The Perspective of Power Trading in Eastern African Countries

Transcription

1 The Perspective of Power Trading in Eastern African Countries By Amare Hadgu, M.Sc.(EE), M.Sc.(EIMT) Addis Ababa, Ethiopia, September 2007,

2 Introduction EAC consist more or less of Egypt, the Sudan, Eritrea, Ethiopia, Djibouti, Somalia, Uganda, Kenya, Tanzania, Rwanda, Burundi and DRC.

3 Installed capacities of some EAC as to recent data are as follows: EEHC/Egypt 21,300 MW KENGEN/Kenya 1,100 MW SNEE/DRC 993 MW NEC/Sudan 800 MW EEPCo/Ethiopia 791 MW TANESCO/Tanzania 567 MW UEGC/Uganda 460 MW ELECTROGAZ/Rwanda 60 MW

4 EAC have different conditions of endowment of primary energy resources. DRC and Ethiopia are highly endowed with hydropower resources and the Sudan and Egypt with fossil fuel resources.

5 The Essence of Regional Power Trade EAC Need fast and continuous development of electricity to improve standard of living of their highly increasing population Growth of electricity expected to occur partly in response to population increase and partly as a result of economic growth process In many EAC annual growth rate of electricity is lagging behind national economic growth

6 Investment of electricity to meet the anticipated increase in demand is is extremely high. Power generation investment has to comply with the concept of economic efficiency. Marginal cost and pricing of power generation are fundamental to the concept of economic efficiency. Economic efficiency is achieved when price equals marginal cost.

7 Marginal costs could be LRMC or SRMC. LRMC includes incremental costs for future capital investment while SRMC contains only operating cost Core essence of regional power lies in the attainment of efficient model of generation and utilization of electricity among nations of a certain region. Three key factors of manifestation for realization of regional power trade in EAC:

8 - imbalance between potential power generation resources and forecasted demand - availability of economic and sustainable power generation resource in the resource rich countries - Special configuration of location which make economic cross country grid interconnection and power trade feasible.

9 Power Trade in EAC Regional power trade and cooperation is one manifestation of globalized economy. There is vast experience globally in hydropower regional cooperation and trade. Some of these are : - Canada and USA at Columbia River - Mexico and USA at Rio Grande - South America at Parana River - South East Asia at Mekong - Europe at Rhine and Danube

10 In Africa, there is rich experience in North Africa, West Africa and Southern African countries EAPP seems to have been the Missing Link in the interconnection of the power Grids of the African Continent.

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12 At present there are moves for realization of EAPP: - legal framework is provided by intergovernmental MoU of Energy Ministers of 9 countries - Uganda-Kenya interconnection has been in existence since 1950s - Electricity exchange exists between DRC,Rwanda and Burundi since 1960s - Uganda and Rwanda are connected by distribution voltage of 30 KV for border towns

13 - Kenya and Tanzania are planning to connect their power Grid by 220 KV transmission line. - Ethiopia is to be connected with Djibouti, the Sudan and Kenya and hopefully with Eritrea and Somalia. - The Sudan is to be connected with Egypt and so on.

14 EAC Power trade is timely for many reasons: - reduction of capital and operating costs - optimization of generation resources - improved power system reliability - enhanced security of power system supply - Improvement of investment climate

15 - high contribution to interconnecting the African Continent Power Grid (ACPG). -Imbalance between potential generation resources and forecasted demand within EAC. - availability of large, sustainable and economic power generation resource in the resource rich nations. - Significance for generation mix of power Grids - Proximity and special congruity of EAC.

16 Strategies for realization of Power Trade in EAC Political consensus of EAC to establish regional electricity market Creation of conducive regional economic cooperation Capacity building of EAC power sector Increasing the generation capacity and reserve margin Enhancing power interconnection and diversification of investment sources

17 Issues and Challenges in Power Trading of EAC Infrastructure constraints Inadequate installed capacity Financial constraints for power projects Difficulty of achieving integrated regional planning. Legal framework and regulations for regional power trading is not in place Absence of trust among some nations

18 Conclusions and Recommendations Need of heartful joint work to realize regional economic cooperation. Need to aggressively intensify power interconnection among the EAC. Need for utmost effort to develop infrastructure of the Region. Power utilities of EAC need to create strong transmission network. Need of EAC utilities for increased generation and reserve margin.

19 EAC need to work with different financing institutions locally and globally. EAC need to develop proper legal framework to manage to manage the emerging power trade of the region. EAC need to intensify HR Capacity building in all spheres of power sector develop. Dispute resolution mechanisms and procedures need to be in place in time.

20 Thank you!