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close this bookEnergy as a Tool for Sustainable Development for African, Caribbean and Pacific Countries (EC - UNDP, 1999, 89 p.)
close this folderCHAPTER 2: THE SUB-SAHARAN AFRICA REGION
View the document(introduction...)
View the documentIntroduction
View the documentMoving Forward
View the documentChallenges and Opportunities
View the documentEnergy in Africa Today
View the documentRegulatory and Legal Frameworks
View the documentBuilding Sustainable Energy Enterprises
View the documentFinancing
View the documentEnergy Prices and Economic Incentives
View the documentTechnology Development and Standards
View the documentRegional Energy Trade and Cooperation
View the documentInstitutional Strengthening and Professional Development
View the documentGhana - Serving Increasing Demands
View the documentMali - Reforming Institutions and Widening Access
View the documentZimbabwe - Stimulating Growth through Reform and Diversification
View the documentPolicies to Promote Sustainable Energy in Sub-Saharan Africa

Regional Energy Trade and Cooperation

Progress towards a sustainable energy future would be strengthened by greater regional cooperation in energy trade, harmonisation of technical standards, common frameworks for energy investments, better exchange of information and experience, and shared energy training and organisational capacity building.

"Progress towards a sustainable energy future would be strengthened by greater regional cooperation in energy trade, harmonisation of technical standards, common frameworks for energy investments, better exchange of information and experience, and shared energy training and organisational capacity building."

ENERGY TRADE

The largest opportunities for increasing sustainable energy supply capacity through regional trade lie in Africa’s vast hydropower resources: a technical potential of nearly 300 GW and a present economic potential of 110 GW, compared to only 15 GW used in 1990 (London Economics, 1995). Because most of these resources are located far from the main demand centres, they cannot be exploited without transnational interconnections and regional power trading. But electricity interconnections can also reduce generation capacity requirements through load sharing, and cut operating costs by integrating hydro and thermal generation in wet and dry years. The resulting benefits can be enormous. One proposal to upgrade interconnections between Zambia, Malawi, Mozambique, Zimbabwe, and South Africa, with some hydropower development, has estimated that US$785 million a year will be saved (1992 prices) between 1995 and 2010 compared to equivalent independent developments.

Regional energy trade is further justified if one considers the potential economic (as opposed to purely financial) benefits. The incorporation of environmental externalities in the cost of power production (particularly in South Africa and Zimbabwe, with their heavy reliance on coal) would make regional development of hydropower even more attractive.

In light of the potential benefits, a comprehensive re-appraisal of large-scale hydropower in the region and its development in a socially and environmentally responsible manner is called for. Development constraints, including high project preparation costs, cost estimation risks due to geological uncertainties, and long construction times, need to be set against the huge potential contribution of this resource to sustainable energy development in the region. Similar reviews should be made of other forms of renewable energy that might be developed in resource-rich regions if there were suitable interconnections to link them to demand centres, including large wind farms, biomass from forestry wastes, and biomass from dedicated sources of trees, grass, or other crops.

Several transborder power connections already exist (and are described in the three specific country sections at the end of this chapter) but many more have been proposed and some have been studied further, notably for the African Regional Interconnection Study (ARPIS). But few of these projects have been implemented and others have been abandoned because of commercial and political barriers that reflect significant failures of international cooperation (see Box 11).

"Effective and reliable power pools will also require strong coordinating centres which are able to control supply-switching to meet real-time demand."

Apart from the political and capacity constraints outlined in Box 11, several technical barriers require attention. One is the fear of increased grid instability and failure as interconnection expands: investing in transmission infrastructure and maintenance is a first necessary step toward reducing this risk. Effective and reliable power pools will also require strong coordinating centres which are able to control supply-switching to meet real-time demand. Support will be needed to fund and train system operators to manage the grid effectively.

As regional energy markets develop, it is also important that countries create level playing-fields for new investments by harmonising their legal, fiscal, and tax frameworks. Failure to do this could result in stranded investments in a more open market environment.

