J.1.2. AID-674-C-17-00002 SAEP Year 5 Annual Report 20221030 Final.pdf

DISCLAIMER

This report is made possible by the support of the American People through the United States Agency for International Develop ment (USAID).

The contents of this report are the sole responsibility of Deloitte Consulting LLP and do not necessarily reflect the views of USAID or the

United States Government. This report was prepared under Contract Number AID-674-C-17-00002.

SOUTHERN AFRICA ENERGY PROGRAM

YEAR 5 – FY22 ANNUAL REPORT

OCTOBER 1, 2021 – SEPTEMBER 30, 2022

Draft 1: October 30, 2022

Year 5 Annual Report

USAID Southern Africa Energy Program

1 October 2021 to 30 September 2022

Year 5 Annual Report

USAID Southern Africa Energy Program

1 October 2021 to 30 September 2022 i | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

Cover photo: With solar-powered light, a seamstress can continue working after dark and increase her income.

Photo credit: ENGIE Energy Access Mozambique

DISCLAIMER

This report is made possible by the support of the American People through the United States Agency for International Development (USAID).

The contents of this report are the sole responsibility of Deloitte Consulting LLP and do not necessarily reflect the views of USAID or the

United States Government. This report was prepared under Contract Number AID-674-C-17-00002.

ii | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

SAEP CONTRACT AND INDICATOR PERFORMANCE SUMMARY

Project Name Southern Africa Energy Program (SAEP)

Performance Period 15 March 2017 – 15 June 2023

TEC $69,955,372

Countries Angola, Botswana, Eswatini, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa and Zambia

Implementing Partner Deloitte Consulting LLP

Subcontractors Year 6: CrossBoundary, Deloitte South Africa, African Women in Energy and

Power (AWEaP), University of Johannesburg, Sustainable Energy Africa, Fluxx

Previous years: ENGAGE Energy, Geometric Talks, Consultec, Endangered

Wildlife Trust (EWT) and SIAL

Performance

Reporting Frequency

Quarterly

Date of Latest PMP

Modification

10 February 2022

Contacts SAEP | COP: Dana Kenney; DCOP-T: Tshegofatso Neeuwfan; DCOP-F: Rajiv

Weeraratne

USAID | COR: Jennifer Baldwin; A/COR: Jordi Arimany

SAEP Results as at: 30 September 2022

Project Goals LOP Target

Progress to Date (as of

09/30/2022)

% Achieved Year 6 Annual Targets

2 Number of new grid connections or off-grid connections (PA #3)

3 million 2,386,645 79.55% 613,355

1 Number of MW from transactions that achieved financial close (PA #8)

4,000 MW 5,771.38 MW 144% 45

Amount of investment mobilized for energy investment (PA #14)

$8,134.8 million $6,778.8 million 83.33% $51.3 million

8 Kilometers of power lines that have reached financial close (PA#20)

1,166 1,121 96.14% 0

9 Greenhouse Gas (GHG) reduced, sequestered and/or avoided (PA #21)

4,376,435 (Thousand tCO2e)

4,139,979 94.59% 364,182 iii | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

3 Number of laws, policies, regulations or standards to enhance energy sector governance formally proposed, adopted or implemented (PA #23)

31 34 109.67% 2

7 Number of Institutions with

Improved Capacity

61 79 129.51% 4

6 Energy Efficiency or Energy

Conservation (GJ of electricity saved)

5,724 55,178 963% 4,230

10 Number of competitive procurement processes for new generation capacity implemented with USG Power Africa assistance (PA #24)

2 2 100% 0

Projected Targets for the Remaining Life of Project

#New connections: 613,355; #MWs at Financial Close: 0 MW; Investment Mobilized: $1,356 billion; # KM of

T&D lines at Financial Close: 45; # New Laws, Policies and Regulations: 0; #Institutions with Improved Capacity:

0; #People Receiving Training in Global Clean Energy: 0 iv | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

ACRONYMS

Acronym Definition

ACE-TAF Africa Clean Energy Technical Assistance Facility

ADER Agence pour le Développement de l’Electrification Rurale

AEF Africa Energy Forum

AfDB African Development Bank

ANNA Angola–Namibia

ARENE The Energy Regulatory Authority

AWEaP African Women in Energy and Power

BERA Botswana Energy Regulatory Authority

BGFZ Beyond the Grid Fund for Zambia

BoD Board of Directors

BPC Botswana Power Corporation

BTG Beyond the Grid

BW5 Bid Window 5 (of REIPPP Programme)

CENORED Central Northern Regional Electricity Distributor (Namibia)

