EnergyIssue 04 - 2023MAGAZINE
GBO_ Renewable Revolution Africa

The ‘Renewable Revolution’ in Africa

Africa has a much higher potential for solar radiation than both North America and South America combined, with a daily potential of 4.51 kWh/kWp

Africa has long been one of the most resource-rich continents in the world. Historically, it has had some of the wealthiest empires, like the Mali Empire, which possessed one of the most profitable gold mines in the world. However, Africa’s resources have been more of a curse than a boon to the people of the region.

On the continent, which has the potential to harvest an abundance of solar energy due to its proximity to the equator, only a few countries have made some gains. With the shift to clean energy underway, Africa wants to increase its usage of other renewable resources quickly.

Angola, which is twice the size of France, would have relied mostly on its oil reserves to supply the majority of its 34 million inhabitants with energy until a few years ago. After all, the former Portuguese territory has one of sub-Saharan Africa’s largest hydrocarbon resources.

However, the country is currently leading the way in the region for other countries in utilising solar energy, which is the region’s main hope for the renewable revolution. Angola added about a gigawatt of new solar power in 2022 alone, a 14% increase from 2022. And while that places Angola well behind pioneers such as South Africa, which supplies over half of Africa’s solar energy, the country’s quick adoption of photovoltaic technology is considered very symbolic.

The government plans to add 100 megawatts of solar capacity as early as 2025, with a third of that capacity coming from off-grid sources since it takes advantage of the 16°C to 26°C average annual temperatures.

Several other African nations are doing the same, as the continent is aiming to attain a significant portion of its energy from solar power by 2030.

Taking Rwanda as an example, the country is situated in East Africa, around two degrees below the equator, which is a fortunate location in terms of solar potential. Its solar radiation intensity is technically far higher than that of many Western countries, about the equivalent of five hours of peak sun every day.

Africa has a much higher potential for solar radiation than both North America and South America combined, with a daily potential of 4.51 kWh/kWp. This is a large region with wide variations in solar potential. Africa did not fully utilise its solar potential until quite recently, according to official sources such as the International Energy Agency and the World Bank’s Global Solar Atlas. Despite its vastness, the region only accounts for 1% of the global installed solar capacity.

However, this is not the whole picture because sub-Saharan Africa prefers to go about things independently and because a large portion of the newly generated solar energy is off-grid—sometimes very off-grid—and therefore eludes official monitoring. For example, rooftop installations in residences and factories have been increasing.

Combined Finances

Representatives of development banks, multilateral lenders, and private-public finance companies mixed among the 40,000 attendees of the COP27 in Cairo in 2022. These organisations are prepared to participate in “blended financing,” or essentially multiple funding sources, which is what will enable the shift to renewable energy sources. There is pressure on the World Bank to take the initiative.

Between 2026 and 2030, the region’s overall renewables budget is projected to be $190 billion, with two-thirds of that amount allocated to clean energy. Nevertheless, the advantages are practically incalculable, and that would still only make up a small portion of the money spent globally on achieving net zero.

IEA executive director Dr. Fatih Birol noted that $25 billion a year in investment is needed to ensure that all Africans have access to modern energy, which is equal to the cost of constructing just one liquefied natural gas terminal.

Concessional finance, a low-cost type of debt that promotes other lending, particularly private capital from local financial markets, is one of the new funding structures that are being discussed.

Stated differently, local lenders would be invested in the outcome and would like to see that the funds are allocated appropriately. Certain governments will need to step up their management of what lenders now refer to as “foundational investments” in the energy revolution to guarantee that.

The cost of providing subsidies to households has increased in the region due to the Ukraine war, leading some nations to double their subsidies, a situation that the International Monetary Fund (IEA) refers to as “an untenable outcome for many countries facing debt distress.”

Concurrently, several African politicians have launched campaigns to demand compensation from Western countries for the ongoing scarcity of water, catastrophic weather occurrences, and increasing levels of poverty.

In private, however, western diplomats claim that other forms of financial support for investments in solar and renewable energy will be considered instead of compensation.

Developed nations are hesitant to write what they believe will be a blank cheque, as the esteemed Oxford Institute for Energy Studies notes. Another obstacle is that few, if any, African nations would acknowledge any responsibility for climate-related damages, leaving them vulnerable to potentially limitless lawsuits.

International lenders are more than willing to accept the risk if they can see the benefits. Several developing countries have drawn many times the necessary amount of capital for solar projects thanks to concessional, leveraged, and other kinds of financing.

Clean cooking

At first glance, it seems impossible to get sustainable energy into Africa in any way. According to the IEA, 600 million Africans, or 43% of the continent’s total population, do not have access to electricity now.

To attain universal access, 90 million individuals would need to be connected to the grid for the first time each year, and at least 130 million would need to be weaned off “dirty cooking,” which involves the use of wood and other biomass fuels. By any measure, this would take a tremendous amount of work.

Rwanda is a good representation of the area. With any luck, less than half of homes will still be using firewood for cooking in 2024, compared to over 80% in 2017. This is the outcome of some intricate funding provided by the World Bank’s Clean Cooking Fund, the Energy Development Corporation, and the Development Bank of Rwanda.

The future looks bright if Africa can realise the promise of solar energy and other natural resources. According to IEA forecasts, by 2030, more than 80% of new power generation will come from the four major renewable energy sources: geothermal, hydropower, wind, and solar. For the most energy-deficient rural areas, where over 80% of residents lack access to the grid, this would be essential. The most feasible options in these regions, according to the IEA, are standalone solar-powered systems and mini-grids.

