Laboratory Laboratory of of Energy Energy Systems Systems
Electricity Market in West Africa Which model for a reliable supply of electricity in Afric...
Laboratory Laboratory of of Energy Energy Systems Systems
Electricity Market in West Africa Which model for a reliable supply of electricity in African countries ?
E. Gnansounou Laboratory of Energy Systems (LASEN) ENAC / EPFL LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Electricity market under competitive conditions – Contents – Necessity of the restructuring of Electricity sector in the SubSaharan African countries Reasons of the low performance of the reforms Need of an ambitious regional integration A scenario of a regional integrated Electricity market in West Africa The cost of the « nationalism paradigm » in Electricity sector Conclusion LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Necessity of the restructuring of the Electricity sector in the Sub-Saharan African (SSA) countries Most of the SSA countries are suffering from severe lack of energy infrastructures including electricity generation, transmission and distribution The costs of this under-development exceed the expenses required for a reliable and optimal Electricity supply
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Necessity of the restructuring of the Electricity sector in the Sub-Saharan African (SSA) countries
High need of investment for the development of the Electricity sector in the World Investment required for the development of the electricity sector (WEC)
Period
1990-2020
2021-2050
Amount
12’000 G$
22’000G$
Share of Developing countries LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
32%
48%
Laboratory Laboratory of of Energy Energy Systems Systems
Necessity of the restructuring of the Electricity sector in the Sub-Saharan African (SSA) countries
SSA countries are in competition with other developing countries for investment and their capability to raise fund for developing their power sectors is low The returns on net fixed assets are still very low in most SSA countries (< 4%), even negative in many countries
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Necessity of the restructuring of the Electricity sector in the Sub-Saharan African (SSA) countries
Poor management performance of the electricity utilities and therefore the lack of capital to expand the electricity system are the main reasons that push forward the necessity to restructure the Electricity sector in SSA countries
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Reasons of the low performances of the ongoing reforms The reforms focus mainly on the privatization of the public utilities in a country-wide framework There is no ambition to end with the long history of « nationalism paradigm » in the Electricity sector The sizes of the national markets are not attractive for the investors
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Need for an ambitious integration The Southern African Power Pool (SAPP) shows the way, the Western African Power Pool (WAPP) is following But the Pools’ vision in Africa still mostly relies on « Nationalism Paradigm », with a priority given to cooperation amongst national Electricity systems
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Need for an ambitious integration The most attractive perspective for the long term (beyond 2010) should be an integrated regional Electricity markets including a high share of standardized spot markets in order to best share the risks between the consumers and the suppliers.
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 1, 2004-2010: Transition to a regional Electricity market -
Build an integrated Interconnected Electricity Grid in West Africa
-
Update the Project of the Electricity Generating Plants in view of a regional Electricity Market
-
Launch a voluntarist rural Electrification programme coupled with a revitalization programme of the economy
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 1, 2004-2010: Transition to a regional Electricity market -
Set up an efficient regulatory and harmonized framework in West African countries
-
Improve highly the management performance of the existing electricity companies in order to increase their financial capability
-
Intensify the rehabilitation of the Electricity infrastructures in the view of the future regional market LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 1, 2004-2010: Transition to a regional Electricity market: cooperative sub-regional markets -
Develop the Western Africa Natural Gas Pipeline
-
Expand the capacity of the Electricity Generating Systems on the basis of cooperative sub-regional markets and competitive bidding
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 2, 2011-2015: Single buyers model IPP
IPP
IPP
IPP
Own generators
IPP
Regional Electricity market
Wholesale purchasing agents
Distco
Customer
Distco
Customer
Distco
Customer
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
MO Wholesale purchasing agents
Distco
Customer
Customer