CEO Chief Executive Officer

COR Contracting Officer’s Representative

CoSS Cost of Service Study

CSP Concentrated Solar Power

CTT Central Termica de Temane

CoCT City of Cape Town

CoW City of Windhoek

DBSA Development Bank of South Africa

DFID UK Department for International Development

EAPP Eastern Africa Power Pool

E&S Environmental and Socioeconomic

ECB Electricity Control Board (Namibia)

EDM Electricidade de Moçambique

EE Energy Efficiency

EEC Eswatini Electricity Company

EGENCO Electricity Generation Company

EMMP Environmental Mitigation and Monitoring Plan

EMU Electrification Management Unit

ENDE Empresa Nacional de Distribuição de Electricidade

EOI Expression of Interest

EPC Engineering, Procurement, and Construction

ERB Energy Regulatory Board (Zambia) v | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

ESC SAPP Environmental Subcommittee

ESCOM Electricity Supply Corporation of Malawi

ESERA Eswatini Energy Regulatory Authority

ESIA Environmental and Social Impact Assessment

ESEEP Energy Sector Efficiency and Expansion Program

ESMP Environmental and Social Management Plan

ESMS Environmental and Social Management System

EWSC Eswatini Water Services Corporation

ETG Energy Thematic Group

EWT Endangered Wildlife Trust

ExCo Executive Committee

FC Financial Close

FY Financial Year

GoM Government of Malawi

HICD Human and Institutional Capacity Development

IA Implementation Agreement

IAEREP Increased Access to Electricity and Renewable Energy Production

IFC International Finance Corporation

IFI International Financial Institution

IPP Independent Power Producer

IPP Office South Africa Department of Energy (DoE) Independent Power Producer Procurement (IPP) Programme Office

IRP Integrated Resource Plan

IRSEA Instituto Regulador dos Serviços de Electricidade e de Água

JDA Joint Development Agreement

KfW Kreditanstalt für Wiederaufbau (German Development Bank)

KPI Key Performance Indicator kV Kilovolt kW Kilowatt

LCOE Levelized Cost of Energy

LEAD Least-Cost Electricity Access Development

LEC Lesotho Electricity Corporation

LOC Letter of Collaboration

M&E Monitoring and Evaluation

MCC Millennium Challenge Corporation

MDM Metering Development Management

MERA Malawi Energy Regulatory Authority

MINEA Ministry of Energy and Water (Angola)

MIREME Ministry of Mineral Resources and Energy (Mozambique) vi | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

MMGE Ministry of Mineral Resources, Green Technology and Energy (Botswana)

MME Ministry of Mines and Energy (Namibia)

MNRE The Ministry of Natural Resources and Energy

MW Megawatts

NARUC National Association of Regulatory Utility Commissioners

NDA Non-Disclosure Agreement

NEESAP National Energy Efficiency Strategic Action Plan

NERSA National Energy Regulator of South Africa

OGTF Off-Grid Task Force

OPE Oshakati Premier Electric

PATT Power Africa Transaction Tracker

PIU Project Implementation Unit

PMEP Performance Management and Evaluation Plan

PMO Project Management Office

PMU Project Management Unit

PPA

PPP

Power-Purchase Agreement

Public Private Partnership

PPPC Public-Private Partnership Commission

PS Permanent Secretary

PV Photovoltaic

Q1 Quarter 1

Q2 Quarter 2

Q3

Q4

Quarter 3

Quarter 4

RBF Results-based financing

RAB Regulatory Asset Base

RAP Resettlement Action Plan

RE Renewable Energy

REA Rural Electrification Agencies

REFiT Renewable Energy Feed-in Tariff

REIPPP Renewable Energy Independent Power Producer Procurement

RERA Regional Energy Regulatory Association

REOI Request for Expressions of Interest

RFA Request for Application

RFB Request for Bids

RFI Request for Information

RFP Request for Proposals

RNT Empresa Rede Nacional de Transporte de Electricidade

RTIFF Regional Transmission Infrastructure Fund Facility vii | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

SACREEE SADC Centre for Renewable Energy and Energy Efficiency

SADC Southern African Development Community

SAEP Southern Africa Energy Program

SAPP Southern African Power Pool

SB Single Buyer

SHS Solar Home System

SIAZ Solar Industry Association of Zambia

SIM Syndicat des Industries de Madagascar

SMO System Market Operator

SOW

SPEED+

Scope of Work

Supporting the Policy Environment for Economic Development

SSIR SAEP Support Information Request

STTA Short Term Technical Assistance

TNA Training Needs Assessment

TO Task Order

ToR Terms of Reference

TTP Temane Transmission Project

TTS Targeted Transaction Support

USD $ United States Dollar

USG United States Government

USAID United States Agency for International Development

USTDA United States Trade and Development Agency

VAT Value Added Tax vRE Variable Renewable Energy

ZESCO Zambia Electricity Supply Corporation

ZTK Zambia–Tanzania–Kenya viii | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

