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Amy.Offord_111 Aug 13

Energy Integration: POOLING POWER

Energy Integration: POOLING POWER image

Energy integration is firmly on the agenda, as intra-African trade gains ground as a catalyst for economic growth and poverty reduction.  James Gavin reports on progress, including the World Bank’s moves to support the West Africa Power Pool.

Growing demand for improved infrastructure services delivery at a regional level is acting as a boost for cross-border initiatives, backed by supra-regional ventures such as the power pools in West, East and Southern Africa. Multilateral agencies are supporting such moves. For example, a $2.5bn loan from the African Development Bank (AfDB) will see the six partner states of the East African Community (EAC) provide an additional 7.48GW of electricity by 2022.

The Economic Community of West African States (ECOWAS) has created a West Africa Clean Energy Corridor (WACEC) to increase renewables’ share of the wider regional energy mix.  The Southern African Power Pool (SAPP) wants to connect Malawi, Tanzania and Angola onto the regional grid by 2021, linking up to nine other Southern Africa Development Com- munity (SADC) nations in sharing and trading surplus electricity.

Work is under way to link up eastern and southern regions. Tanzania Electric Supply Company (Tanesco) and the Kenya Electricity Transmission Company (Ketraco) are working together to build a transmission line between Singida in Tanzania and Isinya in Kenya. The project is due for completion next year and is financed by the AfDB, the Japanese International Cooperation Agency and the two governments involved. It is hoped that connecting the SAPP, the Eastern Africa Power Pool (EAPP) and the Ethiopian grid will allow the countries involved to make maximum use of their hydro capacity. 

Power-sector integration could even be driven by new intercontinental transmission projects, which will affect North Africa. The governments of Italy and Tunisia have agreed to develop the 600MW Elmed interconnector between Cap Bon in Tunisia and Sicily, a means of exporting North African electricity to Europe, including power from proposed jumbo solar power schemes in the Sahara. In the short term, it is expected that it will be used to export electricity from solar power schemes on Sicily and in southern mainland Italy to Tunisia.


The World Bank estimates the economic benefits of a regional power market in West Africa at $5 to $8 billion a year. To date, it has dedicated $1.516bn in International Development Association (IDA) funding to support the regional agenda in the electricity sector of West Africa, with $1.141bn provided to the West African Power Pool (WAPP) for regional transmission projects and $375m for regional electrification access projects provided to other regional entities (ECOWAS and BOAD/ECREE). Improving electricity access and system reliability through the development of a regional energy market in West Africa requires close collaboration between neighbouring countries.

The WAPP is made up of 14 countries: Benin, Burkina Faso, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo – with 27 national electricity utilities working towards a more efficient regional power market. The bank acknowledges that access to energy remains a challenge in West Africa, where many countries are dependent on expensive fossil fuels and the main source of electricity generation is often located far away from its consumers.

“The creation of a regional power market will improve overall reliability and make electricity more affordable, simply by allowing all countries to benefit from lower cost resources available in the region,” said Charles Cormier, Practice Manager in the Energy and Extractives Global Practice at the World Bank. “It will make power generation more sustainable by displacing base-load, oil-fi red power generation and emergency diesel with cleaner sources of electricity, such as natural gas, solar, wind and hydropower.”

The power system will also become more resilient by balancing unexpected energy shortages. By expanding transmission networks, a regional transmission system will allow countries to expand the access to electricity in remote areas. The sizeable market created by integrating these 14 countries will be more attractive to private-sector investment in power generation and allow the countries to benefit from cheaper electricity thanks to economies of scale. “The WAPP has made a great deal of progress and now finds itself at a critical juncture where it needs to focus on building trust in trade,” said Cormier.

“Phase 1 of the West Africa Region-al Market (WARM) was launched in June 2018, with limited bilateral trade arising from the fi rst few interconnectors in the region. Within a few years, the regional power market is expected to grow as all prima-ry interconnectors will be completed, allowing electricity trade among the 14 member countries.”  As of today, with 10 of the 14 member countries interconnected, about 7% of the region’s electricity is already traded across borders. By the early 2020s, it is expected that the remaining critical interconnector projects will be completed, allowing electricity exchanges to take place among all member countries.

Also by the early 2020s, the WAPP plans to launch Phase 2 of the WARM, which will involve the creation of a day-ahead wholesale power market at a regional level, allowing greater flexibility and timeliness of power exchanges, and provide stronger price signals to investors and energy plan-ners in the region. Lastly, Phase 3 will establish a competitive energy and ancillary services market in the WAPP and short-term exchanges through the day-ahead market. The day-ahead market will take time to materialise in West Africa, given that most utilities do not have cost-reflective tariffs.


