REPORTS

Investment needs to meet growing demand and access targets. All work regarding data collection, assumptions, modelling activities and optimization are designed so as to estimate optimal investment needs in the sector, within a reasonable set of restrictions.

Optimization using the Balmorel model. The Balmorel model is the primary tool utilized in the analysis. It applies a wide range of technology and geographic specific data and assumptions pertaining to costs, production, resources (water, solar and wind), fuels, distances, etc. to determine the optimal set of investments in order to meet demand in each country and region by 2020, 2025 and 2030. Importantly, the optimization accounts for country-specific daily demand profiles and solar and wind resource profiles.

Restrictions to the optimization to reflect reality. Because the optimization model is designed to minimize total system costs, it does not inherently reflect certain technical or practical restrictions that may exist. For example, most countries prefer to develop a diversified generation mix, and are not willing to rely entirely on power imports to meet demand. Thus, a key aspect of the analysis has been that of introducing reasonable restrictions to the model, while maintaining significant opportunity for it to determine optimal investment paths.

Interpreting the results of optimization. The results of the modeling are a combination of optimization and a set of restrictions, and must be interpreted as such. The results do not predict what will happen in the future, but rather what the team has deemed as an optimal yet plausible sector development path. By optimal is meant the set of investments that minimize total system costs (including capital, fuel and O&M) for the region as a whole.

Access expansion. An access expansion model has been developed in order to ensure that country specific access expansion paths reflect; i) consistency with the overall targets of the AfDB for the continent, ii) the fact that each country has a different starting point in terms of rapidly expanding access, and iii) the various access options – on-grid (rural and urban), mini-grid and off-grid.

Demand growth and investments access expansion. Demand grows as a result of; i) economic growth and electricity consumptions elasticity, and ii) access expansion. Projections for both sources of growth are made for each country. In addition to generating additional demand, access expansion generates investment needs - directly. Thus, in order to complete investment needs projections for the sector, updated per-connection assumptions are made for on-, mini- and off-grid.