TABLE OF CONTENTS

SAEP CONTRACT AND INDICATOR PERFORMANCE SUMMARY................................................... II

ACRONYMS................................................................................................................................................................... IV

TABLE OF CONTENTS .......................................................................................................................................... VIII

FIGURES ......................................................................................................................................................................... VIII

TABLES .............................................................................................................................................................................. X

EXECUTIVE SUMMARY

1 INTRODUCTION

2 MAJOR ACTIVITIES BY COUNTRY

3 PROGRAM MANAGEMENT, FINANCE, AND OPERATIONS

APPENDIX A SAEP YEAR 5 SUCCESS STORIES

APPENDIX B PERFORMANCE MONITORING & EVALUATION TABLES

APPENDIX C TRANSACTIONS TRACKER

APPENDIX D TRANSACTIONS REACHED FINANCIAL CLOSE

APPENDIX E TRANSACTIONS REACHED COMMERCIAL OPERATION

APPENDIX F PARTICIPANT TRAINING REPORT

APPENDIX G ASSUMPTIONS FOR CALCULATION AND INVOICING OF FEE

APPENDIX H STTA MOBILIZED AND UPDATE ON TRAVEL IN QUARTER 4

APPENDIX I ORGANIZATIONAL CHART & RESOURCES

APPENDIX J DETAILED ACTIVITIES PROGRESS

OUTCOME–SPECIFIC ACTIVITIES

PMO- AND CROSS CUTTING- SPECIFIC ACTIVITIES

APPENDIX K SAEP YEAR 6 QUARTERLY TARGETS

FIGURES

Figure 1: SAEP field trip to the Apollo 400 kV substation and transmission network in Rietvleidam, Pretoria, Figure 2: SAEP team during the March 2022 offsite in Pretoria, South Africa. Photo credit: SAEP

Figure 3: Overview of SAEP's major activities per country

Figure 4: The map shows the intended 343 km transmission line between Huambo and Lubango (in green). The red lines are existing 400 kV lines in the North (Source: AfDB ESEEP I Project Appraisal Report)

Figure 5: Capolo transmission line, Luanda, Angola. Photo credit: SAEP

Figure 6: ENDE's head office in Luanda, Angola. Photo credit: SAEP

Figure 7: An electrified house in Vila Flor, Luanda, Angola

Figure 8: SAEP and the ENDE PIU during working sessions at ENDE's headquarters

Figure 9: An EWSC water treatment plant file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017368 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017370 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017371 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017371 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017372 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017373 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017374 file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017376 ix | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

Figure 10: Autarsys' container arrives at the Fotadrevo mini-grid site

Figure 11: Codal is a food manufacturer and wholesaler. Photo credit: SAEP

Figure 12: SAEP and JIRAMA’s newly established PMO at a workshop addressing the utility’s project management challenges related to its electrification projects. Photo credit: SAEP

Figure 13: A distribution line in Ejeda. The mini-grid development grant is estimated to bring electricity to around

3,626 households and businesses. Photo credit: SAEP

Figure 14: GoM, IFC and the appointed project developers during the relationship agreement signing even on 6

September 2022. Phot credit: USAID Malawi

Figure 15: ESCOM engineers at the SAPP coordination center in Harare, Zimbabwe. Photo credit: SAEP

Figure 16: SAEP trained ESCOM in managing the grid with increased vRE. Photo credit. SAEP

Figure 17: With SAEP’s support, MAEVE facilitated training to REIAMA members to increase agent’s sales capabilities. Photo credit: SAEP

Figure 18: SAEP awarded the Kick-Starter program grants during an award ceremony in Lilongwe, Malawi in July

2019. Photo credit: SAEP

Figure 19: SAEP facilitated a workshop with Malawi’s power sector stakeholders to discuss the development of an ancillary services market. Photo credit: SAEP

Figure 20: Project developer, JCM Power, installing the battery containers. Photo credit: JCM

Figure 21: SAEP visited three substation construction sites. Photo credit: SAEP

Figure 22: TTP transmission towers: from storage sites to erected towers. Photo credit: SAEP

Figure 23: SAEP conduct in-person training sessions with EDM’s analytics team and went on site visits to the

Maputo and Nampula delegations. Photo credit: SAEP

Figure 24: A welder moved to a village outside Inhambane in Mozambique to start his business after the village was electrified in July 2022. Photo credit: SAEP

