39199 NILE BASIN INITIATIVE v 1 NILE EQUATORIAL LAKES SUBSIDIARY ACTION PROGRAM Strategic/Sectoral, Social and Environmental Assessment of Power Development Options in The Nile Equatorial Lakes Region Final Report Executive Summary February 2007 This work was carried out by: SNC-Lavalin International In association with: - Hydro Quebec International - Vincent Roquet et Associés Inc. - Stratus Consulting Inc. - Michael A. Stevens, Consultant - WL Delft Hydraulics - Experco International (Burundi, Eastern DRC and Rwanda) - GIBB Africa Limited (Tanzania and Kenya) - Sustainable Resources Network (Uganda) The project was managed and supervised by: THE WORLD BANK With financial participation by: SNCeLAVALIN SNC*LAVAUN INTERNATIONALInc. International 455 Rene-Levesque Blvd. West February 26,2007 Montreal, Quebec Canada HZ2123 Telephone:(514) 393-1000 Fax: (514) 876-9273 Mr. Jakob Granit Sr. Water ResourcesManagement Specialist The World Bank, AFTNL 1818 H. Street, NW MailstopJ11-1102 Washington, DC 20433 USA Subject: StrategiclSectoralSocial and EnvironmentalAssessment of Power DevelopmentOptions inthe Nile EquatorialLakes Region Final Re~ort Dear Mr. Granit: We are pleased to submit our final report for this interesting and challenging project. The report consist of: The main report, including an executivesummary A volume of appendicescontainingall the basic informationused inthe analyses An executive summary in English and An executive summary in French This report provides a solid foundation for planning the development of the power sectors of the region as it contains a proposed development strategy and a NELSAP indicative development plan to the year 2020. It is based on a review of the current environmental and social context, the existing legal and regulatory framework, an assessment of the power needs for the region, an identification of the power development options available in the region and a comparison of these options in terms of environmental,socio-economic and risk considerations. It has been a pleasure working with you and your team as well as the NELSAP coordinating Unit, other members of the steering committee and the stakeholders who participated in the project. Sincerelyyours, //& Raymond Noel Team Leader, SNC-Lavalin InternationalInc. RNItc Encl. Member of the SNC*LAVALINGroup A Note to Readers This SSEA study is a general framework which was used to develop an indicative power development strategy for the NELSAP region. As such, it is based on information gathered from secondary sources initially in 2003 and updated in 2004. Much of the data received was developed by numerous consultants over long periods of time (some dating back 20 years) using a wide range of assumptions. Every reasonable effort has been made to put the information on the consistent basis needed for a strategic level analysis like this SSEA. The SSEA is not a substitute for detailed project specific studies and environmental/social impact assessments needed for the implementation of particular projects. Such studies would invariably incorporate updated and detailed information about various project aspects including alternate configurations, cost estimates, hydrology and plant output, and environmental and socio-economic impact analyses. TABLE OF CONTENTS Executive Summary TABLE OF CONTENTS PAGE INTRODUCTION 1 OUTLOOK 1 OVERVIEW 1 RECOMMENDATIONS 3 APPROACH AND ANALYTIC PROCESS 4 LEGAL, POLICY AND ADMINISTRATIVE CONTEXT 5 CURRENT ENVIRONMENTAL AND SOCIAL CONTEXT 6 REGIONAL ENERGY NEEDS ASSESSMENT 6 IDENTIFICATION AND SCREENING OF NEW POWER DEVELOPMENT OPTIONS 7 POWER OPTIONS RETAINED FOR COMPARATIVE ANALYSIS 8 Hydroelectric Options 10 Gas-fired and Coal-fired Thermal Options 14 Geothermal Power Options 16 Wind Power Options 16 Options Set Aside 16 COMPARISON OF OPTIONS 17 POTENTIAL IMPACT OF CLIMATE CHANGE 19 POWER DEVELOPMENT PORTFOLIOS 20 NELSAP INDICATIVE POWER DEVELOPMENT PLAN 22 CUMULATIVE IMPACTS 24 Environmental Impacts of Portfolio 2Bb 25 Socio-economic Impacts of Portfolio 2Bb 26 Cumulative Impacts of Other Portfolios 27 Comparison of the Independent and the Regional Integration Approaches 28 INSTITUTIONAL ISSUES 28 OVERALL STRATEGIC CONCLUSIONS FOR THE NILE EQUATORIAL LAKES REGION 29 RECOMMENDATIONS AND NELSAP INDICATIVE POWER DEVELOPMENT STRATEGY 30 SSEA III ­ Final Report S-i 017334-001-00 Executive Summary Strategic/Sectoral Social and Environmental Assessment Executive Summary INTRODUCTION The Nile Equatorial Lakes (NEL) Region of Africa is experiencing an acute lack of electric power. This absence of electricity makes life more difficult in both rural and urban areas, and places a major burden on economic development. In the context of the Nile Basin Initiative (NBI) and the Nile Equatorial Lakes Subsidiary Action Program (NELSAP), the participating countries have agreed that development of low-cost power generation and regional electricity trade are means to improving productivity and to promoting economic growth. The alternative, an independent development approach, would be more costly, have greater impacts on the environment and achieve less electricity security. The area being studied is shown in Figure 1. This Strategic/Sectoral Social and Environmental Assessment (SSEA) is intended to produce strategic/ About SSEA sectoral level guidance to decision making in the power The purpose of the sector at the regional and national levels, and therefore Strategic/Sectoral Social and includes an assessment of cumulative environmental and Environmental Assessment social impacts of different regional power development (SSEA) is to provide an portfolios. This assessment does not replace detailed overview analysis of the social project-specific environmental impact assessments or and environmental issues feasibility studies. surrounding possible regional power development options in OUTLOOK the NEL Region of Africa. The SSEA analyses and ranks identified power options based The SSEA presents a NELSAP Indicative Power on a combination of cost, Development Strategy to meet a medium level of growth in social, environmental and risk the demand for electricity in the region including considerations. recommendations for further studies of identified power options as well as advice related to the legal and regulatory framework. The strategy includes a preferred project portfolio of options defined as the NELSAP Indicative Power Development Plan. OVERVIEW Between 2% and 9% of the population has access to electric power supply. The total demand for electricity will increase by 2,700 MW, and 16,000 GWH over the period up to 2020. By 2020, almost all of the power development options that have low environmental and social impacts will have been used to meet medium demand increases. Development strategies that improve geographical or technological diversification will result in the selection of projects with environmental/social risks. SSEA III ­ Final Report S-1 017334-001-00 Executive Summary Figure 1 - Map showing the Nile River Countries SSEA III ­ Final Report S-2 017334-001-00 Executive Summary The most significant impacts on the physical and social environment are emissions from thermal plants and potential impacts on wetlands in the Kagera River and the Rufiji River. Even the most hydro-intensive portfolio would not have any material effects on the Albert Nile leading to Sudan and the Sudd Marshes. RECOMMENDATIONS This SSEA resulted in the following recommendations that were developed from consultations with the Project Steering Committee (PSC) and stakeholders: Recommendation A: Many options should be implemented as soon as possible. Country Option Generation Why? When? Uganda Bujagali Hydro Rwanda/ Burundi/ Rusumo Falls Hydro Serious As soon as Tanzania power possible Rwanda/DRC Lake Kivu Diesel type using outages naturally occuring and these methane gas options are among the best evaluated Comments: The power options could be installed in the short to mid-term, and they are also low cost and with acceptable environmental and social impacts. Recommendation B: Study and implement other power development options. Country Option Generation Why? When? Burundi Kabu 16 These projects will Tanzania Kakono be required in Hydro Rwanda/DRC Ruzizi III 2014-2018, based on the medium load Soon Tanzania Ruhudji growth scenario. Kenya Suswa Geothermal Tanzania Songo Songo Gas-fired plant Comments: Other power development options (hydro, geothermal and natural gas) should also be implemented. Recommendation C: The countries in the region should move immediately towards a high degree of power system interconnection and ultimately integration. Country Generation Why? When? All countries in the Power system To reduce costs in most of the countries Immediately NEL region. interconnection involved and create synergies using the mix of technological resources. Comments: Integration would facilitate use of projects with the lowest environmental and social risks. SSEA III ­ Final Report S-3 017334-001-00 Executive Summary Recommendation D: Prepare, develop