SOUTHERN AFRICAN POWER POOL
ENERGY TRADING IN THE
SOUTHERN AFRICAN POWER POOL
Alison ChikovaChief Engineer
March 2009Durban, South Africa
SOUTHERN AFRICAN POWER POOL
CONTENTS
1. Introduction to SAPP
2. History of Inteconnections
3. Bilateral Energy Trading
4. Short Term Energy Market Trading
5. Day Ahead Market Trading
6. Trading Platform Functions
SOUTHERN AFRICAN POWER POOL
INTRODUCTION TO THE SAPPGeographic
DR CongoTanzania
ZambiaAngola Malawi
Zimbabwe
MozambiqueBotswanaNamibia
South AfricaLesotho
Swaziland
12 Countries 230 Million people Average Electricity
growth rate 3% p.a. For South Africa
demand growth was 4.9% in 2007 and for whole region 4.6%.
SOUTHERN AFRICAN POWER POOL
Historic
1950s: DRC – Zambia 500 kV HVDC -1700km
1960s: Zambia – Zimbabwe330 kV at Kariba Dam(Zambezi River)
1975: Mozambique – South Africa 533 kV HVDC – 1400 km
DRCDRC
TanzaniaTanzania
AngolaAngolaZambiaZambia
MalawiMalawi
MozambiqueMozambique
ZimbabweZimbabwe
BotswanaBotswana
NamibiaNamibia
South AfricaSouth AfricaSwazilandSwaziland
LesothoLesotho
SOUTHERN AFRICAN POWER POOL
Thermal Southern Network Thermal Southern Network
DRCDRC
TanzaniaTanzania
AngolaAngolaZambiaZambia
MalawiMalawi
MozambiqueMozambique
ZimbabweZimbabwe
BotswanaBotswana
NamibiaNamibia
South AfricaSouth AfricaSwazilandSwaziland
LesothoLesotho
Hydro Northern NetworkHydro Northern Network
HISTORIC
SOUTHERN AFRICAN POWER POOL
Angola Botswana DRC Lesotho Mozambique Malawi Namibia Tanzania South Africa Swaziland Zambia Zimbabwe
Dem Rep of CongoCongoGabon
Luanda
Windhoek
Lusaka
Harare
Lilongwe
Nairobi
Dar es Salaam
GaboronePretoria
Johannesburg
Cape Town
MaputoMbabane
KinshasaBrazzaville
Angola
Tanzania
Kenya
Mozambique
South Africa
Swaziland
Lesotho
Namibia
Zambia
BotswanaZimbabwe
Malawi
RwandaBurundi
H
H
H
H
H
H
H
H
H
HH
H
H
HH
H
PH
H
T
T
T
T
TT TT
TTTTT T
T
T
HH
H
TH
P
N
HH
H
T
Hydro stationPumped storage schemeThermal Station
P
SAPP Membership
SOUTHERN AFRICAN POWER POOL
1.5.2 Generation Mix
74.3% Coal
20.1% Hydro
4.0% Nuclear
1.6% Gas/Diesel
SOUTHERN AFRICAN POWER POOL
No. Country UtilityInstalled Capacity
[MW]
Available Capacity
[MW] As at FEB
2009
Installed minus
Available [MW]
2008 Peak Demand
[MW]
Capacity Required
[MW]
Shortfall ( MW)
10.2% Reserve1 Angola ENE 1 128 870 258 6682 Botswana BPC 132 90 42 5033 DRC SNEL 2 442 1 170 1 272 1 0284 Lesotho LEC 72 70 2 1085 Malawi ESCOM 302 246 56 259.66 Mozambique EDM 233 174 59 415.64
HCB 2 250 2 075 175 7 Namibia NamPower 393 360 33 4448 South Africa Eskom 43 061 38 384 4 677 35 9599 Swaziland SEB 51 50 1 20010 Tanzania TANESCO 1186 680 506 69411 Zambia ZESCO 1 737 1 200 537 1 49512 Zimbabwe ZESA 2 045 1 080 965 1 397
55 032 46 449 8 583 43 171 47 575 (1 126)
52 416 44 653 7 763 41 550 45 788 (1 135) Total Interconnected SAPP
TOTAL SAPP
SAPP DEMAND AND SUPPLY SITUATION
SOUTHERN AFRICAN POWER POOL
1.5.3 COUNTRY CONTRIBUTION INSTALLED CAPACITY
80.4% South Africa 5.0% Mozambique4.1% Zimbabwe3.6% Zambia2.6% DRC4.4% Rest
SOUTHERN AFRICAN POWER POOL
The SAPP Vision is to:
Facilitate the development of a competitive electricity market in the Southern African region.