Figure 25: A solar system keeps the shopkeeper's fridge cold, Legogo, Mozambique. Photo credit: SAEP

Figure 26: The first JET municipal workshop in Mbombela. Photo credit: SAEP

Figure 27: Cape Agulhas municipality is advancing its new generation capacity projects with SAEP support. Photo credit: SAEP

Figure 28: SAEP provided in-person revenue management support to Makana local municipality in September 2022

(Photo credit: SAEP)

Figure 29: The 147 MW Karusa wind farm in South Africa. Photo credit: Power Africa

Figure 30: Shop owner and VITALITE sales agent Teresa runs a one-stop shop that offers drinks, food, toothpaste and pay-as-you-go SHS. Photo credit: SAEP

Figure 31: SAEP assisted RERA to implement its annual conference in February 2022. Photo credit: SAEP

Figure 32: Site visit to Droogfontein solar plant. Photo credit: SAEP

Figure 33: Power Africa acknowledged SAEP for diligently updating the PATT CRM

Figure 34: The PMO team conducting DQAs with EDM in Mozambique from 20 to 21 June 2022. Photo credit:

SAEP

Figure 35: In June 2022, SAEP conducted gender sensitization training with SHS companies in Lilongwe, Malawi.

Photo credit: SAEP

Figure 36: Participants of SAEP’s capacity-building training on gender-inclusive procurement processes. Photo credit: SAEP

Figure 37: EGENCO training group. Photo credit: SAEP

Figure 38: All participants received a certificate of completion. Photo credit: SAEP

Figure 39: SAEP Zambia Office: Disposition of Office Assets, March 2022 Photo credit: SAEP

Figure 40: SAEP's new COP joined the team in August 2022. Photo credit: SAEP

Figure 41: Autarsys' engineer Angelina Gaston at the Ejeda operation site. Photo credit: SAEP

Figure 42. 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file:///C:/Users/SAEP021/OneDrive%20-%20Deloitte%20SAEP/Documents/Communications/Reporting/Annual%20Report/Annual%20Report%20YR%205/Master/MASTER%20SAEP%20Year%205%20Annual%20Report_Draft%201_20221014%20tn1.docx%23_Toc118017408 x | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

TABLES

Table 1: SAEP high-level results

Table 2: Quarterly Impact Indicator Targets, Program Year 5

Table 3: LTTA mobilized during the period 1 July to 30 September 2022

Table 4: SAEP team travel between 1 July to 30 September 2022

Table 5: SAEP Year 6 Quarterly Targets

1 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

EXECUTIVE SUMMARY

In the financial year 2022 (FY22), the United

States Agency for International Development

(USAID) Southern Africa Energy Program

(“SAEP” or “the Program”), completed or advanced over 120 activities in 10 countries to contribute to Power Africa’s goals of creating a brighter, more sustainable future for many across the Southern African region.

This Annual Report (“the Report”) details

SAEP’s successes over the past year, from transaction advisory support for large-scale energy sector projects and utility electrification efforts to assistance to solar home system (SHS) and mini-grid companies.

Below is an overview of SAEP’s key events, milestones and achievements over the 12-month period (from 1 October 2021 to 30

September 2022) covered in this report.

• Facilitated financial close (FC) of 450 megawatts (MW) of new renewable energy (RE) generation in Mozambique.

Over the life of the project, 5,771.38 MW of supported generation and transmission capacity has reached FC

• Achieved 835,321 connections, of which i) 450,544 were new off-grid connections through support to SHS companies and other off-grid providers, and ii) 384,777 were new on-grid connections. Since Year 1, SAEP has contributed to 2,386,645 household and business connections

• Supported 21 off-grid energy companies across sub-Saharan Africa to improve market knowledge and increase sales through active transaction advisory and the development of go-to-market strategies

• Implemented 36 trainings addressing topics such as SHS sales force effectiveness, gender mainstreaming, women’s leadership, utility production optimization, variable renewable energy (vRE) integration, Just Energy Transition (JET) readiness and revenue management

• Finalized support to Angola’s electricity distribution company, ENDE, and transmission company, RNT, on 30 September 2022, which included technical advisory and capacity-building to advance key tender processes under the African Development Bank’s (AfDB) USD $543.5 million

Energy Sector Efficiency and Expansion Program (ESEEP). Both institutions showed commitment and competence to take the work forward independently, thanks to SAEP’s guidance and approach as a trusted advisor

• Guided Botswana and Malawi’s regulators in reviewing the ir respective utilities’ rate case applications and provided recommendations for cost-reflective tariffs

