Emelly Mutambatsere
Principal Economist
African Development Bank
South Africa
Outline of presentation
i. Background
ii. The study
iii. Africa’s wind energy potential
iv. Mapping market development
v. Explaining trends
vi. Policy implications
Background The problem Possible solutions
The problem
Africa’s energy problems are well
documented:
Low power generation capacity per capital
Low grid access rates
High systems operation costs
High but non-cost reflective tariffs
Unstable electricity systems; unreliable supply
High connection charges; connection delays
Possible solutions
Conventional fossil fuel based solutions
Cost effective
Several African countries are well endowed
Clean energy path
Africa’s reserves of renewable energy resources
are the highest in the world (WEC, 2010)
More than half of the top 30 countries by measure
of endowment in renewable energy resources
located in Africa (Buys et al 2007)
The study Why wind? Objectives Data and sources
Why wind?
Wind now the world’s fastest growing energy
source.
Installed capacity grew at ~30% pa between 1996 & 2008
Exponential growth in ongoing/planned projects in Africa
Wind technologies rapidly advancing.
On-shore wind now competitive on generation cost basis
But Africa’s potential largely underdeveloped. Accounted for below 1% of installed capacity in 2011
Objectives
Contribute to filling the knowledge gap on
development of wind energy markets in Africa
What is the potential?
How much of this has been developed?
How is the market evolving?
What explains this trend?
What direction should policy take?
Data and sources
Data sources:
International Energy Agency
Wind maps from various sources
MDB’s project databases
Bilateral donors’ project databases
Project finance databases
UNFCC
Analyzed non-parametrically for a continent-wide
mapping of the market.
Africa’s wind energy potential Africa’s wind speed map On-shore wind energy potential
Wind Speed Map
The best winds
observed in:
Cape Verde,
Mauritania, Morocco,
Tunisia, Algeria,
Egypt, Djibouti,
Eritrea, Somalia,
Seychelles, Lesotho,
South Africa,
Madagascar
On-shore potential
Buys et at (2007) measure ‘potential’ in tons of
oils equivalent
Important assumptions regarding wind speed,
location, technology efficiency, turbine density.
Most on-shore potential located in coastal areas
Large inland potential observed in Chad and
Kenya
On-shore potential (mtoe)
0
10
20
30
40
50
60S
om
alia
Sud
an
Lib
ya
Mau
rita
nia
Egyp
t
Ma
dag
ascar
Ken
ya
Chad
Eth
iopia
Ca
pe
Ve
rde
Tunis
ia
Moro
cco
Sou
th A
fric
a
Moza
mb
ique
Ta
nza
nia
Ang
ola
Na
mib
ia
Seych
elle
s
Cong
o
Co
ng
o, D
em
…
Mauritiu
s
Com
oro
s
High Low
Mapping market development (Major trends)
1. Installed capacity
0
200
400
600
800
1000
12001
98
8
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
Cap
acit
y (M
W)
Annual capacity Cumulative capacity
2. Coverage
0
500
1000
1500
2000
2500
3000
3500
4000Eg
ypt
Mo
rocc
o*
Sou
th A
fric
a
Ken
ya
Nam
ibia
Eth
iop
ia
Djib
ou
ti
Gh
ana
Mau
riti
us
Nig
eria
Tun
isia
Tan
zan
ia
Mo
zam
biq
ue
Alg
eria
Mau
rita
nia
Cap
e V
erd
e
Erit
rea
Cap
acit
y (M
W)
PlannedOngoingCompleted
3. Geographic location
4. Project size/capacity
Installed
Capacity (MW) Completed Ongoing Planned
Total 1,104 1,731 10,907
Range 0.2 – 140 5 – 300 10 – 5,000
Mean 37 108 227 (126)
Median 25 95 110
Standard
Deviation 40 86 701
5. Project size/cost
0
200
400
600
800
1000
1985 1990 1995 2000 2005 2010 2015 2020
Pro
ject
Co
st, U
SD m
illio
n
Project completion year (actual or expected)
…reflecting a phased approach to sector
development
Pilot
Small, lack of familiarity
with technology, insufficient
geo-referenced
resources and data sets
Semi-commercial/
Demo
Further technology
testing, developing
public sector
capacity
Commercial
Sufficient
resources to
fund large
scale
operations
6. Cost per capacity unit
0
1
2
3
4
5
6
0 50 100 150 200 250 300 350
USD
mill
ion
per
MW
Installed Capacity per Project (MW)
…correlated to procurement method
0
1
2
3
4
5
6
0 1 2 3 4
Un
it c
ost
, USD
mill
ion
per
MW
1=Public; 2=PPP; 3=Private
Linear (1=Public; 2=PPP; 3=Private)
…and exhibiting market specific
trends
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1985 1990 1995 2000 2005 2010 2015 2020
Un
it c
ost
, USD
mill
ion
pe
r M
W
Project completion year (actual and expected)
Egypt
Morocco
South Africa
Expon. (Egypt)
Expon.(Morocco)
Expon. (SouthAfrica)
7. Project sponsors
Completed
Public sponsored - governments (78%)
PPP – 7%
Private sponsored - 14%
Pipeline – ongoing and planned
Public sponsored - governments (37%)
PPP – 11%
Private sponsored – (52%)
8. Lenders Financing for Completed Projects, % of
value DFIs, % of Non-Concessional Funding
in Completed Projects
9. CDM
¼ of the projects benefited
NPV of CO2 sales revenues estimated at
5%-20% of initial project cost
Anecdotal evidence points to positive effects
on commercial viability
But ¾ of projects still not applying or failing
to access CDM
Trends: a recap
Market dev. started slow with N. Africa dominating
SSA is quickly catching-up
Installed capacity expected to more than double after completion of ongoing projects.
A 5-fold increase expected if all planned projects are implemented.
Size of projects is increasing, private sponsorship is on the rise, and some countries are managing to leap-frog
All regions except C. Africa have completed/ongoing projects
DFIs the lead lenders; still very low commercial debt flowing into projects; grant financing is shrinking.
Outlook
Despite this progress, the share of wind in Africa’s generation mix is expected to remain low
2% total by 2030 (IEA)
Most progress is in MICs.
Lower progress in LICs – even those with the highest wind energy potential.
Explaining trends Technical, Economic, Climate change, Business environment.
Explaining trends
Technical considerations
Intermittent, non-storable resource
Economic considerations
Value for money affected by technical features of wind,
subsidies on fossil fuels
Climate change considerations
Not as high on the political agenda of low income countries
as access
Business environment considerations
Still inadequate in low income countries; evolving in MICs
Policy implications
Political commitment is a prerequisite to market
development
Establish champions
Provide clear legislation
Correct market distortions
Fund feasibility studies, develop geo-referenced
databases
Invest in regionally integrated power systems
Thank you.
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