and finance in the order of 100 MW of existing hydro options and strengthen the associated transmission. Country Generation Why? When? Eastern provinces of the Hydro Some options need to be As soon as Democratic Republic of rehabilitated. possible Congo (DRC) Some options appear attractive but need more analysis to confirm interes5t Comments: This should also include environmental and socio-economic studies of the Semliki River Basin in which these options are located. Recommendations resulting from this assessment, in the form of year-by-year actions required by each country, are presented at the end of this report. These are actions that are urgently required in order to eliminate the current shortages of power and to ensure that sufficient power is available in the future to meet the load with a reasonable and realistic reserve margin. APPROACH AND ANALYTIC PROCESS The SSEA was conducted over a three-year period in two stages within the framework of the NBI/NELSAP1. The analysis included all of Burundi, Kenya, Rwanda, Tanzania and Uganda, and the eastern part of the DRC, consisting of North Kivu Province, South Kivu Province, the eastern districts of Haut-Uélé and Iluri in Oriental Province, the eastern districts of Tanganyika and Haut Katanga in Katanga Province and the district of Kabambare in Maniema Province. The key elements of the process included: A period of analysis of about 15 years, up to 2020 The solicitation of stakeholder viewpoints in each step of the SSEA The use of existing data as well as information provided by the East African Community Power Master Plan and national power master plans Consideration of the legal and regulatory framework of each of the countries as well as relevant international agreements and conventions 1 This SSEA study is a general framework which was used to develop an indicative power development strategy for the NELSAP region. As such, it is based on information gathered from secondary sources initially in 2003 and updated in 2004. Much of the data received was developed by numerous consultants over long periods of time (some dating back 20 years) using a wide range of assumptions. Every reasonable effort has been made to put the information on the consistent basis needed for a strategic level analysis like this SSEA. The SSEA is not a substitute for detailed project- specific studies and environmental/social impact assessments needed for the implementation of particular projects. Such studies would invariably incorporate updated and detailed information about various project aspects including alternate configurations, cost estimates, hydrology and plant output, and environmental and socio-economic impact analyses. SSEA III ­ Final Report S-4 017334-001-00 Executive Summary Assessment of (calculated/forecasted) climatic changes and runoff due to climate change Consideration of power development options limited to those that could have a regional impact Ranking of power development options according to cost, environmental, social and risk factors Preparation of example portfolios of investments to satisfy alternate development strategies and load growth scenarios Preparation of a NELSAP Indicative Power Development Strategy to guide future investment planning. LEGAL, POLICY AND ADMINISTRATIVE CONTEXT The legal, policy and administrative frameworks within which a power development option is planned and implemented are a vital consideration at the strategic and sectoral level, as they have a strong bearing on the acceptability of the option as well as on its environmental and social performance. The legal and policy frameworks also influence how suitable a particular jurisdiction is to attracting investment, particularly in a regional or multinational context. The analysis of the information indicates the following: All six countries Five of the six countries (the exception being the DRC) have provide a adopted environmental assessment processes that are largely welcoming compatible with international requirements governing power environment for generation and transmission projects. However, these power processes have been introduced relatively recently (most since development. 2000) and the countries concerned have limited experience in applying them. No resettlement policies and regulations that are compatible with international requirements have been adopted to date. The six countries will need to put in place appropriate compensation and involuntary resettlement policies. DRC is the only country that prohibits interventions on rivers within parks and reserves. The other five countries require that Environmental Impact Assessments (EIAs) be carried out in such cases. All six countries provide a welcoming environment for the implementation of power projects. SSEA III ­ Final Report S-5 017334-001-00 Executive Summary A country-by-country assessment shows that even though the overall situation appears to be welcoming, a few complementary measures already in progress need to be completely accomplished to promote both private sector involvement and the development of electricity trade between the countries. Power trade will need to be favoured through facilitating legislation or regulation. Imports need not be regulated or, if they are, as little as possible. As for exports, the law on energy should contain a clause authorising the government or the minister responsible for energy to set conditions by decree or to limit exports for the purpose of operational security of the network and quality of supply. CURRENT ENVIRONMENTAL AND SOCIAL CONTEXT The region encompasses three major lake watersheds (Lakes Victoria2, Malawi and Tanganyika) and two river watersheds (Rufiji and Victoria Nile). From a regional perspective, these lakes and rivers are of paramount importance to the subsistence of their populations as they offer a source of water and dietary proteins; provide revenue through fish harvest, exports and tourism; are used as transport avenues; supply water for irrigation, agriculture and electricity; and are home to diverse endemic fish and fauna of ecological and scientific significance. These lakes and rivers have experienced declines in fish resources, biodiversity and overall deterioration in water quality by means of deforestation, overexploitation and general lack of management. This is due in part to rapid population growth in the areas that border the water (hence increasing pressure on natural resources), human habitat and the economic and social infrastructure. REGIONAL ENERGY NEEDS ASSESSMENT An adequate supply of electrical energy provides the basic foundation for development. There are several key issues in the region that need to be taken into account: Only a very small proportion of the population of the region, between 2% and 9%, has access to electric power supply. The current unit consumption in the region is 95 Electricity consumption in kWh/capita/year and this includes all industrial and the region is about one commercial consumption. To put this into tenth of the average for all perspective, the African countries as a whole of Africa. consume 930 kWh/capita/year, virtually 10 times the current level in the region. The amount of electric energy demanded by the customers currently exceeds the amount that can be provided reliably by the electric power producers. Electric power demand forecasting methodologies are usually linked to historic trends, which implies a continuation of (or possibly a gradual improvement on) the current socioeconomic condition in the region. 2For the purpose of this strategic analysis the Semliki Basin is included in the Lake Victoria basin even if they are two distinct basins. As there are no power development options in that river basin that could be included in the analysis, the environmental and socio-economic situation in the basin has not been reviewed. SSEA III ­ Final Report S-6 017334-001-00 Executive Summary Four load growth scenarios were derived. Three are based on a continuation of the status quo (base load growth) with variation in some of the input assumptions regarding the rate of growth of the economies of the countries. A fourth scenario provides an estimate of the needs for the region to improve significantly and transform its economic situation. The results of the regional load growth forecast are shown below: Regional Electric Power Needs Assessment in the NEL Region for the Period to 2020 Regional Peak Demand 12 000 10 000 Regional Transformation Scenario (MW) 8 000 High 6 000 Power 4 000 Med. Peak Base 2 000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year Incremental capacity The Incremental load growth under base scenario is 3.7% requirements (MW): to 4.0%, under medium scenario is 5.6% to 6.3%, under · Base: 1,500 high scenario is 6.8% to 6.1% and under transformation · Medium: 2,700 scenario is 5.1% to 15%. · High: 4,000 · Transformation: 8,600 IDENTIFICATION AND SCREENING OF NEW POWER DEVELOPMENT OPTIONS Once the electric power needs for the region have been identified, the resources that