2 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

• Supported the Eswatini Water Services Corporation (EWSC) in institutionalizing energy-efficient system design, processes and procedures at its primary water pumping and treatment facilities, saving the utility over 2.35 million kilowatt hours (kWh) and USD $200,000

• Helped the Government of Malawi (GoM) to evaluate and negotiate the bid for project sponsor, and in September 2022, appoint the Scatec ASA and Electricité de France (EDF) consortium as the lead project developer of the 350 MW Mpatamanga Hydropower Project – a major milestone in moving the project closer to FC

• Developed a commercial loss reduction tool, including a forecasting functionality, for

Mozambique’s electric utility, Electricidade de Moçambique (EDM). The immediate and critical value of the tool is that it enables EDM to understand the source and magnitude of its commercial losses, which is a starting point in working towards EDM’s target of reducing commercial losses by two percent per year in the next five years

• Improved South African municipalities’ ability to manage existing energy infrastructure, increase electricity access, understand and implement new energy solutions and participate in the country’s

JET by upskilling 649 energy professionals within these municipalities

Figure 1: SAEP field trip to the Apollo 400 kV substation and transmission network in Rietvleidam, Pretoria, South Africa. Photo credit. SAEP

3 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

Introduction

4 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

1 INTRODUCTION

1.1 THE PROGRAM1

The SAEP contract (AID-674-C-17-00002) was signed between USAID/Southern Africa and Deloitte

Consulting LLP (Deloitte) on 15 March 2017. This is SAEP’s fifth Annual Report2 and reflects results and achievements realized in FY22 (1 October 2021 to 30 September 2022).

SAEP’s objective is to increase investment in electricity supply and access in Southern Africa by strengthening the regional enabling environment and facilitating transactions. SAEP addresses key constraints to energy sector investment, by i) strengthening regulation, ii) improving planning and procurement, iii) improving management of regional electricity trade, iv) demonstrating and scaling RE and energy efficiency (EE) technologies and practices, and v) providing capacity building to institutions and human resources for energy sector management.

SAEP is USAID’s flagship implementing mechanism for Power Africa in the Southern African region. As part of Power Africa, SAEP works to contribute to Power Africa’s goals to add at least 30,000 MW of cleaner and more reliable electricity generation capacity and 60 million connections by 2030. (For more information on Power Africa, see the box on the next page).

Figure 2: SAEP team during the March 2022 offsite in Pretoria, South Africa. Photo credit: SAEP

Over its five-year life, SAEP will meet Program-specific goals to increase electricity supply and access, and will deliver:

• 4,000 MW of new power generation and transmission capacity

• 3 million new connections

1 Previous divider photo: SAEP and African Women in Energy and Power (AWEaP) launched the JET Skills Development Program to train

South African women on renewable energy planning and integrating JET in strategy design . Photo Credit: AWEaP 2 The full report name as per Contract Number AID-674-C-17-00002 is Annual Performance Management Progress Report

5 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

1.2 OVERVIEW

SAEP is a forward-looking program that aims to overcome the challenges of access to energy through actively advancing power sector development in Southern Africa. SAEP employs a proactive, responsive and flexible approach to the design, deployment and monitoring of interventions compatible with, and responsive to, the evolving needs of the region. SAEP recognizes that to sustainably advance the accessibility, reliability and security of the regional energy ecosystem, the Program must promote policy and regulatory reforms to improve the enabling environment. Additionally, the Program must stimulate private sector participation to realize new investment within the power sector.

SAEP is designed to increase electricity generation and to improve access to power in 10 countries located throughout

Southern Africa3 while objectively quantifying and measuring progress towards five key outcomes or work streams of the

Program. Outcomes include:

• Outcome 1 (OC1): Improve regulation, planning and procurement for energy

• Outcome 2 (OC2): Improve commercial viability of utilities

• Outcome 3 (OC3): Improve regional harmonization and cross-border trade

• Outcome 4 (OC4): Demonstrate and scale RE and EE technologies and practices locally

• Outcome 5 (OC5): Increase human and institutional capacity

SAEP will achieve these outcomes by strategically aligning energy reform and electrification goals with investment opportunities through i) tracking and working to close transactions, ii) coordinating with local and regional resources, and iii) building human and institutional capacity. SAEP is employing a results-oriented framework for decision-making related to the identification, prioritization, and selection of intervention activities and programming to increase and accelerate private sector investment and move transactions forward for increased generation and access to electricity. SAEP’s assistance to renewable energy projects and energy efficiency activities throughout Southern Africa supports decarbonization efforts and the U.S. climate change commitments.

