ECOWAS‘S INFRASTRUCTURE: A REGIONAL PERSPECTIVE 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 WAPP area $435 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 scenario is adopted. Overall, trade expansion reduces the total annual cost of producing and distributing power from $12.7 billion to $12.3 billion, saving the region more than $400 million each year (see below). Under the trade expansion scenario, countries would have to make larger investments in capital-intensive hydropower generation of $162 million each year, as well as invest $117 million a year in the development of cross-border transmission capacity. These higher investments of $279 million a year are more than compensated by reduced variables costs of $714 million a year, essentially the annual reduction in the fuel bill associated with reduced reliance on thermal generating plant. The net savings are hence $435 million each year.

**Table 3.3 Annualized costs of system expansion in WAPP, 2015 (US$ millions)**

||**Trade**<br>**stagnation **|**Trade**<br>**expansion **|
|---|---|---|
|_Generation_|||
|Investment cost|3,365|3,527|
|Refurbishment cost|258|258|
|Variable cost (fuel, O&M)|3,442|2,728|
|_T&D and connection_|||
|Investment cost|3,584|3,701|
|- Cross-border|0|117|
|- Domestic|3,584|3,584|
|Refurbishment cost|752|752|
|Variable cost|1,320|1,320|
|_Total_|||
|Capital cost|7,959|8,238|
|- Investment cost|6,949|7,228|
|- Refurbishment cost|1,010|1,010|
|Variable cost|4,763|4,049|
|**_WAPP_**|**_12,722_**|**_12,287_**|

To make trade expansion possible, significant Source: Rosnes and Vennemo 2009. additional investments would be required. In particular, Guinea would need to develop 3,700 megawatts of additional hydropower capacity that would be dedicated to supplying export markets in neighboring countries. Almost all countries in the WAPP region would need to invest significantly in developing a total of 11,250 megawatts of new cross-border interconnectors to allow power to flow more readily around the region (table 3.4). The heaviest transmission investments would have to be made in Côte d‘Ivoire, Guinea, and Mali, each of which needs to develop more than 2,000 megawatts of cross-border interconnectors.

The WAPP region as a whole would need to spend about 4.2 percent of its GDP to meet power needs, and most countries stand to save money by deepening regional trade. The spending needs identified in table 3.3 would absorb between 4.2 and 4.4 percent of the WAPP region‘s 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.

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