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JOHANNESBURG – Key issues affecting electricity and energy supply include dependence on diesel power, erratic electricity grids and insufficient generation capacity. If the current power consumption trends continue, it is estimated that by the year 2030, 655 million people in Africa will be without access to power. Overall, it is estimated that approximately 600-million people in Sub-Saharan Africa currently lack access to electricity.In terms of trade and commerce, sourcing reliable power supply and renewable energy is a key priority for businesses in Africa, and the impact of shortfall and erratic supply continues to be felt across a number of sectors.

The CEO of beleaguered Zambia Telecommunications Company (Zamtel) blamed load-shedding, in addition to a weakening economy, for the company’s failure to make profit.

According to the Auditor General’s report, the company has not made any profit since 2012 when it was grabbed from Libya’s Lap Green Networks, who had bought it in 2010 and operated it profitably.

The report also claimed the company recorded a loss of K224 million between 2013 and in 2014.

At the heart of Africa’s power sector problem is the fact that insufficient generation capacity and limited electricity supply results in low access. Together with geographic constraints, these are barriers to the development of the electricity market in Africa says Issam Darwish, Executive Vice Chairman and CEO of IHS Towers Group.

The mobile telecommunications infrastructure provider recently commissioned a report Power Up, Delivering Renewable Energy in Africa, which has found that the continent requires up to US$90 billion to meet its current energy shortfall, that the market for pico-solar units has grown from almost zero in 2009, to 4.5 million in 2014, and, in January 2016, Africa saw its first solar bonds, a securitisation financial product for small scale off-grid solar projects.

Research also showed that a 680 percent increase in net renewables capacity deployment is required if Africa is to achieve the ambitious goal of 300gW of renewable capacity by 2030 set by the African Renewable Energy Initiative.

Moreover while fossil fuels, notably coal, oil and gas, continue to provide a significant quantity of energy to the continent, there is also a need for cleaner and more long-term, sustainable energy solutions to be developed. As a result, renewables must play a greater role in Africa’s energy mix.

“According to McKinsey, only seven countries (South Africa, Cameroon, Cote d’Ivoire, Gabon, Ghana, Namibia and Senegal) have access rates above 50 percent, with the rest of the countries on the continent having an average grid access of approximately 20 percent. Outside of South Africa, average electricity consumption is about 150kW per capita, which is a fraction of consumption rates in other developing nations such as Brazil and India,” says Mr Darwish.

John Gibbs, Africa Deals Power & Utility Lead at PwC, said: “For the millions of people who don’t currently have access to electricity, the old assumption that they will have to wait for grid extensions is being turned on its head by new technological possibilities. Faster progress is needed, and we believe it can be achieved if national energy policies adopt a more comprehensive approach to energy access, embracing the new starting points for energy provided by standalone renewable technology and mini-grids.”

Africa’s programmatic approach

Darwish says that while investors occasionally pursue one-off projects, government-backed renewable energy procurement programmes are more likely to attract long term investment.

South Africa, Kenya, Ethiopia, Uganda, Tanzania and Zambia are emulating the ‘programmatic’ approach to renewable energy, he adds. This approach includes transparent, standardised and competitive programmes which reduce risks for developers and cost to governments. They also signal long-term policy commitment to green energy and also have an element of localisation which builds long-term local expertise and skills development, Mr Darwish explains.

In addition, greenfield projects are also a good way to attract private equity investors looking for opportunistic high-returns in the renewable energy investment space, according to IHS Towers CEO.

Examples of countries in Africa implementing this type of infrastructure investment include Mauritius, Uganda, Nigeria and Zambia.

“More specifically, in Nigeria, the Lagos Solar Project launched in 2015, provides vital power to communities who are mostly rural and riverine, and who do not have access to power lines. The project provides approximately 5mW of power making it the largest off-grid solar-programme in West Africa,” says Darwish.

“In Uganda, East Africa’s largest solar power plant in currently under construction in Soroti, a small town 300 miles northeast of the capital, Kampala, which will provide enough electricity for 40,000 homes and businesses,” he adds.

In Zambia, the government is planning to plug the country’s energy gap with a 600mW of solar power. Under phase 1 of the programme, two 50mW projects will be built on the Lusaka South multi-facility economic zone.

The solution?

Exploiting renewable energy sources and liberalising the energy sector to attract private-sector participation would certainly improve the cost effectiveness of producing electricity on the continent says Mr Darwish.

Therefore, the case for building renewable energy infrastructure in Sub-Saharan Africa is stronger than ever and positive experiences in lead markets such as South Africa and Kenya highlight successful strategies and best practices, he says.

“In addition, it’s important to note that falling technology costs, ambitious targets, resource abundance, a steady pipeline of high-quality projects, and the support of international donor partners are driving the rollout of renewable power in Africa,” Mr Darwish adds.

Solar and wind energy are especially promising, due to falling costs and resource abundance, he adds, and Africa can also leverage its significant power resources including geothermal power and hydropower.

“From solar-powered hospitals in Lagos to wind farms in Lake Turkana, viable renewable energy solutions are becoming a vital part of the continent’s energy mix. Through a host of off-grid technologies, increased renewable energy capabilities are beginning to provide direct and affordable power to rural and urban regions which have traditionally been beyond the reach of a traditional electricity grid system. In addition, innovative “pay-as-you-go” contracts, affordable technologies such as pico-solar units, and remote utility management software, are all examples of smart alternatives to the conventional grid approach,” says Mr Darwish – ITWeb