On the following page, Table 1 shows targets and results for SAEP’s Year 5 and targets moving forward into Year 6. The rest of this document is organized as follows; Section 2 provides country-level highlights of key successes and impacts as well as challenges and mitigation strategies implemented during the year. Section 3 details SAEP’s program management, finance and operations, and challenges from Year 5 coupled with risks anticipated in Year 6. A series of appendices provide details on SAEP successes, Program staffing (short-term technical assistance (STTA) and resources mobilized), performance indicators and results, and progress reporting against SAEP Year 5 Work Plan activities.

This includes completing outputs and progress against the Work Plan activities and any proposed adjustments to Program delivery.

3 Angola, Botswana, Eswatini, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa and Zambia.

Power Africa is a U.S. Government-led partnership that harnesses the collective resources of over 170 public and private sector partners to double access to electricity in sub-Saharan Africa.

Power Africa’s goal is to add at least 30,000 MW of cleaner and more reliable electricity generation capacity and 60 million connections by 2030.

Since 2013, Power Africa has delivered first-time electricity to 158.9 million people across sub-Saharan Africa and connected more than 32 million homes and businesses to on- and off-grid energy solutions.

6 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

Table 1: SAEP high-level results

Project Goals LOP Target Progress to Date

(As at 09/30/2022) % Achieved

Year 6 Annual

Targets

2 Number of new grid connections or off-grid connections (PA #3) 3 million 2,386,645 79.55% 613,355

1 Number of MW from transactions that achieved financial close (PA

#8)

4,000 MW 5,771.38 144% 45

Amount of investment mobilized for energy investment (PA #14) $8,134.8 million $6,778.8 million 83.33% $51.3 million

8 Kilometers of power lines that have reached FC (PA#20) 1,166 1,121 96.14% 0

9 Greenhouse Gas (GHG) reduced, sequestered and/or avoided (PA #21)

4,376,435 (Thousand tCO2e)

4,139,979 94.59% 364,182

3 Number of laws, policies, regulations or standards to enhance energy sector governance formally proposed, adopted or implemented (PA #23)

31 34 109.67% 2

7 Number of Institutions with Improved Capacity 61 79 129.51% 4

6 Energy Efficiency or Energy Conservation (GJ of electricity saved) 5,724 55,178 963% 4,230

10 Number of competitive procurement processes for new generation capacity implemented with USG Power Africa assistance

(PA #24)

2 2 100% 0

Projected Targets for the Next Performance Period (Remaining Life of Project)

#New connections: 613,355; #MWs at Financial Close: 0 MW; Investment Mobilized: $1,356 billion; # KM of T&D lines at Financial Close: 45; # New Laws, Policies and Regulations: 0; #Institutions with Improved Capacity: 0; #People Receiving Training in Global Clean Energy: 0

7 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

Major Activities

By Country During the Reporting Period

8 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

2 MAJOR ACTIVITIES BY COUNTRY4

In Year 5, SAEP initiated and implemented activities in: Angola, Botswana, Eswatini, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa, and Zambia. Across the region, the Program collaborated with national ministries, utilities, transmission and distribution companies, regulators, cooperating partners, international financial institutions (IFIs) and private companies, including Independent Power

Producers (IPPs) and SHS providers. Figure 4 provides an overview of major Year 5 activity highlights by country.

4 Previous divider photo: TTP transmission tower assembly in Mozambique. Photo credit: SAEP

Figure 3: Overview of SAEP's major activities per country

SOUTH AFRICA

• Supporting South African municipalities to increase energy access and deploy RE projects

• Getting municipalities ready for South Africa’s

JET

ANGOLA

• Advancing a connected power system in

Angola: support to the AfDB-funded 343-km transmission line project

• Improving Angola’s distribution company’s procurement skills to finalize tenders for connecting 1.2 million customers

• Supporting the regulator in analyzing the elimination of subsidies in the electricity supply industry

BOTSWANA

• Assisting BERA in reviewing BPC’s rate case filing

REGIONAL

• Webinars: Advancing climate resiliency in the energy sector

• Guiding utilities to manage wildlife and energy interactions

ESWATINI

• Saving energy helps Eswatini’s water utility cut costs and emissions

MADAGASCAR

• Grantee begins mini-grid construction

MALAWI

• Project sponsor to build and operate the 350 MW

Mpatamanga Hydropower Plant appointed

• Promoting regional power and peer interconnection:

Mozambique–Malawi interconnector readiness

• Assisting ESCOM to manage the grid with increased vRE

MOZAMBIQUE

• Gaining first-hand insights into

Mozambique’s TTP construction

• Helping reduce EDM’s commercial losses

ZAMBIA

• Connecting 122,258 homes and businesses to electricity through operational support to SHS and mini-grid companies

NAMIBIA

• Financial modeling assistance to the City of Windhoek

9 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

2.1 ANGOLA

Angola’s current electrification rate is estimated at 45%.

