ECCAS’S INFRASTRUCTURE: A REGIONAL PERSPECTIVE _trade stagnation_ scenario assumes that no additional cross-border interconnectors will be built, so that trade is constrained at the levels observed today, and countries are thus obliged to meet incremental power demands solely through the development of their own domestic power sectors. For many CAPP countries that lack significant energy resources of their own, this entails increased reliance on thermal generation fueled by oil imports.

Alternatively, under the _trade expansion_ scenario, future regional power demand is met by the most costeffective energy resources available to the region as a whole, and additional cross-border transmission capacity is added wherever required to allow power to flow from production to consumption locations. Essentially, this scenario takes regional power trade to its fullest economic potential, assuming that there are no restrictions to cross-border exchange and that the necessary infrastructure can be built wherever it is required. Reality is likely to lie somewhere in between the trade stagnation and trade expansion scenarios, and in this sense the two scenarios serve to frame the range of possible outcomes.

Deepening regional integration would save the CAPP area $160 million in annual energy costs. Table 3.3 compares the cost of meeting growing regional power demand over the next decade, depending on whether the trade stagnation or trade expansion scenarios are adopted. Overall, trade expansion reduces the total annual cost of producing and distributing power from $1.55 billion to $1.39 billion, saving the region $160 million each year. Under the trade expansion scenario, countries would have to make larger investments in capital-intensive hydropower generation of $62 million each year as well as invest $39 million a year in the development of cross-border transmission capacity. These higher

**Table 3.3. Annualized costs of system expansion in the CAPP, 2015 (million)**

|(Annualized cost millions $)|Trade<br>expansion|Trade<br>stagnation|
|---|---|---|
|_Generation_|||
|Investment cost|860|798|
|Refurbishment cost|48|53|
|Variable cost (fuel, O&M)|92|347|
|_T&D and connection_|||
|Investment cost|292|253|
|- Cross-border|39|0|
|- Domestic|252|252|
|Refurbishment cost|28|28|
|Variable cost (existing capacity)|67|67|
|_Total_|||
|Capital cost|1,227|1,131|
|- Investment cost|1,151|1,051|
|- Refurbishment cost|76|81|
|Variable cost|159|414|
|Total for CAPP|1,386|1,546|
|Total for EAPP|15|16|
|Total for SAPP|18.4|19.5|
|Total for WAPP|12.2|12.7|
|Island states|0.6|0.6|

Source: Rosnes and Vennemo 2009. _Note:_ EAPP = East African Power Pool; SAPP = Southern African Power Pool; WAPP = West African Power Pool; CAPP = Central Africa Power Pool; T&D = transmission and distribution; <u>O&M = operation and maintenance.</u> investments of $101 million a year are more than compensated by reduced variable costs of $255 million a year, which are essentially the annual reduction in the fuel bill associated with reduced reliance on thermal generating plants. The net savings are thus $160 million each year.

To make trade expansion possible, significant additional investments would be required. In particular, Cameroon would need to develop 1,400 MW of additional hydropower capacity to be dedicated to supplying export markets in neighboring countries. All countries in the CAPP region except the Central African Republic would need to invest in developing a total of 1,662 MW of new cross-border interconnectors to allow power to flow more readily around the region (table 3.4). The heaviest 36