The African energy market is on the cusp of a seismic shift, with pioneering utility-scale transactions through the Southern African Power Pool (SAPP) signalling the rise of a regional private electricity market independent of public sector guarantees, according to experts at Bowmans, a leading African law firm.
Allen Leuta, Head of Banking and Finance at Bowmans, and Bavesh Pillay, Partner, highlight these developments’ transformative potential.
“It takes imagination and focus from developers and financiers to make these first-of-their-kind transactions work,” Leuta said.
“What we see across the table is nothing short of extraordinary.”
Established in 1995, SAPP is a regional electricity power pool uniting 12 Southern African Development Community (SADC) countries: Angola, Botswana, Democratic Republic of Congo, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Tanzania, Zambia, and Zimbabwe.
Its mission is to create a common power grid and electricity market.
Historically, only state utilities participated, but the SAPP Association allows any business with power generation and access to transmission lines to join, opening doors for private players.
A key enabler in South Africa has been the 2021 amendments to the Electricity Regulation Act, which permit private power generation projects up to 100 MW without licenses and allow third-party access to transmission and distribution networks.
These changes have dismantled the vertically integrated electricity sector, fostering private-sector-driven development of generation assets. Now, SAPP is unlocking a broader regional market.
For the first time, a generator in the SADC region is developing a utility-scale solar PV facility that will feed electricity into SAPP for trading on competitive markets. Unlike traditional projects reliant on long-term power purchase agreements, this transaction adopts a dynamic trading model.
A licensed market participant will provide trading services, enabling the generator to access SAPP’s Day Ahead Market, Forward Physical Markets, and IntraDay Market based on a shared strategy.
“This is a significant departure from conventional offtake models,” Pillay noted.
“It offers a flexible, market-driven approach to cross-border energy trading, enhancing electricity supply and distribution across African borders.”
The transaction, expected to set a precedent for future SAPP agreements, underscores the potential for an African power market that responds to demand without government fiscal backing. When completed, it will mark a milestone in regional energy integration, paving the way for a more resilient and competitive electricity market across Southern Africa.
