Advancing Sudan’s Industrial and Agricultural Sectors Through Energy as a Service (EaaS): A Technical and Strategic Perspective

As Sudan emerges from a turbulent period of conflict, the nation faces the dual challenge of rebuilding its economy while addressing long-standing issues in its energy sector. Innovative energy solutions are urgently needed with rising fuel costs for thermoelectric power stations—exceeding 10 cents of fuel cost alone per kilowatt-hour (kWh)—and the heavy fiscal burden of energy subsidies. Energy as a Service (EaaS) offers a technically viable and economically advantageous path forward, providing reliable, cost-effective, and sustainable energy to power Sudan’s commercial, industrial, and agricultural resurgence.

For decades, factories in Sudan have been plagued by interrupted power supplies and programmed outages. The government's persistent struggle to provide subsidized electricity to the residential and industrial sectors has left demand consistently exceeding supply, particularly during the sweltering summer months. This situation has not only crippled manufacturing economics but also placed a significant financial burden on the state as it attempts to bridge the colossal gap between the high cost of delivering electricity and the meagre revenues collected from tariffs.

"The ongoing power crisis has long been a chokehold on Sudan’s industrial potential," notes economist Dr. Ahmed Hassan. "Manufacturers are forced to divert precious capital into backup power systems, which erodes the competitive edge of locally produced goods and opens the floodgates to imported and often smuggled products."

The commercial and industrial (C&I) sectors have had to shoulder the added capital expenditures (CAPEX) for purchasing generators, transformers, and fuel storage tanks, as well as the operational costs (OPEX) for fuel, maintenance, and operating staff. These expenditures, compounded by a lack of economies of scale, have significantly strained their financial performance. The depletion of economic benefits once attributed to local manufacturing has paved the way for an influx of imported goods, further diminishing the viability of Sudanese industries.

The situation is even more dire in irrigated farming, where the prohibitive energy cost has made exporting agricultural produce a formidable challenge. "Farmers are squeezed by thin margins, where the cost of energy is the deciding factor between profit and loss," says agricultural strategist Mariam El-Nur. "The high cost of electricity has turned what should be a lucrative export market into a near-impossible venture."

Energy as a Service (EaaS) presents a promising solution amid these challenges. Providing the C&I sectors with an uninterrupted power supply, EaaS could relieve the government of the technical and financial burdens of maintaining the national grid. Additionally, this would free up more electricity—subsidized or otherwise—for critical sectors such as residential, education, and health services, ultimately fostering a more balanced and sustainable energy ecosystem.

Energy as a Service (EaaS) offers a technically viable and economically advantageous path forward, providing reliable, cost-effective, and sustainable energy to power Sudan’s commercial, industrial, and agricultural resurgence.

The Technical and Economic Challenges of Grid-Dependent Energy

Sudan’s energy infrastructure, heavily reliant on thermoelectric power stations fueled by imported fossil fuels, is costly and inefficient. These power stations, which form the backbone of the national grid, consume vast quantities of fuel and place a significant strain on an already overburdened grid. Frequent outages and transmission losses are common, particularly in high-demand areas like Khartoum North (Bahri) and Atbara, where power quality is critical for industrial and agricultural productivity.

Government subsidies on electricity aim to alleviate the financial burden on consumers, but they come at a high cost to the state, limiting the government’s ability to invest in more sustainable and resilient energy infrastructure. As Sudan rebuilds, these subsidies are increasingly unsustainable, highlighting the need for a more efficient and diversified energy strategy.

Understanding Energy as a Service (EaaS)

What is Energy as a Service (EaaS)?

Energy as a Service (EaaS) is a business model where a service provider manages and supplies energy to consumers, typically through renewable energy sources like solar power. Instead of purchasing energy equipment or managing energy production, businesses and organizations pay for their energy, often at a fixed rate or through a subscription model. The EaaS provider is responsible for installing, maintaining, and operating the energy systems. Who Are the Players in EaaS?