For the potential of the regional power market to be fully realised, Cormier, said attention must turn to the ‘soft side’ of building effective institutions and enforcing a sound regional regulatory and policy framework. “The completion of the regional power grid has been made possible by the vision and cooperation of African leaders, and sustained sup-port from the World Bank and other donors to complete a multi-billion dollar cross-border infrastructure investment,” said Cormier. “However, if these investments are to yield their anticipated impacts, it is important that the right institutions, regulations and policies are put in place among member countries in a manner that is harmonised across the region.”

The ECOWAS Regional Electricity Regulatory Agency (ERERA) is now in place and has started to issue important regulations such as grid-code and market rules; however, enforcement of these regulations remains a challenge, said Cormier. Further harmonisation of national regulatory frame-works will be necessary, particularly in regard to transmission pricing and third-party access.

“The WAPP’s Information and Coordination Center (ICC) is already acting as an embryonic system operator that makes possible the current pattern of bilateral exchanges and tracks energy flows across the existing regional grid,” said Cormier. “The demands on the system operator will intensify as the grid expands and there is a need to achieve synchronisation across the region to allow for more fluid exchanges of electricity.”

The World Bank, along with a number of development partners, has supported WAPP in its efforts to improve the physical connectivity and integration of electricity grids. “The World Bank has been a long-standing partner for the power sector in West Africa and has supported the WAPP since 2005,” said Cormier. “Through the IDA, World Bank support is directed toward completing primary interconnections. There are currently 4,000km of transmission lines under development, all coming to completion in the early 2020s.”

Last year, the World Bank financed a regional grid-connector access project to the Solar Development in Sub-Saharan Africa series of projects, aiming to support a harmonised regional approach through the WAPP’s coordination and preparation, as well as to scale-up cost-competitive large-scale solar generation, with storage.

In that context, the WAPP is pre-paring to competitively procure IPPs for 150MW solar parks, with storage in Mali and Burkina Faso. In addition, the bank financed a regional access project that aims to densify the grid around WAPP substations and accelerate access in Gambia, Guinea-Bissau and Mali.


The World Bank also supports private investment in regional projects through guarantee instruments to back up off taker payments. It sup-ported the West African Gas Pipeline and Phase II through a partial risk guarantee to cover the risks faced by investors in the West Africa Pipeline Gas Company arising from non-payment by the largest gas purchaser, the Volta River Authority.

The World Bank extended Inter-national Bank for Reconstruction and Development guarantees of up to $200m, and, in Ghana, an IDA guarantee of up to $500m for the Sankofa Gas Project, which is expected to leverage private-sector participation and enable the mobilisation of nearly $8bn of foreign direct investment in that country alone. A key focus of future World Bank engagement will be strengthening the performance of power utilities as a foundation for improved service and growing regional exchange.

“The complexity of the WAPP power market creates new political and technical challenges that will need to be addressed,” said Cormier. “A well-functioning regional power market requires not only the right infrastructure, but also strong collaboration among policy-makers, regulators and utilities at a national and regional level. It also calls for simultaneous policy, regulatory and institutional steps. Trading institutions and stronger commercial arrangements will need to be developed further.”

The efficient trading of energy across countries is key to overcoming these cost differences, allowing importing countries to have access to more affordable electricity. The role of the ERERA is central in developing an overall regulatory framework that will enable regional trade built upon the basis of industry good practices, consultation and consensus-building with the different actors in the ECOWAS countries (governments, utilities and private sector).

Under the umbrella of ECOWAS, countries in West Africa are working together to ensure regulatory consensus, said the bank. The payment record of trading partners in the region is uneven, acknowledges Cormier. In 2016, arrears reached such a level that the WAPP formed a Task Force on Cross-Border Payments for Power Trade to recommend solutions to the problem. To ensure that West African countries realise regional power integration to its fullest potential, the task force recommended a series of actions to improve confidence in the regional power market. These include improving sector creditworthiness, strengthening contracts, providing guarantees and involving regional institutions.


“The continuous decline in solar electricity generation prices, and more recently, battery storage, is generating interest in investing in cleaner and re-liable sources of electricity generation in West Africa,” said Cormier. Currently, the region’s energy mix is mostly comprised of diesel, HFO and hydropower, while some larger countries, such as Côte d’Ivoire, have access to natural gas. Given the recent drop in solar prices, the creation of more large-scale solar photovoltaic plants could become critical in reducing the region’s dependence on fossil fuel, supporting a shift towards a cleaner and more affordable source of electricity.

“Most countries in West Africa are reviewing their least-cost generation plans to include more solar generation in the energy mix. This is complementary to the development of hydropower resources that has been ongoing over the past decade,” said Cormier. “As the WAPP becomes reality, the role of multilateral donors will extend beyond the financing of physical interconnections toward support in the development of a sound legal, regulatory and commercial framework, and knowledge-sharing around the best financial instruments to mitigate risks of regional transactions. “There is a new urgency to help West Africa leapfrog ahead by learning from other power pools already into operation.”

This article is an extract from the Africa Energy Yearbook 2019, a partnership between African Business and EnergyNet.