Refurbishment: Renewing Veteran Assets and Securing New Megawatts in Zambia and Nicaragua

Two owners of hydroelectric assets in Africa and Central America find that upgrading existing facilities provides an economic means to bring additional electricity online.

By Ezekiel Kasaro and Mario Torres Lezama

Faced with growing electricity demand from industries and consumers, yet constrained by budgets focused on other societal needs, developing countries can find it difficult to finance new power projects. To help fill the power gap on an economical basis, governments and their utilities are taking a fresh look at existing hydroelectric facilities.

As hydro operators draft plans to rehabilitate aging projects, they also are considering ways to add or upgrade generating units in order to squeeze more megawatts out of veteran assets at a reasonable cost.

In Zambia and Nicaragua, programs to rehabilitate existing hydro facilities are important components of the countries’ plans to enhance the electricity supply system. By extending the economic life of their hydro facilities, these countries enhance their abilities to provide electricity at the least cost and in an efficient, sustainable manner.

Rehabilitating and uprating three projects in Zambia

Zesco Limited in Zambia has nearly completed work on an extensive rehabilitation program designed to extend the operating life of its three hydroelectric projects, as well as add capacity needed to meet peak demand. This work is part of a broader rehab project intended to enhance the ability of the country’s facilities to provide electricity.

These three hydro projects — 900-MW Kafue Gorge, 600-MW Kariba North Bank, and 108-MW Victoria Falls — began operating between 1938 and 1976. In 1994, Zesco undertook a technical audit to determine rehabilitation work needed at the plants. The company concluded that major rehab was needed to bring all three plants to design operational levels and to extend their economic life.

The audit resulted in development of the Zambia Power Rehabilitation Project, which took effect in 1998. The overall objective is to enhance the ability of Zambia’s electricity supply industry to provide electricity at the lowest cost and in an efficient and sustainable manner. The project includes rehabilitating hydro plants and distribution and transmission systems to improve technical efficiency and the quality and reliability of supply. Multiple financiers are providing funding for the Zambia Power Rehabilitation Project, including the International Development Agency, Norwegian Agency for Development Cooperation, Swedish International Development Cooperation Agency, Development Bank of Southern Africa, and African Development Bank. As of 2009, total financing secured for the power rehabilitation program is US$317 million, with total spending of about US$275 million.

Like many countries in the region, Zambia faces power deficits during peak demand, which forces reduced output by many industries, such as mining, says Monica Chisela, senior manager for marketing and public relations with Zesco. Because of these deficits, in 2003 Zesco expanded the rehab plan for its three hydro facilities to also add capacity. These plans involved adding 90 MW at Kafue Gorge (originally 900 MW) and 120 MW at Kariba North Bank (originally 600 MW) and regaining the 8 MW of capacity lost at Victoria Falls (which was operating at 100 MW). Total additional costs for expanding capacity at Kafue Gorge and Kariba North Bank are about US$46 million. The additional capacity gained at these two plants has a value of about US$18 million a year. This means the work will pay for itself in less than three years.

Electricity demand in Zambia has varied significantly recently. For example, in February 2008, total available hydro capacity in Zambia was about 1,200 MW, while total demand was 1,600 MW. However, in March 2009, Zambia officials said they planned to export a surplus 200 MW of hydropower resulting from a decrease in demand in the copper sector and an increase in installed capacity due to uprating of Kafue Gorge. At that time, installed capacity was about 1,600 MW but peak demand was 1,400 MW, said Christopher Nthala, director for generation and transmission at Zesco. This excess capacity could be exported to Namibia and South Africa.

Victoria Falls

The first turbine-generating unit at 108-MW Victoria Falls, on the Zambezi River, began operating in 1938, and the final of the 14 units came online in 1972. The Victoria Falls project consists of three powerhouses, 8-MW A, 60-MW B, and 40-MW C. Powerhouse A began operating in 1938 and contained two 1-MW units and two 3-MW units. However, generation from this powerhouse ceased in 2000, pending rehabilitation. By rehabilitating these units, Zesco would be able to regain 8 MW of lost capacity at Victoria Falls.

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Each of the six turbines at the 990-MW Kafue Gorge project in Zambia has been rehabilitated and upgraded to 165 MW from 150 MW. This rehab extended the life of the project, which began operating in 1931, by 20 to 30 years.