could be available to meet All identified power those needs must be identified and screened. The first development options were step is to prepare a long list of options without regard for examined ­ hydro, the feasibility of their development. This resulted in the geothermal, thermal, wind, identification of 9100 MW of hydro capacity and 2395 MW solar and demand-side of thermal and geothermal capacity. The second step is to management. screen this list of options to ensure that all are appropriate for the purpose. This screening reduced the amount to 1899 MW of hydro capacity, 2095 MW of thermal and geothermal capacity plus another 30 MW of wind energy conversion systems. Four screening criteria were suggested by the stakeholders and approved by the Project Steering Committee as follows: SSEA III ­ Final Report S-7 017334-001-00 Executive Summary Availability of data (pre-feasibility level or better) Tolerable residual environmental or socio-economic impacts, in compliance with national laws and international conventions Unit cost below a specified threshold value of 10 cents US/kWh for firm energy Assurance of regional relevance (the size of an option should be greater or equal to 10 MW for Rwanda, Burundi and Eastern DRC, and greater or equal to 30 MW for the East African Community [EAC] countries). Failure to meet one or many of these criteria would result in an identified project option being eliminated from the overall project candidate list under this screening. POWER OPTIONS RETAINED FOR COMPARATIVE ANALYSIS The options retained for the comparative analysis are listed in Table 1. Table 1: Power Development Options Retained for Comparative Analysis Options Passing the Screening Hydro Geothermal Bujagali (250 MW) Longonot (70 MW) Kabu 16 (20 MW) Menengai (140 MW) Kakono (53 MW) Olkaria extension (35 MW) Karuma (200 MW) Suswa (70 MW) Masigira (118 MW) Generic (assumed at 140 MW) Mpanga (144 MW) Mutonga (60 MW) Thermal Ruhudji (358 MW) Combined cycle gas x 3 units (generic, Rumakali (222 MW) capacity depends upon amount of gas to Rusumo Falls (61.5 MW) be imported) Ruzizi III (82 MW) Gas turbine 60 MW gas ­ generic x 4 Songwe (330 MW) units (generic, capacity depends upon amount of gas to be imported) Upper Kihansi (no capacity, only energy) Mchuchuma ­ coal (400 MW) Mombasa ­ LNG (generic, capacity depends upon amount of gas to be Renewable imported) · Kivu methane engines 30 MW x 4 Mombasa ­ coal (generic, capacity units (120 MW)3 depends upon amount of gas to be · Generic wind (nominal capacity imported) depends upon sites, 2 X 30 MW assumed) The location of these options is shown in Figure 2 and they are described briefly on the following page. 3These units use fossil fuel and could therefore be considered as thermal options. However, the fuel is naturally replenished and thus can also be considered as renewable. SSEA III ­ Final Report S-8 017334-001-00 Executive Summary Figure 2- Retained Candidate Power Options SSEA III ­ Final Report S-9 017334-001-00 Executive Summary Hydroelectric Options Bujagali Hydroelectric Development Description: A 250 MW in one or two stages, run-of-river project with about 12 hours of pondage. Main Impacts: Location: the flooding of riverbanks and islands would result in loss of habitats for birds, bats and other Located on the Victoria animals; Nile in Uganda, 8 km resettlement in project-affected areas has already downstream of the been carried out; existing Kiira/Owen loss of tourism revenues and loss of white-water Falls hydroelectric rafting opportunity; projects. the creation of the pondage reservoir would involve a risk of increase of bilharzias. Kabu 16 Hydroelectric Developm ent Description: A 20 M W , run-of-river project w ith hourly pondage. M ain Im pacts: Location: som e 75 persons (1995 estim ate) w ould be Located in Burundi on displaced; the Kaburantw a River, the construction of a 10.5 km road w ould provide 16 km above its better access to m arkets and services. confluence w ith the Ruzizi River. Kakono Hydroelectric Development Description: A 53 MW run-of-river project. Part of the benefit of this option would be the provision of irrigation water. Main Impacts: Location: partial flooding of the Minziro Forest Reserve; Located in Tanzania possible significant resettlement. on the Kagera River near the Uganda border. SSEA III ­ Final Report S-10 017334-001-00 Executive Summary Karuma Hydroelectric Development Description: A 200 MW, run-of-river project with hourly pondage. Main Impacts: Location: about seven hectares of terrestrial habitat would be lost; Located on the Victoria resettlement would be needed for some 35 Nile in Uganda, households; immediately upstream the construction of access roads (about 4.5 km) of the limit of would provide better access to markets and Murchison Falls services. National Park. Masigira Hydroelectric Development Description: A 118 MW run-of-river project. Main Impacts: Location: Located in a pristine high erosion risk; environment rich in project located in a pristine environment rich in wildlife in Tanzania on wildlife. the Ruhuhu River, 80 km to the east of Lake Nyasa. Mpanga Hydroelectric Development Description: A 144 MW run-of-river project. Main Impacts: Location: Located in Tanzania the project could affect the hydrology of the on the Mpanga River, Mpanga River, which flows in Kilambero, an 40 km downstream of important floodplain and designated Ramsar site. the Lower Kihansi project. SSEA III ­ Final Report S-11 017334-001-00 Executive Summary Mutonga Hydroelectric Development Description: A 60 MW, run-of-river project with pondage equivalent of six days. Main Impacts: some 11 km2 of terrestrial habitat would become Location: lacustrine habitats; Located on the Tana sediment trapping in the reservoir would lead to River in Kenya, degradation of bottom life and productivity in the immediately reservoir; downstream of the degradation of the riverbed downstream of the Kiambere hydroelectric dam would affect river morphology, and the power plant. possible reduction of riverine forest area; resettlement of some 1,000 people from the reservoir area; a risk of increase of malaria and bilharzias. Ruhudji Hydroelectric Developm ent Description: A 358 M W run-of-river project w ith a separate upstream reservoir. M ain Im pacts: Location: m odification of terrestrial to lacustrine habitats; m odification of hydrological and nutrient Located on the Ruhudji transport conditions in the stretch of river River in Tanzania, betw een the storage dam and the intake dam ; approxim ately 70 km to the project could affect the hydrology of the the east of Njom be. Ruhudji River, w hich flow s into Kilam bero, an im portant floodplain and designated Ram sar site; the construction of access roads w ould provide better access to m arkets and services. Rumakali Hydroelectric Development Description: A 222 M W run-of-river project. M ain Impacts: modification of terrestrial to lacustrine habitat; Location: modification of water flows and levels in the wetlands downstream of the dam before Lake Located on the Nyasa; Rumakali River in modification of sedimentation patterns could also Tanzania, 85 km west impact the exceptional biodiversity of the lake; of Njombe. flooding of agricultural land and of a village with 80 buildings; reduction of flood risks downstream; the construction of access roads would provide better access to markets and services. SSEA III ­ Final Report S-12 017334-001-00 Executive Summary Rusumo Falls Hydroelectric Development Description: A 61.5 M W project with reservoir. M ain Impacts: flooding of 400 km 2, which would include 125 km2 Location: of existing lake, 250 km2 of existing wetlands and 15 km2 of valley slopes; Located on the Kagera the reduction in downstream flood flows and River at the border levels could affect wetlands downstream, betw een Rw anda and including in the Akagera National Park; Tanzania. approximately 3,000 persons may be affected and some displaced; possible increased health risks due to bilharzias and malaria. An optimization study of the site is necessary. Ruzizi III Hydroelectric Development Description: A 82 MW run-of-river project. Main Impacts: Location: Located on the Ruzizi sedimentation could impact aquatic habitats and River, which forms the the high biodiversity of Lake Tanganyika in the border between Congo basin by reducing nutrient input to the Rwanda and the ecosystem. Democratic Republic of Congo, 25 km downstream (south) of the outlet of Lake Kivu. S o n g w e H yd ro e le c tric D e ve lo p m e n t D escrip tio n : A 33 0 M W p ro jec t th at w o u ld c o m p rise th ree d am s an d h yd ro p lan ts in c as ca d e o n th e S o n g w e R iv e r. M a in Im p a cts: th e c rea tio n o f th ree res erv o irs (to tal a rea : 5,6 00 L o ca tio n : h ec ta res ) w o u ld in v o lv e th e lo ss o f w e tlan d s, th e m o d ifica tio n o f terres trial h a b itat to lac u strin e h ab itats an d a s ea so n al reg u la tio n o f w ater flo w s T h e u p p e r d a m w o u ld th a t w o u ld