By Donna Liedemann, Corporate Communication Officer for Frost & Sullivan, Middle East & Africa
Sub-Saharan Africa’s power pools were established to improve generation capacity and transmission infrastructure for greater cross-border trade and ultimately address a cost-effective way of evacuating excess capacity between countries to offset peak demands.
Is this role of enabling transmission corridors being effective and what are the funding gaps?
The demand for electricity in sub-Saharan Africa (SSA) is expected to grow at an average annual rate of 4.6% by 2030, which will be more than double the current electricity production.
Frost & Sullivan’s industry analyst, Laura Caetano, believes private sector participation in the form of independent power producers (IPPs) is crucial given the financial constraints of the public sector.
Currently, the Southern African Power Pool (SAPP) is operating at a capacity of 60.8GW, exceeding a peak demand of 50.1GW. The SAPP comprises 12 member states, of which nine member countries are already interconnected. Notably, SAPP has evolved into the only fully functioning regional energy market in SSA.
According to a study by Frost & Sullivan, the cost of addressing the region’s power needs has been estimated at $40.8 billion per annum (equating to 6.35% of the African continent’s GDP). Approximately 40% of this funding will be needed for improving the transmission and distribution infrastructure alone.
SAPP’s key focus is on the expansion of generation capacity as well as improving its interconnection network through the execution of projects such as ZIZABONA, which is a 400/330kV interconnector line to establish interconnections between Zimbabwe, Zambia, Botswana and Namibia. Of these countries, only a few have successfully upgraded their network in the past thereby underscoring the importance of this interconnector line.
South Africa has spent $180 million in upgrading its network of transmission stations and power lines. Tanzania has also had particular success in creating an enabling environment for off-grid access.
Despite SAPP being a role model for other African power pools, it, too, faces many challenges and setbacks, including semi-frequent power outages and aged power infrastructure. SAPP has set the pace with its establishment of a successful electricity trade market, which has been replicated by other power pools, including the East African Power Pool (EAPP). Participation from the private sector is critical for the development of future power generation projects.
EAPP was established by the Common Market for Eastern and Southern Africa (COMESA) in 2015 with 11 member states. Its main objective is to alleviate the challenges of limited transmission and distribution infrastructure within and between member countries. A key focus for the region is to expand and improve existing T&D infrastructure, and develop transmission interconnectors between member states.
Despite its setbacks, the EAPP has achieved great progress in bridging the access gap in recent years through a number of start-ups that focus on providing access to electricity in rural areas. The Eastern electricity highway connecting Ethiopia with Kenya will drive this region’s electricity market going forward.
All EAPP members began electricity trading in 2018, both within and beyond the region, upon the completion of six major cross-border transmission lines. The Chinese are becoming increasingly involved in EAPP power transmission with a recent project between a Chinese firm and Ethiopian Electric Power for interconnectors to Kenya. Kenya leads the African market for off-grid solar deployments.
The West African Power Pool (WAPP) was created by ECOWAS, a regional economic union, in 1999. WAPP is working on starting a regional electricity market as it has the capacity and capability to do so. Approximately 7% of regional power is traded through WAPP, surpassing that of EAPP and the Central Power Pool (CAPP).
Nigeria has pioneered the privatisation of its power sector by privatising all T&D distribution companies owned by the government, which resulted in WAPP countries altering legislation to support purchasing power parity (PPP) initiatives.
The biggest challenge for WAPP lies in the inability to finance big generation and T&D projects in smaller regions. The power pool requires a total investment of over $60 billion to meet transmission and distribution goals by 2030.
CAPP was established in 2003 to combat the lack of infrastructure across all aspects of the power value chain and comprises 10 member states. It is the least developed power pool in Africa with 75% of Central Africa lacking access to electricity. CAPP still has a long way to go in terms of operating as a power pool as Central African countries engage in minimal trading due to limited transmission interconnector infrastructure.
Lack of regional framework for electricity trading, lack of regional regulations for dispute management, difficulty in gathering investment, and low interconnection between countries are among the challenges facing CAPP.
The power pool aims to establish an electric power market between its member countries by 2025 and requires a total of over $60 billion if it is to keep pace with increasing electricity demand by 2030.
Three major growth opportunities for sub-Saharan Africa’s power pools
- Micro Grid Technology – EAPP: There is a growing need for decentralised, small-scale generation in remote or underserved areas that are located far from existing grid infrastructure.
- Renewable Energy Technology: High growth opportunities for renewable energy with high interest and activity in wind power and geothermal generation. Solar power technology will also experience positive growth.
- Smart grids and smart meters: Smart grids will be needed to easily integrate small-scale renewable generation projects. New transmission technologies such as specialised high-voltage bidirectional lines are growing in demand and need to be supported by smart grid ICT software. Utilities require smart meters to reduce billing errors and tampering of prepaid metering, and aid with revenue collection.
Strategic imperatives for success and growth require countries in Africa to focus on diversifying power generation sources by taking advantage of the renewable energy potential, which will help mitigate the respective power pools’ vulnerability. ESI