Twelve African nations have committed to achieving net-zero emissions by 2050, accounting for more than 40% of the continent’s total CO2 emissions, and almost all of them have ratified the Paris Agreement. Universal access to reasonably priced electricity is, after all, a popular choice.

Reeling economies

However, fossil fuels will continue to be a source of energy for the country and a source of income from exports. Africa has enormous natural gas reserves—up to 5,000 billion cubic meters—that are waiting to be approved for exploitation.

The fuel will be used to power new businesses and revive devastated economies, such as Mozambique’s, if the permits are granted. Mozambique, one of the world’s poorest nations, sent its first cargo of natural gas to Europe in November 2023 after waiting three years for international aid to aid in its recovery from Hurricane Idai, which decimated wide portions of the nation.

President Filipe Nyusi made no regrets in an interview with Bloomberg Green, claiming that export earnings would finance the country’s economic transition. This is a recurring theme in the scenario that the conflict in Ukraine has warped.

Other African countries, like the oil-rich Algeria, have agreements in place to supply gas to Europe. Furthermore, in advance of Europe’s resolve to wean itself off Russian gas by the end of the decade, LNG facilities are being built or expanded in Senegal, Mauritania, and the Congo. All of this is taking place in tandem with solar installations.

Fossil fuels have historically caused problems for some African nations, such as oil-rich Nigeria. Hydrocarbon revenues are falling after decades of corruption, mismanagement, and neglect.

In 2022, then Governor of the Central Bank of Nigeria, Godwin Emefiele, said, “The official foreign exchange receipts from crude oil sales into our official reserves have dried up steadily from above $3 billion monthly in 2014 to absolute zero dollars today.”

The political and environmental benefits of renewable energy, and solar energy, in particular, are compelling.

Building resilient networks

An independent sustainability-driven energy service provider commissioned decentralised solar energy systems in three countries in September 2022. A 10kWp decentralised solar PV system in Senegal, a 286kWp solar energy system for a plastic recycling plant in Nigeria, and a 69kWp PV hybrid energy system with battery storage for 3,000 residents, 40 businesses, and 10 public buildings in Mali were commissioned.

These decentralised renewable energy systems boost economic activity, reduce carbon emissions, and electrify African villages. Multiple benefits come from these apps. Compared to fuel, decentralised solar systems promote user autonomy while lowering pollutants. Thus, consumers no longer depend on unreliable electricity systems.

Decentralised solar systems give consumers more control over their electricity bills and increase solar technology adoption on the continent. By reducing electricity demand and peak demand, consumers can strengthen the central grid.

Decentralised energy solutions create power where it is consumed, avoiding transmission lines, which Africa lacks.

African countries can reduce power line losses by scaling up decentralised solar installations. The energy system funding gap is closed by lowering network investment.

Decentralised power networks provide affordable electricity and strengthen communities. Communities can expect gradual improvements in physical and digital infrastructure, lowering inequality and creating an economically simulated environment for national investment and growth.

Discussing the disparity

Due to low salaries and rising electricity costs, connecting to the central grid may be prohibitive for impoverished communities covered by the national electricity network. Thus, decentralised solar systems allow low-income communities to benefit from the technology.

According to the Booming Decentralised Solar Electricity in Africa’s Cities research, these populations are more likely to use pico-solar systems and solar lights for electricity and lighting.

Decentralised solar systems become marginal as consumer revenues rise, according to the analysis. Thus, when the central grid grows cheaper, consumers may switch to decentralised technology.

Wealthy African families are more likely to buy decentralised solar systems than rural community projects, regardless of grid quality or reliability, according to the survey.

The survey found that Windhoek, Nairobi, and Cape Town, Africa’s wealthiest cities, had the most decentralised solar capacity at 29.6 MW, 21.7 MW, and 69.6 MW, respectively, with a 20% yield. The poorer towns of Khartoum and Harare have 1MW and 4.5MW capacities with 20% yields, respectively.

The 2022 research notes that distributed power systems threaten centralised power networks despite their many benefits. Most African utilities suffer financially, so losing home and commercial clients could damage their budgets.

Cross-subsidisation is also needed to scale decentralised solar systems in rural and impoverished communities. Poorer consumers, who consumed less and received subsidised power bills, would pay lower charges than larger consumers.

Increasing customer autonomy threatens to fragment African centralised energy grids if wealthy consumers leave the network. The trend may harm centralised networks’ financial sustainability.

Despite this, the paper states that the rising demand for decentralised solar systems offers a chance to research future policies to construct efficient, dependable, and sustainable electrical systems in Africa.

While Africa has only recently started to fully utilise its solar potential, the region’s move towards solar energy is also characterised by a significant amount of off-grid solar installations, which often go unmonitored by official sources.

This transition presents the World Bank and other global organisations with a unique opportunity to provide affordable, reliable, and sustainable electricity services to a large portion of the population, improving economic opportunities and overall quality of life.

The commitment of several African nations to achieve net-zero emissions by 2050 is a significant step in the right direction. While fossil fuels continue to play a role in the region’s energy mix, the transition to renewables, alongside the exploitation of abundant natural gas reserves, is vital for reviving economies and mitigating environmental concerns.

In a world facing the challenges of climate change, Africa’s embrace of solar energy and renewable resources is not only an opportunity for economic growth but also a crucial step toward a sustainable and environmentally responsible future.

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