Eastern African countries are set to begin trading electricity through a centralized system by early 2025. The Eastern Africa Power Pool (EAPP) is spearheading the initiative, which will see member states participate in a day-ahead electricity market. This innovative approach is expected to enhance efficiency, transparency, and competitiveness across the region’s power sector, while contributing significantly to the global push for clean energy adoption.
The EAPP comprises 13 member countries, including Kenya, Uganda, Tanzania, Ethiopia, Rwanda, Burundi, and Sudan. Together, these nations aim to connect 600 million people to clean energy by 2030 through strategic investments in existing and new power interconnections. The day-ahead market will serve as a trading platform where electricity can be bought and sold in advance, based on anticipated demand and supply.
Enhancing Regional Cooperation
Speaking at the EAPP conference’s opening ceremony, Kenya’s Cabinet Secretary for the Ministry of Energy and Petroleum, Opiyo Wandayi, highlighted the transformative potential of the centralized platform. He emphasized that the system would enable countries to optimize their energy resources, meet fluctuating demand, and foster equitable trade through effective price discovery.
“This platform will not only enhance efficiency and transparency but also unlock competitiveness, driving down electricity costs for consumers,” Wandayi remarked.
The system leverages a mix of existing and new interconnections to enable multilateral trading. This represents a significant shift from bilateral agreements, which have historically dominated the region’s energy trade. By allowing countries to pool their energy resources, the initiative ensures better utilization of renewable energy sources like hydro, wind, and solar, which are abundant in the region.
Preparing for Launch
Hon. Okaasai Opolot, Chairperson of the Council of Ministers, assured stakeholders of the council’s commitment to providing the necessary support for the market’s launch. He called upon regional utilities and regulators to allocate resources towards the development of market rules, a trading platform, and the appointment of a market operator.
“The council is dedicated to facilitating the seamless implementation of this initiative. By early 2025, we anticipate a fully operational day-ahead market that will revolutionize how Eastern African countries trade electricity,” Opolot stated.
The successful implementation of the market is expected to address pressing challenges, such as rising power tariffs and electricity shortages, which have plagued the region due to increasing demand and limited infrastructure.
Impact on Energy Costs
One of the most significant benefits of the initiative is the potential reduction in electricity costs. With the ability to trade surplus power and tap into cheaper renewable energy sources, countries can achieve economies of scale and stabilize their power grids. This will likely result in lower tariffs for consumers, despite the ongoing volatility in global energy markets as they transition to cleaner sources.
However, experts caution that price fluctuations may persist in the short term as markets adjust to the new trading mechanisms. Factors such as weather patterns affecting renewable energy production and geopolitical influences on energy supply chains could still impact electricity prices.
Path to Clean Energy
The EAPP’s efforts align with global goals to combat climate change by reducing reliance on fossil fuels. By enabling cross-border electricity trade, the initiative promotes the use of renewable energy, reduces wastage, and supports economic growth across Eastern Africa.
As the region progresses towards the market’s launch, the collaboration between member states will be critical. Investments in infrastructure, regulatory harmonization, and political goodwill will play pivotal roles in ensuring the initiative’s success.
Ultimately, the EAPP’s day-ahead market is poised to be a game-changer for the region, fostering sustainable development, economic integration, and improved energy access for millions of people.