HARMONISATION OF STANDARDS

Poor design and equipment quality, equipment incompatibility, and inefficient end-use technologies hamper energy development and trade in the region. In West Africa, for example, national LPG container designs are incompatible, preventing the rational expansion of LPG markets and trade. Common fuel specifications will greatly facilitate trade in petroleum products; and cross-border electricity networks and gas pipelines will require common technical standards. Harmonisation of these and other technical standards could result in significant benefits across the region, not least by enlarging the potential markets for energy equipment, and hence the incentive for manufacturing investment. Most continents have already moved in this direction. Africa could benefit by following suit.

For many REEF technologies, harmonised standards would also help to avoid poor design and equipment quality, which undermine consumer confidence and damage market development. Classic examples include solar water heaters that corrode and leak after a few months; and PV systems with poor quality and/or badly installed modules, charge controllers, batteries, and lamps.

Adequate technical specifications and standards, as well as monitoring systems to ensure compliance, could ensure the quality of renewable energy technologies and remove the most inefficient key energy-consuming products (e.g. some buildings, lights, motors, and refrigerators) from the market. This would allow for greater returns, in the form of energy services, from REEF systems. The benefits of such measures could be achieved most efficiently and with wide-reaching results if they were designed and implemented at the regional level. Regional equipment testing and evaluation, as well as certified testing centres, would be required to ensure compliance to agreed standards. Best-practice information for equipment installers and operator/users could be developed, translated into local languages, and disseminated widely. In addition, equipment producers and suppliers should be encouraged to provide guarantees.

Box 11. The Southern African Development Community (SADC) and Southern African Power Pool (SAPP)

Activities in the SADC Energy Sector, including the creation of the SAPP, illustrate the promise of sub-regional energy cooperation, but also highlight some of the barriers. The SADC Energy Ministers agreed in mid-1997 to develop an integrated resource planning framework for the electricity sector. This framework could promote more rational regional capacity expansion (from an economic and environmental perspective) as well as demand-side alternatives to costly new supply. The process has been stalled, however, by national concerns over energy security, insufficient capacity within regional coordinating bodies, and resistance from utilities.

Similarly, the 1995 creation of the SAPP offered a way to use complementary energy resources to meet rapidly expanding electricity demand. SAPP has also experienced growing pains, both because utilities recognise that they may be competing with each other in the future, and because many lack the capacity even to have consistent representation at SAPP meetings. For SADC and SAPP, the implicit requirement of consensus for virtually all decisions, while participants put their country’s interests ahead of regional ones, has hampered their ability to develop or implement new initiatives. Investors are unlikely to finance major transnational infrastructure unless stable, transparent government and utility coordination is in place for policy-making and for implementation. If they do so without those elements in place, they could demand a significant risk premium which would raise energy prices in the region.

"In West Africa, for example, national LPG container designs are incompatible, preventing the rational expansion of LPG markets and trade."

At least two initiatives along these lines already exist. The World Health Organisation, working with UNICEF, set international performance standards for PV refrigerators and now insists that these be met by all projects that it funds. This has raised the standard of available products, but international standards do not exist for all PV components/systems yet. This shortcoming is being addressed through the PV Global Accreditation Programme (PV-GAP), which is supporting an industry-led effort to approve standards for PV components and systems in developing countries. Support is needed for African countries to participate in such processes and to empower them to create their own standards, as well as the legislation to enforce them.

Many longer term opportunities for technical leapfrogging and cutting costs by accelerating progress down the learning curve could be realised if technical standards were developed and implemented soon. Energy efficiency standards for new (commercial and institutional) buildings, and selected end-use equipment (e.g. electric lights, motors, and refrigerators) are particularly important. OECD experience has shown that efficiency standards can result in huge energy savings.

While the need for harmonised standards is clear, the levels at which they should be set are not quite so obvious. Quality standards that are set too high (as is the case in many countries where legislation has been inherited from colonial times) result in unnecessarily high costs and limitations on consumer choice. With some relatively novel RETs (notably PV systems) some practitioners insist that high technical standards are essential in order to minimise failures and gain the confidence of the business and financial worlds as well as consumers. The UNDP-GEF PV project in Zimbabwe adopted this approach and achieved very low failure rates (and commensurately greater respect and trust) compared to other installations in the country. On the other hand, as with the automobile and many other consumer goods, lower standards also mean cheaper and more affordable products and, therefore, market access to a broader range of consumers. Finding the right balance between product acceptance and affordability is crucial in the market development phase that characterises REEF systems. This issue has been important in the development of PV in Kenya (see Box 6 earlier).