Overcoming many challenges for improved energy access in Africa

There are many efforts underway to promote the use of renewable energy in Africa. Only this week there was the South African International Renewable Energy Conference. There was a good article this week by John Aglionby in the Financial Times calling for the need for more innovative solutions. Things are happening but, given the needs, hopefully they will accelerate wit recent developments.

 

Innovative solutions required to meet Africa’s rising electricity demand

Drivers parking on the roof of Nairobi’s newly opened Garden City mall may notice that their vehicles are shaded by unusual structures: 3,364 solar panels. These will generate 1,450MWh of electricity a year, or 40 per cent of the mall’s daily power needs.

Solar power is nothing new in Kenya or Africa. But while it still accounts for only a tiny fraction of the electricity generated across the continent, James Irons, chief executive of SolarAfrica, believes his company’s success is indicative of a rapid change under way.

“You’ve got fairly under-developed grids in Africa, so there’s this great opportunity to develop . . . innovative solutions,” he says, citing as drivers of change the falling cost of technology, creative financing options and rapidly escalating demand.

Innovative projects such as Garden City are barely meeting that demand. The International Energy Agency (IEA) estimates energy use in sub-Saharan Africa has risen 45 per cent since 2000 but fewer than 300m of its 920m inhabitants have access to electricity.

The region accounts for 13 per cent of the world’s population but only 4 per cent of usage, with some 80 per cent of the population still relying on solid biomass, mostly wood, for cooking.

Solving the problem involves overcoming many challenges. In a recent report, Deloitte, the advisory firm, presented the following list: inadequate generation capacity; poor transmission infrastructure; low numbers of skilled workers; poor maintenance of existing power stations and poor metering and billing systems.

Kartik Jayaram, director of the Nairobi office of McKinsey, the consultancy, says a change in mindset is needed “in every country to address the two big challenges for the sector — financing and delivery capability”.

He believes that much potential could be unlocked if all sides were more flexible: “Governments will have to ensure they have a fair tariff; the private sector will have to say ‘We’ll take a lower rate of return’; and the development funding . . . will have to move to longer-term financing.”

“It is a binary game,” he adds. “Either things get fully financed and built, or nothing happens.”

The picture is changing. Growth, development and expansion are tangible — barely a day passes without newspapers reporting on deals to expand national grids, build off-grid networks and mini-grids.

McKinsey estimates that commercial and industrial electricity demand will grow at an average of 4.1 per cent a year until 2040, while residential demand will increase fivefold in the same period.

Investment and development come in many shapes. At one end are big state projects like the $4.1bn Great Ethiopian Renaissance Dam, the largest hydro project in Africa.

It will generate 6GW of power, more than 2.5 times the country’s current capacity. Addis Ababa expects to export a significant amount of electricity to Egypt when the dam is completed in 2017 and hopes to expand its generation capacity by another 20,000MW over the next few decades. In a sign of the times, the government recently signed its first private power agreement to generate 500MW from a geothermal project.

Exporting power, and improving links between countries’ grids, are on the increase. South Africa is among the nations supplying power overseas, despite shortfalls in power supply at home. While a pan-African grid is not on the horizon, analysts say that multi-nation grids will be a key part of meeting Africa’s power demand.

Several countries are considering building nuclear power stations, although analysts say realisation is decades away. The only one on the continent at present is near Cape Town.

At the other end of the spectrum are mini-grids designed to provide power to people in remote regions. The IEA estimates that “70 per cent of people getting connected in the next 25 years in rural areas will be via either these or off-grid projects.”

It is in the middle ground that much of the investment is taking place, particularly in the renewable sources of solar, wind, hydro and geothermal.

Mr Jayaram believes that, for an African country to get ahead in the power race, it should dare to think in original ways. “What Africa would really benefit from would be a test lab in many dimensions, off-grid at scale, renewables at scale and financing at scale.”

He adds: “The way to do this is to bring the best minds in the world to the table, from tech companies, government, suppliers and financing.”

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