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.
Mozambique, which currently has the potential to produce more electricity than its economy requires at present, is likely to dominate the supply-side of this trading market with Namibia, Zambia and Botswana expected be the main purchasers in the region, after South Africa.
The biggest challenge to these arrangements will be reliable and stable transmission networks to facilitate the seamless transfer of electricity between sellers and purchasers. These networks require significant co-operation between neighboring countries, so the role of the South African Power Pool (SAPP) in ensuring cross-border planning, investment and trading between member states remains critical.
Our executive in the power and Infrastructure division, Cody Aduloju says "power will increasingly become one of the most tradable commodities across the region in the coming years given the electricity shortage we are seeing across Southern Africa," says Cody Aduloju, Executive in Standard Bank's Power and Infrastructure division."
"Almost every aspect of a modern economy relies on electricity to function so the countries that emerge as the ones with excess supply will have significant negotiating power, so to speak."
Mr Aduloju says that Mozambique, which plans to double its generating capacity to 5 Gigawatts (GW) by 2025, is one of the few countries in Africa that currently possesses an over-supply of electricity thanks to the hydro power available from the Cahora Bassa dam, which has an installed capacity of 2,075 Megawatts (MW) of power per year or around 73% of the country's installed generating capacity.