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Afghanistan:Embarks on growth backed by international support [free access]

May 8, 2019

Afghanistan’s economy has been marred by decades of insurgency and conflict. Despite having received continuous support from international development organisations, the country faces challenges of declining economic growth, political instability and continuing poverty. Today, Afghanistan is ranked as one of the least developed countries in the world. As per the World Bank, Afghanistan’s gross domestic product (GDP) declined to 2.7 per cent in 2017 from 13.8 per cent in 2007.

 

With abundant and unexploited energy resources, the country’s electricity sector could play a pivotal role in improving living conditions and providing opportunities to the population. However, the electricity sector first needs to overcome its own challenges of high dependency on imports to meet domestic demand, limited access to grid-connected electricity (only about 32 per cent of the population has access to grid-connected electricity) and growing electricity demand (demand in major load centres is growing by 25 per cent annually).

 

The country’s vast stores of renewable energy resources can play a vital role in achieving sustainable economic, social and environmental development. In line, the government has set a target to supply 10 per cent of forecast electricity demand through renewable energy by 2032. The recent policy and regulatory moves such as the Power Service Regulatory Act and the Public Private Partnership (PPP) law have also laid the groundwork for private investors to invest in the country’s energy sector. Also, the government is focusing on rebuilding its electricity infrastructure, which was destroyed in the decades-long war. Several initiatives in this regard are moving forward, including investment in transmission lines to increase the country’s capacity to import low-cost electricity from neighbouring countries and solicitation of PPP to develop new gas-based supply sources. These steps are expected to help the country move towards achieving greater energy security and improving energy access.

 

Sector overview

Da Afghanistan Breshna Mossesa (DABM), a department of the Ministry of Energy and Water (MEW), was transformed into a new, vertically integrated power utility, Da Afghanistan Breshna Sherkat (DABS) in 2009. DABS, wholly owned by the government of Afghanistan, operates and manages the entire electricity infrastructure in Afghanistan including generation, imports, and transmission and distribution activities. Currently, there is no private participation in any vertical of the power sector. MEW is responsible for policy and strategy development for the electricity sector. The Renewable Energy Directorate (RED) was created in 2009 and is the technical body concerned with the development of renewable energy projects at MEW.

 

The country’s domestic generation capacity is estimated to be around 580 MW, of which around 53 per cent is based on hydroelectric sources and the remaining on thermal sources. Another 1,000 MW of capacity is available from neighbouring countries for power imports. The largest domestic power plants include the 100 MW Naghlu and 66 MW Mahipar hydropower plants; and the 105 MW Tarakhil, 63.5 MW Kandahar, 50 MW Khairkhana AEG and 45 MW Khairkana BBC thermal power plants. The thermal plants are fuelled by imported diesel, making them very expensive to operate. Of the total electricity generation of around 5,710 GWh in 2017-18 (fiscal year ending March 20), domestic resources (hydro, thermal and diesel generators) accounted for only around 19 per cent and imports accounted for the remaining 81 per cent.

 

The country’s transmission system is highly fragmented and consists of isolated grid systems that are supplied power from different generation plants and different import sources. Afghanistan has to operate several separate power systems each of which is synchronised with its neighbouring supplier or with its own domestic supply (which is itself not synchronised).  The power system is divided into four different networks, namely, the North East Power System (NEPS), which is connected with Tajikistan and Uzbekistan; the South East Power System (SEPS); the Herat Zone System, which is connected with Iran and Turkmenistan; and the Turkmenistan system. As of March 2017, Afghanistan’s transmission network was estimated to comprise around 1,905 km of line length and about 1,544 MVA of transformer capacity at voltage levels of 110 kV to 220 kV. The distribution capacity was estimated at around 1,155 MVA, operating at the 20/15/6 kV voltage levels across 10 distribution zones (as of 2015).

 

Electricity consumption in 2017-18 stood at 2,920 GWh and accounted for 51 per cent of the total electricity generated, reflecting the high level of energy loss in the system. As per the Afghanistan Living Conditions Survey 2016-17, conducted by the country’s Central Statistics Organization, 98 per cent of households have access to some form of electricity supply. The rural population’s access to electricity has increased rapidly mainly due to deployment of solar panels. Around 73.2 per cent of rural households use solar power as their source of electricity. Grid-based electricity supply is available to around 92 per cent of urban households and only 12.7 per cent of rural households.

