ICA Report "REGIONAL POWER STATUS IN AFRICAN POWER POOLS"

18 July 2012

This ICA report provides an overview of power pools in Africa as of end 2010, including the most recent key data and relevant information. The report covers current infrastructure and institutional status in addition to key investment trends.

OBJECTIVE OF THE STUDY

Given the important contribution of regional power generation and interconnection projects to the development of access to electricity in Africa and the increasing contribution of the Regional Economic Communities (RECs) through their respective power pools in promoting regional power projects and trade, the Infrastructure Consortium of Africa (ICA) has taken the initiative of conducting a study with the objective of providing a synthetic overview on the status of the African power sector at the regional level.

As far as regions are concerned, there are primarily five power pools acting as specialized agencies of their respective RECs: (i) the Central Africa Power Pool (CAPP) for the Economic Commission for Central Africa States (ECCAS), (ii) the Comité Maghrébin de l’Electricité (COMELEC) for the Union of Maghreb Arab (UMA), (iii) the Eastern Africa Power Pool (EAPP) for COMESA, (iv) the Southern Africa Power Pool (SAPP) for SADC, and (v) the West Africa Power Pool (WAPP) for ECOWAS.

Changes in the development of the power pools have been so rapid in recent years that perceptions of their status can lag behind the reality. This report captures that reality and provides an overview of power pools in Africa as early 2010. The report covers both current status and key trends. By design, the report does not provide analysis, discuss current issues, or forecast the future.

More specifically, for each of the power pools (section 2 to 6), the report seeks to provide a synthetic presentation on (i) the main characteristics of the power sector (e.g. installed capacity, energy mix, consumption, imports/exports, electricity tariffs), (ii) investment programs in regional generation and transmission projects, and (iii) institutional set up and regulations governing the development of regional investment and power trade, and (iv) main findings and recommendations by power pool.

KEY MESSAGES AND FINDINGS

1. There are primarily five power pools acting as specialized agencies of their respective RECs: (i) the Central Africa Power Pool (CAPP) for the Economic Commission for Central Africa States (ECCAS), (ii) the Comité Maghrébin de l’Electricité (COMELEC) for the Union of Maghreb Arab (UMA), (iii) the Eastern Africa Power Pool (EAPP) for COMESA, (iv) the Southern Africa Power Pool (SAPP) for SADC, and (v) the West Africa Power Pool (WAPP) for ECOWAS.
2. Changes in the development of power pools have been rapid in recent years. Through this report, the Infrastructure Consortium of Africa (ICA) aims to provide an overview of power pools in Africa as of end 2010, including the most recent data and information. The report covers both current status on data and information as well as on key investments trends. By design, the report does not provide analysis, discuss current issues, or forecast the future. Therefore, the report provides also specific conclusions and recommendations for each of the power pools.
3. Installed capacity is 6073 MW for CAPP (2009), 27 347 MW for COMELEC (2009), 28 374 MW for EAPP (2008), 49 877 MW for SAPP (2010) and 14 091 MW for WAPP (2010). The installed capacity per thousand habitants is the highest in North and South Africa in terms of kW per thousand habitants: COMELEC (319), SAPP (311), followed by EAPP (74), WAPP (54) and CAPP (49).
4. As far as electricity mix is concerned, at Africa level, most of the existing capacity is thermal (75%) due to the size of the COMELEC and SAPP systems, which are predominately thermal. Hydropower is predominant in CAPP (86%). In EAPP and in WAPP, the present share of hydro is 24% and 30%, respectively, but this share is expected to grow rapidly as ongoing and future generation investments are mainly in hydropower projects (e.g. Ethiopia: Gibe III with 1870 MW).
5. Access to electricity is still very low: 31% of the countries have an electrification rate below or equal to 10%. Nearly 70% have an electrification rate below or equal to 30%.
6. The electricity consumption per capita is still very low: 54% of the countries have an average consumption below 200kWh/capita, with only 18% having an average consumption over 1000 kWh/capita.
7. As far as power trade is concerned (mainly within power pools), electricity traded is still low for CAPP (0.2% in 2009) and in EAPP (0.4% in 2008). It is relatively higher respectively in COMELEC (6.2% in 2009), in SAPP (7.5% in 2010) and in WAPP (6.9% in 2010). SAPP is at a more advanced stage with 28 bilateral contracts already signed between the member countries and with an active role played by the Short Term Electricity Market (STEM) since 2001 and by the Day Ahead Market (DAM) since 2009. Further development of the regional market is however constrained by the lack of generation capacity linked with congested and insufficient interconnections capacity.
8. Institutional set up and market rules and regulations have already been implemented in SAPP, are being implemented in WAPP and under design in EAPP. However, CAPP and COMELEC have still to design and develop their power market institutions and rules.
9. As for regional projects, all power pools are experiencing concrete achievement in implementing interconnection projects. Up-to-date regional master plans are available for all power pools. Except for COMELEC, the four other power pools have formally adopted their priority projects at the regional level and are mobilizing funding.
10. Given the level of investment required, private sector participation is requested with possible public participation (under PPP set up). However, so far, the pace of mobilizing funding is slow for various reasons and innovative approach is required for mobilizing funding for regional projects.
11. For interconnection projects, some solutions are already initiated: as these projects are benefiting to various countries, their funding could be developed through specific vehicle project (SVP) where the concerned utilities/players could contribute to the assets, provided that proper wheeling charges are agreed upon. This solution is already considered in SAPP for ZIZABONA interconnection project (Zimbabwe-Zambia-Botswana-Namibia). It could be also considered in other power pools such as EAPP for the interconnection Ethiopia-Sudan-Egypt.
12. For Generation projects with regional dimension, they could be developed through a PPP/IPP arrangement with an innovative approach, providing a minimum set of guarantee for investors and securing an acceptable level of competition between the operators of the regional market. This could lead to the following propositions:

• The regional market could constitute a sufficient guarantee for future investments,
• An alternative option could have two main components: (i) the first component could consist in establishing a PPA between the PPP/IPP and the national TSOs through the power pool for part of the generation output (for example, 50%). This would secure a minimum revenue guarantee for the promoter, (ii) the second component would consist in establishing bilateral contracts or in selling on the short-term market the rest of the generation output (remaining 50%). This would secure a minimum level of competitiveness in the regional power market.

The same approach could apply for WAPP with all coastal zones already connected (7 of 14 countries).

Download the complete report with annexes: REGIONAL POWER STATUS IN AFRICAN POWER POOLS

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