Energy Efficiency Made Simple Vol IV 2015

The electrical sector is a regulated and relatively conservative sector – for a good reason. The opportunities that renewable energy sources offer in the sub-Saharan Africa arena have encouraged regulation to reflect on how to incorporate these technologies, and Independent Power Producers in general, into the existing grids.

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Large-scale Renewable Energy power opportunities: Africa C Paton, Frost & Sullivan Africa

E ven when including the national electrification rates of South Africa (85%) and Ghana (72%), which are currently the highest in sub-Saharan Africa, the average electrification rate at national level remains as low as 30%. This is despite an annual average GDP growth context of about 4-5% as shown by the latest forecasts from the International Monetary Fund (IMF). One cannot hide the fact that power deficits are, and will remain, a core obstacle for socio-economic development in sub-Saharan Africa within the next decade. Wind, solar, geothermal Thanks to their cheap and environmentally-friendly operating costs (no fuel costs), falling technology and capital costs, as well as short construction lead times compared to traditional fossil fuel power plants, wind, solar and geothermal technologies are gaining momentum in Africa. Thereby, massive investments in solar and wind power have been taking place in the past three years in South Africa with the success- ful implementation of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). These technologies have also been gaining strong ground in North Africa, with Morocco and Egypt taking the lead by implementing large grid-connected solar and wind power projects. What can we expect from the rest of Africa? Next to this, the logical question that one could raise is: What can we expect from the rest of Africa? This has been the purpose of the anal- ysis report, titled ‘Large-scale RE power development opportunities in sub-Saharan Africa – A story about bankability, affordability, and grid capacity (2015)’ [2]. The study [2] identifies countries with the highest opportunities in terms of grid-connected RE resources, combined with a series of other factors such as the countries’ regulatory, political, and economic landscape. The research focused on four different RE technologies: Solar photovoltaic (PV), Concentrated Solar Power (CSP), wind, and geothermal. Hydropower was excluded as many countries, Following a global trend, governments inmost sub-Saharan African countries have set up Renewable Energy (RE) targets for their power sector that are becoming increasingly ambitious. According to the REN21 Renewables 2015 Global Status Report [1], as of early 2015 most of the countries in sub-Saharan Africa have already set up official RE targets with the exception of Angola, Burkina Faso, Cameroon and Zambia. The latter is rather unexpected and most likely explained by the fact that 99% of its power installed capacity already comes from renewable sources (i.e. hydropower).

especially those suffering from severe drought in Eastern and Southern Africa, are trying to diversify their electricity generation mix to include more non-hydro renewable energy sources, which are less prone to climatic changes. As stated previously, most countries in sub-Saharan Africa are facing a power deficit or need to build additional power generation capacity in order to address a strong economic growth or to replace ageing power plants. The gap between power supply and power demand is less important in certain countries compared to the others (especially countries with lower population density such as Botswana and Namibia). Nevertheless, ideal geographic locations combined with strong natural resources can offer an opportunity to export their power surplus to neighbouring countries or to regional power pools where the deficit is larger. So far, regional power trades have remained limited, with the Southern African Power Pool (SAPP) being the most active as of today. Emphasis is currently placed on reinforcing intra-regional power transmission networks, especially in Eastern Africa where one of the main active projects includes the Ethio-Kenyan transmission line project which aims to build a 433 km transmission line between Ethiopia and Kenya, with the intention to export Ethiopian power further into the Eastern African region. This will constitute an important prerequisite to implement successful, sustainable, and diversified large-scale RE power sources. New opportunities Following the recent success of the South African REIPPPP, the strong global fall of RE technology costs, and the available RE stock/services surplus from a financially constrained European power market, many international (RE) power developers decided to look for new opportu- nities elsewhere, including in Africa. Large economies of scale (with the auctioning of solar and wind power projects of several hundreds or even thousands of megawatts) combined with a clear regulatory and institutional framework, as well as a strong will (i.e. which concre- tises into action) from governments to implement large amounts of RE power technologies in a relatively short timeframe, have favoured North and South Africa. Now, many developers are showing a growing interest to develop their activities in the rest of sub-Saharan Africa. Many private equity funds have been set up with the intention to in- vest large amounts of money into clean energy infrastructure projects across sub-Saharan Africa. Power demand remains; however limited in most countries and, therefore, does not allow the economies of scale benefitting RE developers in North and South Africa. Nevertheless, there is a plenitude of ‘smaller’ opportunities across the region. It will be more a matter of finding an efficient way to finance them or to ‘scale them up’ in order to improve the bankability of such projects.

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ENERGY EFFICIENCY MADE SIMPLE 2015