CCG’s COP27 Policy Brief Series Looks At How To Enable Southern Africa’s Transition To A Low-Carbon Electricity System
The Southern African Power Pool (SAPP), is one of the more developed power pools on the African continent. The SAPP operates four competitive electricity markets between 12 member countries. It has facilitated trade between utilities in Southern Africa since 1995. The operating member countries include Namibia, South Africa, Lesotho, Eswatini, Zimbabwe, Botswana, Mozambique, Zambia, Malawi, and DRC, which are principally represented by each country’s national utility. Countries in Southern Africa represent about 40% of total electricity demand and about 40% of total carbon emissions in Africa. Most of the demand and carbon emissions can be attributed to coal-dominated South Africa.
The SAPP markets are:
Bilateral Market: Bilateral Trading Objectives are mainly to meet long-term demand and supply balance
- Trading arrangements mutually agreed between bilateral parties
- Volumes and prices are the key parameters
- Transmission path to be secured in advance
- Can be firm or non-firm
- Firm contracts
- Have penalties for non-delivery and
- Generally, not interruptible — reliability premium
- Non-Firm contracts
- Are interruptible with notice
- If notice given, no penalties
- Generally, less than 75% reliable.
- Firm contracts
Forward Physical Markets: Is competitive trading in monthly or weekly contracts (or any other defined periods longer than one day ahead) for future delivery according to the contract specifications.
The regional interconnections and the SAPP markets could play a key role assisting Southern Africa’s transition to a low-carbon electricity system. A recent policy brief looks into several scenarios for cost-optimal low-carbon electricity pathways for the 12 mainland countries of Southern Africa. The paper by Deshmukh, R., Ndhlukula, K., Wu, G.C., and Chowdhury, A.F.M.K. (2022), is titled “Enabling Southern Africa’s Transition to a Low-Carbon Electricity System” and is under the Climate Compatible Growth Programme COP27 Policy Brief Series. Their work found that increasing competitive electricity trade through the Southern African wholesale electricity market by at least 5 times, as well as doubling the inter-regional transmission capacity for sharing both renewable and conventional energy resources across the region, would be critical in enabling the transition to a high clean energy electricity sector with up to 80% of total generation coming from renewables by 2040. Meeting this target would roughly halve annual GHG emissions in the region.
Other key recommendations from the policy brief include:
- Annual wind and solar energy procurement should be increased by up to 5 times the current rate by 2040 as this is the least-cost strategy to meet growing future electricity demand in Southern Africa.
- New coal power plants were found to be not cost-effective and therefore should be avoided.
- Planned hydropower projects should be critically re-evaluated as half of the planned capacity was found to be not cost-effective.
- Development of hydropower, wind, and solar PV projects in areas with high biodiversity should be avoided, a strategy that would incur less than 5% additional costs.
- The additional costs of adopting clean energy targets or retiring coal plants 20 years early to halve GHG emissions by 2040 should be offset through low-cost international financing and climate grants.
South Africa’s national electric utility company Eskom plans to decommission 5,400 MW of electricity from coal generation by year 2022, 10,500 MW by 2030, and 35,000 MW by 2050 (IRP, 2019). As South Africa has the bulk of the coal plants in the region, it will be a key determining factor when it comes to reducing the region’s emissions.
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