SOMALILAND ENERGY
SOMALILAND ENERGY
Energy plays a very vital role in the livelihood of people. It has a role to play in all sectors. In most developing countries, 30% of household income is spent on energy services. Without energy, we cannot work in agriculture. It affects our environment. At household and individual level, energy addresses the basic needs. It helps to facilitate the process of social-economic development and is a fuel for the industry. Given that energy dramatically increases human capabilities and opportunities, adequate energy services are integral to poverty alleviation. In terms of energy and environment, energy plays an important role in protecting the environment through stopping deforestation, reducing soil erosion, reducing water pollution and sequencing of carbon or capturing carbon.
Furthermore, constrained access to energy constitutes the greatest challenge to sustainable development of any country. Energy plays a critical role in provision of several energy and non-energy services critical to human development. Energy is used in our houses to provide lighting and cooking services, deliver water and improve health of people through provision of services like refrigeration. Energy is needed to provide jobs and process the agricultural/livestock products and can influence both positively or negatively on our biodiversity resources. The human development index demonstrates that the more we consume energy, the better we get in terms of welfare. The countries that use little and low quality energy are low in the human development index where most of the developing countries including Somaliland is positioned. Despite all the above mentioned needs for energy, there is lack of polices with regards to energy in Somaliland.
The commitment of the Somaliland Government and its people is basically focused on working towards faster development and social transformation. This is supported by the private sector and respective ministries to find ways of providing the social, economic and technical services that people need. Such commitment and good working relationship between the government and private sector has kept the country moving despite enormous challenges with the environment and natural resources. In such context, an energy policy is urgently required in Somaliland.
Energy and energy services are an important part of reconstruction of the Somaliland economy that is in the process of economic and social transformation after the war.
The inadequacy and lack of clear policies is one of the factors restraining deliberate actions to promote sustainable energy in Somaliland. There is also lack of regulatory framework and inadequate capacity to lobby for energy policies.
Furthermore, Somaliland requires enough energy1 for its needs and has to build social, economic and technical capacity of its people to sustain the infrastructure that is currently being put in place.
The main policy goal is to meet the energy needs of Somaliland in a sustainable, cost effective and socially acceptable manner for social and economic development while minimising the negative impacts of energy production and use. The specific objectives are to:
- Increase access to modern affordable and reliable energy services in ways that contributes to poverty reduction.
- Utilize energy as a tool to accelerate socioeconomic development for largely urban and rural populations.
- Establish, maintain, continuously review and improve a legal and institutional framework for effective management and planning of energy services in the country.
- Enhance security of supply of all types of energy forms and services.
- Provide sustainable, cost-effective and various energy sources for all stakeholders in the country.
- Establish and improve systems of energy governance and administration.
- Promote strategies that encourage diversification and switching to alternative energy fuels that enable reduction of pressure from trees as sources of fuel.
- Promote exploration and fast tracked development of indigenous energy resources especially coal for power generation and natural gas thought to be possible in the country’s geological formations.
- Promote strategic actions on environmental management, energy efficiency and conservation as well as prudent health, safety standards and practices.
The project on Somaliland Energy Policy Dialogue (SEPD) carried out by ADRA, in collaboration with the Ministry has enabled capacity building of Government Officials, Non State Actors, for example Business and Civil Societies in policy development. Such capacity has been utilized in ways that have facilitated the development of an energy policy and regulatory framework for Somaliland. Since policy formulation requires participation and consensus building, the process involved training and capacity building of stakeholders in energy policy development and advocacy that was carried out in August 2006. This process also enabled stakeholders to plan for and be guided by ADRA to undertake data and information collection that would inform the policy planning process.
Data and information was collected through undertaking an energy study that was implemented in Somaliland targeting households and service/commercial sectors in Hargeisa, Borama, Berbera and Burao regional centres. The study was commissioned by ADRA, in collaboration with the Ministry of Industry and Energy, as part of the activity in a project ‘Facilitating Somaliland Energy Policy Dialogue’ funded by the European Commission under the ‘Decentralised Cooperation’ Budget line.
