Power Network Interconnections and Development of Regional

Markets in Maghreb and Europe 

ANGOLA, 2-6 June 2014 Mr. Djebrouni Mohamed

Mrs. Bennadji Nassia

18th APUA Congress

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OUTLINE

1. Introduction

2. Economic and Technical Benefits of Electrical Interconnections.

3. Current status of the Maghreb grid.

4. Increased Energy Exchange between Interconnected Countries.

5. Projets for Interconnecting the Maghreb and the European grids

6. Electricity Interconnections as Integration Factors 

7. Regional Electricity Market in Maghreb Countries

8. Conclusion and Recommendation

Introduction

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Implementing interconnections linking up national grids helps to create regional power exchange markets. Countries which need electricity to meet the demand of their growing economies thus buy electricity at a lesser cost.

A regional energy exchange market would thus be profitable to exporters who could sell their excess electricity generated, and to importers who could buy it at a lesser price.

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Economic and Technical Benefits of Electrical InterconnectionsEconomic and Technical Benefits of Electrical Interconnections

Technical Benefits: Increasing the availability and reliability of the grid and reducing the

probability of supply losses;

Providing mutual assistance in case of emergency or incident;

Increasing the dynamic stability as the interconnected system is more robust than the isolated system. It ensures a greater stability as the interconnected system is more powerful than the isolated system. It helps to ensure a greater stability after serious disruptions or incidents and to improve frequency and voltage quality (increase in the system’s power frequency);

Providing opportunities to improve periodic maintenance programmes;

Optimizing the operating of generation facilities by decreasing reserves to meet demands.

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Economic and Technical Benefits of Electrical Interconnections Economic and Technical Benefits of Electrical Interconnections (cont’d)(cont’d)

Economic Benefits:

Grid interconnections

promote the development of exchanges and energy purchase or sale opportunities;

foster savings on investment through the economy of scale effect on generation units and reduced spinning reserve generated by each grid;

help to develop generation facilities in places where generation costs are less expensive;

generate a financial return on transit cost for countries.

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Economic and Technical Benefits of Electrical Interconnections Economic and Technical Benefits of Electrical Interconnections (cont’d) (cont’d)

Environmental Benefits:

Reduced emissions thanks to a more effective power generation;

Use of renewable energy sources;

Increased possibility to choose the best locations to set up generation facilities.

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Current Status of the Maghreb GridCurrent Status of the Maghreb Grid

Morocco Tunisia

Libya

Algeria

Spain

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Current Status of the Maghreb Grid (cont’d)Current Status of the Maghreb Grid (cont’d)

Under normal operating conditions the Maghreb (ONE, SONELGAZ and STEG) and European grids are interconnected and operate synchronously.

Energy exchanges between the various grids will be made either on a scheduled or an unscheduled basis.  Energy compensations will be bilateral and on contract basis or as per agreements entered into by the various couples of partners: Spain- Morocco, Morocco – Algeria and Algeria - Tunisia.

Involvement of SONELGAZ into the Iberian power market as external operator to the Iberian market (OMEL) since July 2001.

SONELGAZ undertook its first energy sale operations on the Spanish market in June-October 2002. These operations are an interesting exchange experience between Southern and Northern Mediterranean countries.

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Increased Energy Exchange between Algeria and Tunisia Increased Energy Exchange between Algeria and Tunisia

The annual capacity of the lines interconnecting Algeria and Tunisia is estimated at 3150 GWh while the average annual exchange during that period was of 216 GWh, which is equivalent to a share of the use of interconnections not exceeding 7 percent.

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Increased Energy Exchange between Algeria and MoroccoIncreased Energy Exchange between Algeria and Morocco

The annual capacity of the lines interconnecting Algeria and Morocco is estimated at 3500 GWh in 2000-2009 period while the average annual exchange during that period was of 235 GWh, which is equivalent to a share of the use of interconnections not exceeding 7 percent. With the going live of the 400kV-lines, the average annual capacity reached 17 500GWh as from 2010, the average exchange over the period being of 1370GWh which represented an 8-percent use rate.

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Despite the relatively low level of exchange compared with what is noticed at the level of interconnections across the world, the interconnection between Maghreb countries helped to capitalize experiences in managing interconnections (bilateral agreements, reserve management, back-up system, operating rules).Liberalizing the electricity sector introduced an amendment to rules governing commercial transactions. Interconnections facilitate cross-border exchanges by getting several regional markets involved (Maghreb-Maghreb and Maghreb-Europe). Sonelgaz initiated studies for electricity export to the European market. These studies concern the feasibility of direct submarine electrical interconnections linking up Algeria and Spain, and Algeria and Italy..

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Projects for Interconnecting the Maghreb and the European Projects for Interconnecting the Maghreb and the European GridsGrids

Algeria signed two energy cooperation agreements with Spain on the one hand and Italy on the other to conduct with each of these countries the feasibility studies required to implement direct electrical interconnections between Algeria and Spain on the one hand, and Algeria and Italy on the other hand.

Morocco Tunisia

Libya

Algeria

SpainItaly

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Electricity Interconnections as Integration Factors 

The reforms initiated by Maghreb countries and the level of energy requirements in the South-western Mediterranean region can only buttress the desire to establish Maghreb-Europe electricity market.

This market will not be achievable without a reinforcement of the internal electricity grids in each Maghreb country, of interconnections between Maghreb countries and between Maghreb and Europe.

Interconnections which are one of the key elements for developing regional power markets foster convergence towards a single block resting on the integration of these regional markets.

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Regional Electricity Market in Maghreb Countries

In Algeria The applicable law is adapted to the establishment of a regional market

with the opening of generation and marketing activities to private investment and competition

Legislative texts: all the electricity law enforcement texts enacted in 2002, are finalized and published

Eligibility of clients and third parties’ access to the grid: regulations finalized and published

In Morocco: An act reforming the sector has been in the making for years. It would set up two parallel markets a “free market” and a “regulated market”

In Tunisia: Apart from the introduction of private power generation from 1996, many segments of the electricity industry are under STEG’s control. Currently no change has been planned into the organization or shareholding of the electrical system.

For Maghreb countries with an interconnection and exchange tradition, the issue of establishing a Maghreb electricity market was raised long ago within Comelec.

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Conclusion and recommendation

Based on the existing links between the various countries and on the will expressed to develop commercial exchanges at all levels, it is necessary to:

Develop crossborder interconnection capacities ensuring convergence in market prices

Ensure coordination between grid managers

Defining the level of eligibility, third parties’ access to the grid

Promote a concerted regulation and provide an incentive for pooled investments in capacities in order to better harness complementarities existing between countries.

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The interconnection generated the desired benefits by improving the stability of the network and by improving the reliability of the grid and backups. However, the benefits of energy exchange and of the reduction in the spinning reserve remain indefinite.

The interest in a common electricity market, owing to the economic and operational benefits of the market. But this calls for sweeping legal changes while providing the investments required to expand the generation and transmission systems.

Integrating electricity interconnection projects contributes to energy security and strengthened relations between people and nations, and thus contributes to economic and social development.

Conclusion and recommendation

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Conclusion and recommandation

Develop and adopt policies seeking to improve the performance of the electricity markets in each country so as to pave the way for creating an energy market in the region, and take social conditions in each country into account by adopting arrangements to support the poor and needy.

Harness the expertise available in the neighbouring European region in the electricity interconnection field to contribute to technical capacity building, knowledge transfer and the development of policies and plans to protect networks.

Set up arrangements to ensure fair and transparent pricing to provide leeway and the required legal and regulatory frameworks.

Thank you for your attention