 

Figure 1: Trend in generation, imports and consumptions (GWh)

 

Source: Central Statistics Organization, Afghanistan

 

Changing the generation mix: focus on RE

The county’s power demand is likely to grow at 12-15 per cent per annum, which is expected to result in a shortfall of 6,000 MW of generation capacity by 2023. The government, with the support of international donor agencies, is working to bridge the future demand-supply energy gap. One of its key focus areas is the development of renewable-energy-based generation capacity. According to MEW, Afghanistan has the potential to produce 67,000 MW of electricity from wind energy; 220,000 MW of electricity from solar energy; 4,000 MW of clean energy from biomass; and 23,000 MW of electricity from water resources annually.

 

In August 2016, MEW, with support from the Asian Development Bank (ADB), announced a roadmap to exploit the nation's renewable resources in an effective manner to maximise the benefits for the people. In addition, in 2015, the country, with support from German Development Cooperation, adopted the Afghanistan National Renewable Energy Policy (ANREP) with the objective of deploying and utilising renewable energy sources in an optimised manner. Under this, it has set the target of installing 350-450 MW of renewable energy capacity by 2032, representing 10 per cent of the target of 3,500-4,500 MW of capacity addition set under the Power Sector Master Plan (PSMP-2013).

 

Recently, in November 2018, MEW issued an expression of interest for the development of 2,000 MW of grid-connected solar energy. The tender forms the first lot of the government’s Solar Energy Package. Under this, the government has proposed to set up solar power plants of 400 MW each in Kabul, Nangarhar, Kandahar, Herat and Balkh. These projects will be implemented through PPP.

 

Earlier, in May 2018, MEW had awarded two solar projects aggregating 50 MW.  China’s Shuangdeng Group will develop a 40 MW solar hybrid project at Hisar-e-Shahi Industrial Park in Nangarhar province, while India’s Waaree Energies will develop a 10 MW solar hybrid project in Khost province.

 

In addition, three solar power projects in Kandahar province are under construction. These are the 15 MW plants of Turkey’s 77 Construction Company and Afghanistan’s Zularistan-Baywaj respectively, and a 10 MW plant of India’s Jaguar Overseas. Works on these projects are slated for completion in 2019. DABS is also expected to begin construction works on a 20 MW on-grid solar photovoltaic (PV) plant to be located in Naghlu in Kabul’s Surobi district. The project is backed by a USD45 million ADB grant. When commissioned in 2020, the project is expected to generate 43,000 MWh of solar power annually.

 

In addition, the government recently awarded two gas-to-power projects (50 MW Mazar-e-Sharif and 40 MW Bayat) aggregating 90 MW. The government is also in the process of awarding two hydro projects (240 MW Baghdara and 210 MW Sarobi II). All these projects are being implemented through the PPP route.

 

Grid expansion and cross-border links

 

Afghanistan intends to strengthen and expand its transmission infrastructure with an emphasis on the construction of 220 kV and 500 kV transmission lines. The primary aims of the grid expansion are to increase access to electricity for households, strengthen grid capacity to facilitate cross-border power exchanges and connect new generation facilities. Based on the projects under development, around 6,000 km of new transmission lines and 2,850 MVA of transformer capacity are expected to be added to Afghanistan’s grid by 2025. These projects entail an investment of around USD2.2 billion. A significant portion of the investment requirement is being met by donor agencies such as the United States Agency for International Development (USAID),  World Bank, ADB, etc.

 

The grid expansion plans include several interconnector projects to connect Afghanistan’s grid with those of various neighbouring countries. Key planned projects are CASA 1000 (Central Asia-South Asia), TUTAP (Turkmenistan, Uzbekistan, Tajikistan, Afghanistan and Pakistan) and TAP (Turkmenistan, Afghanistan and Pakistan).

 

The World Bank-funded CASA 1000 project aims to facilitate the trade of 1,300 MW of electricity among four countries—Tajikistan, the Kyrgyz Republic, Afghanistan and Pakistan. The project is aimed at transporting surplus energy from hydroelectric power projects in Kyrgyzstan and Tajikistan to the power-deficit countries of Pakistan (1,000 MW) and Afghanistan (300 MW). The project will be an anchor project for establishing the Central Asia–South Asia Regional Electricity Market (CASAREM). Key project components are a 475-km-long, 500 kV high voltage alternating current (HVAC) line from Datka (Kyrgyz Republic) to Khudjand (Tajikistan); a 1,300 MW high voltage direct current (HVDC) converter in Tajikistan (at Sangtuda); and an 800-km, ±500 kV HVDC transmission line connecting a 1,300 MW terminal at the Nowshera converter station in Pakistan via Afghanistan. Construction contracts for key components have been awarded and export of electricity to Afghanistan and Pakistan is likely to commence by 2020.

