Southern Africa has long grappled with energy insecurity, with power deficits in some nations juxtaposed against surpluses in others. Recognising the need for an integrated electricity market, the Southern African Power Pool (SAPP) was established in March 1995 as a collaborative initiative among 12 landlocked members of the Southern African Development Community (SADC). Over the past three decades, SAPP has evolved from a resource-sharing entity into a structured wholesale electricity market, playing a pivotal role in regional energy distribution.
Despite its achievements, SAPP has encountered challenges, notably a decline in electricity trading volumes. Once averaging 2,100 GWh per year, cross-border electricity trade has diminished due to constrained supply in South Africa, economic downturns exacerbated by the COVID-19 pandemic, and prolonged droughts in Zambia and Zimbabwe. According to SAPP’s Chief Planning and Operations Engineer, Alison Chikova, these factors have collectively impeded growth in energy trading across the region.
A significant milestone for SAPP is the expansion of its interconnected grid. To date, only Angola, Malawi, and Tanzania remain isolated from the regional network. However, Malawi is set to be connected by September 2025, while negotiations for a Zambia-Tanzania interconnector are in their final stages. Efforts are also underway to integrate Angola into the grid through a partnership with Namibian power utilities. By 2027, all 12 inland SADC nations are expected to be interconnected, marking a major advancement in regional energy integration.
Interconnectivity offers substantial economic and infrastructural benefits. Angola, for instance, boasts an installed generation capacity of approximately 6,000 MW, yet its domestic peak demand, including reserves, stands at just 2,800 MW. The surplus 3,000 MW could significantly bolster supply for electricity-deficient SAPP member states. Similarly, Malawi and Tanzania’s installed capacities of 506 MW and 1,822 MW, respectively, present additional trading opportunities within the pool.
A key development underpinning SAPP’s future growth is the establishment of the Regional Infrastructure Financing Facility (RTIFF). This platform is designed to provide debt financing for critical transmission projects across Southern Africa. Initially, RTIFF will cover 25% to 50% of project costs, with potential expansion in the long term. The fund, which aims to bridge financing gaps, will be supported by a consortium of investors, including Africa50, Meridiam, and Gridworks. Lending institutions such as the African Development Bank, the International Finance Corporation, and development finance entities from the United States, Germany, and the United Kingdom will further bolster its capacity. Additionally, RTIFF is positioned to access climate financing from institutions such as the Green Climate Fund and the Climate Investment Fund.
While SAPP has made considerable strides, it has not been without criticism. A report by the US-based National Renewable Energy Laboratory (NREL) highlights inefficiencies stemming from the dominance of bilateral agreements between national utilities. Between 2023 and 2024, such contracts accounted for 68% to 90% of traded electricity, potentially limiting competitive pricing and efficient grid utilisation. Bilateral agreements often lead to higher-cost electricity being prioritised over lower-cost alternatives, thereby restricting the economic efficiency of regional power distribution.
Chikova acknowledges these constraints but points to transmission bottlenecks as a limiting factor in trade expansion. While bilateral contracts provide stability for national utilities, additional transmission capacity is essential for enabling greater trade volumes. Currently, five independent power producers operate within the SAPP market—two in Zambia and one each in the Democratic Republic of Congo, Namibia, and Zimbabwe. However, increasing private sector participation remains a priority for future development.
Concerns have also been raised regarding market transparency and regulatory oversight. Unlike other regional power pools, SAPP lacks a dedicated regulatory authority with enforcement powers. The closest equivalent, the Regional Energy Regulatory Association (RERA), based in Namibia, functions as an advisory body rather than a rule-enforcing entity. NREL advocates for a stronger regional authority to address pricing mechanisms, cross-border transmission tariffs, and investment facilitation, ensuring a harmonised regulatory framework.
In response, Chikova states that SAPP is working closely with RERA to develop regulatory frameworks, including policies for cross-border access. Efforts are underway to transform RERA into a more authoritative body, a process being led by the SADC. The objective is to create a regulatory environment that fosters investment, promotes equitable market access, and aligns national policies with regional standards.
Another contention is the cost of SAPP membership. Observers argue that fees are prohibitive, particularly for smaller market participants. In 2019, a single 5 MW project developer was required to pay an annual membership fee of up to $20,000, while national utilities were charged $73,000. Critics contend that these costs, coupled with limited voting rights for new entrants, deter investment and restrict governance influence.
Chikova refutes the notion that membership fees are excessive, asserting that the financial benefits of market participation outweigh the costs. Furthermore, he insists that SAPP’s market rules and data are publicly accessible, with necessary confidentiality provisions in place.
Despite its challenges, SAPP remains a model for regional energy integration, recognised by institutions such as the World Bank as one of the most advanced power pools in Africa. It is currently the only entity on the continent operating a competitive electricity market. Looking ahead, SAPP aims to play a central role in the African Union’s initiative to establish a continent-wide electricity market.
By leveraging new financing mechanisms, strengthening regulatory frameworks, and expanding its transmission network, SAPP is poised to enhance energy security across Southern Africa. The next decade will be crucial in determining whether it can overcome existing structural barriers and fulfil its potential as a driver of regional economic development.