1. EaaS Providers: These companies develop, own, and operate energy systems, such as solar parks or wind farms. They take on the responsibility of producing energy and managing the infrastructure.
2. Consumers/Clients: These businesses, industries, or agricultural operations purchase energy from the EaaS providers. Instead of investing in their energy infrastructure, they pay for the energy they consume, often benefiting from lower costs and more reliable energy.
3. Investors: These entities provide the capital necessary to build and maintain the energy infrastructure. Investors may include banks, private equity firms, or government entities.

Simplified Example of EaaS:

Imagine a large factory in Sudan that requires significant electricity to run its operations. Instead of investing in expensive solar panels, batteries, and maintenance staff, the factory owner partners with an EaaS provider.

The EaaS provider installs a solar power system on the factory's premises, including all the necessary equipment and technology. The factory owner does not pay for the installation or maintenance of this system. Instead, they sign a long-term contract to purchase electricity from the EaaS provider at a predetermined rate, often lower and more stable than the fluctuating prices from the national grid. The factory benefits from reliable, clean energy without the upfront costs and operational headaches. Meanwhile, the EaaS provider earns revenue from the power supplied, and investors gain returns on the initial capital they provided for the project.

The Role of Energy as a Service (EaaS) in Post-War Sudan

Energy as a Service, particularly when focused on renewable energy sources such as solar power, offers a technically superior and economically viable alternative to the traditional grid-dependent model. Here’s how EaaS can address Sudan’s energy challenges while supporting the country’s reconstruction and growth:

Localized Power Generation and Transmission Optimization:

Reduced Transmission Losses: Solar parks developed under the EaaS model can be strategically located near industrial and agricultural clusters, such as those in Khartoum North and the irrigated agricultural zones. By generating power close to where it is consumed, EaaS projects can significantly reduce transmission losses, which are a persistent issue in Sudan’s current grid system. Solar installations within a 10-20 km radius of these clusters ensure more efficient power delivery and reduced energy costs.

Grid Bypassing and Augmentation: EaaS providers can supply power directly to industrial and agricultural users through dedicated transmission lines, bypassing the inefficiencies of the national grid. This approach not only improves energy reliability but also relieves pressure on the grid, allowing it to better serve other sectors, including residential areas.

Scalability and Modularity of Solar Installations:

Modular Solar Parks: EaaS models allow for modular and scalable solar parks that can grow with the energy needs of Sudan’s recovering industries and agricultural sector. For example, a 10 MW solar park serving a cement factory in Atbara or an irrigated farm in Gezira can be expanded as their energy demands increase, ensuring continuous and reliable power supply.

Battery Storage Integration: To guarantee energy availability during nighttime or periods of low sunlight, EaaS projects can integrate battery storage systems. These systems store excess energy generated during peak sunlight hours and release it when needed, providing a stable energy supply that rivals or exceeds the reliability of the current grid.

Advanced Power Management Systems:

Smart Grids and Microgrids: EaaS projects can incorporate smart grid technologies, enabling real-time monitoring and management of power generation and consumption. Microgrids, which can operate independently or in conjunction with the national grid, provide C&I and agricultural users with greater control over their energy supply, optimizing efficiency and reducing waste.

Demand Response Capabilities: EaaS providers can implement demand response strategies, incentivizing industrial and agricultural users to reduce or shift energy consumption during peak periods. This not only optimizes energy use but also reduces the strain on both EaaS infrastructure and the national grid.

Overcoming the Influence of Subsidies: How EaaS Stays Competitive

One of the biggest challenges EaaS providers face in Sudan is the presence of government subsidies for grid electricity. These subsidies artificially lower the cost of electricity, making it difficult for alternative energy solutions to compete. However, EaaS has several advantages that allow it to combat the influence of these subsidies:

Levelized Cost of Energy (LCOE):

Understanding LCOE: The Levelized Cost of Energy (LCOE) is a measure of the average cost of producing electricity over the lifetime of an energy project. It takes into account all the costs—capital expenditure, operation and maintenance, and fuel costs—and spreads them over the total energy produced. For solar power, the LCOE is often lower than fossil fuel-based electricity, especially when fuel costs are high, as is the case in Sudan.

