Africa’s clean energy revolution
In the next twenty years, half of the people born into the world will be born in Africa. The continent will become the most populous region in the world by 2023, and more than half a billion Africans will join the urban populations by 2040. This young and urban population will need a huge amount of energy to support its burgeoning cities. How energy suppliers rise to meet this growing demand has the power to reshape the entire world’s energy landscape.
For one, the pandemic has significantly altered the market dynamics of the energy sector. Not only has the crisis revealed how less volatile renewables are as an energy resource, but the long-term investment outlook means they are likely to be significantly cheaper and faster to build. Wood Mackenzie have predicted up to $210 billion of planned oil and gas investments are now at risk from the coronavirus, with at least half of that almost certainly deferred. As oil companies continue transitioning into becoming energy companies, investment into their renewable assets and investment into greener technologies is set to increase.
Africa has long had the potential to emerge as the major force in the global oil and gas markets, but the effect of oil’s collapse is likely to devastate government revenue, at exactly the moment when they face the huge costs of responding to the coronavirus pandemic. Even so, most of the continent’s oil is still exported to fuel industrial development abroad.
Meanwhile, half of the continent still does not have access to electricity, although this doesn’t tell the full story. Polish journalist Kapuscinski once wrote that “In reality, except as a geographical term, Africa doesn’t exist.” The depth and variety of the continent is vast, and its energy needs are no different. In North Africa for example, over 99% of citizens have access to electricity, and we need to consider how their energy needs might be different to Sub-Saharan Africa, where access to electricity is closer to 30%.
Having access to energy is also not the same as having access to quality electricity. In Nigeria, access to the electrical grid is cheap, but power outages are common. Oil can still play a pivotal role in economies like this, but the oil-rich country is still turning to renewables to help bring power to all its communities. Nigeria now aims to generate 30% of its total energy from renewable sources by 2030.
Kenya is also tapping into a range of sources including geothermal and solar and in 2019 opened Africa’s largest wind farm just outside Nairobi. The Lake Turkana Wind Power project is made up of 365 turbines, each having a capacity of 850 kilowatts and is one of several renewable projects launched.
It helps that Africa is the sunniest continent on earth and Hydro-electric, wind and solar power all derive their energy from the Sun. Solar power alone has the potential to bring energy to virtually every location in Africa, while desert solar power, such as in the Sahara, could easily meet all local energy demand and even eventually power Europe too. It is after all, very closely compared to some underwater cables already in existence. The world’s longest underwater power cable, for example, runs for nearly 600km between Norway and the Netherlands. The shortest distance between North Africa and Europe is just 15km.
While this would be an example of a huge project, the key advantage of renewables their adaptability. Geothermal energy is mostly concentrated in eastern Africa, and there is enormous potential for geothermal energy in the East African Rift. The large African coastline offers abundant wind and wave resources, with the availability of wind on the western coast of Africa particularly substantial. In central areas, solar power will be extremely effective at meeting rural electrification needs, especially where connecting to existing grid networks just isn’t an option.
In this sense, renewables are the only practical solution to people in rural areas, and investment is needed to shift to this sort of energy decentralization if it is to sweep the continent. This is because the biggest costs for utility scale wind, solar and battery storage projects are the upfront capital, once these projects are operating costs tend to be minimal and incredibly scalable. For this reason, renewable energy technology has the potential to alleviate many of the problems that face Africans every day, but also play a huge role in reshaping our own companies and energy development.
A clean energy revolution in Africa can help fight against energy poverty, promote robust development and make it more sustainable. Delivering on these opportunities requires not just innovative financing but a package of policies to promote clean energy access and massive political effort from both domestic actors and the international community to make these markets work.
Better planning and collaboration in-country will also be required to shift available public and private resources into renewables.
As investments in renewables in Africa increase as more countries try to boost their renewable energy potential, our next blog will explore the critical role strong financial partners play in the African energy market.