m o d ify s ed im e n ta tio n p a tte rn s in th e b e o n th e b o rd e r la ke a n d u ltim a te ly im p act th e lak e's v e ry h ig h b e tw e e n T a n z a n ia a n d b io d iversity; M a la w i. T h e m id d le in crea se in riv erb a n k e ro sio n d o w n strea m o f th e an d lo w er d am s w o u ld d am s ; d am s w o u ld b lo ck fis h m ig ra tio n ; b e in M a la w i. en c ro ac h m en t in p ro te cted a rea s; sig n ific an t p o p u la tio n d is p lac em e n t; in crea sed h ea lth ris ks (m a laria an d b ilh arzia ). T h e p ro je ct co u ld g e n era te sig n ific an t flo o d co n tro l a n d irrig a tio n b e n efits. SSEA III ­ Final Report S-13 017334-001-00 Executive Summary Upper Kihansi Hydroelectric Development Description: A storage dam to regulate flows to an existing downstream hydro project. The regulation of river flows would allow for an increase in the average annual generation of the existing plant by about 124 GWh but no increase in capacity. Main Impacts: Location: The dam would be the reservoir would possibly encroach on primary located on the Kihansi forest habitat; River in the Rufiji River the project could regulate the flow of the Kihansi basin, 12 km upstream River, which flows into Kilambero, an important of the existing Lower floodplain and designated Ramsar site. Kihansi power project. Gas-fired and Coal-fired Thermal Options Gas-fired Plant in Tanzania Description: Gas-fired thermal plants would be sized as required. Main Impacts: Location: Gas-fired thermal social and environmental impacts of climate plants would be change due to greenhouse gas emissions; located as required. impacts of acid rain; impacts on public health. SSEA III ­ Final Report S-14 017334-001-00 Executive Summary Mchuchuma Coal-fired Plant in Tanzania Description: A 400 MW project. Main Impacts: Location: Coal-fired thermal social and environmental impacts of climate plant would be located change due to greenhouse gas emissions; as required. impacts of acid rain; impacts on public health; impacts on land use, habitats and resources due to ash disposal in the case of coal-fired power plants. Generic Coal-fired Plants in Kenya Description: Coal-fired plants would be sized as required. Main Impacts: Location: Coal-fired thermal social and environmental impacts of climate plants would be change due to greenhouse gas emissions; located as required. impacts of acid rain; impacts on public health; impacts on land use, habitats and resources due to ash disposal in the case of coal-fired power plants. Lake Kivu M ethane G as Developm ent Description: Specially m odified diesel engines using m ethane gas extracted from deep in Lake Kivu have been retained in m odules of 30 M W each. There appears to be enough capacity for four such m odules. M ain Im pacts: Location: greenhouse gas and air pollutant em issions w ill be com parable to a therm al pow er plant fuelled Lake Kivu by natural gas. There m ay be a consequent beneficial increase in nutrients and aquatic productivity in the upper region of the lake. SSEA III ­ Final Report S-15 017334-001-00 Executive Summary Geothermal Power Options Geothermal Plants Description: All identified geothermal options have been retained. These are the extension of the Olkaria plant and the Longonot, Suswa and Menengani options, amounting to 455 MW. Main Impacts: Location: geothermal power stations, with appropriate site All located in Kenya. selection and plant design, do not involve significant environmental and social issues. Wind Power Options Generic wind energy conversion systems Description: Generic wind energy conversion systems have been retained where wind resources are adequate. For purposes of this study, one or two sites in Tanzania with 30 MW were assumed. Main Impacts: Location: most impacts of wind power options can be All in Tanzania: Gomvu minimised with appropriate site selection for the (near Kimbiji, southwest of wind farm that takes into account land tenure Dar es Salaam), Litember systems and land use conflicts, effects on (southwest of Mtwara, near landscapes and effects on wildlife. Karatu) and at Mkumbura (near Kmomazi in the Pare/Usambara mountains). The best site is Mkumbura, due to wind conditions. Options Set Aside Some potential options were screened out because of insufficient information for evaluation (in most cases, 521 MW of power conceptual level information) even though these options development potential was could meet the other screening criteria (environmental risk, set aside for lack of cost and size). These power development options are listed information. in Table 2, which shows a further potential total of 521 MW that could be included in the project evaluation and planning process if, after further studies are undertaken, they remain as attractive as the preliminary information suggests. SSEA III ­ Final Report S-16 017334-001-00 Executive Summary Table 2: Hydropower Options Not Prepared to Pre-feasibility or Better but Meeting Cost Criteria Name Country Total Cost Installed Energy Generation Cost US $ Capacity million Average Firm Average Firm $/kW (MW) (GWh) (GWh) c/kWh C/kWh Babeba I DRC 122.40 50 351 * 3.89 2448 Bangamisa DRC 123.47 48 420 * 3.28 2572 Budana DRC 12.72 13 70 * 2.08 979 Igamba Falls West 41.74 11 87 * 5.32 3661 FSL 865 m Tanzania Rwanda Kiliba DRC 39.06 15 65 * 6.70 2604 Kiymbi/ DRC 52.06 43 377 * 1.57 1211 Bendera II Mugomba DRC 87.63 40 160 * 6.13 2191 Muhuma DRC 71.69 25 100 * 7.98 2868 Panzi Rwanda - 136.72 36 175 * 8.66 3798 DRC Piana DRC 35.00 38 193 * 2.40 1065 Mwanga Semliki DRC 95.59 28 120 * 8.85 3414 Sisi 3 Rwanda - 405.93 174 883 * 5.14 2333 DRC Total 521 COMPARISON OF OPTIONS The options retained from the screening need to be compared with each other in order to prepare an indicative power development portfolio to meet the load growth scenarios under consideration. This is carried out using a multi-criterion analysis (MCA) and a risk analysis. The characteristic feature of MCA methods is the establishment of formal and, to some extent, quantified procedures for the following three phases of options assessment4: Identification of criteria Ranking of options according to each identified criterion Aggregation across criteria to establish an overall preference ranking for the options There is also a need to identify and assess the risks a power development option could face that would result in its performance being different from that planned (costs higher or lower than estimated, output higher or lower than expected, on-power date earlier or later than expected, etc.). The comparison of the cost ranking with the above results of the MCA within the socio-economic and environmental categories, and when taking into account the assessment of project risks leads to the following: 4 Nichols, David, and David Von Hippel (Tellus Institute, USA), Theo Stewart (University of Cape Town, South Africa). November 2000. Thematic Review. VI Planning Approaches. Chapter 4: Multi- Criteria Analysis Methods. Report Prepared for the World Commission on Dams. SSEA III ­ Final Report S-17 017334-001-00 Executive Summary All run-of-river hydroelectric options ­ Mutonga, Ruzizi III, Bujagali, Karuma, Ruhudji, Kabu 16 and Run-of-river options Kakono ­ have a good performance with regards to (Mutonga, Ruzizi III, socio-economic and environmental criteria and, Bujagali, Karuma, Ruhudji, except for Kabu 16 and Kakono, are among the Kabu 16 and Kakono) least-cost options. However, results from the project ranked well. risks assessment raise some issues concerning the following options: - Bujagali (at 4.24¢/kWh) in Uganda would affect scenery that is considered to be of exceptional beauty. - Mutonga in Kenya has a good overall performance against risks as well as socio-economic and environmental criteria. However, it has the highest unit cost among all options at 8.68¢/kWh. - Ruzizi III is the second lowest unit cost option (at 2.86¢/kWh). However, it is located in Rwanda and the DRC, and bilateral agreements need to be negotiated before it can be developed. Hydroelectric options with seasonal regulation (Songwe and Rusumo Falls) provide more power benefits than run-of-river options, but they also raise the following additional dilemmas: - Songwe, at the border of Tanzania and Malawi, also has a relatively low unit cost (3.43¢/kWh) and flood control and irrigation benefits. However, it has significant resettlement and land requirements. - Rusumo Falls, at the border of Rwanda and Tanzania near Burundi, with a unit cost of 4.14¢/kWh, is expected to have high land and resettlement requirements. It may also pose problems associated with the proliferation of water hyacinths, increased waterborne diseases and downstream impacts on the Akagera National Park. It may also involve risks related to the need to negotiate power-sharing agreements between Burundi, Rwanda and Tanzania. The geothermal options considered in Kenya are ranked second-best against environmental criteria and risks as well as score high against socio-economic