Give the end user a choice of electricity supply.
Ensure that the southern African region is the region of choice for investment by energy intensive users.
Ensure sustainable energy developments through sound economic, environmental & social practices.
SAPP Vision
SOUTHERN AFRICAN POWER POOL
Management Structure and Governance Structure
SADC-DIS
Executive Committee RERA
Management Committee
Planning Sub-
Committee
Operating Sub-
Committee
Coordination Centre Board
Coordination Centre
Environmental Sub-
Committee
Markets Sub-
Committee
SAPP Management & Governance Structure
SOUTHERN AFRICAN POWER POOL
SAPP Reporting Protocol
Directorate of Infrastructure and Services
Committee of Senior Government Officers
Integrated Council of Ministers
Council
SAPP
SOUTHERN AFRICAN POWER POOL
TRADING ARRANGEMENTS
Some countries in the SAPP have excess Generation Capacity, others have deficit:
The result is energy flow between member countries in form of energy trading.
Northern network is predominantly hydro and Southern network thermal:
Good generation mix that mitigates drought Members share in the resulting benefit.
Rationale for Power Trading
SOUTHERN AFRICAN POWER POOL
BILATERAL CONTRACTS Takes up 90-95% of energy trade: 15 - 20 TWh Peak and standard times.
STEM The short-term energy market (STEM) was introduced in
April 2001 Precursor to full competition Caters for 5-10% of energy trade: 0.8 – 4.3 TWh Daily and hourly contracts Off-peak periods
Competitive Market Development Development of competitive market in the form of a Day-
ahead Market (DAM) started in 2003. The SAPP is also developing an Ancillary Services Market
and a Balancing Mechanism.
SOUTHERN AFRICAN POWER POOL
BILATERAL CONTRACTS Can be firm on non-firm contracts
Non-firm contracts: Are interruptible with notice If notice given, no penalties Generally less than 75% reliable.
Firm contracts: Most have attached reliability premium Penalties for non-delivery applies.
SOUTHERN AFRICAN POWER POOL
2008 Bilateral Contracts in SAPP
96210200
120100
2501370
100150
80454040
950270
0 200 400 600 800 1000 1200 1400
Eskom-SEC
Eskom-BPC
Eskom-NamPower
Eskom-EdM
Eskom-LEC
HCB-ZESA
HCB-Eskom
SNEL-ZESA
SNEL-Eskom
ZESA-NamPower
EdM-BPC
EdM-NamPower
EdM-SEC
Eskom -MOZAL
HCB-EdM
Capacity [MW]
SOUTHERN AFRICAN POWER POOL
STEM DEMAND AND SUPPLY
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2001 2002 2003 2004 2005 2006 2007Year
Ener
gy in
GW
h
Supply Demand
SOUTHERN AFRICAN POWER POOL
STEM TRADING: ENERGY TRADED AND COST
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2001 2002 2003 2004 2005 2006 2007
Year
Ener
gy a
nd C
ost
Energy Traded ( GWh) Monetary Value (USD x 1000)
SOUTHERN AFRICAN POWER POOL
Bilateral contracts
PREVIOUSLY
Bilateral contracts Short-Term Energy Market (STEM) - 2001 Post STEM (Balancing Market) - 2002
CURRENT
Bilateral contracts Day-Ahead Market (DAM) – From 2008 Ancillary Services Market – From 2010 Balancing Mechanism – From 2010
FUTURE
POWER TRADING EVOLUTION
SOUTHERN AFRICAN POWER POOL
THE SAPP COMPETITIVE MARKET
GOALS of the SAPP DAM design: Establish an efficient and competitive marketplace Ensure that consumers benefit from the market
METHODOLOGY: Development of consistent market mechanisms. Efficient price signals for the procurement and
transmission of electricity. Assurance of fair and open access to the
transmission system. Optimization of generation & transmission capacity.
