Regional electricity market to open in September

KAMPALA - Twenty years after the formation of the Eastern Africa Power Pool (EAPP), electricity trade among member countries is expected to commence in September this year. 

This follows the approval of the Day-Ahead Market as well as the Market and Trading Unit by the EAPP council of ministers, the pool’s top governing body, during the two-day concurrent 32nd Steering committee and 20th council of ministers meetings at the Kampala Serena Hotel on Thursday. 

The Day-Ahead Market creates an auction system where countries with surplus electricity are able to make offers in terms of the amount of energy that they are ready to sell and at which price, a day prior to the actual trading. 

The Market and Trading Unit, on the other hand, is an independent body that will oversee the daily trading of electricity among member countries. This is one of the final steps that have had to be taken towards the realisation of the pool. 

The establishment of the Day-Ahead Market as well as the Market and Trading Unit were some of the final steps that needed to be taken towards the realisation of the pool. 

Key among the points of discussion during the two-day meeting was the need to agree on the completion of the final review of the Day-Ahead electricity market rules, procedures, and Market Participation Agreement. 

Participants also sought to discuss and agree on an interim arrangement to operationalise the Market and Trading Unit of EAPP. 

While reading the resolutions by the Council of Ministers, EAPP’s top governing body, Okaasai Opolot, Uganda’s Minister of State for Energy, who chaired the council, confirmed that indeed an agreement had been reached. 

“The council of ministers acknowledges the completion of the EAPP market rules, Market Participation Agreement and associated market procedures which together form the legal and operational framework for electricity trading under the EAPP,” Opolot said. 

He said the documents were finalised and formally endorsed by the steering committee following an extensive consultative and technical review process led by the market committee, legal working group, and operations committee in collaboration with the EAPP secretariat. 

“The council of ministers ratifies the market rules and associated agreements as a foundational instrument for the eventual deployment and operations of the regional electricity market,” Opolot added. 

Earlier in the day, officials had announced that electricity trading would commence in May, but this was later tentatively pushed to September this year due to the ministers’ failure to agree on which country would host the market operator. 

Opolot described the selection of a market operator as a pivotal step towards ensuring that the entity is established in an environment that is supportive of its operations, functions independently, neutrally, with a secure financial settlement system, regulatory alignment and access to skilled human capital. 

The host country of the market operator is expected to be selected by June this year. It is also expected that the market launch will be held tentatively in September in the selected host country. 

The EAPP is a regional body established in 2005 to facilitate cross-border electricity trade and grid interconnection among member countries. 

The pool consists of 13 member countries: Burundi, Djibouti, the DR Congo, Rwanda, Egypt, Ethiopia, Kenya, Sudan, Tanzania, Uganda, Libya, South Sudan and Somalia.

Currently, member countries are trading electricity among themselves based on individual bilateral agreements. 

For instance, Uganda’s electricity trade with its neighbouring countries like Kenya, Rwanda and Tanzania is based on individual agreements signed with each of these countries. 

The World Bank says the electricity based on individual bilateral agreements costs the region an estimated $8b. 

The commencement of the power pool will usher in a new era where electricity trade among member countries is based on harmonised rules and systems. 

Official statistics indicate that power pool members boast a total installed generation capacity of about 90,000 megawatts that has been accumulated over the years, against a peak system demand of about 54,000 megawatts by last year. 

Despite surplus in some countries, others are experiencing deficits. For instance, Uganda has an installed generation capacity of 2,048 megawatts against a peak demand below 1,000 megawatts. 

The regional power pool is one of the avenues that countries like Uganda are banking on to offload their current excess generation capacities. 

Member countries are currently developing and upgrading their interconnecting infrastructure to enable smooth exchange of electricity once the Market and Trading Unit is established. 

According to officials, nine of the 13 EAPP members are interconnected, and the World Bank is undertaking studies to interconnect Somalia with the East African region.

80-year power trade 

Dr Kevin Kariuki, the vice-president for Power, Energy, Climate and Green Growth at the African Development Bank, said the power trade among Eastern African countries dates back to the 1940s when a 33kV line from Pangani Falls Hydropower Station in the then Tanganyika (present-day Tanzania) was delivering power to Mombasa in Kenya. 

He explained that this was followed by the commissioning of the 523km 132kV power line from the current Nalubaale Power Station in Uganda to Nairobi in 1958, becoming the main source of electricity for the Kenyan capital. Subsequently, the 1959 commissioning of the Nzizi1 Power Plant in the DR Congo enabled evacuation of power to Burundi and Rwanda, thereby facilitating trade. 

“Today, nine of the 13 member countries are interconnected, enabling cross-border power trade through bilateral agreements. As a result, annual regional power exchanges have increased from 300 gigawatts in 2010 to more than 200 gigawatt-hours in 2024, while cross-border transmission lines have increased to almost 3,000km. 

“We expect this to grow even further with the development of more lines like South Sudan’s interconnection line to the East Africa grid. Additionally, the World Bank is currently supporting studies to interconnect Somalia to the EAPP grid,” Dr Kariuki said.

Regulation 

During the same meeting, the ministers also commissioned the Independent Regulatory Board (IRB), the body that will regulate power trade under the EAPP. Engineer Ziria Waako, the IRB chairperson, said they have undertaken an analysis of regional regulatory gaps and a study on the harmonisation of national regulatory frameworks.

“The regulators in the region are at different levels of development and growth and it was important that we analyse the gaps that could impede us from managing EAPP affairs collectively so that no regulator feels inferior and to ensure that all countries benefit from the trading,” she said.

Waako explained that the board shall establish the market monitoring and surveillance function that will enable them to oversee the trading. 

“We shall have a council and staff who are knowledgeable about where surpluses are, where deficits are, and where constraints on the network are, so that we support the System Operator to operate the market efficiently,” Engineer Waako said.