criteria. However, this option has a relatively high unit cost of 5.05¢/kWh. The generic wind option has a very good performance against socio-economic criteria and risks, and has a fair performance against environmental criteria. However, it also has a relatively high unit cost of 8.33¢/kWh. The Kivu methane engines option performs well against socio-economic criteria, but has a higher unit cost of 6.11¢/kWh, and a low energy-payback ratio. Coal-fired thermal options: with unit costs of more than 6 ¢/kWh, these options have the highest greenhouse gas and air pollutant emissions among the considered options. Besides, the Mombasa - Coal option in Kenya could have significant impacts in relation to increased risks of pulmonary diseases. On the basis of the above analysis, two groups of options can be identified for consideration in preparing power development portfolios: (1) best-evaluated options and (2) other options, as presented in Table 3, with the options listed in order of increasing unit cost. SSEA III ­ Final Report S-18 017334-001-00 Executive Summary Table 3: Options to Be Considered in Power Development Portfolios (Listed in alphabetical order by technology) Best-evaluated Options Other Options Hydro Options Thermal Options Hydro Options Bujagali (250 MW) Combined cycle gas x 3 Masigira (118 MW) Kabu 16 (20 MW) units (generic, capacity Mpanga (144 MW) Kakono (53 MW) depends upon amount Songwe (330 MW) Karuma (200 MW) of gas to be imported) Upper Kihansi (no capacity, Mutonga (60 MW) Gas turbine 60 MW gas only energy) ­ generic x 4 units Ruhudji (358 MW) (generic, capacity Thermal Rumakali (222 MW) depends upon amount Mchuchuma ­ coal-fired Rusumo Falls (61.5 MW) of gas to be imported) steam (400 MW) Ruzizi III (82 MW) Mombasa ­ LNG Mombasa ­ coal (generic, Geothermal Options (generic, capacity capacity depends upon amount of gas to be Generic geothermal depends upon amount imported) (assumed at 140 MW) of gas to be imported) Longonot geothermal (70 Kivu methane engines MW) 30 MW x 4 units (120 Menengai geothermal MW) (140 MW) Olkaria extension (35 MW) Suswa Geothermal (70 MW) Total: 1881.5 MW plus Total: 992 MW plus generic Renewable Options generic gas-fired coal-fired thermal plants . · Generic wind (nominal thermal plants. capacity depends upon sites, 2 X 30 MW assumed) POTENTIAL IMPACT OF CLIMATE CHANGE The output from the retained hydroelectric options is a direct function of the amount of water that flows through their turbines for conversion to electricity. Globally, there is strong evidence of climate change that may be significant over time. It is therefore appropriate to assess what these changes are likely to be in the region and to estimate their impact on the output of the options retained for use in this strategic assessment of power development options. In northern and central- The results of this climate change risk assessment are: west regions of the study area, there is a high Overall, for the northern and central-west regions of the probability of increases in study area, there is a high probability of increases in runoff, and thus generation. runoff, and thus generation, compared to historic data. For the southern region, For the southern region, there is a high likelihood of there is a high likelihood of changes in seasonality of runoff, resulting in lower changes in seasonality of effectiveness for flow regulation of smaller reservoirs. runoff, and lower effectiveness for flow regulation of smaller reservoirs. SSEA III ­ Final Report S-19 017334-001-00 Executive Summary As most of the power development options that have been retained are located in the northern part of the region, the impact of climatic change will be positive for the development of the portfolios of generation options. No sensitivity analyses for climate change will be carried out, since they would only present higher energy availability than current conditions indicate. POWER DEVELOPMENT PORTFOLIOS A number of illustrative portfolios of power investments are developed to indicate the range of choices available in the region to meet demand. In assembling the portfolios, two major development approaches are considered: independent development by each country and a regional cooperation approach in which the six countries plan for a joint development of resources. With independent development, mostly in-country options are considered along with the base load growth scenario described above. This is the reference case to which impacts of the other portfolios were compared (Portfolio 1Aa, as shown in Table 4 below). With regional cooperation, three strategies to develop power portfolios were considered to meet the demand based on three of the load growth scenarios described above (medium, high and transformation) (see Table 4 below). The strategies were: 1. Maximise the use of the best-evaluated options available within the region. This strategy leads to heavy reliance on hydroelectric options with the attendant risk of power shortages due to drought conditions. 2. Make use of attractive resources while enhancing technological diversification. This strategy reduces reliance on hydroelectric facilities, but increases the cost of power and involves the use of thermal power options that are less attractive from an environmental and social point of view. 3. Make use of attractive resources while enhancing geographical diversification. This strategy ensures that each country, in the long term, is not overly dependent upon its neighbours, but at increased financial, environmental and social cost. SSEA III ­ Final Report S-20 017334-001-00 Executive Summary Table 4: Nomenclature Used In Portfolio Development Power Development 1. Independent 2. Regional Cooperation Approaches Strategies to A) Primarily B) Best Evaluated C) Technological D) Geographical Develop Power National Options Options Diversification Diversification Option Portfolios a - Base (growth in demand of 3.7% to 4.0%), one portfolio examined: Portfolio 1Aa b - Medium (growth in demand of 5.6% to 6.3%), three portfolios examined: Load Growth Portfolio 2Bb Portfolio 2Cb Portfolio 2Db Scenarios c - High (growth in demand of 6.8% to 8.1%), two portfolios examined: Portfolio 2Cc Portfolio 2Dc d - Transformation (growth in demand of 5.1% to 15.0%), one portfolio examined: Portfolio 2d* Limited level of readiness (S1): Portfolio 2Cb (S1) Allowing import options (S2): Sensitivity Analysis Portfolio Cb (S2) No comparative analysis; only screening of options (S3): Portfolio 2Cb (S3) Note: as the transformation scenario would require all the identified power options in the region it is not appropriate to give the portfolio an identifier for a specific strategy. As also shown in Table 4, six power development portfolios were prepared to illustrate how applying these different strategies under different load growth scenarios would influence the choice of investments for a NELSAP Indicative Power Development Strategy. Three portfolios (2Bb, 2Cb and 2Db) were based on the medium load growth scenario, and applied all three strategies. Two portfolios (2Cc and 2Dc) were based on the high load growth scenario, and applied only the technological and geographical diversification strategies since, as it turned out, all the best-evaluated options would be used up with the medium load growth scenario. The sixth portfolio (2d) was based on the transformation scenario and required the use of all identified options in the region. These analyses indicate the following: The independent approach to power development leads to lower power availability and the use of smaller, less cost-effective and less environmentally acceptable development options. There is very little difference in the early years of the period of analysis between portfolios representing the best-evaluated options, technological diversification and geographical diversification. This applies in terms of option selection, investments, present value of costs and transmission requirements. From a power sector planning perspective, security of supply is an important criterion and geographical diversification is preferred. On the other hand, the history of SSEA III ­ Final Report S-21 017334-001-00 Executive Summary droughts in the region suggests that technological diversification should be emphasized. As mentioned above, there is little difference between these two strategies. Thus, for purposes of the NELSAP Indicative Power Development Strategy recommended below, the technological diversification strategy is used. The medium and highly load growth scenarios can be met with power development options from the region but these growth scenarios will not materially improve the standard of living of the population in the region. To significantly improve the standard of living of the people in the region, the transformation scenario would be needed, however, there are insufficient resources in the region to satisfy that demand. In addition, three sensitivity tests were applied to the strategy of enhanced technological diversification in order