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Could Africa be the Global Epicenter of Renewable Energy by 2030?

Today, headlines like “Africa Rising” and “Africa Ascending” are often used around the world to describe the unprecedented transformation and steady economic growth on the continent. Over the past 12 months, I have attended several conferences in Africa and other parts of the world where this theme has been sounded. The promising economic prospects for sub-Saharan Africa is also highlighted in the Africa Progress Panel 2014 report titled, Grain, Fish Money – Financing Africa’s Green and Blue Revolutions.

But, this should come as no surprise, since in recent years, six of the world’s fastest growing economies are in sub-Saharan Africa. In spite of the positive economic news, currently 74 percent of the population has no access to electricity, and should the current trend continue, over 800 million people could still be without access to power in the next sixteen years. At the same time, its fast growing population is projected to exceed 1.5 billion people by 2030.  Yet, it is well-known that to fuel economic growth and meet the growing consumption will require significant increase in access to energy. This must be done using ways and means that are both environmentally and financially sustainable.

Africa has vast and largely untapped endowment of renewables and is now seeing greater interest in using hydro, solar, wind, and geothermal to address the vexing problem of lack of access to electricity. In Chapter 3 of Renewable Energy Integration, “Harnessing and Integrating Africa’s Renewable Energy Resources,” Ijeoma Onyeji provides a thorough discussion of the continent’s renewable landscape, and the potential challenges and the opportunities of tapping clean energy resources. Whether grid connected or off-grid systems, appropriate long-term policies along with adequate investment in infrastructure and human capacity are vital to harnessing the renewable energy in African countries.

According to the International Energy Agency (IEA), the African Development Bank, the World Bank, the United Nations Sustainable Energy for All (SE4ALL), and other organizations, tens of billions of dollars will be needed annually to address Africa’s energy access challenges. Some estimate that at least $93 billion per year is required over the next decade.

Leaders of African countries and their bilateral partners realize the urgency to close investment gaps and have made energy a top development priority. For example, U.S. President Barack Obama last year launched a public-private sector initiative called Power Africa that aims to catalyze investments to support energy projects that will result in increasing energy access for 20 million people in sub-Saharan Africa. Power Africa will use various mechanisms to help accelerate the completion of transactions on the continent so that actual power projects can be implemented. This effort and other programs related to promoting investments in Africa’s energy infrastructure are expected to be discussed at the US-Africa Leaders Summit this week in Washington, DC. Heads of State from nearly all Africa countries will meet President Obama as well as other leaders from the U.S. Government and the private sector.

With 40 percent of Africa’s population living in rural areas by 2030, it is clear that centralized power stations connected to the grid will not be adequate nor economically feasible for providing universal and sustainable energy access to the millions of people in rural parts of the continent.  It is therefore important to point out that Power Africa will not only focus on centralized power stations and the grid. Instead, the U.S. Secretary of Energy Dr. Ernest Moniz recently launched a new framework under Power Africa called “Beyond the Grid.” It will leverage over $1 billon of commitment from the private sector into off-grid and small scale energy solutions for underserved mostly in rural communities of Africa.

In addition to the U.S. led efforts, governments in Africa are being flooded with project proposals from foreign and domestic investors seeking to cash in on Africa’s new energy bonanza. Partly fueling this bonanza is the fact that several countries are putting greater emphasis on how to best harness their abundant renewable resources. Investors are being attracted, in part, due to improved regulatory environment and policy incentives in countries such as Angola, Ethiopia, Ghana, Kenya, Morocco, Mozambique, Namibia, Nigeria, South Africa, and Zambia.

So, in light of the above, could Africa be the global epicenter of renewable energy by 2030?

Today, providing the essential electrical energy services, e.g. lighting, water, food, refrigeration, mobile communication, internet access, is getting more affordable with renewables compared to the use of other conventional fuels. For example, lighting systems based on kerosene cost $4-$15 per month compared to $2 per month for solar lighting system. Also, continued advances in renewable technologies, costs reductions, improvements in the experience curve, and the adoption of successful business and best practice regulatory models could certainly spur faster growth as renewables are deployed to meet the needs of hundreds of millions of people in Africa. --continued -- 

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Unlike most industrialized countries and other emerging markets, many countries in sub-Saharan Africa have a unique opportunity to leverage leapfrog technologies as well as state-of-the art regulatory models when making decisions about the development of their energy sector.  For example, providing universal access to hundreds of millions of people in rural communities using off-grid renewable solutions including mini- and micro-grids will create investment opportunities which drive the penetration of renewables. Advances in sensors and other metering technologies are proving to be viable solutions for ensuring revenue adequacy and financial solvency of utilities. For example, sensors and controls can be embedded in the distributed renewable energy solutions like solar PV. This will allow the energy service providers to collect revenue, but also help consumers manage their energy usage.

By 2030, the majority of the remaining 60 percent of Africa’s population in urban communities will expect to get their electricity services from grid-connected power stations.  Even in this scenario, renewable energy could play an important role. In several African countries, e.g. Ghana, Ethiopia, South Africa, large utility scale wind and solar plants are already being connected to the grid. Renewable Energy Integration deals with many of the salient issues and provides practical case studies from other utilities about managing variability, uncertainty, and flexibility associated with renewables. In Chapter 31, “Managing Operational Uncertainty through Improved Visualization Tools in Control Centers,” Richard Candy presents a case study from South Africa.

Africa’s large renewable potential such as the Grand Inga Hydro, and other large wind and solar plants will be better harnessed by making the different regional energy market work. Experiences from functioning electricity markets in other parts of world where renewables have been integrated between countries and across multiple regions can help Africa regional power pools design efficient markets. Regional integration also requires investments in power grid infrastructures, i.e. smart grid technologies, High Voltage Direct Current (HVDC), and Flexible Alternating Current Transmission Systems (FACTS).

An important aspect of successful markets is unbundling of generation, transmission, and distribution.  As African countries like Nigeria, Ghana move to unbundle and privatize their power generation and distribution sectors, they should consider the use of service- or performance-based regulatory models instead of traditional cost recovery mechanism based on volumetric sale of energy. Such models in which a myriad of energy-related services can be appropriately monetized have the potential to provide for a more flexible business environment that will benefit both the utility (large or small energy entrepreneur) and the consumer (grid or off-grid).

Indeed, Africa does have the potential to become the global epicenter for renewable energy by 2030 in ways that are financially and environmentally sustainable. The need to provide 800 million people access to electricity is gargantuan, and the market opportunities tremendous. However, this will largely depend on the decisions made by African governments, who must take the long-term view as they prepare and execute their energy roadmap to 2030 and beyond.

Last and perhaps most important, African governments must accelerate the development of human capital, including tapping into the vast amount of expertise in the diaspora, in order to properly leverage the flood of investments to build and maintain its energy infrastructure. Africa must then begin to use that energy to produce more value-added products and services for domestic, regional, and international markets.

Download the report here: (PDF, 932KB)

Lawrence’s book Renewable Energy Integration: Practical management of Variability, Uncertainty and Flexibility is available for purchase on the Elsevier Store at a 25 percent discount!

Lead image: Wind Turbine in Africa via Shutterstock.

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