East Africa Power Market will launch a ‘Day-ahead market’

The Eastern Africa Power Pool (EAPP) is set to launch a day-ahead market (DAM) in early 2025. This marks a pivotal step toward realizing a functional regional East Africa Power Market.  Accordingly, this initiative aims to foster competition, reduce electricity supply costs, and enhance energy security across the region. By enabling day-ahead power trading among its 13 member countries, the DAM will facilitate a more efficient allocation of resources, balancing supply and demand more effectively.

The DAM will serve as a centralized platform where participants can buy and sell electricity at financially binding day-ahead prices. Additionally, this structure is designed to optimize the use of available generation resources, potentially driving down costs and delivering customer savings. Improved price signals can provide clarity on the marginal cost of electricity, encouraging a convergence of regional power prices—although this will depend on mitigating transmission constraints and losses. Without deeper regional integration through significant transmission expansion, the potential benefits of the DAM may remain unrealized.  

 

 

The EAPP must address operational and policy challenges to fully reap the benefits of the DAM

The proposed market holds significant potential for advancing renewable energy integration. However, without changes to entrenched operational and policy challenges, the goals of the DAM may lead to modest gains, mirroring the limited outcomes observed in other power pools, such as the West African Power Pool (WAPP). Furthermore, East Africa’s extensive hydropower and growing investment in renewable projects can be best utilized through a flexible market mechanism. The flexibility allows the management of intermittency and enhances grid stability. With zero marginal cost renewables, the DAM could support a greener, more efficient energy future.  

Increased trading volumes within the EAPP could alleviate power deficits in some nations while enabling others to monetize surplus capacity. Can the East Africa Power Market fully realize these benefits without addressing price disparities and making the necessary infrastructure investments?