6th ERERA Forum – Concept Note
“The Regional Electricity Market: Key Factors for Success”
I. ESTABLISHMENT OF THE REGIONAL ELECTRICITY MARKET: IMPORTANT PROGRESS ACHIEVED
- After several decades of severe energy crises, the West African electricity sector has undergone significant developments in recent years with the realization in ECOWAS Member States of several infrastructure of regional interest with the aim of increasing access to electricity and reducing the costs of service to the final consumer. Indeed, since 1999, the date of the decision of the Heads of State to establish the West African Power Pool (WAPP), the realization of electricity interconnection projects between ECOWAS Member States has marked important progress. Given these significant advances and the current trend, we could say that the period 2018-2022 will see the extension and strengthening of the regional transmission network, as well as the development of cross-border exchanges with the emergence of new markets. more dynamic national markets and greater openness of the regional market.
- At the institutional and regulatory level, the two regional institutions responsible for the development of the regional electricity market, namely ERERA and WAPP, have also made considerable efforts to develop and adopt rules of organization and supervision of this electricity trade among Member States. Indeed, since its creation, ERERA, in collaboration with the General Secretariat of the West African Power Pool (SG / WAPP), has been developing and implementing a programme of activities for the establishment and development of the ECOWAS regional electricity market. In recent years, the two institutions have agreed to accelerate the implementation of certain activities crucial to the fulfilment of the conditions precedent to the launch of the ECOWAS regional electricity market as provided for by the regional market rules. These actions resulted, in particular, in:
- The adoption of a roadmap which provides for the establishment of the market in three phases, with preconditions to be fulfilled for the commencement of the market and the transition from one phase of the market to another.
- The adoption of the Rules precedent for the commencement of the Regional Market, namely:
- The Regional Market Rules (proposed by WAPP and approved by ERERA in August 2015)
- The WAPP Operations Manual (proposed by WAPP and approved by ERERA in September 2015)
- The WAPP Transmission Tariff Methodology (adopted by ERERA in August 2015)
- Model Bilateral Contracts (proposed by WAPP and approved by ERERA in August 2017)
- ECOWAS Regional Electricity Market Procedures
- The Rules of Practice and Procedures of ERERA (administrative rules of regulation) adopted by ERERA in December 2017.
- In view of the fulfilment of all these conditions necessary for the take-off of the first phase, ERERA and WAPP have agreed to officially launch the Regional Electricity Market at a special ceremony to be held in the week of 25th to 29th June 2018, in Cotonou, under the auspices of the Head of State of the Republic of Benin.
- During the same week, ERERA will hold its sixth Regional Regulatory Forum, the general theme of which is “The Regional Electricity Market: Key factors of success”.
II. THE SIXTH ERERA FORUM: EXCHANGE OF IDEAS AND EXPERIENCES ON THE CONDITIONS FOR THE SUCCESS OF THE MARKET
- The benefits of integrating states electricity markets are well established in view of the mutual reinforcement of national electricity systems, the economies of scale offered to the huge and indispensable investments, as well as increased energy security for the countries concerned.
- It is clear, however, that this process of integration also requires a process of harmonization and a certain level of concession of authority by national governments and institutions. These are the biggest obstacles and can only be overcome with strong political will and constant support from national public authorities. It must be acknowledged that this willingness and support is very difficult to obtain because of the legitimate concerns of sovereignty and security of each country. Although the benefits of integration are generally understood, few regions in the world have been able to overcome all these challenges and to create a regional integrated electricity market. It has taken ECOWAS nearly 20 years since the decision of the Heads of State till the adoption of the essential rules to allow for the official launch of the market, confirming the difficulties of the process of setting up an integrated market.
- ECOWAS is an example which is already generating interest from the rest of the world, considering the feat already achieved due to the large number of countries concerned (fifteen), the diversity of national peculiarities, as well as political and technical plans (public monopoly vertically integrated in some States, electricity markets totally unbundled in others) and the creation of independent supranational institutions with regulatory and decision-making powers (regional regulator and operator of the regional market).
- This effort is expected to continue after the official launch of the market so as to sustain the gains and facilitate the adoption and implementation of the new rules necessary for the functioning and development of the market. Thus, the choice of the main theme of this sixth forum which should allow participants to exchange and share ideas and experiences on the key success factors to ensure, from its launch, the smooth functioning and harmonious development of the regional electricity market.
- The discussions of this forum should focus on several points of reflection, including:
(i) The type of approach or approaches to successful integration, given the diversity of national contexts, analysis of the concepts of gradualism and reciprocity in the adoption and implementation of regional rules
(ii) The modalities of a strong and sustained involvement of the policy makers for the success of the market, including the identification and engagement of key national actors in decision-making process and their implementation
(iii) Establishing and/or strengthening of the role of new players, including national regulators and regional institutions in charge of the market, which is essential to ensure transparency and impartiality in the functioning of this common regional market.
- The Forum will bring together representatives of the Ministries of Energy and Finance, national regulatory authorities, electricity companies, parliamentarians, academics, researchers, consumer associations and other relevant organizations. civil society, regional and international banking and financial institutions as well as development partners.
- Thus, as in previous editions, ERERA intends to give this 6th forum an international dimension by inviting to Cotonou, what ECOWAS, the other regions of Africa and the world, have experts and specialists sharing the same challenges in terms of regulation and who can bring the best in terms of feedback.
III. EXPECTED RESULTS
- The sixth regulatory forum should make it possible to:
- Better understand and appreciate the challenges facing the regional market from its launch
- Strengthen the role of ERERA as a key player in the harmonization of regulatory policies and practices, and as a platform for promoting cooperation, exchanging information and pooling regional expertise
- Sustain the space of exchange and dialogue between the actors of the electricity market, the operators of the electricity sector, as well as the donors and the investors intervening in the energy sector of ECOWAS Member States
- Contribute to building the capacity of the players in the regional electricity market through the lessons learned from these exchanges and sharing of experiences.
IV. DATE AND VENUE
- The forum will be held on 27th June 2018 in Cotonou, Republic of Benin. It will be preceded by a meeting of the ERERA’s Consultative Committees of Regulators and Operators to be held on 26th June 2018. The launch of the market will take place on 29th June 2018, after the ECOWAS Energy Ministers meeting.