Developing a competitive market for regional electricity cross border trading: The case for the Southern African Power Pool Dr. L. Musaba, P. Naidoo, W. Balet and A. Chikova SAPP Coordination Centre, 17th Floor Intermarket Life Tower, 77 Jason Moyo Avenue, PO Box GT897, Harare, Zimbabwe [email protected] 1. THE SAPP Figure 1. : SAPP structure The Southern African Power Pool (SAPP) is a regional body that was formed in 1995 through a SADC Directorate of Southern African Development Community Infrastructure & Services (SADC) treaty to optimise the use of available energy resources in the region and support one Executive Committee another during emergencies. The Co-ordination Centre for the power pool is located in Harare, Management Committee Zimbabwe. The pool comprises of twelve SADC member countries represented by their respective national power utilities, Table-1. Planning Operating Environmental Sub-committee Sub-committee Sub-committee Table-1 Co-ordination Current SAPP Members Centre Full Name of Utility Country Botswana Power Corporation Botswana 2. THE SAPP GRID Electricidade de Mocambique Mozambique Electricity Supply Commission of Malawi Malawi 2.1 Historic Development Empresa Nacional de Electricidade Angola ESKOM South Africa Interconnection and regional bilateral trading in Lesotho Electricity Corporation Lesotho Southern Africa started in the 1950s with the line NAMPOWER Namibia connecting the Democratic Republic of Congo Societe Nationale d’Electricite DRC Swaziland Electricity Board Swaziland (former Zaire) and Zambia. The line was meant to Tanzania Electricity Supply Company Tanzania supply power to the Zambian mining industry on ZESCO Limited Zambia the Copperbelt province. Interconnection of Zimbabwe Electricity Supply Authority Zimbabwe Zambia and Zimbabwe systems started in the 1960s following the construction of Kariba Dam. In 1975 South Africa was connected to Mozambique SAPP is managed by the decision-making that via a 533 kV DC line from Cahora Bassa to occurs in the hierarchical structured committees Apollo. illustrated in Figure-1. Reporting to the Energy Ministers of SADC is the Executive Committee As a result of these interconnections, two primary that is composed of the Chief Executives of the electricity networks were created in the region. participating utilities. Reporting to the Executive The first network was the southern network based Committee is the Management Committee, which principally on thermal generation with is composed of senior managers from the transmission links interconnecting Namibia, South transmission system operations and energy Africa and Mozambique. The second network was trading divisions of each utility. based on hydropower with transmission links interconnecting the DRC, Zambia, Mozambique’s The Management Committee collates the Cahora Bassa hydro power station and Zimbabwe proceedings of the sub-committees of Operating, (Figure-2). Until the end of 1995, when the 400kV Planning and Environmental, summarizes the line from Matimba in South Africa to Insukamini in proposals and recommendations and presents bi- Zimbabwe was constructed, the two systems were annually the report to the Executive Committee. linked by 220kV and 132kV lines crossing Botswana. 1 2.3 Future Developments Dem Rep of Congo 2.3.1 Western Power Corridor Kinshasa The demand for power in SAPP is increasing. SAPP has estimated that after the year 2008, the region will run out of capacity and investment in generation should be done now to meet the future challenge that SAPP will face. A study conducted by SAPP in conjunction with Purdue University (SAPP Pool Plan, 2000) established that the Inga Zambia Mozambique hydroelectric scheme in the Democratic Republic Lusaka H H T of Congo (DRC) could generate over 39,000MW H of power for the region and part of this energy H Harare T could be exported to other regions. Hydro Station Zimbabwe T Thermal Station Inga-I and Inga-II were commissioned in 1972 and 1982 respectively. SAPP is interested in the development of Inga-III in the next ten years to T Maputo meet the projected demand. The development of Inga III is now associated with the Western Power Corridor (WESTCOR) project. Figure-2: The Northern network The WESTCOR project is intended to exploit the environmentally friendly, renewable, hydroelectric 2.2 Recent Developments energy of the Inga rapids site in the DRC. The Societé Nationale d’ Electricité (SNEL) in the In the last eight years, SAPP has commissioned Democratic Republic of Congo owns and operates the following transmission lines: the two existing power stations, Inga-I and II, with a combined output of 1,770 MW. Inga-III is the • The 400kV Matimba-Insukamini Interconnector next phase of the development of the Inga site, linking Eskom of South Africa and ZESA of with an estimated rated output of 3,500 MW. The Zimbabwe in 1995. BPC Phokoje substation final phase is Grand Inga has a potential rated was tapped into