Regional power market

Central America

Regional power markets, supported by cross-border grids, are not only critical for the viability of large-scale renewable energy but can also yield tangible financial and political benefits. In 1996, six Central American countries signed the framework treaty to set up a regional electricity market. The initiative established the Central American Electrical Interconnection System (SIEPAC) and the Regional Electricity Market (MER). The MER, managed by three different regional institutions, aims to optimise electricity generation by locating power plants in the most cost-effective sites and by planning balancing infrastructure collectively. The initiative had led to monetary benefits of $271.5 million by 2014 on account of reduction in national oil imports and more efficient sourcing of power generation. When Panama, one of the participating countries, faced energy shortages due to droughts, the regional market helped cover the shortfall, demonstrating its benefits for regional energy security.

Benefits of a single power market in Europe

Nord Pool, the power exchange that connects Nordic and Baltic countries, is one of the most successful power exchanges in the world. The complementarity of energy resources in the Nordic region was the key driver for establishing a common market for cost-efficient power exchange. Today, more than 20 countries trade electricity in Europe through Nord Pool. The power exchange is an example of deep integration of the different national electricity markets through harmonisation of domestic power regulations and structures. The initiative has resulted in lower prices of electricity in Norway and Sweden, has increased energy availability during the dry months in Denmark and Finland, and has halved the capacity reserve required for all. The exchange has also demonstrated its utility for high renewable energy penetration: in 2020, 50% of Norway’s contribution came from wind power. 

Asian Renewable Energy Hub



The Asian Renewable Energy Hub plans to build renewable energy at a scale similar to the oil and gas industry to take advantage of economies of scale. By building 26,000 MW of solar and wind hybrid capacity, the project will optimise the operational and administrative costs per unit of electricity generated and to a large extent, manage the variability of the two resources. Although the project conceptualisation is still evolving, it has been envisaged to supply electricity to local industrial consumers and produce green hydrogen for selling to national and international consumers such as Japan and Korea. The project is located in North-Western Australia. Local indigenous communities have been involved in the development of the project and have been employed in the construction and operation processes. The domestic manufacturing facilities for the project will further contribute to the economy of Western Australia.

Southern African Power Pool 

Southern Africa 


Established in 1995, the South African Power Pool (SAPP) is one of the most advanced regional grid interconnection projects, not just in Africa but globally. Through the successful establishment of a competitive market, the SAPP enabled 32% of all power traded in 2019. The relative success of SAPP encouraged plans for the addition of large-scale renewable energy capacity to the market. The large diversity of renewable resources will ensure that risks around resource uncertainty are reduced. This is particularly relevant for countries dependent on hydro-powered electricity. Recent studies show that full integration and development of the power systems in the region can deliver cumulative savings of $42 billion by 2040. SAPP is currently conducting a Regional Renewable Energy Integration Study to assess the optimal utilisation and integration of the immense renewable energy resources in the region.

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Southern Africa power pool

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Southern Africa power pool