The electricity sector in East Africa has quickly evolved from a situation of scarcity to abundance. Power plants have been developed in earnest to meet the projected growth in GDP of each member state that will transform them to middle income countries.
As of 2019, Uganda had 1.2GW installed, with a demand of 0.7GW and an expected additional 0.6GW from Karuma HPP. Tanzania had 1.5GW installed with a demand of 1.9GW and an expected medium-term addition of 2.1GW from Stiegler’s Gorge HPP. Kenya had 2.7GW installed with a demand of 1.8GW and an expected addition of 0.4GW from Olkaria V geothermal, solar and wind. Ethiopia had 4.2GW installed with a demand of 3.7GW and an expected 6GW from GERD. Rwanda had 0.2GW installed with a demand of 0.2GW with an expected 0.1GW from Rusumo and Ruzizi III HPPs. South Sudan had 0.1GW installed with a demand of 0.3GW and long-term expected 0.2GW from Fula Rapids HPP. DRC had 2.7GW installed and plans for several hydro plants including 11.048GW from Ruzizi III HPP and Inga III HPP. Burundi had 0.05GW installed and an expected addition of 0.05GW from Ruzizi III HPP and Mubuga solar.
The power generation expansion plans indicate that most of the East African countries will be in an excess supply position post 2020. The interest to export this power from all parties will lead to an export dead heat. The countries will want to export to neighbours who themselves will be in a surplus and looking to export. The matter is exacerbated by the missing crucial transmission line links between the countries. This need for transmission lines has been noticed by the East African governments and development partners and funding has been provided. There is a continuing effort to complete these lines. They include the Ethiopia-Kenya line which is at an advanced stage of construction, the new Kenya-Uganda line, the Uganda-Rwanda line, the Kenya-Tanzania line, and the Tanzania-Zambia line (linking the East and South African Power Pools). Linking to the Southern Africa Power Pool will open opportunities to trade with Southern Africa. The oversupply seen in late 2019 in Kenya, Uganda and Ethiopia could have been used to supply Zambia and Zimbabwe which faced severe droughts that greatly affected hydropower generation. In 2018 market conditions, Power Africa estimated that USD 500 million could have been saved by East African countries by importing cheaper power as opposed to using expensive emergency power. This would be achieved with the interconnectors in place.
As the East(ern) African countries continue to develop power projects and transmission interconnectors, there is a need to in tandem develop a modality to enable the short-term trade in power. Faced with climate change, there is likely to continue to be unexpected periods of drought and flood that will either provide excess power or sharp deficits that will need to be met efficiently. The current approach of long-term bilateral PPAs for fixed capacities between the countries will limit the region’s capability to efficiently respond to needs and opportunities. An additional framework for short-term trade of the excess non-contractual electricity and provisions for bidirectional flows will allow for more efficiency in utilising the excess capacity available in the region. Utilities will be enabled to trade in the short-term for capacities that are not contractually assigned. Time is of the essence as East African countries race to become middle-income economies and their utilities are threatened with financial distress from idle power. Our electricity sector must leap frog as have the telecommunications and banking sectors. Opening up to a short-term wholesale market approach over the Eastern Africa power pool will allow the region to trade power in the short-term and also better absorb variable renewable energy. This will however require synchronisation of the regulations, grid codes, ancillary facilities and possibly a shared system operator or an Eastern African Energy Exchange. Collaboration with Central and Southern African grids will also increase the commercial viability of the pool.
An interconnected, short-term-trade capable market will unlock investments in renewable energy by enabling the transfer of power from one country to the other during seasonal weather events. The possibility of transferring excess capacities to regional markets in the short-term will increase the bankability of projects while reducing the market exposure of the projects and utilities. The capability to rapidly deploy interconnected powerplants will provide a virtual storage to support sudden deficiencies and balance overproduction related to the vagaries of weather. Such trade should also include the trade in ancillary services to strengthen the grids and further support the operation of renewable plants. Price-efficiency in the renewable sector would also be achieved through hourly day-ahead auctions for energy. Development of a day-ahead market will allow for power producers and utilities to market projected short-term excess capacity instead of curtailing plants while paying for the unused capacities. Ultimately, when the market matures, investors will be able to build powerplants at their own risk with the promise of relying on an open-access market to guarantee offtake and demand. This will also free up much needed resources and liabilities of the state for other developmental agenda while allowing for increased investments by the private sector. The deployment of new renewable energy capacity will bring additional benefits including; lowering consumer prices as the LCOE of new plants will be lower than existing ones and the marginal price of generation in renewable plants would be near zero; continuing the reduction in CO2 emissions due to power generation; and reducing dependence on imported fossil-based energy. The region will also be able to efficiently utilise the abundance of hydro, wind, solar, and geothermal power in the individual countries to drive a common sustainable economic growth.