The Missing Energy Narrative for Africa

It is estimated that up to a 580million Africans lack access to electricity. In addition, unpredictable and frequent power outages cost firms in low- and middle-income countries – the majority being in Africa – up to $300 billion or 2 – 4% of GDP each year. To bridge this gap, fossil-based high emitting measures such as generator-based power costs three to six times what grid consumers pay across the globe. This is not competitive power as it translates to a high cost of utilities that denies enterprises in the region the ability to produce affordably and price their offerings competitively.

The question to answer is: how can Africa bridge this electricity gap to deliver affordable power that is clean without ramping up climate change causing emissions, which are a risk factor for Africa already heating up twice as fast as the rest of the globe?. And do so by leveraging the continent’s vast clean energy resources?

The answer calls for prioritization of the following fundamentals

a) Define Space for Off-Grid Electrification

It is estimated that up to 84% of Africa’s energy poor are in rural areas and live far distances from grid connectivity. This means two things. One is that bridging the gap among these most underserved needs to be prioritized for immediate impact. The other, however, is that the low energy demand densities in rural areas and high dispersal where potential users are spread sparsely over a large area mean that extending grid connectivity becomes uneconomical, including through high transmission losses.

When electrifying through the main grid, while the average cost of a typical urban connection in Africa is estimated at $500, a similar connection in rural Africa is estimated at $2,300. This means electrifying rural Africa using the main grid can be up to 4.6times costlier or 360% more than doing a similar main grid connection in an urban area. On average, decentralized solutions such as solar mini-grids have been billed as the cheapest way to electrify rural Africa. In addition, the cost of these decentralized solutions is set to be further reduced by up to 60% in the next eight years.

Why should solar be the renewable solution in off-grid Africa instead of wind or any other? The answer is simple – it is the most universally accessible and available across the continent. Africa has 60% of the world’s best solar resources, which means that economies of scale will best be leveraged from solar. It also has the largest solar installed capacity gap meaning the biggest untapped potential, as it holds less than 1% of the global total decentralized solar installed capacity.

b) Off-Grid Electrification Must go beyond lighting to also cover productive use

Off-grid electrification has been chiefly looked at mostly from lighting. But to maximize returns, electrifying off-grid Africa should go beyond lighting and be tied to powering income-generating uses, especially agro-value addition. Such an approach has been shown to boost utilization efficiency, popularly called load factor, of the decentralized systems to 40% while lowering costs. It also creates income opportunities to enable beneficiaries to be better placed to maintain use of the system – e.g., being able to afford light bulbs when they go out. Up to $48 billion in enterprise opportunities can be recouped each year from reversing postharvest losses through agro-processing by powering enterprise activities that transform raw agro-produce into more finished value-added goods that can fetch more in the market.?

c) Bridge Base-load Electricity demand in grid-connected areas by leveraging a clean energy mix

Africa has vast clean/renewable energy resources. However, none can provide high base-load power as a standalone. For example, while the continent has up to 1000GW solar potential, solar is limited because of the need for storage technologies to store and render the harnessed solar energy as usable power. For example, despite this great resource potential, Africa’s largest solar power plant, the Noor Ouarzazate Solar complex in Morocco, generates only about 580MW. Another continent’s biggest solar plants range between 175MW and 75MW. These tap only a fraction of the continent’s solar resource potential.

The best way to bridge base-load demand using clean, renewable sources is to leverage a renewable energy mix that creates an energy generation portfolio that taps into all the different clean, renewable resources – i.e., solar, wind, geothermal, and hydro.

d) Regional Power Integration - expand regional power pools to enhance the accessibility of the region’s clean sources

While Africa’s clean, renewable energy sources are vast, their availability is not equally distributed, and some regions/countries are more endowed with one type than the other. For example, the majority of hydro – up to 57% is concentrated in Central Africa and up to 32% in Eastern Africa – the great lakes region. Wind has the most attractive sites on the Northern and Southern African coast. Geothermal is in Eastern Africa only – along the rift valley. Only solar is available almost universally. The question is – how do we ensure these skewed resources are available for continental use? The answer lies in regional power pools. The region’s electricity grids need to be interconnected so that a country or region with abundance in one source can create a power pool that it can sell to another without and vice-versa. In this way, every country can develop a renewable, clean energy mix by tapping into different power pool grids that specialize in different clean/renewable sources. E.g., a country in Southern Africa complements its wind power by tapping a hydropower pool in central Africa and a geothermal power pool from Eastern Africa. A country in the Eastern complements its geothermal by tapping wind power pools from Southern and Northern Africa, hydro from Central Africa etc. ?