The Government of Angola has set targets of 9.9 gigawatts

(GW) of installed generation capacity and a 60% electrification rate by 2025.5

In Year 5, SAEP finalized support to Angola’s electricity distribution company, ENDE, and transmission company, RNT, to advance key tender processes under the AfDB’s

USD $543.5 million energy program, ESEEP. SAEP also helped ENDE complete technical specifications for the installation of advanced metering as part of the World

Bank’s Revenue Protection Program, which will lead to

200,000 connections in Angola when fully implemented. In support of the government’s policy to eliminate subsidies in the electricity supply industry (ESI), SAEP worked with Angola’s Regulatory Authority for Energy and Water, Instituto Regulador dos Serviços de

Electricidade e de Água (IRSEA), to quantify the amount of government subsidies for the three electricity utilities and explore options to progressively reduce the subsidies.

2.1.1 TOP ACHIEVEMENTS AT A GLANCE

Advancing a Connected Power System in Angola

On 30 September 2022, SAEP completed its support to RNT, which included technical advisory and capacity-building. RNT is responsible for completing the AfDB-funded Central–South transmission line project. The project entails the construction of a transmission line from Huambo to Lubango, including a new substation and the expansion of another. It will create an integrated national power grid from the north to the south and bring low-cost hydropower from the northern

Kwanza River basin to the southern provinces. The transmission line will have the capacity to deliver around 1,000 MW of electricity to improve overall access, reduce the use of diesel generators and strengthen the financial viability of Angola’s power sector.

SAEP’s assistance to RNT resulted in several important outcomes. From the initial setup and operationalization of a project implementation unit

(PIU), SAEP focused on skills transfer to enable the

RNT PIU to continue with delivery once SAEP’s assistance comes to an end. In consultation with the

5 https://www.usaid.gov/powerafrica/angola

Figure 4: The map shows the intended 343 km transmission line between Huambo and Lubango (in green). The red lines are existing 400 kV lines in the

North (Source: AfDB ESEEP I Project Appraisal Report)

10 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

different PIU sections, SAEP identified skills gaps and presented topic-specific training as part of weekly technical working sessions. With SAEP’s support, RNT has also advanced key procurement processes.

A significant highlight and prerequisite for implementing the transmission project was the appointment of the owner’s engineer (OE). This independent consulting firm plays a supporting role in technical project management. SAEP subsequently reviewed and managed all deliverables submitted by the OE, including the inception report, the construction work plan and budget, final engineering designs for the substations and transmission line and the Engineering, Procurement and

Construction (EPC) bidding documentation. Further, SAEP assisted RNT in developing an

Environmental and Social

Management System (ESMS) and a Gender Action Plan

(GAP). The ESMS is a crucial requirement to develop the project according to the AfDB operational safeguards and ultimately promote sustainable development.

The GAP explains how

RNT will deal with gender inequality in employment during the project’s life cycle and address gender -based violence and treatment of women in general in the communities the project impacts.

As this was the last year of SAEP assistance, the team focused on the transition process, which included a series of skills transfer exercises and handing over documents to RNT. RNT will be able to utilize the jointly developed management tools (procurement plan, monthly progress and planning trackers, stakeholder engagement plan, procurement Gantt chart and many more) to effectively implement the

Central–South transmission line project, expected to be commissioned by the end of 2024. Overall, the assistance to RNT on ESEEP I was successful, resulting in many important outputs. This success can be attributed to the strong and positive working relationship between the RNT PIU and SAEP. Refer to

Appendix A: Success Stories for more information.

Supporting Angola’s Distribution Company to Connect 1.2 million Customers

SAEP assisted Angola’s electricity distribution company, ENDE, in developing and implementing internal systems and processes required to install over 1.2 million prepaid meters effectively and efficiently in the coming five years under the AfDB-funded ESEEP-I. SAEP’s support entailed technical advisory and on-the-job training as the ENDE PIU prepared the required tender packages for i) the installation of prepaid meters, ii) systems and integration services, and iii) supervision services tender. In Year 5, ENDE made accelerated progress in advancing all the tenders and the stakeholder management of internal and external stakeholders.

AfDB established a dedicated Angola local technical team who will operate from Luanda to better

Figure 5: Capolo transmission line, Luanda, Angola. Photo credit: SAEP.

11 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

support the implementing agencies in Angola. This organizational change strengthened the ENDE-AfDB engagement and mutual collaboration. In addition to advancing technical aspects of the ongoing tenders, SAEP focused on transitioning ownership of the procurement processes to the ENDE PIU. ENDE showed commitment and competence to take the work forward independently.

