Does Econet’s Solar Power Plant Plan Make Business Sense?

Econet wants to construct a solar power plant at their Data Centre in Willowvale. Let’s look at the notice concerning their application for an electricity generation licence first and then look at possible reasons why they are going that route. Does it even make sense for them to do that?

NOTICE OF APPLICATION FOR AN ELECTRICITY GENERATION LICENCE

– Econet Wireless (Private) limited –

Electricity Act (Chapter 13:19) of 2002

Notice is hereby given that the Zimbabwe Energy Regulatory Authority (ZERA) has received an application from Econet Wireless (Private) Limited to construct, own, operate and maintain the proposed 0.45 MW rooftop solar photovoltaic power plant at 8 Earl Road, Willowvale, Harare. The purpose of the generation facilities is for own consumption. The project will also entail connection of the proposed solar system to the Highfield 132/33/11kV substation.

This notice is issued in terms of Section 65(2)(c) of the Electricity Act (Chapter 13:19) of 2002 as read with Sections 3 and 4 of Part II of Statutory Instrument 103 of 2008 [Electricity (Licensing) Regulations 2008]

The licence application by Econet Wireless (Private) Limited was done in terms of the provisions of Sections 40 and 46 of the Electricity Act (Chapter 13: 19) of 2002.

Any person desiring to make representations on this application for a generation license as advertised may within 14 days from the last day of this publication lodge a written representation with the Zimbabwe Energy Regulatory Authority (ZERA) whose offices are at 45 Samora Machel Avenue, 14th Floor Century Towers, Harare. The written representations can either be handed over to ZERA offices or emailed to admin@zera.co.zw.

Any objections or representations received after the 14-day period shall not be considered by the Authority.

Firstly, if anyone knows of any reason why Econet should not be allowed to proceed with this venture, you have two weeks to rain on their parade or forever hold your peace. What could you possibly have against the deal though, I wonder?

Why is Econet building their own power plant?

As mentioned above, they want to build their solar power plant in Willowvale, where their data centre is located. Data centres require a lot of power, hence the strategic positioning of the solar power plant.

Google consumes over 5.7 million megawatts, compare that to the Zimbabwean electricity demand of 1,400 megawatts. Econet’s 0.45 megawatt or 450kW power plant does not sound significant in comparison but consider that it is 3.2% of Zimbabwe’s peak electricity demand.

Power costs

But what does data centres consuming a lot of power have to do with Econet building their own power plant? Well, firstly power has to be paid for and by having their own solar plant that leads to cost savings. You might be wondering how they save, especially considering the capital outlay required in building the solar plant. ZESA energy is expensive, charging US9.8c/kWh compared to a regional average of US6c/kWh.

Despite ZESA charging over 60% more that the regional average they actually want to increase their charges to US12.8c, a good 113% more than the regional average. ZESA has had two tariff increase applications turned down in the last two years but who knows when they will finally get their wish. Econet cannot sit idly by hence the power plant.

As mentioned in the notice, the solar power plant will be connected to the Highfield substation. This probably means any surplus power from the Econet plant would be fed to the ZESA grid. Not being sure of the data centre’s power consumption we do not know what kind of surplus there will be.

The question is, will ZESA pay or at least offset with Econet’s other ZESA bills the electricity which Econet feeds into the national grid? It won’t be much initially I presume because the average Zimbabwean household consumes about 10-15kW. The data centre will probably use up much of the 450kW but if there is a surplus of 50kW, that can power a small number of households.

That’s not exactly much for Econet or ZESA right now but who knows how many such solar power plants Econet intends to construct. In just a few years it could be a totally different story.

Reliability and availability

These days load shedding is not that common in Zimbabwe. This state of affairs is not to be celebrated because it is only so because peak demand has fallen from about 2200MW in 1999 to about 1400MW currently. This is because of the slowdown of economic activity in the country.

Econet could be anticipating an upturn in economic activity which will see an increase in demand for power. Higher demand will lead to erratic supply from ZESA who currently cannot even supply the low 1400MW.

Not only can Econet not depend on availability from ZESA, they also cannot trust ZESA to be reliable. Even in these times when demand is low, there is a frustrating number of faults, which to the end user is as good as load shedding. I know of neighbourhoods that went for more than two months without electricity in 2017.

By constructing their own power plant, Econet would have control over their own power needs, for the data centre at least.

What do you think about this move? Do you think this is great foresight by Econet or is it unnecessary capital expenditure? Let us know in the comments below.

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