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East Africa closer to regional electricity auction market

Uganda is among the 13 member states that produce more electricity than they consume. Photo / File 

What you need to know:

  • Data indicates that the 13 member countries under the Eastern Africa Power Pool currently have an electricity surplus of 878 megawatts

Uganda and other eastern African neighbours are inching closer to a regional auction market where member states will auction excess electricity.

The auction market will also be key in dealing with blackouts among member states with countries that cannot meet their demand tapping from those with surpluses.

Consultants tapped by the 13 member states in the Eastern Africa Power Pool (EAPP) are expected to publish regulations that will govern trade in electricity next month and establish a Day Ahead Market (DAM) that will allow distributors to hedge against price volatility.

The regional market will boost access to clean and possibly cheaper electricity in the region, mainly for countries beset by generation hitches.

Publishing of the draft regulations marks a crucial step in helping the EAPP to operationalise a plan that was mooted in 2005.

Countries in the EAPP include Uganda, Kenya, Ethiopia, South Sudan, Tanzania, Somalia, Libya, DR Congo, Djibouti, Rwanda, Sudan, Egypt and Burundi.

Dr Patricia Litho, the Energy Ministry assistant commissioner for communication and information management, yesterday said Uganda was actively participating in the EAPP to ensure its success.  

“We are working closely with other member countries and consultants to finalise the draft regulations and establish the DAM. We are also investing in our power infrastructure, including the construction of high-voltage interconnecting lines with neighboring countries, to enable seamless trade and transmission of electricity,” she said, noting that Uganda will be a significant player in the regional auction market, with a substantial quantity of power available for trade. 

Through DAM, participating countries are able to lock prices for the next 24 hours through an auction system, helping distributors (buyers) hedge against price fluctuations, and buy and sell electricity at a set price for the following day.

DAM will allow countries with excess power to submit price offers while those with deficits will table bids, which will directly impact final prices besides ensuring steady supply and thus helping countries to avoid blackouts tied to generation hitches.

The regulations will also allow the economies to buy and sell electricity without relying on bilateral agreements. Data indicates that the 13 member countries under the Eastern Africa Power Pool currently have an electricity surplus of 878 megawatts, which is expected to grow to 3,430 megawatts next year. Uganda is currently among some of the countries in the region producing excess power.

Data from the Electricity Regulatory Authority indicates that Uganda currently has an installed capacity of 2,048.1 megawatts, a 63.7 percent increase from 1,251 megawatts in 2019, against peak demand of 987.8 megawatts. On the other hand, Kenya, Tanzania, DR Congo, and Burundi continue to face challenges in generating enough electricity to meet demand. Countries in the EAPP are also banking on the regional power market trade, to significantly reduce dependence on dirty and expensive plants, which have for years been used to shore up supply during peak demand, especially in countries with low hydro-power production.

Kenya has the highest potential for geothermal electricity in the region with an installed capacity of 940 megawatts, while Ethiopia is the highest producer of hydro-power on the continent at 4.9 gigawatts as of mid-last year. The regulations come months after completion of high-voltage interconnecting lines that link Kenya to Uganda, Tanzania, and Ethiopia.

Currently, Kenya has bilateral electricity trade agreements with Uganda and Ethiopia, which have been key in helping the country avert power rationing amid low generation that has been unable to meet the fast-rising demand.

Power trade within the EAPP will enable member countries to harness the region's vast reserves of low-cost renewable energy resources, enhancing reliability and affordability of electricity supply.

Neighbouring Tanzania, DR Congo, and Burundi have high electricity deficits underscoring the critical role of the looming regional power trade.

EAPP is one of the five power pools on the continent with the others being Central Africa Power Pool, North African Power Pool, West Africa Power Pool and the Southern African Power Pool.