AREP - MDTF 2016-23, support to SAPP/EAPP for reg electricity trade &integration
Contribution ID : SE-0-SE-6-51050107This website displays open data about Swedish aid, which shows when, to whom and for what purpose Swedish aid is paid out, as well as what results it has produced. This page contains information about one of the contributions financed with Swedish aid.
This is a contribution to a multi-donor Trust Fund administered by the World Bank with the aim to accelerate the construction of regional transmission lines of renewable energy generation plants in Southern and Eastern Africa, and to help these countries to build a regional power trading. The contribution is mainly channelled to the Southern African Power Pool...
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This is a contribution to a multi-donor Trust Fund administered by the World Bank with the aim to accelerate the construction of regional transmission lines of renewable energy generation plants in Southern and Eastern Africa, and to help these countries to build a regional power trading. The contribution is mainly channelled to the Southern African Power Pool (to the so-called project acceleration team) and the Eastern Africa Power Pool . This support includes considerable efforts for capacity and organisational development and strategic sector studies related to the development of regional power trade .
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Result
As the Swedish support forms part of a larger program financed by many Developing Partners, it is sometimes difficult to give specifics of the MDTF (Swedish financed) part. However, in this chapter, most results are attributable to Swedish financing. The results in the SAPP part, could be linked to the three focal areas of the support 1) Enhancing an electricity trade enabling environment including capacity building, political economy, system planning, market instruments and regulation. 2) Unlocking regional transmission constraints, i.e. supporting building of transmission lines 3) Advancing decarbonisation and scaling up renewable energy production units, i.e. supporting feasibility studies for renewable energy plants, particularly in solar, wind and hydro. In the first area there are 3 main results, i.e. i) the establishment of an Advisory Unit at SAPP offices in Harare ii) the development of a Regional Environmental and Social Management Framework (ESMF) and iii) the development of a Regional Master Plan (SAPP Pool Plan). In the second area there are also 3 main results; i) the SAPP-EAPP Interconnection Study has been finalised ii) Feasibility studies for specific pipeline projects has been finalised (eight with IDA/MDTF funding and 7 with other financing) iii) A Project Development Readiness Assessment (PDRA) tool has been developed to help member countries to more effectively develop there transmission connections and renewable power generation facilities. In the third area a Regional Renewable Energy Integration Study has been finalised. In respect to results under the EAPP component, achievements have been made in the following five activity areas; 1) Technical and fiduciary capacity strengthening 2) Operational readiness 3) Stakeholder engagement 4) Operationalization of technical committees 5) Elaboration of a EAPP Short Term Action Plan. EAPP has made substantial progress from the start of the AREP engagement. The EAPP general secretariat has been strengthened with budget, staff, and advisers and is now able to deliver results to its members and is coordinating more effectively with regional stakeholders and development partners. The EAPP technical committees have been reinvigorated and the stage 1 of the Interconnection Code program is almost complete. There is an agreement on the strategic direction, action plans, and monitoring frameworks between MS, GS and donors. MDTF funded technical assistance has been provided to the Operations and Planning Committees of the EAPP. The TA has spanned approximately 2 years and will be completed 2021. Capacity building for technical committees was also provided with the aim of carrying forward the work after the consultancy ends – working groups being established. A Senior adviser has been brought on board to leverage experience from SAPP. There has been strong participation by the member utilities. 1:1 meetings with each member utility is currently ongoing to discuss findings and next steps. The plan is to develop the regional power market in a phased manner: growing bilateral trade followed by the implementation of a competitive market. At an initial phase EAPP will play a key role in supporting bilateral trade: facilitating PPA negotiations and commercial agreements between utilities, adopting contract templates for power purchases and wheeling and adopting rules for x-border imbalances. Institutional strengthening and stakeholder outreach is key for moving regional integration agenda forward and has and will contain i) the revitalization of Technical Committees for Operations, Planning, Market, ii) Next EAPP Short Term Action Plan finalized early 2021, iii) Donor coordination and workshops on i.a. private capital injection i transmission finance and iv) facilitate the integration of Somalia, Eritrea, and South Sudan into EAPP.
The International Development Association (IDA) (The World Bank) established a Multi-Donor Trust Fund (MDTF) called Advancing Regional Energy Projects in Southern and Eastern Africa (AREP) to channel interested donors funding towards the objectives of connecting countries through energy transmission lines and to establish a platform for regional power trade. Sida was the first donor, with a financial agreement in 2016 with the World Bank at an amount of SEK 158 million allocated to the MDTF. At the beginning of 2021 Norway also joined the fund with additional 100 mNOK. The World Bank contributes with 25 million $ in parallel funding and other donors like AfDB, USAID, AfD also contributes with parallel funding. The World Bank has since 2019 an engagement strategy with substantially more financing for regional energy integration lined up. It is called the Regional Integration and Cooperation Assistance Strategy (RICAS) for Africa for a five year period up to 2023. The overall objectives of the AREP Multi-Donor Trust Fund is to extend reliable and sustainable electricity supply in Southern and Eastern Africa. The anticipated specific outcomes are: (a) advance the preparation of prioritized regional non-fossil energy projects (both transmission and generation) in Southern and Eastern Africa; and (b) support the development of power trade through the establishment and development of so called Power Pools. Regional power integration has huge effects on economic and social growth. Countries in the two regions will be enabled to scale up and improve access to electricity services for the benefit of their residents and firms. Power trade will facilitate development of more cost-effective and cleaner energy resources, resulting in large cost savings and in a reduction of the carbon footprint associated to energy use. Only in the Southern African region regional power trade is expected to save 41 million ton CO2 emissions annually. Similar figures for East Africa are expected. Electricity trade could also save enormous amount of resources. An economic simulation study based on data derived from the EAPP regional master plan 2014, estimates the impact of power trade under two scenarios – shallow and tight integration versus a business as usual scenario. The analysis suggests that under shallow integration, Eastern Africa could accrue up to USD 7.6 billion in economic benefits between 2020-2030. If the power pool evolves to tighter integration by 2025, these benefits could be as high as USD 18.6 billion over the same period. It is estimated that increasing regional integration in SAPP power sector can provide overall cost savings of $37 billion in the Southern African Development Community region (SADC) through coordinated generation and transmission planning (NPV up to 2040).
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