Can Africa reach ambitious 2030 renewables goal?

Adam Green, EIU | May 12 07:11 | Comment | Share

Last December, as part of their contribution to the

Paris climate talks, a coalition of African governments and the African Union set a hugely

ambitious goal to deploy 300 gigawatts of renewable energy by 2030.

That’s roughly the equivalent of Japan’s entire electricity capacity and nearly a third of that

of the US, in a continent where hundreds of millions of people currently lack access to power.

It will require an average annual deployment rate of 17 GW. Sub-Saharan Africa’s biggest

annual deployment to date has been 2.6 GW. So, the 2030 goal means increasing yearly net

capacity additions by a whopping 650 per cent.

Of course, targets should always be ambitious. Renewable power will improve energy

security and promote economic diversification and growth in a continent currently struggling

to maintain its recent high growth rates.

Can Africa get close? The Economist Intelligence Unit this week publishes an in-depth

report, commissioned by IHS Towers, on African renewable infrastructure to explore that

question.

Over the last two months we have interviewed technology leaders, infrastructure developers

(and the banks funding them), regulators and energy analysts and visited projects on the

ground, from solar-powered hospitals in Lagos to East Africa’s largest solar farm, 300 km

north of the Ugandan capital, Kampala.

First, the positives: it is the right time to set an ambitious renewables goal. The price of wind

and solar power technology is falling steeply, and emerging markets are driving investment in

green power. In South Africa and Kenya, Africa already has home-grown success stories.

Countries with less experience in renewable infrastructure, like Zambia and Uganda, are also

making impressive strides especially in solar. There is support coming from international

partners such as the World Bank and bilateral donors, who bring de-risking facilities,

technical assistance and capital.

Like Africa’s mobile phone revolution, we are also seeing huge innovation in leapfrog

technologies: microgrids, off-grid tech, pico-solar units, remote utilities management

software, and mobile payment plans. Renewable power today resembles Africa’s mobile

phone sector in the late 2000s: the consumer market is far bigger than many people realise;

they are willing to pay and just need the products, and payment flexibility, to do so.

However, the continent has its share of hurdles to overcome to reach the 2030 goal.

Currently, excluding large hydroelectric projects, only 4 per cent of Africa’s power comes

from renewable sources. While large hydro is a major source of electricity, greater

diversification is needed. Africa is experiencing increasing droughts from climate change.

Zambia, which derives almost all its energy from hydroelectric power, came perilously close

to nationwide blackouts when seasonal rains failed last year. Moreover, many smaller African

countries cannot deliver huge capital-intensive hydro projects and even if they could, they do

not have a grid through which such power could be made available to the mass population.

Solar and wind have far greater application.

During our research, we interviewed investors, and engineers, about the process of

developing infrastructures like wind and solar farms. Several challenges continually surfaced.

Firstly, artificially low tariffs, and the weak fiscal conditions of energy ‘off takers’, deter

investors from risky greenfield projects. They need cost reflective tariffs to recoup their

investment, and confidence they will be able to sell the power to off-takers.

Then come the infrastructure challenges that come with building greenfield projects.

Companies constructing wind and solar farms need roads to and from project sites and, in

more remote regions of Africa, these are rarely of good quality. Those in landlocked

countries also need ‘soft’ infrastructures like faster customs processes so they can get

turbines, solar panels and other equipment in and out of the country.

Lastly, all investors argued that countries with long-term renewable power procurement

plans, like South Africa’s, will attract far more investment than those governments hoping for

speculative one-off investments.

The renewables firms we spoke to were optimistic on Africa as a green energy market.

Tackling these roadblocks could allow the continent to reach its 2030 goals.

Adam Green is an Africa editor at the Economist Intelligence Unit.

“Power up: Delivering renewable energy in Africa” is an Economist Intelligence Unit report

commissioned by IHS towers.

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