The purpose of the study was to review the energy sector in Somaliland and identify the current trends in energy demand and supply, establish energy end use trends, sources, applications, cost implications, constraints and other key issues on the delivery infrastructure. The study was also to undertake stakeholder analysis of all actors involved in energy and assess the potential role of renewable energy in development and highlight successful case studies for possible replication; and finally, propose strategies to promote access to sustainable energy services.
A household survey was undertaken between August and November 2006 targeting 200 households in low, medium and high residential areas in urban and peri-urban settlements. Energy consumption patterns were also surveyed, targeting 73 commercial enterprises and service institutions.
This was followed by a policy dialogue that was undertaken from 28th to 30th January 2007. The purpose of the policy dialogue workshop was to deliberate the processes of policy planning and enable stakeholders to participate in this process. This workshop enabled a participatory process to be undertaken with various categories of the stakeholders. It helped to start on the process of gaining consensus on the content of the policy. The second policy dialogue was held on 26th February 2007 to enable stakeholders to debate on the draft policy and seek consensus on the content.
- Overview
Energy use in Somaliland is extremely low by world standards. It is currently estimated at 200 to 280 kgoe per capita per year and is mainly dominated by biomass based fuels. At household level, biomass fuels constitute approximately 90% of the gross energy consumption.
The main commercial fuel used is imported petroleum and electricity. Establishments in the Service Sectors and Commercial Enterprises consume an average of energy of 8.6 toe monthly (103 toe annually), out of which 76% is attributed to petroleum and electricity (generated from diesel). This does not include energy for transportation purposes.
- Household energy
In overall terms, charcoal, kerosene and electricity constitute an important fuel for households in urban and peri-urban areas, while fuel wood constitutes an important source of energy for rural areas. Charcoal is used by 97% of households; kerosene is consumed by about 80% followed by electricity at 68%. The average monthly expenditure on energy in the urban and peri-urban areas is about US$ 60. This is equivalent to about 31% of average monthly income.
Charcoal is widely used for cooking in the urban and peri-urban populations, mainly purchased from vendors. A typical household consumes approximately four sacks (72kg) of charcoal per month, at an average cost of US$ 19. Despite the shortage, only 2% of households use improved charcoal cook stoves. Almost all households (98%) use traditional metal stoves, considered inefficient. The major challenges to charcoal users are costs, increasing scarcity, slow cooking, dirty and hazardous.
Firewood is the main source of energy for cooking in rural areas. However, a significant proportion of households consume firewood in urban and peri-urban areas. Households consume an average of 344 kg of firewood and spend approximately US$ 8 every month mainly for cooking in urban and peri-urban areas. Most of the firewood consumed is collected freely as only 17% purchase from vendors. All households use traditional firewood cookstoves. There is a strong willingness amongst households to switch to other forms of energy. Several reasons are cited including collection problems, scarcity, dirty and unhealthy, smoke and drudgery.
About 68% of households have access to electricity in urban and peri-urban areas. It is mainly purchased from private electricity companies, while a few households are connected to electricity supplied by the government agency, especially in Hargeisa. Some households have invested in their own generators to supplement electricity supplied from private companies.
Households consume an average of 20kWh of electricity monthly, spending an average of US$ 19. Electricity is mainly used for lighting and running household appliances such as televisions, radios, mobile phone chargers and to some extent, refrigeration and electric fans. Consumers are not satisfied with the forms of electricity supplied to them, and would consider switching if better alternatives are provided. The challenges faced by households with the current supply of electricity is extremely high costs of between 60 US cents per unit to close to 1 US$, poor safety, low quality of power and service attributed to lack of a regulatory framework.