Rehab work on Victoria Falls began in 1998, when Zesco signed a US$2.3 million contract with Electricité de France to provide consulting services for detailed design engineering and project supervision. In April 2002, the utility signed a US$45 million contract with Alstom Hydraulique of France to perform the rehab work at Victoria Falls. This work, to be performed on all three powerhouses, included installing supervisory control and data acquisition (SCADA) systems, refurbishment of mechanical equipment, supply of new governors, and installation of new electrical and control systems. The contractor began site work at Victoria Falls in April 2003.

In July 2008, Zesco announced successful completion of the Victoria Falls rehabilitation. Total cost of this project was US$51 million. Zesco estimates average load factor of the plant is 0.85 after the rehabilitation, compared with 0.80 before the rehab began. However, the utility says load factor is restricted by the environmental requirement to reduce generation during the dry season and that the plant is able to operate at a load factor above 0.85.

Once work on Victoria Falls was complete, the government of Zambia allotted US$44 million to Zesco to speed up rehabilitation of both Kafue Gorge and Kariba North Bank. The government supplied the cash injection in a bid to more quickly provide adequate power to four new mining units and other industries, says Rhodnie Sisala, managing director of Zesco.

Kafue Gorge

The first 150-MW unit at 900-MW Kafue Gorge, on the Kafue River, began operating in 1971. The last of the six units began operating in 1977.

Work on Kafue Gorge began in 2001, with civil and turbine rehabilitation. Civil work, performed by China Henan International Economic Technical Cooperation Corporation, included repair of the spillway pier and gates, construction of fire partitioning walls, and resurfacing of roads and areas around the power station. Turbine rehabilitation was performed by a consortium of Alstom Power Generation of Sweden and GE Hydro of Norway. In October 2002, Zesco awarded a 13 million euro (US$17 million) contract to a consortium of Alstom Hydro Projects Limited, Alstom Power Hydraulique, and ABB Switzerland Ltd. to carry out rehab work on the generators and switchgear at Kafue Gorge. Alstom supplied and installed new static excitation equipment and excitation control and online diagnostic measurement systems. The company also refurbished the generator stator and rotor coils. ABB was responsible for upgrading the generator switchgear.

In March 2009, Zesco reported rehabilitation and uprating of Kafue Gorge was complete. Each of the plant’s six turbine-generating units now has a capacity of 165 MW, for a total plant capacity of 990 MW. Total cost for the upgrade and rehabilitation was US$85.5 million. Zesco says this rehabilitation extended the life span of the Kafue Gorge project by 20 to 30 years.

Kariba North Bank

The four 150-MW units at the 600-MW Kariba North Bank project, on the Zambezi River, began operating in 1976.

Rehabilitation work on this plant began in 2000. The work being performed at Kariba North Bank includes installing a SCADA system, refurbishing the mechanical equipment, rehabilitating the governors, and installing new electrical and control systems. Alstom Hydraulique is the turnkey contractor for the rehab work at Kariba North Bank.

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Generator failures were among the many problems at 50-MW Centroamerica that led Nicaraguan utility Empresa Nicaragüense de Electricidad (ENEL) to commission a rehabilitation feasibility study.

Changing the scope of the rehab work at this plant to uprate the units delayed the project for one year.

In 2005, the European Investment Bank (EIB) approved a 7.6 million euro (US$9.37 million) loan and the Development Bank of Southern Africa approved a US$15.4 million loan to Zambia for rehabilitation of the final two generating units at Kariba North Bank. EIB’s loan approval statement said Alstom would continue as contractor for rehabilitation of Units 3 and 4. In February 2007, the government of China agreed to lend US$300 million to Zambia for renovation of the Kariba North Bank project.

As of January 2009, work was complete on three of the four units at Kariba North Bank. Work on the final unit began in March 2009 and is expected to be complete in one year.

Nicaraguan utility works to refurbish two hydro plants

Utility Empresa Nicaragüense de Electricidad (ENEL) has completed a feasibility study to determine work needed to rehabilitate two hydroelectric projects: 50-MW Centroamerica and 50-MW Carlos Fonseca on the Viejo River. This work is intended to ensure a continued reliable supply of electricity by extending the useful life of these plants by more than 25 years. This hydro plant rehab is part of a broader project to rehabilitate the power sector in Nicaragua.

This power sector rehabilitation project has three main components. The first is rehabilitating Centroamerica and Carlos Fonseca. The second is extending and upgrading the power distribution grid, including lines and substations, in northeastern Nicaragua and near Managua, the capital. The third is preparing studies on new investment in renewable energy.