to assess: The impact of including options that have not yet been adequately studied on the portfolio of projects assembled (Portfolio 2Cb [S1]) The impact of power imports at a defined unit cost of power on the portfolio of projects Three sensitivity tests: assembled (Portfolio 2Cb[S2]) · Include options not The impact of eliminating the comparative sufficiently studied analyses of options and considering only · Include imports financial cost in determining the order of installation of options on the portfolio of projects · Eliminate comparative assembled (Portfolio 2Cb[S3]) analysis The sensitivity tests indicate that: The replacement of local options by imports is attractive provided such power is available for less than 3¢US/kWh It is appropriate to study further some of the options that were set aside initially due to lack of information. Portfolios developed without benefit of a comparative analysis do not lead to any cost savings, but increase environmental and social impacts. Based on the portfolio analysis a NELSAP Indicative Power Development Plan has been prepared outlining a proposed agenda for regional power development in the NELSAP region including transmission interconnection. The plan is further expanded into a broader strategy with recommendation on regional transmission interconnection and legal and regulatory reform. NELSAP INDICATIVE POWER DEVELOPMENT PLAN Table 5 presents an indicative power development plan. During the early years of the analysis, there are limited ways in which the load can be met, thus the options in all three strategies are the same. For the period beyond about 2015, there is sufficient time available to carry out the required studies to prepare options for implementation and therefore decisions need to be made as to the strategy that is to be followed. The key issues in the decision are: The strategy of using the best evaluated options results in a heavy reliance on hydro options with the attendant risk of drought. It also leads to a heavy reliance by some countries on those countries with abundant hydro resources SSEA III ­ Final Report S-22 017334-001-00 Executive Summary Table 5: Mid-Long Term on Power Dates ­ NELSAP Indicative Power Development Plan Capacity Year Addition Country Addition (MW) 2009 Gas Turbines Tanzania 120 Combined Cycle Tanzania 60 Diesel Tanzania 10 2010 Geothermal Kenya 70 Kivu engine #2 R/DRC 30 Combined cycle unit Tanzania 60 2011 Kivu engine #3 R/DRC 30 Gas turbine Tanzania 60 2012 Bujagali 1 ­ 4 Uganda 200 Rusumo Falls B/R/T 61.5 2013 Geothermal (Suswa) Kenya 70 Kabu 16 Burundi 20 Kakono Tanzania 53 2014 Bujagali 5 Uganda 50 Ruzizi III R/DRC* 82 Gas Turbine Kenya 60 2015 Ruhudji Tanzania 358 2016 Geothermal (Menengai) Kenya 140 2017 Kivu engine #4 R/DRC 30 Geothermal (non-specified) Kenya 140 Karuma Uganda 200 2018 Wind (two plants) Kenya 60 Mombasa 1 Kenya 150 2019 Mombasa 2 Kenya 150 2020 Rumakali Tanzania 222 Mchuchuma (Units 1 and 2) Tanzania 200 Mombasa 3 Kenya 150 Notes: B/R/T = Burundi, Rwanda and Tanzania R/DRC = Rwanda and Democratic Republic of Congo * Ruzizi III could be developed by Burundi, DRC and Rwanda The strategy of technological diversification reduces reliance on hydro options but includes more options that are less attractive. There remains, though the issue of perhaps a disproportionate reliance by some countries on others The strategy of geographical diversification addresses the issue of perhaps a disproportionate reliance by some countries on others but includes more options that are less attractive. SSEA III ­ Final Report S-23 017334-001-00 Executive Summary Another key element is the rate of growth of demand in the region and the resources that are developed to meet this load. As mentioned previously, the base, medium and high load growth scenarios will not change appreciably the standard of living in the region; only the transformation scenario will do so. However, that scenario will use up all the resources identified in the region (all the best evaluated options, others and screened out options). For the above reasons, it is essential that the NELSAP power Flexibility needed when development strategy remain as flexible as possible to meet implementing plan. different economic growth and demand scenarios. For the purpose of this analysis, the portfolio of options selected for the NELSAP Indicative Power Development Plan is based on technological diversification, and the medium load forecast of 5.6% to 6.3% per year (2Cb). Options not listed in Table 5 but listed in Table 3 (best evaluated and others) will be needed to implement under the high and transformation growth scenarios. These include the options shown in Table 6. Table 6: Options Necessary to Implement the High Growth and Transformation Scenarios Location Option Capacity (MW) Kakono Hydro 53 Mpanga Hydro 144 Mutonga Hydro 60 Songwe Hydro 330 Upper Kihansi Energy only Generic where required Additional combined cycle plants As required Thermal plants fuelled with LNG, Mombasa assumed in the number and sizes As required needed Mchuchuma Additional coal-fired units 400 Thermal plants fuelled with coal Mombasa imported from South Africa or elsewhere, assumed in the number and As required sizes needed. These options could be used if the load grows at a rate greater than the medium load growth scenario or of different development strategies are accepted. CUMULATIVE IMPACTS The cumulative impacts of the NELSAP Indicative Power Development Portfolio are assessed compared to independent development (in other words, it uses Portfolio 1Aa as a reference point). The cumulative environmental impacts are analysed by river basin. The cumulative social impacts extend beyond the borders of a river basin and are much more related to government administrative units. The approach taken is to compare the portfolio based Cumulative impacts assessed by on comparing the best-evaluated options and the comparing impacts for the best medium load growth scenario (Portfolio 2Bb) with evaluated options to the Portfolio 1Aa, and then to indicate the incremental independent development impacts in going from Portfolio 2Bb to the portfolio situation. SSEA III ­ Final Report S-24 017334-001-00 Executive Summary emphasising technological diversification (Portfolio 2Cb) and then to the portfolio emphasising geographical diversification (Portfolio 2Db). Environmental Impacts of Portfolio 2Bb As most of the options in Portfolio 2Bb are hydroelectric, the environmental impacts would be bounded by river basins and not by political or administrative boundaries. For that reason, the environmental impacts are discussed below by river basin. Lake Tanganyika Basin (includes Kabu 16, Ruzizi III and Lake Kivu methane options): As all the hydroelectric options are run-of-river, there would be no change in the flow regime Water quality and riparian and vegetative resources would be improved because of the reduction in nutrient flow (with attendant reduction in water hyacinths) No impact is expected on fisheries since the options would be built where an obstacle to the migration of fish already exists Lake Nyasa/Malawi Basin (includes Rumakali and Songwe options): The reservoir associated with the Songwe option would reduce flood flows and increase evaporation, but would stabilise the river bed and increase dry season flows The reduction in nutrients and change in flow regime could have a negative impact on the wetlands in the delta area Migratory fish could be affected; there is insufficient data to assess the degree Rufiji River Basin (includes Ruhudji option): There would be a reduction in flood flows, an increase in dry season flows and an increase in evaporation No migratory fish; wetlands are too far away to be affected Tana River Basin (includes Mutonga option): Would eliminate residual flooding Possible reduction in riverine forest could increase pressure on two rare primate species Potential presence of migratory eels; importance of impact cannot be assessed without EIA Lake Victoria Basin (includes Rusumo Falls and Kakono options): Reduction in flood flows, slight increase in dry season flows, all absorbed by Lake Victoria Reduction in flood flows, Virtually no change in evaporation/ reduction in wetlands in Lake evapotranspiration rates Victoria Basin; no change in evaporation and Reduction in wetlands could have an impact on evapotranspiration rates. migratory birds; additional studies are required to assess the impact SSEA III ­ Final Report S-25 017334-001-00 Executive Summary Potential presence of migratory fish; importance of impact cannot be assessed without EIA Victoria Nile Basin (includes Bujagali and Karuma options): As options are run-of-river, there would be no impact on flow regime Slight reduction in sediment and nutrient flow would lead to improved water quality Some localised loss of habitat Cumulative impact on downstream Nile (includes only the Lake Victoria Basin and the Victoria Nile Basin - Rusumo Falls, Kakono, Bujagali and Karuma options): Virtually no change in flow regime