Kerosene is another major fuel for most of the households and institutions in Somaliland. The energy survey report indicates that 88% of households use kerosene, mainly for lighting (100%), cooking (5%) and space heating (1%). An average of 7 litres of kerosene is consumed monthly, at approximately US$ 4. Kerosene is mainly used in hurricane lamps (97%), wick stoves (5%) and pressure stoves (<1%). Distribution of kerosene seems to be fairly good in urban areas as residents source it from nearby outlets.
Others fuels3 used in Somaliland include Liquefied Petroleum Gas (LPG), which is considered significant to households and hotels and institutions consuming it. LPG is mainly sourced from a supplier in Hargeisa town. In early 2006, 12.5 litres of LPG cost US$ 25 but currently the price has risen to about US$ 35 for a similar amount. Others household energy sources include batteries, candles and solar photovoltaic. Approximately 4% of households interviewed have installed and use solar photovoltaic systems for lighting and powering radios.
- Industrial, Service, and Commercial Energy
Establishments in the Service Sectors and Commercial Enterprises consume an average of energy of 8.6 toe monthly (103 toe annually), out of which 76% is attributed to petroleum and electricity (generated from diesel). However, this does not include energy for transportation purposes.
Approximately 96% of the firms consume electricity, mainly sourced from local private electric companies. A significant number of firms have own generators, while a few obtain electricity from alternative sources, such as through solar PV. An average of 304kWh is consumed per month sourced from private providers, at an approximate cost of US$ 313. Electricity is mainly used for lighting, though approximately 38% of firms use powers for productive purposes, while 40% use it for general office appliances, especially in office ICTs and health services.
Institutions with standby generators have mean installed capacity of 161kVA, and consume an average of 6,975 litres of diesel at a cost of US$ 5,496 to produce electricity, mainly for productive purposes monthly. Generators are mostly used for an average of 6 hours per day. Among the challenges faced by commercial and service establishments are high costs, high wastage, poor quality, unreliability and losses of power and there is a strong reason for switching to alternatives.
Charcoal constitutes an important fuel for cooking purposes in institutions and commercial enterprises. Institutions consume an average of 37 sacks, spending approximately US$ 195 per month. Such institutions are mainly hotels and restaurants, health and education institutions. Only 13% of institutions use improved charcoal stoves, while the rest use metal stoves. 82% of the institutions are not satisfied with the charcoal and stoves on the market, as they are considered dirty and dusty, smoky, poor quality of charcoal, scarcity of charcoal in some circumstances and the increasing cost of the fuel.
Firewood is also heavily consumed in the country, mainly for cooking and baking, especially in hotels, restaurants and government institutions such as military, police and prisons. 70% of firms purchase wood fuel while the rest collect it freely from forests. It is estimated that firms consume an average of 3,341kg of fuel wood monthly. Institutions use traditional firewood stoves, though 78% are not satisfied with the appliances, while 88% confirmed their willingness to switch to alternative appliances and fuels. There are a number of challenges including increasing scarcity, health implications due to indoor air pollution and rising costs mainly due to distances covered in obtaining firewood.
Kerosene is consumed by about 16% of firms mainly purchased from petrol stations and local retailers. Institutions consume an average of 321 litres monthly, at an approximate cost of US$ 134. Kerosene is mostly used for lighting and cooking. Some firms use kerosene in workshops for cleaning purposes. Kerosene is consumed in hurricane lamps (34%) and pressure stoves (18%), and other appliances (18%). Only 46% are satisfied with kerosene while the rest are not.
Liquefied Petroleum Gas (LPG) is currently being used in hotels and restaurants, schools and offices. A number of commercial enterprises and institutions use LPG. The gas is mainly used for cooking but in schools, it has a supplemental role of providing gas for experiments in the laboratory. LPG is considered expensive and is sometimes unavailable.
- Electricity sub-sector
Somaliland has an estimated installed capacity of 77 MW, out of which less than 7% is attributed to the public electricity agency. Only 44% of installed capacity is actually realised. This could be attributed to poor servicing, inefficient production, aging generators and idle capacity.
Power is mainly generated for selling, though 44% of generation is for own consumption, only selling off extra power that would otherwise go to waste once own demand is fully met. These include big hotels and telecommunication companies.
