SADC’S INFRASTRUCTURE: A REGIONAL PERSPECTIVE power demands solely through the development of their own domestic power sectors. For many SAPP 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 cost-effective 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 SAPP area $1.1 billion 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 $19.5 billion to $18.4 billion, saving the region $1.1 billion each year. Under the trade expansion scenario, countries would have to divert $0.4 billion of their investment budget from generation to regional interconnectors. This would allow the SAPP area to tap into large-scale hydropower, reducing variable costs by $1 billion annually.

To make trade expansion possible, significant additional investments would be required. In particular, the Democratic Republic of Congo would need to develop 7,640 MW of additional hydropower capacity to be dedicated to supplying export markets in neighboring countries. Mozambique would have to develop 900 MW of power generation capacity for export, and Tanzania and

**Table 3.3 Annualized costs of system expansion in the SAPP, 2015**

|($ billion)|Trade<br>expansion|Trade<br>stagnation|
|---|---|---|
|New investment|7.5|7.5|
|Generation|4.5|4.9|
|Interconnectors|0.4|0|
|Distribution|2.6|2.6|
|Refurbishment|2.6|2.6|
|Variable cost|8.4|9.4|
|SAPP total cost|18.4|19.5|
|CAPP|1.38|1.54|
|EAPP-NB total cost|15|16|
|WAPP total cost|12.2|12.7|
|Island states|0.6|0.6|

_Source:_ Rosnes and Vennemo 2009.

_Note:_ WAPP = West African Power Pool; EAPP-NB = East African Power Pool–Nile Basin (EAPP is expanded to include key Nile Basin trading partners Egypt, Ethiopia, and Sudan); CAPP = Central Africa Power Pool; SAPP = Southern African Power Pool.

Zimbabwe would have to develop less-daunting capacities of 279 MW and 93 MW, respectively, to meet export demands under trade expansion. Almost all countries in the SAPP region would need to invest in developing a total of 23,839 MW of new cross-border interconnectors to allow power to flow more readily around the region (table 3.4). The heaviest transmission investments would need to be made in Zambia (7,526 MW), the Democratic Republic of Congo (5,984 MW), and Zimbabwe (3,072 MW). These three countries have the onus of developing 70 percent of the total required interconnection capacity for the power pool.

The spending needs identified in figure 3.2 would absorb between 3.9 and 3.7 percent of the SAPP region’s gross domestic product (GDP), depending on whether the trade stagnation or trade expansion scenario is adopted (figure 3.2). For individual countries, the impact of adopting trade can substantially influence the burden of power sector development needs on their national economies. Under trade 41