Achieving effective power pooling for Africa: beyond a dream

Achieving effective power pooling for Africa: beyond a dream

Regional power pooling, regulations and efforts in Africa have arguably remained in infancy stages. The impact of Africa’s power generation and distribution relies on the success of a reliable and stable supply. The current regional grid networks and interconnections between neighbouring countries have ‘theoretically’ been functional. In reality however, power pools have achieved mixed results across the four regions. This is because of the various technical and political dynamics, which have been at play.

Regional electricity trade has in some instances been driven by national interests and agendas in spite of the drives towards continental integration. For example the establishment of the Ethiopian GERD project has resulted in a dispute neighbouring Sudan and Egypt. The project has widely been viewed as a pursuit of national interests hindering regional objectives This has made the benefits of power pooling in the region slow to realise. Countries should adopt regional policies to encourage the success of energy distribution. Governments need to collaborate more on regional transmission capacity matters to ensure that regional objectives are met.

Despite the centrality of secure and reliable energy in driving development, most African countries still have undeveloped grid and related access infrastructure. The absence of urban development and adequate town planning in African cities has promptly resulted in many haphazard settlements complicating transmission, distribution and access to electrical energy. Furthermore, national grid integration has been effectively blocked widely due to unmaintained infrastructure from key players. In vastly populated cities such as Lagos, Kampala, and Addis Ababa residents have been bypassed by economic opportunities despite living near power grids – which represent commercial opportunity. However, the challenge is not only infrastructure, but the cost is also highly exorbitant putting access at bay especially for the poor. For example, grid connections in Kenya cost a warping $400. Countries should adhere to strategically developed grid infrastructure to ensure adequate distribution. There should be increased dialogue between all stake holders to ensure that settlements are better planned to enable grids to be planned more effectively.

With the slight exception of East Africa which accounted for over half of the global investment in off-grid systems particularly in Tanzania and Kenya in 2015, installation capacity of regional energy markets have remained fairly undeveloped. This is because most countries have failed to present a harmonised and consistent effort to ensure that regulatory policies and practices are effectively met across the regions. For example, the Southern African Power Pool does not have a regional energy body regulating the trade. Instead a Regional Electricity Regulatory Association (RERA) is responsible for regrouping national regulators.

Tariffs have been another point of contention in effective power pooling. The absence of common transmission tariffs between countries has prohibited successful trade and negatively hindered an effective energy regional integration system. The East African Power Pool has made limited progress towards an integrated regional electricity market. Less than a quarter of the population has access to electricity. Kenya’s energy growth market drive has been weakened, by its budgeting and financial management practices which reportedly lack transparency and bureaucratic inefficiencies.

There is tendency for regional public goods to suffer from ownership and predictable funding. There is need for regional governments to draw in more investment in transmission and maintenance of power pools projects. Financing in energy to date has largely been through donor led loan financing. Governments need to work together in public-private partnerships alongside market led approaches that draw in large private sector engagements. Most electricity companies have been run like state owned entities resulting in political domination, making them susceptible to political interference and in some instances, mismanagement.

There is also need for countries to strategically liberalise the energy sector as this approach results in lessening the difficulties in attracting the requisite investment. Uganda’s recently launched partnership between the country’s largest utility UMEME and the private sector off grid company in the project Utilities 2.0: Integrated Energy for Optimal Impact is a ground breaking example of the kind of public -private partnerships which are needed to transform Africa’s energy access. Cote d Ivoire has been an example of how engaging Independent Power Producers (IPP) has led to the growth of excess capacity generation and making it a net exporter of energy.
In engaging the private sector, distribution should be involved by more than one company to avoid disadvantaging the consumers. Reliable supply and distribution could be provided by collaboration between utilities and off -grid providers. Using these alternatives coupled with revised business models which are tailored to better suit the poor rural communities, we can realise an increase in supply for the rural customer base.

African regional power pools need to undergo reform. There is need to look beyond the national interests and have a regional perspective of how countries can engage in reform towards an efficient energy market. Indeed, power pools are practical ways for countries to pool sovereignty and enhance their energy security. The changes and regulations in the energy sector must be compatible with the local conditions and reality of development of that region. There should be no “one-size-fits-all” solution as different regions are confronted by challenges unique to their own circumstances. Strategic solutions should be given to allow countries to develop the technical competence, sound regulations, and implement the necessary reform to speed up sustainable access to energy for all.