Varieties of diesel generators are used in electricity production in the country. Most firms prefer Perkins generators (57%), Deutz (46%), Cummins (21%) and Caterpillar (21%). Approximately 87% of the generators are purchased as second hand (used generators) as opposed to 13% purchased as branded new.
Diesel is the main fuel used in electricity generation in Somaliland. Electricity producers consume an average of 78.15 barrels per month in electricity production. This translates to an average cost of US$ 12,977 spent monthly. The fuel is mainly purchased locally from distributors.
Generation of power from alternative energy sources has been given some consideration by 61% of companies. Such alternatives include coal, solar and wind. However, possible alternatives are considered expensive options. Companies also lack technical know how and resources to invest in alternative generation equipment.
There is also lack of awareness amongst alternative energy sources. Some companies have invested heavily in current diesel generation and would not consider switching to alternatives in the short and medium term.
Across the nation, the average charge per kWh of electricity consumed is US$ 0.8. Approximately 75% of the companies sold their electricity below US$ 1 while the rest charged a dollar or more.
Electricity demand on a per capita consumption is very low, currently estimated at between 27kWh to 30kWh despite the 68% coverage in urban and peri-urban areas (about 125,370 customers). Much of this electricity is used for lighting and entertainment purposes as opposed to production of goods and services.
The average electricity consumption per capita in Sub-Saharan Africa, excluding South Africa is 126kWh. Somaliland compares well with Ethiopia, whose per capita consumption is 24kWh, Eritrea 44kWh and Sudan per capita consumption is 49kWh, but way below the average sub-Saharan consumption.
The Country’s electricity supply industry is mainly characterised by unreliable power supply, low capacity utilisation (currently below 44%) and availability factor, deficient maintenance, poor procurement of spare parts, poor safety records and high transmission and distribution losses amongst many other problems. Power losses have been estimated at an average of 25% with some suppliers recording more than 40%. This is quite high compared to 10-12% international target. The table below indicates power production and systems losses in the Somaliland Electricity Agency, 2005:
Somaliland experiences the highest cost of electricity in the world. Perhaps this denotes the low per capita consumption levels despite the 68% coverage levels in urban and peri-urban areas. The current high prices of electricity (US$ 0.8 – 1 per kWh) need to be looked into. This is a record high tariff that may be attractive to investors, but could have detrimental impacts on the economy in the long run. Besides fluctuations in international oil prices, the inefficient production and distribution of electricity and many uncoordinated players on the market are factors adding to the cost of electricity production.
One important thing to note is that provision of electricity is largely confined to the privileged urban middle and upper low-income groups as well as commercial sectors and institutions. Rural communities have been neglected by the private producers, since that kind of market is unattractive.
The country lacks mechanisms to regulate electricity generation, transmission and distribution. Most electricity companies are operating as general traders and are therefore, licensed by local authorities. Some claim to be registered by the Chamber of Commerce or Ministry of Commerce, Attorney General, Local Government, Governors etc. This means that there is no central authority to deal with licensing, setting standards and monitoring operations of numerous private electricity producers.
The main problems, challenges and weakness experienced in the electricity sub- sector include:
- Safety: Short-circuiting and damaging of electrical appliances.
- Affordability: High connection cost as well as difficulty in being connected.
- Low quality of power: Power supplied is considered to be of low quality. This is due to the problems that consumers experience through frequent outages, unreliable supplies or lack of power in some circumstances.
- Regulatory framework: Lack of legal and regulatory framework reflected through absence of rules and regulations governing the energy sector.
It is very expensive or impossible to switch companies in case of dissatisfaction with one company.
- There are weak transmission and distribution networks; high price is hiked because 44% of power is lost; and there is lack of clear coordination for regulation of electricity (different regulatory structures with different regulatory frameworks).
