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Southern African Power Pool could learn from Nordic countries’ approach to energy market

13th September 2017 BY: Natasha Odendaal
Creamer Media Deputy Editor Online
Norwegian Energy and Water Resources director Ove Flataker

Southern Africa can take heed of the success of the Nordic region’s achievement of energy security through successful cross-border trade and integration, its integrated markets and other critical elements of the Nord Power Pool.

This is the message that emerged from the first day of the three-day Nordic Energy Days conference, being held at the Innovation Hub, in Pretoria, from September 13 to 15.

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Over a period spanning more than two decades, the Nordic countries – Denmark, Finland, Norway and Sweden – have developed viable and innovative energy systems with a focus on effective system integration, grid stability and sustainable energy solutions.

“Huge” opportunities could materialise if Southern African countries strengthened their partnerships with the Nordic countries, with “tremendous know-how” and industrial capacity expected to emerge from the tie-up, Norway Deputy Minister of Petroleum and Energy Ingvil Smines Tybring-Gjedde said during the opening of the conference.

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Further, Norway and its Nordic “friends” were taking a long-term view on the development of the Southern African Power Pool (SAPP), she said, indicating the European region’s keenness to partner with Africa to ensure its own energy security.

Through the Nordic countries' own cross-border market, the security of energy supply has been cemented in the region, leveraging a range of sources, including hydropower, nuclear, wind and solar.

The Nordic countries have been assisting South Africa and its neighbours to set up the SAPP on the back of what is deemed to be great potential for enhanced cross-border cooperation.

In the position to lead the way, South Africa can learn from the Nordic countries’ models to secure sustainable and reliable energy for the region, particularly as the Nord Pool Market Model has been considered one of the most successful power markets in the world.

“We have to learn, as the SAPP, from the Nordic pool on how it is done,” said South Africa presidential special energy adviser Silas Zimu, adding that South Africa needed to drive Southern African energy sector development, particularly as the nation already had the necessary resources and capacity.

“Let us learn from what the Nordic countries have done,” he said, adding that it was time to stop “going into boardrooms” to just talk.

The Nordic system, which is highly interconnected regionally, promotes innovation, efficiencies, technological developments, research and development, along with stability and security of supply, Sweden Special envoy for Africa Promotion Ambassador Bengt Carlsson said.

Further unpacking the Nordic electricity market, Norwegian Energy and Water Resources director Ove Flataker said the low-cost system, which incorporates a significant mix of energy sources across several countries, produced more than 400 TWh/y.

The cornerstone of the Nordic model was efficient and liquid power exchange, an independent transmission system operator, open access to the network and unbundled utilities in the transmission grid, splitting the monopoly base, he explained.

Other characteristics include efficient and transparent regulation for consumer protection, a level playing field and the elimination of market manipulation and abuse, along with extensive public ownership, with clear-cut roles and responsibilities and transparent processes.

“It is important to build trust over time and learn what works and what doesn’t,” Flataker noted, highlighting the drivers behind the successful Nordic cooperation, which included the complementary mix of natural resources and production technologies, developed through trust among stakeholders and rooted in the Nordic Energy Ministers’ determination to expand and integrate the regional electricity market cooperation.

At the base of this were transparent processes, balanced solutions and a step-by-step approach.

Further, the cross-border trade remained a critical component of the model, eliminating vulnerabilities and reducing risks.

However, Nord Pool Consulting CEO Hans Bredesen warned that, if anything was to be learnt from the Nordic power market experience, it was that “these things take time” and there was a need to allow the process to evolve, pointing out that the Nordic power markets have been integrating for more than two decades.

The Nord Pool traded volumes of about 500 TWh in 2016, with 380 companies from 20 countries trading on the markets in the Nordic and Baltic regions and in the UK market, he said.

Last year, the system recorded a new Nordic and Baltic day-ahead market trading record at 391 TWh, while the Nordic, Baltic and German intraday market recorded trade of 5.1 TWh and day-ahead trading in the Nord Pool UK power market reached 109 TWh.

The summary notes from the conference reveal that South Africa mirrored the sustainable Nordic renewable-energy experience.

The African country has attracted nearly R200-billion in investments in renewable-energy projects, with the number of new construction and operational jobs under the Renewable Energy Independent Power Producer Procurement Programme upwards of 110 000. 

EDITED BY: Creamer Media Reporter
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