EA states stuck with excess power after building billion-dollar plants
Delays in implementing transmission lines could lead to financial losses.
IN SUMMARY
While investments in power generation projects have significantly increased their installed capacity, they have also resulted in what could become a paradox.
Currently, electricity surplus in the region stands at 878MW, with only Tanzania and Rwanda experiencing a deficit.
The surplus power is projected to hit 3,430MW by 2025.
Over the past decade, countries in East Africa have made multibillion-dollar investments in power generation, to connect more consumers to the grid and spur industrial as well as economic growth.
But while investments in power generation projects in Ethiopia, Kenya, Uganda, Tanzania and Rwanda have significantly increased their installed capacity, they have also resulted in what could become a paradox — excess capacity that could see countries suffer financial losses.
Currently, electricity surplus in the region stands at 878MW, with only Tanzania and Rwanda experiencing a deficit.
The surplus power is projected to hit 3,430MW by 2025.
Apart from national priorities, the investments in generation were driven by the understanding that the region will be a single power market interconnected through the Eastern Africa Power Pool (EAPP).
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The EAPP would farther connect with the Southern and West African markets, effectively transforming Africa into an integrated power trade market.
Financial losses
But delays in implementing transmission lines have led to fears that countries could suffer financial losses with electricity generation plants that cannot produce to full capacity.
Key projects that were expected to anchor electricity trade, particularly the Ethiopia-Kenya-Tanzania high-voltage lines, are behind schedule, which has denied countries with excess capacity the opportunity to trade in power and those with deficits to bridge the gap.
An analysis by the US government-led Power Africa Initiative shows that Ethiopia has the potential to earn over $200 million in power exports to Tanzania over the next four years.
Tanzania on its part could save up to $500 million by substituting its expensive emergency power with cheap imported electricity.
The Uganda-Rwanda line, the study notes, would save Rwanda $1.3 million to $2 million per month — money being spent on diesel generation — in 2019-2020. The savings represent about 15 per cent of the Rwandan utility’s monthly spend on energy.
Experts say that failure to accelerate regional interconnection to facilitate the power trade puts countries with excess power in a precarious situation due to charges that come with idle capacity.
“It is unfortunate that consumers are unable to utilise all the electricity produced, because sectors like manufacturing have not expanded in tandem with generation,” said Lamarck Oyath, managing director of renewable solutions firm Lartech Africa.
In Kenya, for example, the World Bank declined to guarantee the 310MW Lake Turkana Wind Power (LTWP) due to the country’s weak grid, delays in completing the transmission line to evacuate the power, and concerns over the country’s ability to absorb all the power.
Now, LTWP has admitted that the windfarm in Turkana County in the north cannot generate optimally, with maximum generation capacity set at 65 per cent, yet Kenyan taxpayers had to pay a fine of $52.5 million after the government failed to complete the transmission line.
Kenya Power has also signed a power purchase agreement with LTWP and other generators that give them the comfort of recouping their investment despite the idle capacity.
Challenge
The challenge of surplus electricity has prompted Power Africa Initiative to mobilise at least $3 billion to help finance priority transmission lines to facilitate electricity trade in Africa.
“Unused power generation facilities result in lost opportunities and lost revenues for governments,” notes the Power Africa Transmission Report.
East Africa’s peak supply that stood at about 7,800MW last year and is expected to grow to about 17,800MW by 2025, with peak demand of about 7,000MW growing to about 14,400MW.
Uganda is the latest country to experience excess capacity following the commissioning of the 183MW Isimba hydropower dam, which pushed the country’s power generation capacity to 1,167MW, way above a peak demand of about 600MW.
In Kenya, power generation capacity stands at 2,250MW, against a demand of 1,640MW while in Ethiopia, the installed capacity stands at 4,206MW against a demand of 3,700MW.
Ethiopia and Kenya will have excess capacity, reaching as high as 1,900MW for Addis, when ongoing projects start generation.
Tanzania and Rwanda, which are currently experiencing a deficit of 485MW and 13MW respectively, will also have peak surplus when ongoing projects come on-stream.
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