In Africa, Green energy is a hanging fruit
As the world is adjusting to Covid-19, some sudden changes will be inevitable Post-pandemic say, experts. Among these changes is the surge of resource nationalism- a situation where countries will domesticate production processes and resources.
Africa is no exception. In Africa, the pandemic and its attendant movement restrictions shifted a large proportion of economic activities and operations to digital platforms. Teleworking, e-learning, e-medicine, e-commerce, video conferencing have come into the vogue -and they are efficient and cheap.
According to the Executive Secretary of ECA, Dr. Vera Songwe, the shift to digital platforms, consumes 40 percent of Africa’s electricity, she said. “This means that, to ground the ICT revolution and allow our economies “build back better,” post-COVID-19, we will need to invest in more power generation,” she concludes.
In her diagnosis, that investment should focus on replacing fossil energies with green and sustainable ones. We are here talking about energy source substitution- the shift from fossil powered energy to green based sustainable energies that are clean and cheap.
Clean energy sources include Wind, Solar, Geothermal, and Hydro. In this respect, Africa as a whole is well endowed. In fact, these sources favor Africa’s economic circumstances because they are cheap and quick to install and commission.
Estimates place the current demand for power in sub-Saharan Africa at 100GW. Out of this, 22 percent or 22GW is hydro generated. By 2040, experts say, our demand for electricity will rise to 385 GW. Hydro will generate only 100GW of this, leaving the bulk of the demand to be met from other sources.
This means that 78% of energy generation in Africa is largely thermal generated using diesel-powered generators and Coal. These are dirty and expensive electricity generation sources. Now, say experts, is time for a paradigm shift in the energy sector. Time for green energy is now!
Thanks to technological advances, green sources have become viable. These are wind, solar, hydro and geothermal.
According to IRENA, the International Renewable Energy Agency, green energy generated 42 GW of Africa’s power in 2017, but, argues the agency, these sources can generate 310 GW by 2030. That is 81 percent of total demand projected to rise to 385 GW then.
To reach that level of transformation, says IRENA, needs an average investment of US$70 billion a year to 2030. African governments cannot spare this amount. In fact, according to the Africa Development Bank, Africa can only raise US$50 billion a year for infrastructure- Roads, Seaports, Railway lines, Airports, water, and energy. The energy sector, according to AfDB’s estimates, requires an investment of $35-50 billion on the energy sector alone. There is a yawning financing gap.
To bridge the gap, the private sector will have to step in. The sector is quite active in green-energy sources including Wind, Solar, and Geothermal. The private sector has no stomach for hydro projects because of the massive investment needed and the long gestation period.
Even in geothermal, the private sector only generates power from the capped wells. The public sector takes drilling and capping risk.
However, the private sector is signing Power Purchase Agreements with local power utilities to generate power from wind and Solar technologies. The PPAs are 25 years long and are predictable since the purchase price is defined in the contract. The deployment of the private sector in the power generation has increased power generation in a number of African countries. Among them Kenya and South Africa.
A good example is the Lake Turkana wind project, the largest wind farm in Africa. The US$78 million project is the largest private sector investment in Kenya’s history. It generates 310 MW of power to the national grid at $0.07 per unit.
Deployment of Wind Power Technology has picked up apace. By 2018, Africa’s wind power production stood at 4.3GW. South Africa was the leader in the wind industry with 1170 MW already on the grid and another 700MW was in the pipeline. Others are; Morocco 920MW; Egypt 750 MW; Ethiopia 320 MW; Kenya 336 MW with another 200MW in the pipeline. By 2030, South Africa targets 8GW of wind-generated power and Morocco is targeting 2GW.
Kenya, which boasts of the largest wind farm in Africa, the Lake Turkana Wind Project generates 310 MW from this single source. Her potential from this source is estimated at 3GW and yet, Kenya is not among the high potential countries. That slot goes to South Africa and other coastal countries North of Sahara.
Kenya leads Africa in the deployment of geothermal power. Her potential is estimated at 10GW. Thus far, she has deployed 962 MW, making her the sixth powerhouse in the world and the leader in Africa. In fact, geothermal is now the baseload source in Kenya, replacing hydro.
A combination of Geothermal and Hydro as the leading sources of power make Kenya energy secure. Wind and Solar are viable as supplementary sources. Wind and Solar energy generation are suitable for decentralization of power in that they can be customized to serve local populations either as on-grid or off-grid supply.
Geothermal power generation is only viable in Eastern Africa because it is generated from steam found only in the bowels of the Rift valley. Other high potential countries are Ethiopia, Tanzania, Somalia, and Eritrea.
Although the leader in geothermal power generation, Kenya is barely scratching the surface for her potential estimated at 10GW. In fact, estimates show, Kenya has the largest potential in geothermal generation in Eastern Africa. Ethiopia is the second player in this sector of the energy industry in East Africa with significantly lower generation capacity.
Africa will reap great by deploying green energy. It is domestic and cheap. It eliminates dependence on imported fossil fuel whose prices are volatile. Currently, the continent imports $50 billion worth of fossil fuel, hitting her balance of trade. Reducing fossil imports will result in forex savings. Further, green energy power costs US$0.09 per Kwh compared to $0.20 or more from diesel propelled power generation.
Africa is looking to green energy to cut its electricity costs in the manufacturing sector and improve its competitiveness. The continent is also looking to provide an estimated 640 million people with electricity to improve their health and welfare. Green energies are fast to deploy and customizable.
Africa exploited mobile technology to bridge the communications gap. Now, says the IMF, Africa is the fastest-growing mobile communications market. It is set to exploit the green energy technologies to leap over the electricity generation hurdles. For the time being, the only hurdle is financiers’ lack of knowledge about the sector in Africa. For this reason, they are reluctant to finance green energy sources. It took the LTWP project nine years of dogged determination to raise the US$78.6 million needed to take off. Fund managers, are you listening?