- Biomass energy sub-sector:
Biomass energy sources account for more than 90% of total energy consumed in Somaliland. It is sourced from various land cover formations such as open trees and shrubs and woody vegetation, accounting for 37% of land cover in Sanaag region, 47% in Togdheer, and 52% in the rest of North West regions. Grasslands occupy 52% in Sanaag and Togdheer, and 37% in North West regions
There is a general trend in the decline of biomass resources. In the Sanaag region, the area of coverage of Galool forest has declined by 52% from 162,467.5 ha in 1988 to 78,211.89 ha in 2003. Open shrubs that comprised 45% in 1988 declined by 30% 15 years later.
An estimated 85,713 metric tonnes of charcoal is consumed annually by households in the country out of which 22% is attributed to consumption in Hargeisa city. The demand by commercial enterprises and institutions is also significant as the study indicates that 23% consume charcoal. An average of 8 tonnes of charcoal is consumed by each institution or enterprise annually. These include hotels, restaurants, schools, hospitals and small & medium industries.
The average cost of charcoal has risen in the past 5 years from approximately US$ 1 in 2002 to US$ 4 a sack in 2006. These increases will likely affect the majority of poor people especially in urban and peri-urban areas as scarcity and rates of urbanisation increases.
- Petroleum sub-sector
Petroleum energy is the second most important source of energy in Somaliland. Petroleum fuels are mainly used in electricity production, transport sector, households, agriculture and livestock production. All the petroleum fuel consumed in the country is imported. The country imports an average of 60,000 metric tones and spends over US$ 40 million annually in importation of petroleum fuels. About 80% of the fuel consists of petrol and diesel, while 20% is Jet Al used in airplanes and as kerosene for cooking and lighting.
It is estimated that less than 2,000 consumers are using LPG in Somaliland. About 60% of these consumers are attributable to corporate entities such as hotels and restaurants, and institutions, while individuals in middle and high income consume 40%. Assuming a conservative figure of 1,700 consumers, then an average of 202 tonnes4 is consumed annually, with more than 90% consumed by institutions and commercial enterprises, while less than 10% is attributed to households.
Liquefied Petroleum Gas (LPG) has a number of attractions as a supplement for charcoal. It is clean, convenient and efficient. A number of factors have limited its use in Somaliland. Both the bottles and LPG stoves are expensive and hard to get hold of. LPG cannot be purchased on a daily basis, as there is a minimum size to the gas bottles. The initial investment for LPG is beyond the means of low-income households, but would be attractive to higher-income families and a number of businesses such as restaurants and bakeries if market conditions were right. At present however, the supply of LPG and the availability of equipment severely constrain the potential of this fuel.
Kerosene has been imported to Somaliland for many decades, mainly for lighting purposes in households and institutions. There is a current annual demand of about 12,600 tonnes of kerosene, out of which 60% is consumed in urban areas, while 40% is attributed to rural areas. This is way below current importations through Berbera Oil Terminal, estimated at between 4,000 – 8,000 tonnes. With future utilization of kerosene for cooking, this demand will increase rapidly.
Kerosene stoves are imported from China, Gulf Countries, Ethiopia and India and are available in very limited numbers in Somaliland markets for SL.Shs.69,300 – 85,000 (US$ 11- 13), depending on the size and type. However, pressure stoves can be sold at a much higher price of US$ 40, a price unaffordable to many households.
2.0.1 Other Renewable Energy
In view of the scarcity of easily exploitable conventional energy resources, wind and solar could contribute to meeting local energy requirements. Data on wind and solar potential while inadequate do indicate that wind resource is among the largest in Africa particularly in the coastal areas where wind speeds average 6-7m/s (World Bank, 1985).
Solar energy is also abundant, with relatively high clearness index of the atmosphere (0.6 – 0.7 for most of the year, and 0.5 for a few months) and for approximately 2,900 – 3,100 hours of sunshine per year. This irradiation is equivalent to about 5.4 to 5.8 kWh/m2/day. (Somali Joint Needs Assessment, 2006; UNDP/Worldbank 1985).