EaaS LCOE Advantage: Despite subsidies on grid electricity, the long-term LCOE of solar energy under an EaaS model can be more competitive. Solar power has no fuel costs and low operating expenses, making it less vulnerable to price volatility. As subsidies diminish or fuel prices increase further, the LCOE for solar can undercut the cost of subsidized grid electricity, making EaaS a more attractive option.

Cost Predictability and Stability:

Predictable Pricing: Unlike grid electricity, which is subject to fuel price fluctuations and potential government policy changes, EaaS offers fixed or inflation-linked pricing through long-term contracts. This pricing stability allows businesses to budget more effectively, reducing the financial risk associated with energy costs.

Subsidy Vulnerability: Government subsidies are often subject to political and economic pressures. As Sudan’s economy stabilizes and grows, there may be pressure to reduce or eliminate subsidies to balance the budget. In such a scenario, businesses relying on grid electricity would face sudden and significant cost increases, while those using EaaS would continue to benefit from stable, predictable energy costs.

Reliability and Quality of Supply:

Mitigating Grid Instability: Even with subsidized costs, the national grid in Sudan is prone to frequent outages and power quality issues. EaaS providers can offer a more reliable and higher-quality energy supply, which is crucial for industries where downtime directly translates to financial losses.

Reducing Downtime Costs: Industries and agricultural operations are highly sensitive to power interruptions. EaaS solutions, especially those integrated with battery storage, can ensure a continuous power supply, eliminating the productivity losses accompanying grid outages.

Environmental and Corporate Responsibility:

Sustainability Goals: As global markets increasingly demand sustainability, Sudanese businesses that adopt EaaS can align with these trends by reducing their carbon footprint. This is particularly important for companies looking to export goods or attract foreign investment, as many international partners prefer working with environmentally responsible businesses.

Corporate Image: Adopting renewable energy through EaaS can enhance a company’s reputation, making it more attractive to consumers, investors, and business partners who prioritize sustainability.

Legal and Financial Arrangements with the Government

Strategic legal and financial arrangements are essential to successfully implement EaaS projects in Sudan, particularly in a landscape previously dominated by subsidized grid electricity. These arrangements will ensure that EaaS becomes a cornerstone of Sudan’s energy strategy in the post-war era.

Public-Private Partnerships (PPPs):

Shared Investment and Risk: The government can enter into PPPs with EaaS providers, sharing investment burdens and associated risks. The government could provide land, infrastructure, or initial capital subsidies, while the private sector handles construction, operation, and maintenance. This model ensures mutual benefit and leverages private sector expertise in renewable energy.

Revenue-Sharing Models: The government could establish revenue-sharing agreements with EaaS providers, where a percentage of the revenue generated from industrial and agricultural clients is directed back to the state. This arrangement helps offset the revenue loss from reduced energy subsidies and provides a sustainable income stream for public investment.

Power Purchase Agreements (PPAs):

Long-Term Contracts: EaaS providers can secure long-term PPAs with industrial and agricultural clients, offering fixed or inflation-linked electricity prices over 15-20 years. These agreements provide financial stability for providers and clients, ensuring reliable revenue streams and enabling businesses to plan for growth.

Tariff Structures: The government could implement a tiered tariff structure that gradually increases grid electricity prices for industrial users, making EaaS offerings more competitive and encouraging a transition to renewable energy sources.

Regulatory Framework and Incentives:

Streamlined Permitting: The government can streamline the permitting process for EaaS projects, reducing bureaucratic delays and making it easier for providers to establish and expand operations. This could include fast-tracking environmental impact assessments (EIAs) and offering tax breaks on renewable energy equipment.

