the past six years, electricity generated by thermal energy has almost doubled, from 518 GWh in 2006 to 998 GWh in 2011. Over the same time period, electricity generated by hydro has stayed about even, with annual fluctuations due to water levels. Thermal capacity has increased as well. In 2011 thermal power accounted for 229 MW of generating capacity, about 57% of Gabon’s total installed capacity of 400 MW. In the same year, thermal power generated 54% of 1837 GWh of electricity produced, up 6% from 2010, when thermal power generated only 48% of the country’s total.

RECENT CONSTRUCTION: Almost 100 MW of thermal capacity has been installed in Gabon since 1997, when the electricity distribution sector was privatised. Major investment began in 1997, when SEEG installed two gas turbines with a total capacity of 8 MW in Port-Gentil. In 1999, a heavy fuel power station with a capacity of 33 MW was installed at Owendo, near Libreville, to meet the capital’s growing demand for electricity.

Since that time, the high price of fuel has favoured the installation of gas-fired plants instead of ones using diesel or heavy fuel. Consequently, in 2007, SEEG modified the TAG power plant at Owendo to be able to handle gas as well as diesel. In 2009 work began on a CFA9.2bn (€13.8m) project to build two new gas-powered turbines, TAG 3 and 4, at Owendo power station. The new turbines entered into service in 2010, providing an additional 27 MW of installed capacity.

FUELLING EMERGENCE: A major plank of the government’s economic diversification strategy, Emerging Gabon, is the construction of special economic zones (SEZs). These will provide incentives to encourage industrialisation, both to supply the domestic market and to process raw materials before they are exported. Construction has already begun on the economic zone outside Libreville at Nkok, which will be primarily focused on timber processing. A second zone will be established at Mandji Island in Port-Gentil, with a focus on petroleum-related industrial projects.

Both of these economic zones will require large amounts of power. “Nkok alone might eventually need up to 500 MW of dedicated electricity, once all the phases are complete,” Alain Herth, the director-general of the Agency for the Regulation of the Potable Water and Electric Energy Sector (l'Agence de Ré gulation du Secteur de l'Eau potable et de l'Energie Electrique, ARSEE), told OBG.

To fulfil short-term demand from the SEZs for electricity, the government has again turned to thermal power. In 2009, the government awarded a contract to build a new power plant at Alenkiri in Owendo to the Israeli company Telemenia. The power plant is being built in two phases. Each phase consists of two 17.5-MW dual-fuel (natural gas and diesel) generators. The plant will provide a total installed capacity of 70 MW when it is completed and has an estimated cost of some CFA29bn (€43.5m). Although the first phase of the plant has been completed, it remains idle as it has not yet been connected to the grid or natural gas feedstock supplies. The plant was originally planned to supply power directly to the Nkok SEZ, along with another thermal plant to be built by the Indian firm Abhijeet onsite. Given Libreville’s shortage of power, however, some of the capacity might be diverted to the capital.

Telemenia is also building a similar dual-fuel thermal power station in Port-Gentil. The station has a planned total capacity of 105 MW and will be built in two phases of 52.5 MW each. Construction began in February and is scheduled for completion in 2013. The project, which was announced by Société d’Electricité de Télé- phone et d’Eau du Gabon is estimated to cost about CFA72bn (€108m). The power plant is being built to supply power to the Mandji Island SEZ.

GAS SUPPLY: As the newly built thermal generators come on-stream, the demand for natural gas in Gabon will rise significantly. This raises questions about the availability of natural gas in the country. Up until 2005, the SEEG had a contract directly with Shell to supply its natural gas needs. In 2005, however, Perenco signed a contract with the government to provide natural gas from its Ganga field, which the government then resells to the SEEG. Perenco has subsequently installed a network of gas pipelines to supply both Port-Gentil and Libreville. The current gas pipeline from Port-Gentil to Libreville is operating at close to maximum capacity. Consequently, to ensure a supply of gas to the new plant at Alenkiri, a new pipeline may have to be constructed.

An operator for the new power plants under construction has not been identified. The government is currently looking to reorganise the power sector and has created several new entities in order to achieve its stated goal of increasing overall power generation to 1200 MW by 2020. Whether or not the new plants will be run by an independent operator, the SEEG, or by one of the new agencies is not yet clear. Transmission lines are also required to connect the new power plant to the Libreville grid as well as Nkok.

LONG-TERM PLANS: The government’s long-term goal is to return to hydroelectric power as a clean and stable source of energy. Most hydroelectric projects are located far away from demand centres, however, requiring large investments in transmission infrastructure to bring the power to where it will be used. Therefore, until the three hydroelectric dams that are currently under construction come on-line, Gabon’s energy mix should continue to favour thermal power. However, thermal power remains susceptible to volatile fuel prices and gas-supply constraints. Thus, if the state is to realise its long-term goal of reducing rates while increasing power supply, the energy mix should return to a balance between thermal, to provide peak energy, and hydroelectric as the principle supplier of base-load demand.