The lack of transmission infrastructure is negatively affecting the ability of African countries to meet their energy access goals and tap into their renewable energy potential, reports Nasi Hako from the 2023 Africa Energy Forum (aef) in Nairobi.
The Lake Turkana wind farm in Kenya is one example of the importance of transmission assets. The plant was ready to evacuate power in July 2017, but the accompanying transmission line delayed the turbines supplying power to Kenya’s electricity grid until October 2018.
However, there is hope for regional power pools to catalyse crossborder transmission lines and solve multiple issues simultaneously. This infrastructure can carry energy over long distances, increase cross-border transmissions and reduce overall system costs and carbon emissions.
Cross-border transmission lines can also facilitate regional energy trade, relieving shortages, decreasing energy prices and encouraging decarbonisation. The issue arises when it comes to the financing of these transmission projects.
According to a 2014 Black and Veatch cost model, an electrical transmission line costs $2.29 million per mile (0.62km). However, a lack of profitability, among other factors, makes this sector an unattractive investment decision. As Mohamed Rali Badissy, attorney advisor at the US Department of Commerce, says: “There are very few transmission billionaires in the world.” [Refer Issue 2-2022 pages 60-61]
According to the US Department of Commerce, investment in generation has been about four times higher than transmission and distribution combined. However, of the three segments, transmission has been the most impacted by the need for more public and private investment.
A change is happening in Africa, where transmission sector investment is currently geared towards building more cross-border interconnectors between neighbouring countries. The objective is to promote regional electricity trade and create genuine power pools, creating an opportunity to leverage the electricity market, pool resources and collect revenues.
Several plans are currently in place to build regionally integrated transmission lines across Africa. One such project is the multinational Kenya-Tanzania Power Interconnection Project.
The project involves the construction of a high voltage alternating current 400kV transmission line with a total length of 507.5km, with 414.4km located in Tanzania and 93.1km in Kenya.
The line will be connected to the Ethiopia-Kenya transmission system and is part of the Eastern Africa Electricity Highway with a transfer capacity of 2,000MW.
Through cross-border exchanges of cheap and cleaner surplus power from neighbouring countries, the project’s ultimate objective is to improve the electricity supply in Eastern Africa. Completion is planned for the end of June 2024.
For private-public partnerships to be successful, private investors must align with the government’s plans.
The Eastern Africa Power Pool is facilitating trade with the Southern African Power Pool (SAPP). The construction of a transmission line to connect Tanzania and Zambia was underway at the time of publication.
The Southern African Power Pool (SAPP) is actively taking steps to ensure the interconnection of the power grids of its 12 member states. According to the Southern African Research and Documentation Centre (SARDC), all mainland SADC counties – excluding Angola, Malawi and Tanzania – are interconnected to the regional grid through SAPP, allowing them to trade in electricity.
The SAPP has also embarked on ten transmission projects to ensure that all its members are interconnected and that the regional grid is strengthened to facilitate greater power trading by 2024.
The SARDC also named the construction of two regional transmission power projects as a priority for the SAPP. These are the ZiZaBoNa Interconnector Project linking Zimbabwe, Zambia, Botswana and Namibia and the Angola-Namibia interconnector to connect Angola to SAPP.
Adding to West African Power Pool development, the President of Ghana commissioned the 330kV KumasiBolgatanga Power Transmission Project in 2022 to export electricity to Burkina Faso.
Despite these developments, stakeholders must undertake more projects to solidify interconnected regional transmission lines and prepare the continent for a renewable energy transition.
During an Africa Energy Forum (aef) session discussing the viability of public-private partnerships (PPPs) in supporting and growing regional transmission projects, panellists expressed that PPPs could be the solution to closing the existing financing gap for transmission projects.
Robert Voskuilen, Energy Manager at the Dutch development bank FMO, said that things move faster when the private sector is involved. However, private sector involvement in regional transmission projects presents its own challenges due to the need for thorough regional planning and policy development.
The SAPP is looking at strategies to facilitate private participation in regional transmission development. Given that the SAPP has no regional regulator, it is guided by its internal policies and procedures in line with the SADC’s mandate. For public-private partnerships to be successful, private investors must align with the government’s plans. Therefore, each country needs to set clear obligations in its master plans, Vosuilen said. He further advised that the private sector should be involved from the start to create a replicable and scalable model.
As John Mativo, Managing Director and CEO of KETRACO (Kenya Electricity Transmission Company), said the transmission company has been fortunate to have received capacitybuilding finance in the past, but the transmission company is looking to private sector funding and government participation to fill the $3.5 billion funding gap. To encourage private sector participation, Kenya has also instated its PPP act which governs the involvement of private sector players.
Panellists of the aef session agreed that these kinds of regulations and crossborder laws inhibit the implementation process of regional transmission projects. They agreed that the private sector would have to be involved from the start to create a replicable and scalable model through a solid contract structure to make regional transmission projects successful.
Neb Girma, Practice Lead Senior Director at MCC, expressed that creating an enabling environment for policy and reform is crucial in making these transmission projects viable.
Mutale Mukaka, CFO of Copperbelt Energy Corporation, said that issues around bankability are also important aspects to consider. Mukaka noted that players involved in these projects should carefully ensure that the correct party picks up the risk.
He suggested that the government should not necessarily be responsible for accepting all risks and obligations but can instead support the project regarding regulations and tax while financiers address bankability issues.
In addition to these considerations, Ziria Tibalwa Waako, CEO of the Electricity Regulatory Authority in Uganda, suggested that policymakers and regulators ensure that the structures put in place are predictable and inclusive of wheeling, transmission and electron charges.
When implementing regional transmission projects with private and public players, tariffs must be negotiated and approved by both parties in line with regional regulators. Therefore, Waako also noted that stakeholders must conduct a comprehensive risk assessment to ensure accurate demand and supply analysis. She added that there should be commitments regionally without question about whether people would pay.
For interconnection to be successful, Voskuilen concluded, all parties must be secure on financial and trade risk and the parts they each play in managing these risks. However, he said regional interconnection between countries is only possible if the political will exists. ESI
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