At the point of transition, ENDE’s AfDB ESEEP Phase I procurement tenders are in various stages of progress as outlined below:

• The prepaid metering tender is currently at the Request for Bids (RFB) stage, awaiting submissions from the prequalified bidders. The submissions due date is 24 October 2022.

Estimated contractor(s)’ start date is March 2023 (following the RFB evaluation, AfDB’s No

Objection (NO), contract signing, and the Angola court of audits’ approval).

• The systems and integration services tender is currently awaiting the AfDB’s NO to proceed with the Request for Proposals (RFP) Stage 2 (technical and financial evaluation) of the tender with the three qualified bidders. This is the critical stage of the systems tender process, which will result in the appointment of the consultant, also expected to commence with its mandate in March 2023 (following the RFP- Stage 2 completion, ENDE’s RFP-stage 2 evaluation, AfDB’s NO, contract signing and the Angola Court of Audit’s approval).

• The supervision consulting tenders, which ENDE will execute as two separate tenders (each for two sets of lots) is at the stage where ENDE is awaiting AfDB’s NO to commence with the RFP stage. Similar to the other two tenders, it is expected that the appointed consultants’ work will commence in March 2023 (following the RFP stage completion, ENDE’s RFP evaluation, AfDB’s NO, contract signing, and the Angola Court of Audit’s approval).

Furthermore, In Year 5, AfDB approved an updated

ENDE-RNT integrated procurement plan, which SAEP helped to develop. The plan is an overarching guidance document, incorporating the procurement timeframe and actions for the distribution (ENDE) and transmission (RNT) executing agencies under ESEEP

Phase 1. As the AfDB is the source of the funding for

ESEEP Phase 1, it has to review and approve all plans and procurement documents for both executing agencies. For ENDE, in particular, the approval permits

ENDE to issue tender documents to procure and install the prepaid meters, the supporting IT systems and the services of the supervision consultants who will supervise the installation of meters. Also, the updated plan shows adjusted and realistic ESEEP Phase-I timelines, projecting the commencement of the prepaid meter installations in February 2023.

ENDE has proven capable and adaptable in executing procurement processes based on SAEP’s guidance and approach as a trusted advisor. SAEP's overall legacy to

ENDE is the team SAEP collaborated with – a team of professionals with an increased skill set and experience to confidently manage future ENDE large-scale

IFI-funded projects.

Figure 6: ENDE's head office in Luanda, Angola.

Photo credit: SAEP

12 | USAID SAEP YEAR 5 ANNUAL REPORT USAID.GOV

Options for Eliminating Subsidies in Angola’s Electricity Supply Industry

In support of the Government of Angola policy to eliminate subsidies in the ESI, SAEP has been working with IRSEA in cooperation with the World Bank. Specifically, through the analysis of financial data and numerous virtual meetings with Angolan utilities, SAEP developed an estimate of total subsidies from the government to the ESI as of 31 December 2021. SAEP recommended reducing the subsidies in two phases: i) ensuring that operation and maintenance and fuel costs are covered by the utilities (presently fuel is bought for PRODEL by the government; ii) seeking full cost recovery for all capital-related expenditures, presently subsidized. Both of these subsidy-closing activities would be performed in the context of rate cases for each of the three Angolan utilities. Further, SAEP stressed that closing subsidies in these rate cases is not simply a matter of raising tariffs. Rather, SAEP recommended that

IRSEA concentrate on providing incentives to the utilities to: i) collect all of the money that is owed them (the SAEP activity regarding prepaid meters will help this aspect); ii) ensuring that the cost structure of each utility is reasonable; iii) if tariff changes are necessary after the above actions, to do so gradually. IRSEA will be getting training from MRC Associates of Madrid on analyzing applications for changes in tariffs. This initiative is funded by the World Bank. The World Bank also solicited SAEP’s advice and help (in the form of ToRs) to provide IRSEA with an embedded advisor to support subsidy reduction/elimination efforts, among others. The embedded advisor will also be able to provide general advice on operations and policy to IRSEA since IRSEA has stated that it will be getting more independence. Successful implementation of this subsidy reduction will enhance IRSEA’s credibility as a regulator and, more importantly, help align the

Angolan economy with allocative and productive efficiency.

2.1.2 ADDITIONAL

HIGHLIGHTS FOR ANGOLA

In Year 5, SAEP engaged in the following additional activity:

• The AfDB-funded Central–South transmission line is a precursor to connecting Angola to regional electricity markets once the transmission line is completed in 2024. As such, SAEP worked with

RNT to prepare for the Angola–Namibia (ANNA) interconnector.