as only Rusumo Falls option would cause small localised changes in flow regime, which would be absorbed by Lake Victoria; all other options are run-of-river Possible slight reduction in sediment and nutrient flow would lead to improved water quality Virtually no change in evaporation/ evapotranspiration rates Socio-economic Impacts of Portfolio 2Bb As most of the options in Portfolio 2Bb are hydroelectric, the socio-economic impacts would be local or regional, but not necessarily bounded by river basins. For that reason, the socio- economic impacts are discussed below in a regional context, although the concept of the impact on river basin is retained to provide similarity for comparison with the environmental impacts discussed above. Impacts affecting all options: Improved employment due to construction and operation of the options Overall: Improved employment but risk of Risk of increase in communicable diseases due to increase in communicable influx of workers and opening of sites; mitigation diseases due to work force. programs can minimise these impacts No change in river navigation as options would be located at existing obstacles; river crossings could be facilitated by the construction of new dams with reservoirs if so designed. Most options are run-of- the river options with no major reservoirs. Northern part of Lake Tanganyika and Kagera watersheds (includes Rusumo Falls, Kakono, Kabu 16, Ruzizi III and the Lake Kivu methane options): A potential agricultural boom due to increase in irrigated lands A risk of increases in waterborne diseases Increases in human pressure due to resettlement and refugee movement in overpopulated areas Lake Nyasa/Malawi and Rufiji River Basins (includes Rumakali, Songwe and Ruhudji options): Possible loss of irrigated land due to Songwe reservoir; potential agricultural boom due to increase in irrigated lands at other options SSEA III ­ Final Report S-26 017334-001-00 Executive Summary A risk of increases in waterborne diseases Tana River and eastern part of Lake Victoria (includes Mutonga option and geothermal options): Loss in irrigated lands and possible out-migration of farmers There might be interference with an irrigation project at Bura A risk of increases in waterborne diseases Higher H2S emissions Victoria Nile watershed (includes Bujagali and Karuma options): Some negative impact on tourism as a section of rapids will be closed to white-water rafting; mitigation measures being implemented include support to tourism industry to promote other areas Cumulative impacts on downstream Nile: Economic development, river navigation, population density and impacts on health in the areas of the options being considered are clearly not applicable. As there are no significant changes in the flow regime there would be no consequent changes in agriculture. Cumulative Impacts of Other Portfolios Overall, there are not many differences between the Portfolio based on Best Evaluated Options, Medium Load - Portfolio 2Bb and the Technological and Geographical diversification portfolios, The differences are summarized below: Portfolio 2Bb vs Portfolio 2Cb Portfolio 2Bb vs Portfolio 2Db Best Evaluated vs Technological Diversification Best Evaluated vs Geographical Diversification Removal of Songwe (H) Removal of Songwe (H) Removal of Mutonga (H) Removal of Rumakali (H) Addition of Mombasa (C) Addition of Mombasa (C) Addition of Mchuchuma (C) Because the portfolios differ so little, the difference in cumulative impacts between the Portfolio of Best Evaluated Options and the two diversification portfolios is small. Moreover, since the two diversification portfolios share some of the same modifications from the portfolio of Best Evaluated Options, i.e. removal Songwe (hydroelectric option) and addition of Mombasa (coal option), the differences are even less determinant. The main differences between the two diversification portfolios and the Best Evaluated Options portfolio, are that the two diversification portfolios (2Cb and 2Db) increase the air emissions, greenhouse gases and pollutants responsible for acid rains compared to 2Bb. This will translate into a cumulative impact that will be perceptible at the regional level. The other differences due to the removal of Songwe, Mutonga or Rumakali will be much more localized and will translate into less change or no change in the hydrology and aquatic environment of the rivers involved. It will also translate into less positive socio economic SSEA III ­ Final Report S-27 017334-001-00 Executive Summary impacts because less direct and indirect jobs will be created since dams and power plants will not be built. Some of these jobs will be created where the coal projects will be located, but the construction activities are less important than for hydropower plants and dams, and overall economic benefits would be smaller. Apart from the advantages derived from the diversification, whether technological or regional, the two portfolio do not offer environmental or social benefits compared to the Best Evaluated Options portfolio (2Bb). Comparison of the Independent and the Regional Integration Approaches The most significant differences between all portfolios lie between the Independent portfolio (1Aa) and any of the Regional Cooperation portfolios (2Bb, 2Cb, 2Db). Over the Independent portfolio, any of the regional portfolios will have the following advantages: Decrease pressure on deforestation Less greenhouse gases and other air pollutants Better regional integration more reliable electricity supply Less water related conflicts Better environmental planning and management with positives consequences on management of aquatic resources: fisheries and biodiversity Improvement of socio-economic conditions, including alleviation of daily chores such as wood gathering. INSTITUTIONAL ISSUES There does not seem to be any major legal or regulatory impediment to regional cooperation. Indeed, there is cross-border trade in electric power. There are, however, some key issues that would need to be resolved before some of the options identified above can be implemented. These include: Certain hydropower options span international boundaries in trans-boundary rivers. Before they can be financed, lenders will insist that agreements be concluded between the countries on the joint use of the water. Some of the options may be installed in one country for the immediate benefit of another country. This will require power purchase agreements as well as transmission access agreements with other parties. Significant cross-border trade may require strengthening of transmission systems as well as close cooperation between Significant cross-border the load dispatch centres of each affected country. In this trade in electricity will context, for the efficient functioning of a regional electricity require strengthening of market (at some point in the future), the member countries transmission systems as need to articulate a minimum platform for cross-border power well as close cooperation trade that embraces the following: between the load dispatch centres. Each member country should decide on the degree of security of power that is appropriate to it, given the availability and cost of resources and the level of reliance it is willing to place on the power systems of neighbouring countries. Imports/exports need not be regulated per se or, if they are, as little as possible, to ensure only that (a) such trading is not more costly than native generation when such SSEA III ­ Final Report S-28 017334-001-00 Executive Summary supply is available; and (b) operational security of the network and quality of supply are not compromised. If a country opts for a multi-buyer system to facilitate and foster regional trade, then it is important to have open access to the transmission network and transparent procedures and non-discriminatory rules for pricing and volume of trade. OVERALL STRATEGIC CONCLUSIONS FOR THE NILE EQUATORIAL LAKES REGION This strategic/sectoral and environmental and social assessment of regional power development options in the NEL Region leads to the following conclusions: Load Growth: Under the base forecast scenario, electricity use would increase by less than 10% over current levels of about 95 kWh/capita/per year. Under the medium load growth scenario, consumption would increase to 141 kWh/capita, an increase of 53% over current levels, but not even half of the current average for all of Africa (even excluding the wealthier countries) of 320 kWh/capita. For the high growth scenario, consumption would reach 181 kWh/capita, an increase to almost double the current level in the region, but still well under the current average for all of Africa (even excluding the wealthier countries). It is only under the transformation scenario that consumption would reach 318 kWh/capita, which is about the current average for all of Africa excluding the wealthier countries. This is still only about one-third of the level reached by the developing countries of the world, even when the