The last few years have seen many different solar systems such as solar PV lighting kits, solar PV water pumps, solar PV system for telecommunication and solar PV refrigerator being installed in the country and are becoming increasingly popular.
Over 25,000Wp (25kW) of solar systems worth US$170,000 have been installed in the country since 1994. The number of installations have been increasing since 2002. Out of the 133 installations sampled, 44% are rated between 3 to 50 watts, 17% between 51-100 watts, while 39% rated more than 100 watts. Households account for 59% of systems, 29% institutions, mainly NGO, health centres and schools, while business enterprises such as hotels and restaurants, and retail shops accounts for 12% of installations. Over 76% of solar installations are located in Hargeisa region, 8% in Saaxil while 7% are installed in Awdal region. The remaining 9% was a combination of installations in Borama, Gabbelley, Dila, and Herter Sheikh, Kalabaydh, Sanaag and Sool.
Systems are mainly installed for lighting (70%), powering a wide range of household/office appliances and acting as back up (27%), while 3% of the systems have been installed for water pumping or as heating water for restaurants, hospital or offices.
The cost of solar systems varies greatly depending on the source, output and availability of systems in the market. Analysis reveals that it costs US$ 6.4 per watt in Somaliland.
There are good wind regimes sufficient for running wind pumps and generate electrical energy in Somaliland. Any wind over 5 meters per second is considered “excellent” for wind pumps. Most areas in Somaliland experience wind speeds of between 6-10 meters per second throughout the year. The wind is sufficient to sustain different sizes of wind mills/pumps throughout the year if there is sufficient amount of water. It is also sufficient to run small wind turbines and electricity generators.
Wind energy applications are also increasingly accepted in Somaliland with the current installations of about 4,000Wp in Hargeisa, Borama and Burao, mainly used for pumping water in farms. A workshop5 to manufacture mechanical wind pumps was recently commissioned in Hargeisa city and the first 2 mechanical wind mills are being produced.
Despite the demonstrated potential of wind energy, there have been little efforts to deploy this resource in Somaliland. One of the reasons is lack of awareness on the potential, lack of wind data, lack of wind equipment, high cost of wind systems, lack of technicians to install and maintain wind energy systems.
The use of renewable energy technologies (RETs) has been slow to develop in Somaliland for the following reasons:
- Absence of a policy environment that encourages the use of alternative energy systems and the production and delivery of energy services by the private sector.
- Lack of public education and information regarding the use, advantages and limitations of RETs.
- High up-front cost of RETs and the absence of credit for end-users to spread the initial cost of PV systems over time and for local suppliers to enable them to purchase system components locally and from abroad.
- Fragile private sector lacking the necessary fund, human resources, information and linkages to RET’s equipment suppliers in industrialized countries.
- An absence of financial mechanism to allow users to purchase solar or wind systems, although economically competitive may cost more than a diesel driven- pump.
Energy institutions, legal and regulatory framework
The energy sector appears to be operating in a policy vacuum, without a legal and regulatory framework. It is only the environment sector that has some regulations geared towards protection of forests and minimise charcoal production and sale. However, the efficacy of such regulations have not been analysed, but discussions with stakeholders indicate that there is a challenge in the enforcement due to lack of resources and skilled personnel.
Actors in the petroleum and power sub-sectors are mainly private entrepreneurs who are normally licensed to operate as general retail businesses, but have not been properly vetted to meet basic requirements for the kind of energy activities carried out. In some circumstances, the authorisation to undertake such businesses have been on an ad-hoc basis without clear licensing or contracts or any legal basis.
There is no mechanism to vet quality and safety standards of energy equipment and fuels imported into the country, thus exposing the consumers to safety risks.
The Government is in the process of creating institutions to deal with various sectors, building capacity of staff etc. Currently, there are over 7 Government Ministries that have a stake in the energy sector; although lack of coordination mechanisms means that these ministries operate independently. They also lack capacity to develop, enforce and monitor the sector.
