Electricity Market Design for African Power Pools

Abstract

The situation of power system reforms in Africa displays incomplete reform steps and unfulfilled goals. The performance statistics of the power system are very low and tremendous efforts remain to be exerted to bridge the gap. Reforms in Africa were pursued with the end goal of creating an electricity market on both the national and the regional levels. While none of African countries’ experiences was successful in creating a national market, the regional efforts succeeded in creating a regional competitive market. Currently in Africa, five power pools are under development for creating regional markets that cover the entire continent of Africa. These power pools are in different stages of development and little attention has been given to study them. Our research aims to provide for the first time a thorough understanding of the function and the factors that shaped the development of African power pools. Through a comparative case study, we investigate the three biggest and most advanced power pools in Africa to answer the question of "How can the design of regional power pools in Africa be adapted to facilitate the sustainable energy transition, improve service quality and economic efficiency?". In this research, we provide a comprehensive understanding of African power pools by building on market design theory and integrating the theories of organization, capacity building, and regional integration. Based on theory and our empirical findings, we formulate a framework that explains the factors and dynamics of developing and designing regional power pools. The report concludes with a series of policy recommendations for the different actors and recommendations for further research.