the Matimba line to allow for output of 39,000 MW. Botswana’s tapping into the SAPP grid at 400kV in 1998. The WESTCOR Steering Committee was formed under the auspices of the SAPP to initiate studies • The 400kV Interconnector between determining the technical and economic viability of Mozambique and Zimbabwe was the Western Power Corridor with source at Inga- commissioned in 1997 and is being operated III. The WESTCOR Joint Venture Company was at 330kV. registered in Botswana to fund the engineering and financial studies, and to build, own, and • The restoration of the 533kV DC lines between operate the infrastructure should the project prove Cahora Bassa in Mozambique and Apollo to be viable. substation in South Africa was completed in 1998. Five utilities are participating in the project. Each utility is represented on the Steering Committee • The 400kV line between Aggeneis in South and will own 20% of the share capital of the Africa and Kookerboom in Namibia was proposed new joint venture company WESTCOR. commissioned in 2001. The utilities are: • The 400kV line between Arnot in South Africa • NamPower, power utility company of Namibia and Maputo in Mozambique was • Eskom, power utility company of South Africa commissioned in 2001. • Empresa Nacional De Electricidade (ENE), power utility company of Angola • • The 400kV line between Camden in South Societé Nationale d’ Electricité Democratic Africa via Edwaleni in Swaziland to Maputo in Republic of Congo (SNEL), Mozambique in was completed in 2000. • Botswana Power Corporation, (BPC), power utility company of Botswana 2 Dem. Rep. Of Congo Kinshasa 400 kV HVAC System to supply Kinshasa ENE Hydro Kuanza 6000 MW ANGOLA NAMIBIA Botswana Gaborone Auas South Pegasus Africa Omega Figure-3: Projected WESTCOR transmission lines 2.3.2 Other Priority SAPP Interconnectors Mozambique to Malawi at an estimated cost of USD46 million. The maximum power is estimated The SAPP Planning Sub-Committee has identified at 300MW. This interconnection may be the several transmission projects, which have been beginning phase of a transmission corridor to East classified as priority projects. These include Africa. several interconnectors that would improve system reliability and enable the exchange of iii.) DRC-Zambia Reinforcement - A team of energy to improve system economy. These representatives from Botswana, the DRC, projects are at different stages of development. Zambia, Zimbabwe and South Africa is pursuing this project. The project is i.) Zambia -Tanzania Interconnector - A associated with the refurbishment of Inga-I Ministerial Committee and a high level and Inga-II in the DRC so that additional technical committee were set up to accelerate energy from Inga can be accessed by the project in view of the imminent shortage of Countries south of the DRC. The initial phase power in Tanzania and persistent shortage of of the project would include the power in Kenya. The eventual Tanzania-Kenya refurbishment of Inga-I and Inga-II and the Interconnector makes the project more viable. construction of a 220kV line from the DRC to The whole project is expected to be Zambia at a total cost of USD94 million. The constructed at 330kV and would move up to combined new and existing interconnection is 300 MW of power from Southern Africa. The expected to deliver about 500MW firm total cost of the project has been projected to capacity. be around USD160 million for the Zambia- Tanzania interconnector. At the end of the interconnection projects the new grid would be as shown in Figure-4. ii.) Mozambique-Malawi Interconnector - The Power Purchase Agreement negotiations are still in progress. Malawi requires the project for system security and reliability, particularly if there were a drought. It will also permit the exchange of economy energy. The project involves the construction of a 220kV line from 3 H Kenya Gabon Congo Dem Rep of Nairobi Rw anda Congo Burundi Brazzaville Kinshasa H Tanzania H H Dar es Salaam H Luanda H Angola Malawi Zambia H Mozambique H Lilongwe H Lusaka H H H H T H H H H H Harare T H Namibia H Zimbabwe Botswana T H Windhoek E Gaborone E E H E E T Pretoria E E E E E Maputo Johannesburg E E Mbabane T Swaziland P H Lesotho H Hydro station South H Africa P Pumped storage scheme N T Thermal Station E Cape Town P Hydro station Eskom thermal station Figure-4: SAPP current and future grid 4 3. ELECTRICITY TRADING IN THE SAPP a very small percentage of the total electricity generated. 3.1 Bilateral Trading In 2002, the bilateral energy traded in SAPP is Based on intergovernmental agreements, the shown in Figure-5. general trading arrangement in SAPP is for the national utilities to engage into long term bilateral 1,521 contracts for the sourcing and consumption of Eskom-ZESA 150 3,375 electrical energy. The intergovernmental HCB-ZESA 400 agreements and the bilateral contracts form the 2,500 HCB-Eskom 1,370 foundation for cross border electrical energy 230 trading.