Grid Access and Wheeling Charges: The government could establish fair and transparent wheeling charges for EaaS providers that use the national grid to distribute their energy. These charges would cover the cost of using grid infrastructure while ensuring that EaaS providers remain competitive.

Subsidy Reallocation and Transition Strategies:

Gradual Subsidy Reduction: The government could implement a phased approach to reducing energy subsidies, gradually decreasing them for fossil fuel-based electricity while supporting the development of EaaS projects. This transition allows industries and agriculture to adapt to new pricing structures while encouraging the shift to renewable energy.

Incentive Programs: The government could introduce incentive programs that provide financial assistance or tax credits to industries and agricultural sectors that adopt EaaS solutions. These incentives could be tied to performance metrics, such as reduced carbon emissions or increased energy efficiency.

Strategic Locations for Solar Parks and Technical Considerations

Identifying optimal locations for solar parks is critical to maximizing the benefits of EaaS. These locations must consider technical and logistical factors to ensure efficient power generation and transmission.

EaaS as an Attractive Investment in Post-War Sudan

In the post-war context, EaaS offers significant benefits for various stakeholders, including the government, C&I, agriculture, and investors.

For the Government:

Economic Recovery: By promoting EaaS, the government can reduce its dependency on costly energy subsidies and imported fossil fuels, redirecting savings towards reconstruction and public services. Developing a renewable energy sector aligns with Sudan’s long-term sustainability goals and commitments to international climate agreements.

Job Creation and Skills Development: EaaS projects can stimulate job creation in construction, maintenance, and energy management, providing employment opportunities in urban and rural areas. The government can further support these efforts by investing in vocational training programs to build the necessary skills within the local workforce.

For the C&I Sectors:

Cost Savings and Reliability: EaaS offers cost savings and reliability to Industrial and commercial sectors, particularly in regions where grid power is unreliable or expensive. By securing long-term PPAs, businesses can lock in stable energy prices, enabling better financial planning and supporting expansion efforts.

Sustainability and Competitiveness: As global markets increasingly demand sustainable practices, adopting renewable energy through EaaS can enhance the competitiveness of Sudanese businesses. Companies that demonstrate environmental responsibility are more likely to attract international partners and investors.

For the Agricultural Sector:

Energy for Irrigated Agriculture: Sudan’s vast irrigated agricultural zones, such as those in the Gezira region, require reliable and affordable energy for water pumping and processing activities. EaaS can provide a sustainable energy source for these operations, reducing reliance on diesel generators and lowering operational costs.

Increased Productivity: With consistent and affordable energy, the agricultural sector can improve productivity, leading to higher yields and contributing to food security in Sudan. EaaS can also support the modernization of agriculture, enabling the adoption of energy-intensive technologies like precision farming and automated irrigation systems.

For EaaS Investors:

Attractive Returns: Sudan's growing demand for reliable and sustainable energy presents a significant opportunity for investors in the EaaS sector. With the right legal and financial frameworks in place, EaaS projects can offer attractive returns on investment, driven by long-term contracts and stable revenue streams.

Market Expansion: Sudan’s ongoing reconstruction and economic recovery create a fertile environment for expanding EaaS offerings. Investors can capitalize on the increasing energy needs of the industrial and agricultural sectors and the potential for future growth in other areas.

Conclusion: A Path Forward for Sudan’s Energy Future

The adoption of Energy as a Service in Sudan, supported by strategic legal and financial frameworks, presents a technically sound and economically viable solution to the country’s energy challenges. By reducing reliance on expensive and environmentally harmful fossil fuels, enhancing grid stability, and promoting the development of renewable energy, EaaS can drive industrial growth and economic development.

The government’s role in this transition is crucial. By fostering public-private partnerships, facilitating long-term power purchase agreements, and implementing supportive regulatory frameworks, the government can ensure that EaaS becomes a cornerstone of Sudan’s energy strategy. The development of strategically located solar parks, coupled with advanced power management systems, will meet today’s industries' energy demands and pave the way for a sustainable and prosperous future.