By: ESI Africa

When characterising the overall performance of the SAPP in the last six months, Mbuseli says they have seen an increase in electricity “trading taking place through bilateral contracts.”

This has led to lower volumes traded in their month ahead, week ahead and day ahead markets.

“This has been as a result of constrained generation capacity. In the region we currently have a persistent drought that has affected hydropower generation. This has been coupled also by transmission constraints where our interconnectors have been dominated by bilateral contracts and therefore having less volumes traded in our competitive markets,” said Mbuseli.

The South African region is currently experiencing supply side constraints thanks to supply exceeding demand and he thinks talk about expanding transmission network is important as SAPP needs this expansion in order to operate optimally.

Setting up a wholesale electricity market

Ideal conditions to establish a fully competitive wholesale electricity market for him would be a hybrid multimarket structure.

“In terms of establishing a fully competitive market there really is never a perfect time to say these conditions are fully ideal. However, I believe that every internal market or every region should look at issues that are pertinent to that region.

“In terms of designing a suitable wholesale electricity market structure, of course the market structure has to be supported by the enabling environment. You need to have the right policy in place, the right legislation as well as the right regulations that will enable a fully competitive electricity market,” said Mbuseli.