Funding for the power sector rehabilitation project will come from several sources. In December 2007, the Inter-American Development Bank (IADB) awarded US$34 million to Nicaragua for the rehab project. These funds are to be supplemented with loans totaling US$40.8 million from the Central American Bank for Economic Integration (CABEI) and the European Investment Bank (EIB). And Nicaragua was to invest US$3.2 million.

Feasibility study

To fulfill the first component of this project, ENEL needed to determine the work required to rehab Centroamerica and Carlos Fonseca. In December 2007, CABEI awarded a US$785,000 contract to the Spanish consortium Applus-Norcontrol-Nipsa to perform a feasibility study. (CABEI administered the bidding process for ENEL.)

Applus-Norcontrol-Nipsa diagnosed the current situation; examined options for rehabilitation, modernization, or expansion; analyzed cost benefits of each option; and formulated a plan to implement study results. The study was completed in June 2009. The study concluded that the plants require an investment in equipment and automation to guarantee their continued reliable operation; the rehabilitation plan presents an attractive internal rate of return for the utility; the rehab activities will not significantly affect electricity generation in the country; and without this work the country would have to rely on fossil fuel plants to provide the 100 MW of capacity provided by these two hydro facilities.

Now that the feasibility study is complete, ENEL has begun preparatory work to rehabilitate Centroamerica and Carlos Fonseca. The utility also will issue a request for proposals for the electromechanical and civil works. ENEL anticipates rehabilitation of these two plants will require two to three years once work begins and will cost US$62.6 million. This work is being financed, in part, through a US$40.2 million loan from IADB awarded in December 2008 for rehabilitation of Centroamerica and Carlos Fonseca.

The Centroamerica facility began operating in 1965. The plant, which contains two 25-MW turbine-generating units, uses water from Apanas Dam that then is discharged to Virgen Dam. ENEL is experiencing numerous operating problems at Centroamerica. These problems include generator failures, decreased reservoir capacity as a result of sediment accumulation, obsolete control and protection equipment, and aging civil structures (e.g. the spillway).

The Carlos Fonseca facility began operating in 1972. The plant, which contains two 25-MW turbine-generating units, uses water from Virgen Dam that then is discharged to the Viejo River. At Carlos Fonseca, the main limitation to plant operation is a problem of vibration when the units operate at a capacity of less than 15 MW. ENEL believes this vibration is caused by cavitation, which must be repaired once a year.

Overall goals of rehabilitation

The overall goals of the hydro plant rehabilitation are to: maximize turbine flow without adding generating equipment, reverse a decline in production at the two facilities, decrease operational problems resulting from aging equipment, optimize the use of the water in the reservoir, increase the safety of the civil structures, replace equipment and components that have reached the end of their useful life or do not meet national standards, and increase efficiency of the plants.

The second component of the power sector rehab project is extending and upgrading the distribution grid. Empresa Nacional de Transmisión Eléctrica (ENATREL) manages and operates the transmission lines and electric substations throughout Nicaragua. ENATREL received a US$32.7 million loan from IADB for this work; the money will be used to procure materials and contract the work needed to both upgrade existing infrastructure and expand the grid to areas of the country that lack service. The company currently is seeking companies to perform the work.

The renewable energy studies, the third component of the power sector rehab project, are scheduled to begin in the second half of 2011. These studies will investigate:

— Developing hydro projects in the Escondido River watershed on the Caribbean coast;

— Developing geothermal projects;

— Increasing electricity supply in remote rural areas; and

— Developing small hydro projects in remote rural areas.

Ezekiel Kasaro is commercial manager for Zesco Ltd. Mario Torres Lezama is director of projects for Empresa Nicaragüense de Electricidad.

Beyond Zambia and Nicaragua

Many other countries are investing in rehabilitation of aging hydro facilities.

France is one example. National utility Electricite de France (EDF) will invest more than 2 billion euros (US$2.5 billion) as part of the country’s economic stimulus program, says Patrick Devedjian, France’s economic recovery minister. This investment will include spending on modernizing EDF’s hydro projects, he says.

In recent months, EDF has issued several solicitations for hydropower equipment and other work for its many projects, including up to 50 turbine-generators over five years.

The minister also says the electricity transmission network will increase its investments 23 percent to 1.03 billion euros (US$1.3 billion).

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