News / National
Power trading will drive electricity landscape
30 May 2016 at 06:53hrs | Views
Power trading agreements between countries that possess excess power generating capacity and those battling supply shortages will be a dominant theme in the electricity markets of south-central African nations in the next three to five years, says Standard Bank.
Manica Post reported that Mozambique, which currently has the potential to produce more electricity than its economy requires at present, is likely to dominate the supply-side of this trading market with Namibia, Zambia and Botswana expected be the main purchasers in the region, after South Africa.
The biggest challenge to these arrangements will be reliable and stable transmission networks to facilitate the seamless transfer of electricity between sellers and purchasers.
These networks require significant co-operation between neighbouring countries, so the role of the Southern African Power Pool (SAPP) in ensuring cross-border planning, investment and trading between member states remains critical.
"Power will increasingly become one of the most tradable commodities across the region in the coming years given the electricity shortage we are seeing across Southern Africa," says Cody Aduloju, Executive in Standard Bank's Power and Infrastructure division.
"Almost every aspect of a modern economy relies on electricity to function so the countries that emerge as the ones with excess supply will have significant negotiating power, so to speak."
Aduloju says that Mozambique, which plans to double its generating capacity to 5 Gigawatts (GW) by 2025, is one of the few countries in Africa that currently possesses an over-supply of electricity thanks to the hydro power available from the Cahora Bassa dam, which has an installed capacity of 2,075 Megawatts (MW) of power per year or around 73 percent of the country's installed generating capacity. Mozambique has the potential to expand the existing capacity of the Cahorra Bassa hydro facility by approximately 60 percent provided it can attract the necessary investment, he says.
"The biggest challenge that Mozambique faces in taking advantage of this opportunity and many other power projects, is that it has weak transmission infrastructure, which is a key requirement for exporting adequate levels of electricity to other countries in the region," says Aduloju. "However, it has phenomenal potential for electricity production, ranging from coal, gas and hydro powered generation."
Mozambique has recently commissioned Sasol's CTRG 175MW gas fired project. While small by international comparison, the value of such projects should not be underestimated in a regional context.
The 118MW gas-fired plant built in Mozambique by Gigawatt, a company that was awarded a gas power generation concession by the country's Government to supply electricity to the capital city of Maputo,will add significantly to the nation's grid. Mozambique has a strong pipeline of projects under development and over the next five years is seeking to add 600MW of generating capacity.
This will come via a range of different sources such as coal, solar and gas.
Improved transmission line infrastructure would enable Mozambique to boost power exports.
The country already supplies approximately 1,349MW to South Africa, 100MW to Zimbabwe and 50MW to Botswana each year. Mozambique has recently begun supplying 100MW to Zambia where there is a shortage of power due to low water levels at Kariba Dam.
Namibia represents a huge opportunity for countries with potential oversupply in the region as it currently imports about 61 percent of its electricity needs.
Given Namibia's total power demand of 534MW, that would leave an estimated 320MW in possible supply deals up for grabs based on current peak usage of 508MW.
Namibia however, has several plans under way to boost its power generating capacity.
These include 800MW from the Kudu combined gas and steam plant; 44MW in onshore wind potential and 120MW in solar PV potential.
"The lack of its own sizeable power generating capacity means that it is absolutely imperative for Namibia to start entering into Power Purchase Agreements (PPAs) with other partners in the region, which is currently happening," said Mr Aduloju.
"From a financial perspective, NamPower is probably one of the strongest utilities on the continent so it has a lot in its favour in terms of entering into these PPAs."
Current agreements are being negotiated and finalised with South Africa and Mozambique.
Botswana is another country in the region that is likely to remain reliant on its neighbours for the foreseeable future given that the country already imports 68 percent of its power needs.
SAPP has, since inception facilitated the regional power trading framework by ensuring reliable and economical electricity supply across the region. Its members include utilities and private power producers from Botswana, South Africa, Mozambique, Lesotho, the Democratic Republic of Congo (DRC), Zimbabwe, Zambia, Namibia, Swaziland and Malawi.
Plans are also afoot to determine the viability of building a multi-billion project to build a power transmission network linking the power grids of South Africa, Mozambique, Namibia, the DRC and Angola. Hydro power has already been identified as a possible opportunity for Angola via the proposed 2067MW Luaca and 300MW (50 percent) Baynes plants.
That will go some way towards enabling Angola to achieve its goal of almost tripling its installed generating capacity 9,000MW by 2025.
Aduloju says that the DRC represents perhaps the biggest missed opportunity for the economic growth of any single country across the entire African continent.
Apart from the fact that the country possesses virtually every mineral resource known to man, the Congo River is estimated to have a potential hydro-power generating capacity of between 40,000MW and 60,000MW.
"It is unlikely that any country in Africa will have sufficient power generating capacity in the foreseeable future so it is absolutely imperative that the continent consider an adequate power trading mechanism in addition to investments in generating infrastructure," said Aduloju.