 

The ADB-funded TUTAP interconnector project aims to provide an export route from Afghanistan’s Central Asian neighbours—Turkmenistan, Uzbekistan and Tajikistan—and from Afghanistan itself to Pakistan. Pul-e-Khumri in Afghanistan will serve as a hub for power exports from Turkmenistan, Uzbekistan and Tajikistan. The project comprises five phases. Phase 1: 220 kV Afghanistan–Uzbekistan link, completed in 2009; Phase 2: 220 kV Afghanistan–Tajikistan link, commissioned in 2011; Phase 3: 500 kV Afghanistan–Uzbekistan link, expected to be completed by 2019; Phase 4: extend existing Afghanistan–Turkmenistan link through a 500 kV transmission interconnection until Pul-e-Khumri in Afghanistan where the CASA 1000 line from Tajikistan and the Kyrgyz Republic meets the TUTAP line, under construction and expected to be commissioned in 2020; Phase 5: a 500 MW HVDC back-to-back convertor station at Pul-e-Khumri in Afghanistan to synchronise Turkmen and Afghan systems and complement CASA 1000, to be completed by 2020.

 

The two-phase TAP project will enable power trade and exchange among the three countries. The first phase (to be completed by 2019) will use existing or financed infrastructure under TUTAP to export Turkmen power to Afghanistan and Pakistan. Possibilities are being explored to optimise and use any excess power or transmission capacity during the winter months (October-April) through integration with CASA 1000. This phase will also look into additional ancillary infrastructure to complement TUTAP and other planned infrastructure. The second phase (to be completed by 2021) will transfer power from Turkmenistan via the Serhetabat-Torghundi border to the Afghan cities of Herat, Kandahar and Spin Boldak, and to Chaman and Quetta in Pakistan. The memorandum of understanding (MoU) for the project was signed in December 2015 among the respective countries.

 

A key domestic project is the NEPS–SEPS interconnector project being funded by USAID. The project entails the construction of two key lines along with associated substations. The first is the 220 kV Arghandi–Ghazni transmission line and the 220 kV Sayedabad and Ghazni substations (both commissioned in 2018). These will extend further the country’s NEPS. The second is the 220 kV 511-km Ghazni–Kandahar East line, along with five new 220 kV substations (Qarabagh, Moqor, Shah Joy, Qalat and Kandahar East), which will interconnect NEPS with SEPS.

 

Table 1: Key transmission projects in Afghanistan

Project

Voltage

Line length (km)

Scheduled completion

North–South power transmission enhancement project

500 kV AC

225

2019/2020

Chimtala–Kabul South (Arghandi) transmission line and substation project

220 kV AC

30

2022

Doshi–Bamyan transmission line and converter station project

220 kV AC

180

2018

NEPS–SEPS interconnection

220 kV AC

490

2020

CASA 1000 Project

±500 kV DC, 500 kV AC, and 220 kV AC

1,227 km (750 km at ±500 kV DC and 477 km at 500 kV AC)

2020

Turkmenistan–Uzbekistan–Tajikistan–Afghanistan–Pakistan (TUTAP) interconnection

220 kV and 500 kV AC

NA

2025-30

Turkmenistan––Afghanistan–Pakistan (TAP) Interconnection

500 kV AC

500

2021

Note: AC – alternating current; DC – direct current;  NA – not available

Source: Da Afghanistan Breshna Sherkat; Global Transmission Research

 

Other initiatives

In September 2018, DABS signed an MoU with India-based Tata Power to undertake mutual investment in the country. The MoU is aimed at assisting in the implementation and monitoring of electricity projects; improving energy supply and revenue collection; reducing losses; developing new capacity projects; and aiding project management in Afghanistan.

 

In 2018, DABS, in collaboration with local engineering service company Noor Kabul Khurasan, launched a smart meter pilot. These smart meters will have the ability to operate with GPRS, GSM, PLCC and radio systems. They will help DABS reduce power losses and standardise the electricity distribution system.

 

Way forward

Afghanistan is still recovering from over three decades of conflict, which has greatly damaged its power infrastructure and reduced the per capita electricity consumption in the country to amongst the lowest in the world. The government has recognised the important role renewable energy can play in achieving the energy needs of its population as well as in reducing reliance on imported electricity. While several policies and programmes have been announced to promote the development of renewable energy, the government’s limited financial ability is hindering the progress of these initiatives. However, several donor agencies have extended significant financial and institutional support to push forward these programmes. The country’s energy expansion and independence now depends on the timely implementation of both generation and transmission projects.