wealthier of them are excluded from the comparison. It is also well under the value of 500 KWh/capita/year, which is regarded as a minimum quality of life. Resources: By the end of the period of analysis (2020), three-quarters of the power development options that passed the screening will have been required to meet the medium load growth scenario. In order for the countries to be able to cooperate regionally in the development of their power sectors, a backbone of transmission facilities needs to be built as soon as practicable. Cumulative Impacts of Power Development: The cumulative impacts were considered using the development of the region with no regional integration as a reference case. This would include continued suppressed electricity demand and the installation of smaller and less attractive power development options than regional integration would foster. The cumulative impacts on the environment from multiple hydro projects in a river basin or several thermal plants compared at the global level are relatively minor; the most significant would be emissions from thermal plants and potential impacts on wetlands in the Kagera River and the Rufiji River. Only two of the five river basins studied flow into the Nile beyond the Victoria Nile. These contain only four hydro power development options (Bujagali, Kakono, Karuma, Rusumo Falls). Appropriate operation of these options will allow the flows out of the Lake Albert towards the Sudan and the Sudd marshes to simulate the natural flow patterns. SSEA III ­ Final Report S-29 017334-001-00 Executive Summary Climate Change: The runoff in the northern part of the region is expected to increase due to climate changes. On the other hand, the runoff in Southern Tanzania is expected to remain at current levels or to decrease slightly. The overall impact of climate change on the power output of the NELSAP Indicative Power Development Portfolio is expected to be positive over the period of the assessment. Investments Required: To meet the medium load growth scenario for all three regional cooperation strategies, the total capital investment required over the period 2005 to 2020 is very similar at just under US$6 billion (includes US$0.7 billion up to 2009 inclusive). Over US$6 billion required The high load growth scenario would require over to meet medium load 50% more investment ­ US$8.25 billion to meet an growth scenario, regardless additional demand of 1300 MW. of strategy selected. The transformation scenario would require over three times more investment ­ US$16 billion. Imports: Imports from Inga in the DRC, or from other sources, would be attractive if power can be delivered into the region for under approximately US 3¢/kWh. RECOMMENDATIONS AND NELSAP INDICATIVE POWER DEVELOPMENT STRATEGY The following are specific recommendations (based on the medium load growth scenario): Each of the following options should be designed and built as soon as possible: Power Development Options Country Option Capacity Uganda Bujagali 250 MW Burundi Kabu 16 20 MW There is an urgent need for Tanzania Kakono 53 MW additional electricity installations. 1025 MW of the Kenya Geothermal plants in Kenya 2 by 70 MW best evaluated options should The second & third be implemented as quickly as Rwanda/DRC phases of the Lake 30 MW each possible. Kivu gas engines Tanzania Ruhudji 358 MW Burundi, Rwanda & Tanzania Rusumo falls 62 MW Rwanda & DRC Ruzizi III 82 MW SSEA III ­ Final Report S-30 017334-001-00 Executive Summary All of these options are required during the period 2009 to 2015. The order of installation of these options would depend upon the speed with which the additional studies required for each can be completed. During the period 2009 to 2015, provide additional gas turbines, diesels and some combined cycle plants to fill an expected shortfall that cannot be met by the implementation of the above power development options. Planning should begin now for the installations required after 2015. Such planning should take account of the strategy for development that the governments of the region opt for (best evaluated options, technological diversification or geographic diversification). Planning should be based on the medium load growth scenario but should be flexible enough to advance new power development options if the growth is higher than the medium load growth scenario. Replace local plants with imports from outside the region if such imports cost less than US 3¢/kWh (levelised unit cost over the life of the purchases). Additional Studies: Carry out studies on several of the power development options that have only been identified and studied to the reconnaissance level. These include: Country Option Capacity (MW) Kiymbi 43 (rehabilitation) Budana 13 (rehabilitation) Piana Mwanga 38 (rehabilitation) DRC Bangamisa 48 Babeda 1 50 Sisi 3/5 174-205 Carry out further studies of the Malagarasi Cascade (including Igamba Falls) from the point of view of development for the region (current information is for options that use only a small fraction of the potential of the cascade). Transmission Requirements: The East African Community Master Plan5 has proposed a substantial investment in transmission lines and substations within each of the EAC countries. In addition, the plan proposes two interconnections: - a 330 kV transmission line, Arusha, Tanzania-Embakasi (Nairobi), Kenya To take advantage of the synergies of integrated - a double circuit 220 kV transmission line, development, transmission needs Tororo-Lessos (note the countries) to be reinforced in each country AND interconnections need to be expanded and reinforced. 5BKS Acres, East African Power Master Plan Study, Final Phase II Report, March 2005 SSEA III ­ Final Report S-31 017334-001-00 Executive Summary During the assessment of the needs of Burundi, Rwanda and Western Tanzania, the following transmission lines were proposed: - 110 kV line from Kigoma, Rwanda to Rwegura, Burundi - 132 kV line from Kabarondo, Rwanda passing near Ngara to Biharamuro in the Kagera Province of Tanzania - 132 kV line from near Ngara, Rwanda to Gitega, Burundi - 110 kV line from Gitega, Burundi through Bururi to Kigoma, Tanzania The routing of the first three of these lines is based on the assumption that the Rusumo Falls project would be built so that these lines would evacuate power from that plant to Burundi, Rwanda and Western Tanzania. In addition to the above transmission requirements, additional lines are required to connect more strongly the East Africa Community (Kenya, Tanzania and Uganda) with Burundi, Eastern DRC and Rwanda: - A 132 kV line from Mbarara to Kigali - A 132 kV line from Bulyanhulo to Biharamulo, Tanzania Coordination and Integration: The governments of the six countries should decide on the level of coordination and integration of their power sectors and then carry out the appropriate actions on changes to the legal and regulatory framework to facilitate, to the desired level, power trading between the countries of the region. There does not seem to be any legal or regulatory impediment to regional cooperation. There are however, some issues that would need to be resolved before some of the options identified above can be implemented. This includes agreements between the countries on the joint use of the water will need to be concluded for the Ruzizi III and Rusumo Falls options as they are located on international boundaries; Significant cross-border trade may require strengthening of transmission systems as well as close cooperation between the load dispatch centres of each affected country. For the efficient functioning of a regional electricity market (at some point in the future) the member countries need to articulate a minimum platform for cross- border power trade that embraces the following security of supply and policies on imports and exports: If a multi-buyer system is promoted in the region to facilitate and foster regional trade, then it is important to have: - Access to transmission networks are open, transparent and non- discriminatory; - Functional unbundling, at least in the initial stages, be limited to transmission and generation coupled with the creation of an independent transmission system operator at the national level that would provide transmission services and open access same-time information; SSEA III ­ Final Report S-32 017334-001-00 Executive Summary - Transparent pricing arrangements for transmission services (also called wheeling charges or transit fees) and ancillary services. Countries where options are located must have institutional capacities to ensure full implementation of national laws, standards and regulations with regard to environmental impact assessments, community impacts, mitigation and monitoring. SSEA III ­ Final Report S-33 017334-001-00 Executive Summary Figure 3- Map Showing Regional Development of Power and Transmission Requirements to 2015 (Regional Approach, Technological Diversification, Strategy and Medium Load Growth Scenario) SSEA III ­ Final Report S-34 017334-001-00