Nairobi — Despite having one of the best solar regimes in the world, Africa is still a trivial player in the global solar market. Less than 1.5 percent of the trade in solar came to Africa last year, and most of those solar panels were bound for South Africa.
That Africa has massive solar resources is no secret, this has been discussed since the 1980s. As well, it is not a secret that solar prices are at an all-time low — at less than US$0.60/W. At the same time, electricity costs in Africa are among the highest in the world. And they are rising rapidly.
Clearly, the global age of solar energy is dawning. This leads one to ask “Why isn’t Africa at the centre of solar commerce?” “Why are countries like the UK, with meagre resources that amount to less than a third of the equatorial blast of sun we enjoy here, installing more than the entire African continent?”
A Market Transformation
Going back less than 20 years, 99 percent of the PV business was off-grid. In 1995, when world production was only 80 MW/year, almost all solar systems provided power for applications far from power networks: remote telecomm sites, signalling sets and village schools and clinics. And, in the mid-90’s, over 20 percent of the world PV trade came to Africa. However, in the mid-1990’s the green party in Germany succeeded in getting their Government to invest in support for on-grid solar power. In the U.S. and Germany, engineers developed inverters which enabled solar modules to synchronously feed their electricity into the grid.
Within 10 years, a market was created that allowed customers on-grid to dispense with batteries, place modules on their roof, and power loads in their houses directly from solar arrays. Better yet, many customers spun their electricity meters backward and laughed at power companies while they fed power the other way. Interest in production of solar power on rooftops skyrocketed. Programs in Japan, Germany, Spain and California encouraged consumers to buy household and small business solar systems. By 2003, the solar industry, which has been growing at 20 percent per year for twenty five years, passed the one gigawatt per year production mark. By 2012, 99 percent of PV business, now over 30 GW per year, was on-grid.
A huge transformation had taken place. The solar industry had gone from laboratory hobby of rocket scientists to off-grid hippie diversions to a mainstream investment, supported by feed in tariffs in more than 60 countries. But, in 2012, Africa was not a player in solar demand. Why? Because solar in developed countries is on-grid and in the hands of the middle class. As grid demand grows, demand for solar grows. But solar in Africa is off-grid. It charges batteries and is, predominately, in the hands of lower income groups. As the grid expands, the market for solar contracts.
Barriers to Development
Africa has been slow to invest in all renewables. According to Bloomberg New Energy Finance, of $268.7 billion invested worldwide in renewable energy last year, only about $4.3 billion was made in Africa — and most of this went to South Africa and north Africa. But it has been particularly slow to join the solar PV party.
There has never been a conspiracy to keep solar out of Africa. Instead, a set of factors has led to a market failure that keeps solar off Africa’s grids. The inability to connect and market solar “on to the grid” has kept major solar companies out of Africa and has made solar a tool with limited markets, an expensive choice for rural people without cash, often peddled with missionary zeal by aid agencies and NGOs. Among rural people who get by on a few dollars a day, off-grid solar will always be limited — a plaything that cannot deliver what grid or generator power can, something in a shop window, or a toy that provides a few watt hours a day, but not a permanent solution.
The first major blockage to the development of African’s solar sector has been political. As is still the case in much of the developed world, actors who think “big” manage electricity sectors from Capetown to Cairo. Centralized power from large coal, hydro and petroleum plants has been the order of the day for decades among African power companies, and they are always planning large projects to overcome many obstacles they must deal with. Small, decentralized PV power projects do not easily fit into their programs. In developing big fixes to solve short-term problems, solar PV is overlooked in favour of crisis management. When the hundred million dollar focus is on expanding the grid to the whole country, off-grid solar does not play well among bureaucrats or politicians.
Secondly, Africa’s policy makers have been among the last in the world to adopt the message of decentralized power. Even though end consumers, adapting to regular power outages, are forced to utilize decentralized diesel generators all over the continent, ignorance and inertia at policy levels have kept new solutions from gaining a foothold. Policy makers, often stuck in crisis-prevention mode on a day-to-day basis, haven’t looked forward to use of solar power. They have not had the time or support to create the policies, regulations and incentives necessary to start the transformation of power sectors to new sources. Often, they are simply unaware of the real transformative potential of solar energy for their countries. And, unlike Europe and the U.S., there have been few “champions” for solar among Africa’s government and private sector.
Thirdly, it is impossible to ignore the entrenched interests that actively seek to maintain the status quo. In much of East and West Africa, electricity sector power is increasingly produced by diesel-powered thermal generators. Diesel generation is extremely expensive for consumers, but it is lucrative business for the well-connected moguls that have the supply contracts. Even if solar were cheaper (and it is lower cost that diesel generation from $100/barrel petroleum!), what business interest would the powerful elite have in replacing their generators with customer-owned solar?