"The bottom line is that for as long as the electricity shortage in Africa persists, the negotiating power will remain in the hands of countries that have the capacity to produce."
Manica Post reported that Mozambique, which currently has the potential to produce more electricity than its economy requires at present, is likely to dominate the supply-side of this trading market with Namibia, Zambia and Botswana expected be the main purchasers in the region, after South Africa.
The biggest challenge to these arrangements will be reliable and stable transmission networks to facilitate the seamless transfer of electricity between sellers and purchasers.
These networks require significant co-operation between neighbouring countries, so the role of the Southern African Power Pool (SAPP) in ensuring cross-border planning, investment and trading between member states remains critical.
"Power will increasingly become one of the most tradable commodities across the region in the coming years given the electricity shortage we are seeing across Southern Africa," says Cody Aduloju, Executive in Standard Bank's Power and Infrastructure division.
"Almost every aspect of a modern economy relies on electricity to function so the countries that emerge as the ones with excess supply will have significant negotiating power, so to speak."
Aduloju says that Mozambique, which plans to double its generating capacity to 5 Gigawatts (GW) by 2025, is one of the few countries in Africa that currently possesses an over-supply of electricity thanks to the hydro power available from the Cahora Bassa dam, which has an installed capacity of 2,075 Megawatts (MW) of power per year or around 73 percent of the country's installed generating capacity. Mozambique has the potential to expand the existing capacity of the Cahorra Bassa hydro facility by approximately 60 percent provided it can attract the necessary investment, he says.
"The biggest challenge that Mozambique faces in taking advantage of this opportunity and many other power projects, is that it has weak transmission infrastructure, which is a key requirement for exporting adequate levels of electricity to other countries in the region," says Aduloju. "However, it has phenomenal potential for electricity production, ranging from coal, gas and hydro powered generation."
Mozambique has recently commissioned Sasol's CTRG 175MW gas fired project. While small by international comparison, the value of such projects should not be underestimated in a regional context.
The 118MW gas-fired plant built in Mozambique by Gigawatt, a company that was awarded a gas power generation concession by the country's Government to supply electricity to the capital city of Maputo,will add significantly to the nation's grid. Mozambique has a strong pipeline of projects under development and over the next five years is seeking to add 600MW of generating capacity.
This will come via a range of different sources such as coal, solar and gas.
Improved transmission line infrastructure would enable Mozambique to boost power exports.
The country already supplies approximately 1,349MW to South Africa, 100MW to Zimbabwe and 50MW to Botswana each year. Mozambique has recently begun supplying 100MW to Zambia where there is a shortage of power due to low water levels at Kariba Dam.
Namibia represents a huge opportunity for countries with potential oversupply in the region as it currently imports about 61 percent of its electricity needs.
Namibia however, has several plans under way to boost its power generating capacity.
These include 800MW from the Kudu combined gas and steam plant; 44MW in onshore wind potential and 120MW in solar PV potential.
"The lack of its own sizeable power generating capacity means that it is absolutely imperative for Namibia to start entering into Power Purchase Agreements (PPAs) with other partners in the region, which is currently happening," said Mr Aduloju.
"From a financial perspective, NamPower is probably one of the strongest utilities on the continent so it has a lot in its favour in terms of entering into these PPAs."
Current agreements are being negotiated and finalised with South Africa and Mozambique.
Botswana is another country in the region that is likely to remain reliant on its neighbours for the foreseeable future given that the country already imports 68 percent of its power needs.
SAPP has, since inception facilitated the regional power trading framework by ensuring reliable and economical electricity supply across the region. Its members include utilities and private power producers from Botswana, South Africa, Mozambique, Lesotho, the Democratic Republic of Congo (DRC), Zimbabwe, Zambia, Namibia, Swaziland and Malawi.
Plans are also afoot to determine the viability of building a multi-billion project to build a power transmission network linking the power grids of South Africa, Mozambique, Namibia, the DRC and Angola. Hydro power has already been identified as a possible opportunity for Angola via the proposed 2067MW Luaca and 300MW (50 percent) Baynes plants.
That will go some way towards enabling Angola to achieve its goal of almost tripling its installed generating capacity 9,000MW by 2025.
Aduloju says that the DRC represents perhaps the biggest missed opportunity for the economic growth of any single country across the entire African continent.
Apart from the fact that the country possesses virtually every mineral resource known to man, the Congo River is estimated to have a potential hydro-power generating capacity of between 40,000MW and 60,000MW.
"It is unlikely that any country in Africa will have sufficient power generating capacity in the foreseeable future so it is absolutely imperative that the continent consider an adequate power trading mechanism in addition to investments in generating infrastructure," said Aduloju.
"The bottom line is that for as long as the electricity shortage in Africa persists, the negotiating power will remain in the hands of countries that have the capacity to produce."
Source - Manica Post