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 2: The prerequisites of the single buyers Model Limit the activities of the previous monopoles in the field of Electricity Generation in order to allow new entries Structure the regional Electricity Market around a Market operator offering as well standardized contracts as facilitations to set the Forward contracts LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 2: The prerequisites of the single buyers Model National or subregional regulation commissions will prevent from collusion between the single buyers and the electricity producers and will supervise a fair repercussion of the gain of productivity over the electricity selling prices to the consumers
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 2: The prerequisites of the single buyers Model A regional regulation commission will take charge of the efficient operation of the regional market, in particular will make sure that there is no collusion between the market operator, the producers and the national or subregional single buyers, especially in the case of the standardized markets LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
A scenario of a regional integrated Electricity Market in Western Africa Phase 3: Beyond 2015, the era of the retail markets IPP
IPP
IPP
IPP
IPP
Regional Transmission network
ISO, MO
Wholesale market
Distco
Distco
Distco
Distco
Local Transmission and Distribution networks
Retail market Customer
Customer
Customer
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Customer
Laboratory Laboratory of of Energy Energy Systems Systems
Evaluating the cost of the « nationalism paradigm » in the Electricity supply We have compared two strategies -
The first refers to the « nationalism paradigm » presently prevailing in the Electricity supply systems of the most African countries
-
The second concerns a full integrated Electricity market in West Africa
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Evaluating the cost of the « nationalism paradigm » in the Electricity supply Comparison basis of two strategies : Present worth (2010-2030) including -
Investment minus salvage value Fuel cost Operation and maintenance cost Cost of the unserved energy
The production of each plant is simulated using a probabilistic model taking into account the outage of the Power plants as well as the scheduled maintenance LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Outline of the Model used: PlanElec Pro
Database
Module 1 Load description
Module 2 Fixed system
Module 3 Variable system
Module 4 Generation of the configurations
Module 5 Probabilistic simulation of the configurations Module 6 Optimization of the expansion
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Report Writer
Laboratory Laboratory of of Energy Energy Systems Systems
The main results: « Nationalism versus Integration» 110'000 100'000 90'000 80'000 70'000 60'000 50'000 40'000 30'000 20'000 10'000 0
2000
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Guinea
Ivory Coast
Mali
Senegal
Sierra Leone
Liberia
Guinea Bissau
Gambia
Niger
Burkina faso
Togo
Benin
Nigeria
2010 2030
Ghana
GWh
Electricity demand in 2000, 2010, 2030
Laboratory Laboratory of of Energy Energy Systems Systems
The main results: « Nationalism versus Integration»
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Others
ECOWAS
Laboratory Laboratory of of Energy Energy Systems Systems
The main results: « Nationalism versus Integration» Average levelized electricity generating cost 2010-2030 8.00 7.00
ctsEURO/kWh
Integration paradigm 6.00
Nationalism paradigm
5.00 4.00 3.00 2.00 1.00 0.00 Benin
Burkina Faso
Niger
Mali
Senegal
Cost of the « Nationalism Paradigm » (Period 2010-2030): 4471 Million Euro LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
The main results: « Nationalism versus Integration» Electricity exchange in the nationalism paradigm, 2010-2030
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
The main results: « Nationalism versus Integration» Integration paradigm
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Conclusion The results are imprecise in many aspects -
The existing data on electricity demand in West African countries (WAC) are not reliable
-
The existing projects of capacity expansion in WAC that have been considered in the fixed system do not take into account the perspective of integration
-
The cost of the energy not served should be evaluate more accurately LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Conclusion The results are imprecise in many aspects - The integration paradigm here assumed that competition is perfect in the electricity generation and retail segments. In case of oligopoles, the benefits will be reduced - The problems of stability of the grid due to the long carrying distances and very variable loads should be stated and carefully analyzed. Mitigation costs should be taken into consideration. LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Conclusion Despite these limitations, it is clear that WAC should change their present paradigm and develop a strong confidence in a regional security of Electricity supply Political stability will help in strengthening the security of supply but it is not a prerequisite
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
Laboratory Laboratory of of Energy Energy Systems Systems
Conclusion There is a strong need for a research on a regional security of the Electricity supply in a competitive environment. This kind of research will help in convincing the national stakeholders to firmly adopt the integration paradigm
LASEN- LRE /EPFL/ 25/06/2003/ Dr Edgard Gnansounou
