Energy, Frontier Markets

Renewable Energy: A Bright Spot For Africa

By Anzetse Were

Africa Solar EnergyAs the world begins to respond to the reality of climate change, generating renewable energy has become an important component of managing the issue. Indeed, the amount of money committed to renewable energy investment totalled $286 billion last year, up 5 percent from $273 billion in 2014. Interestingly the part of the world leading the charge to renewable energy is the developing world which committed $186 billion compared to the developed world’s $130 billion. Solar power accounted for $148 billion, wind accounted for $107 billion and biomass accounted for $5 billion of investment pledges. This is not to say fossil fuels are not being invested in, but that amount stood at much smaller $130 billion. It is however important to note that this UN- backed study, excluded large hydrological power projects because of environmental concerns.

With regards to Africa, clearly a growing population and economic progress are pushing up requirements for energy. According to International Renewable Energy Agency (IRENA) the push for renewable energy development in Africa is rooted in four core phenomena: to fuel industrial growth, catalyse power sector transformation, support lifestyle changes and for rural development. These will be sourced primarily from four renewable energy technologies: biomass, hydropower, wind and solar power. For Kenya and East Africa an additional important source is geothermal.

Efforts exist under the Africa 2030 umbrella to ensure renewable sources collectively meet 22% of Africa’s total final energy consumption by 2030. According to IRENA this would require an average of $70 billion per year of investment between 2015 and 2030 within which about $45 billion would be for generation capacity and $25 billion for transmission and distribution infrastructure. The vamping up of electricity generation by renewable sources is especially important for East Africa which has the lowest KwH per capita in Africa and the lowest percentage of individuals with access to electricity.

The push for renewables has a practical component for Africa in that renewable energy creates more jobs than fossil fuels, renewable energy technologies can be deployed locally at small scales, and the costs of renewable technologies are decreasing rapidly; indeed IRENA argues that recent project deals for renewables in Africa have been among the most competitive in the world. Kenya seems to be well aware of the benefits of renewable energy as Kenya currently generates about two-thirds of its electricity from renewable sources. Further, there is aggressive investment into the sector; investment in the sector in Kenya grew from next to nothing in 2009 to $1.3 billion in 2010. Important projects include The Lake Turkana Wind Project spanning 40,000 acres which can contribute 300 MW to the country’s national grid. There are aims to expand the country’s geothermal power production capacity to 5,000 MW by 2030 with a target of 460 megawatts by 2018. The solar scene has hobbled more than the other sectors in that government has not been as involved and most development has been primarily self-initiated by companies and businesses such as Safaricom’s MKopa. However, last year the government announced a financing partnership to develop 1-gigawatt of solar power in the country.

The truth is that the rise of renewables in Kenya and Africa is positive and will help put the country’s recent finds in fossil fuels in perspective. However, the truth of the matter is that extensive fossil-fuel reserves, including recent natural gas and oil discoveries, could tempt some countries to disregard the benefits of a more balanced energy mix. This is worrying given that currently over 52 percent of energy on the continent is sourced from thermal and other non-renewable sources. But investment in renewables needs to continue to build momentum across the continent because as the world continues to shift from fossil fuels to renewables, the boon that used to be fossil fuel discoveries in Africa will likely wane and the continent, particularly those reliant on the export of fossil fuel exports, will be negatively affected. Africa stands to become one of the cleanest continents in the world with regards to energy generation. This is a possibility that should be embraced not resisted.

This article first appeared in my weekly column in the Business Daily on April 3, 2016

Anzetse Were is a development economist based in Kenya and a weekly columnist for the Business Daily.  Twitter: @anzetse, email: anzetsew@gmail.com

About Anzetse Were

I'm an optimistic cynic. Born in Africa, raised all over the world, I have a passion to see Africa take its rightful place in the world. Long weary of the Africa bashing, continental character assassination and negative branding I am determined to ask: What can Africa do right particularly with regards to economic development? Most of my pieces will be on Africa's economies. Some pieces will be more formal than others but the guiding thrust is to become one of the growing voices that believe in Africa...We're here to stay. Follow me on twitter: @anzetse

Discussion

One thought on “Renewable Energy: A Bright Spot For Africa

  1. go for it Africa.

    Like

    Posted by mukul chand | April 7, 2016, 5:21 am

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