Goals and Methodology
SOUTHERN AFRICAN POWER POOL
Day Ahead Market … Market place for secure, effective and non-
discriminatory trade of electricity o Trading conducted daily for delivery next dayo Forward bidding up to ten dayso Participants submit (purchase) bids and (sale)
offers o Only market operator and participant know
their own bids Provides a neutral reference price
o Price discoveryo Over-time provides reference for bilateral
contracts o Market Clearing Price (MCP) valid for all trades
SOUTHERN AFRICAN POWER POOL
DAM Design Principles
1. Market type Auction type market Participants bid into market for all 24 hrs of
next/future day.
2. Bidding Participants submit both purchase & sale bids. Types of bids: Single hour and Block bids.
3. Bid areas Multiple bid areas with configurable transmission
capacities between areas.
SOUTHERN AFRICAN POWER POOL
4. Price calculation At defined time, market closes & Market Clearing
Price (MCP) calculated. MCP is price where supply equals demand without
taking transmission constraints into consideration.
5. Congestion Management Calculated contract flow between bid areas
computed & compared with available transmission capacity for spot trade.
In case of congestion, market splitting performed, and local area prices calculated.
6. Auction results Participants receive area prices with associated
volume. Multiple currencies.
SOUTHERN AFRICAN POWER POOL
SOUTHERN AFRICAN POWER POOL
SOUTHERN AFRICAN POWER POOL
CHALLENGES IN POWER TRADE
Limited transmission capacity leads to congestion.
Lack of monitoring system at SAPP Coordination Centre to trace transactions (contracts).
Adherence to schedules leading to inadvertent energy.
SOUTHERN AFRICAN POWER POOL
OPPORTUNITIES IN POWER TRADE
Regional market diverse.
Optimal use of regional resources.
Generation mix consists of hydro / thermal.
Correct price of electricity in the Pool determined.
Send signals for investment for power generation and transmission projects.
Enables demand side to respond to supply side signals.
SOUTHERN AFRICAN POWER POOL
Challenges experienced by SAPP at start of the pool:
Language of communication Local languages Foreign languages - English, French or Portuguese?
Dispute resolution How will disputes be resolved? Who will be the referee?
Harmonisation Issues Different legal frameworks Different technical standards
STARTUP CHALLENGES
SOUTHERN AFRICAN POWER POOL
Competitive or Co-operative pool SAPP is moving from cooperative to competitive pool. Power sector reforms taking place in member countries
at the same time as the SAPP transition – Uncertainty? SAPP governance and membership
Settlement Cost allocation of SAPP budget to members Delays in membership fee settlements
Regional and Individual Priority Projects What is a priority project and what criteria should be
used to define it? What is a regional project? Reduction in generation capacity – what next?
OPERATIONAL CHALLENGES
SOUTHERN AFRICAN POWER POOL
Transmission Projects
2010: Mozambique Malawi
2011: DRC - Zambia
2014: Zambia - Tanzania
DRCDRC
TanzaniaTanzania
AngolaAngolaZambiaZambia
MalawiMalawi
MozambiqueMozambique
ZimbabweZimbabwe
BotswanaBotswana
NamibiaNamibia
South AfricaSouth Africa
SwazilandSwaziland
LesothoLesotho
2010 -2011: ZIZABONA
2012 -2014: WESTCOR
2015: EASTERN CORRIDOR
SOUTHERN AFRICAN POWER POOL
BURKINAFASO
INTERCONNECTING POWER POOLS IN AFRICA
SAPP
SOMAL
IA
CONG
O
ALGERIAMOROCCO TUNISIA
MAURITANIA
GUINEE
SENEGALGAMBIA
SIERRA LEONELIBERIA
LESOTHO
SWAZILANDMOZA
MBIQUE
MADA
GASC
AR
MALAW
I
TANZANIA
KENYA
OUGA
NDA
R.B.
ETHIOPIA
DJIBOUTI
ERITERA
GUINEE-BISSAU
COMORES
SAO TOME &PRINCIPE
LIBYA
NIGERMALI
COTED’IVOIRE GH
ANA
TOGO BE
NIN
GUINEE EQ.
TCHAD SUDAN
RCA
NIGERIA
ANGOLA
RSA
BOTSWANA
CAME
ROUN
GABONRD CONGO
NAMIBIAZIMBABWE
ZAMBIA
EGYPT
COMELEC
WAPP
EAPP (+ RDC, Rwanda , Burundi)
CAPP
POWER POOLS IN AFRICA
Top Related