Stanbic Bank Botswana says power trading agreements between countries that possess excess power generating capacity and those battling supply shortages will be a dominant theme in the electricity markets of south-central African nations in the next three to five years.
Stanbic Bank’s Head Corporate and Investment Banking division Shepherd Aisam said electricity shortage across Southern Africa will drive power to become one of the most tradeable commodities across the region in the coming years. He added that almost every aspect of a modern economy relies on electricity to function, so countries that emerge as the ones with excess supply will have significant negotiating power. He gave the example of Botswana which imports power at tariffs which are above the regional average.
“The drive towards alternative energy sources and the availability of eager private sector participants will most likely lead to more generation projects being established alongside those mentioned above leading to more capacity,” said Aisam.
He is of the view that Botswana, with its extensive coal and coal bed methane (CBM) reserves, has the potential to produce more electricity than its economy requires. He also stated that once ongoing projects are completed and the country achieves energy self-sufficiency, it is likely to be one of the key suppliers with Namibia and Zambia expected to be the main purchasers in the region, after South Africa. He believes that the biggest challenge to these arrangements will be reliable and stable transmission networks to facilitate the seamless transfer of electricity between sellers and purchasers. Since these networks require significant co-operation between neighbouring countries, the role of the Southern African Power Pool (SAPP) in ensuring cross-border planning, investment and trading between member states remains critical.
“Challenges that Botswana faces in the journey towards becoming a net exporter of power are weak regional transmission infrastructure and the drive towards clean energy. Botswana’s energy mix is highly skewed towards coal and the environmental concerns around coal make it a less favoured option in some quarters,” he stated.
He added that legislative provisions and the encouraging response by the private sector indicate a positive trend towards more private sector participation and the diversification of the country’s energy mix.
“The expertise and resources of the private sector will speed up progress to the envisaged energy self-sufficiency by 2018,” he said.
He says indications are that most countries in the region will continue to experience shortfalls for the foreseeable future so it is absolutely imperative that the continent consider an adequate power trading mechanism in addition to investments in generating infrastructure. Aisam stated that recent drought conditions in the south-central region have revealed the risks of hydro power, and Botswana’s thermal energy resources can augment regional supply and add diversity to the regional energy mix.
“Improved transmission line infrastructure would enable Botswana to grow power exports. While the country is currently a net importer of power, it is imperative that existing infrastructure be improved and more be developed to enable any future surpluses to be exported with ease,” he said.