26 Sep

The growing importance of renewable power in Africa

To fuel economic growth and support its growing population, Africa needs power. Renewable energy technologies and distributed infrastructure are playing an increasingly important role in the continent’s energy mix.

Around the world, 1.2 billion people live without access to electricity. Half of them are in sub-Saharan Africa. Africa trails the rest of the world in terms of access to electricity by a huge margin. In 2014, less than half the population of the continent had electrical power. Everywhere else, the equivalent figure has now passed 90%. If the region is to continue the strong pace of economic growth it has achieved since the end of the 1990s, better access to energy, especially electrical power, will be essential.

The International Energy Agency (IEA) expects demand for electricity in sub-Saharan Africa to rise considerably faster than the region’s GDP growth for at least the next 25 years. Fulfilling that demand will require electricity production in the region to increase by a factor of more than three by 2040 to 1,300 terawatt hours.

Africa’s energy challenge isn’t all about resources. The continent has plenty of coal, gas and oil, for example. What it lacks is generation capacity and, just as importantly, the transmission and distribution infrastructure to deliver that power to the homes and businesses where it is needed most. Progress in building that infrastructure has been painfully slow. Between 1990 and 2010, the fraction of the region’s population with access to electricity increased by only 0.2 percentage points a year, as new energy investments struggled to keep up with overall population growth.

A brighter outlook

Over the past seven years, Africa’s electrification rate has accelerated to around 1 percentage point a year. That’s a fivefold increase in the share of the population that gains access to electricity every year. But it still isn’t fast enough. Analysts at McKinsey & Company estimate that electrification rates on the continent will only reach 70 or 80% by 2040, noting that an electrification rate of less than 80% is almost universally associated with low per capita GDP and widespread poverty.

There’s growing consensus that, to make better progress toward full electrification, Africa will need a different approach. The continent’s phone systems provide a model. While older economies built centralised fixed line telephone networks first, Africa largely skipped that step with the rapid deployment of mobile telephone infrastructure, driven by entrepreneurial private sector companies. Africa’s energy networks may develop in a similar way, with renewable sources playing a leading role.

Energy infrastructure projects are often big, expensive and technically complex. Building them is usually the domain of large, international companies. In Africa, which has few local large-scale engineering companies, that is especially the case. Many of the world’s largest energy players have been involved in African energy investments over the years, but most recently it is contractors from China that have transformed the pattern of energy development on the continent.

China’s involvement in Africa is a core part of Beijing’s “Going Abroad” policy, which was first introduced in the country’s 10th Five-Year Plan in 2001. The motivation for the policy is simple and logical. Closer relationships with developing economies in Africa and elsewhere help develop new markets for Chinese goods and services overseas, and secure access to important commodities needed to fuel the economy at home.

IEA analysis suggests that Chinese firms were responsible for 30% of the utility-scale new power generation capacity built in sub-Saharan Africa between 2010 and 2015. Between 2010 and 2020 Chinese contractors are expected to install around 28,000 kilometres of new electricity transmission and distribution lines.

Chinese companies have been pragmatic in their choice of power technologies, building generation capacity to suit the fuel types available locally. The projects analysed by the IEA in its 2016 report include coal, gas, wind and hydroelectric power, as well as biomass and waste-to-energy facilities. Overall, however, the share of renewable energy technologies is significant, as engineering firms export technology and knowhow resulting from the huge investments in domestic renewable capacity that China has made in recent years.

Read more: How We Made It in Africa