Finance is another key problem. Unlike Germany, there is a comparative lack of middle class to invest in solar PV systems (though commercial classes invest heavily in generators). Banks and financiers are uneducated about renewables and they tend to be ultra-conservative. The long payback periods, small size and the lack of established business models make solar PV a foreign language to the finance community. Instead, they chase more lucrative large-scale power projects. High interest rates mitigate heavily against solar PV – when banks want upwards of 20 percent interest on home loans, no math anywhere can make a loan for a PV system a smart move.
Neither has the aid community helped build the real solar energy sectors seen elsewhere. While a multi-billion dollar solar “party” rages in the north, and in places such as UK, Germany, California and Italy potential solar buyers have access to subsidies, feed-in tariffs, tax holidays and low interest loans, in Africa solar is for the poor. Since Rio in 1992, for Africa renewables have been about energy access for off-grid communities. Donor investments from groups like the Global Environment Facility and bilateral agencies have been to increase energy access with renewables. The message is paradoxical – in Europe, solar is for the green-minded middle class and rich. In Africa, solar is for disenfranchised communities in distant off-grid counties.
To a city-based middle class African, the array of off-grid solar powered lighting gadgets, often marketed by well-meaning and well-funded “social entrepreneurs” look a lot like toys. Yes, perhaps something to take home to the village over Christmas, but not something that would be of interest to a city-based African.
And here’s the rub: even though today, most Africans have limited access to electricity – 70 percent or more of all Africa – the people that are starting businesses, creating opportunities, growing economies and using the bulk of the country’s generated power are the urban middle classes. So, while donors and social entrepreneurs smugly trundle renewables to distant rural communities, in the big towns electricity is increasing unsustainable and dirty. The very city-based NGO workers and aid agencies that speak of green and clean energy for the poor, sit in CO2 spewing traffic jams and use hundreds of times more power than their pico-solar gadgets can generate.
So, while no one can legitimately criticize the intentions of aid-focused attempts to help replace the poor person’s kerosene burden, there is a glaring fallacy in the rhetoric. Where is the power for the NGO office computers coming from, and where is the power that runs the town coming from? In the big picture, a day in the dirty-energy life of Nairobi discharges more emissions that a week in a hundred rural communities.
The point of this article is not to bash the use of solar energy for rural access. It is a vital part of rural electrification in many countries. It changes lives. It has also been the starting point for solar industries. However, off-grid solar power is a dead end. Asking major solar companies to get involved in pico-and small-scale solar work is like asking automobile manufacturers to get involved in bicycle production and marketing. It will not happen – the products are very different.
How We Can Move Solar Forward
If Africa wants to attract more investment in solar, it has to increase solar demand twenty fold. And this will only occur when, as has happened everywhere else, programs are developed to bring solar on-grid and to greatly increase demand for solar.
First we need to change the ownership of the energy discussion. It is not about poor people’s energy access — it is about green power period. In the same way that Biko’s Black Consciousness movement preceded real moves to Black Empowerment, there must be a Green Consciousness movement in Africa to push for environmentally-sound energy strategies. Whether the big-power, petroleum and coal-fuelled status quo is kept in place by ignorance, inertia or greed, it will not step aside voluntarily. As was the case in the US and Europe, neither will old interests leave the corridors of power in Africa. A green-minded civil society must demand mainstream green power in Africa. This is not something that will be given to Africa by donor agencies, social entrepreneurs or missionaries. It is something that Africans themselves must achieve through discourse and political struggle.
It will be the educated middle classes — not the rural poor — that help consolidate moves to greener energy. They are the ones that are using resources, investing, deciding the direction that the country moves in. Sure, in a real democracy there are many voices, but ask yourself how many of the million solar systems in Germany are owned by poor people.
Companies that sell solar in Africa need to act like “real” companies and recognize that the rapidly growing urban middle class is a viable market. They use electricity, they are keen, they would like to be green and they would like to be empowered. This is a growing market that requires investment — and policy framework — to open up.
Secondly, there is a need to do the hard work of re-writing policies, framing enabling environments, drafting regulations and building up capacities of companies to manage the use of solar energy. Whereas energy access for the poor often requires small artisanal businesses, large solar projects require engineers, financers and even lawyers.
Finally, there is a need to re-think how local and international incentives can build solar markets. It is a complicated discussion. The question of energy access will remain central – because providing access to those without power is about political equity and a problem to be resolved. But at the same time, solar energy sectors must be built — in the same way electricity sectors have been built in the past through large investments in dams, coal stations, geothermal wells and transmission infrastructure. Solar must have its place at the table, with all of the other important generation technologies.
We are, slowly, getting there. South Africa is now installing hundreds of megawatts of solar PV capacity. Kenya is developing grid connected regulations, and will have more than a dozen net-metered grid-connect systems by the end of 2013. Tanzania, Ghana, Cape Verde, Botswana, Namibia and Uganda all have ambitious plans for solar. But there is so much more to do!
Mark Hankins has worked in as a trainer, project manager and advocate for solar in Africa for over 20 years.