"Solar eclipses traditional power in sub-Saharan Africa"

" \n Africa\u2019s largest solar park, Benban, in Egypt, is in line with many solar projects seen the world over. It is a large-scale state utility project providing 1.5GW to the national electricity grid. \n \n\n \n Across the Sahara desert, solar energy has begun to package itself as the mirror inverse: small-scale projects on off-grid distribution networks. \n \n\n \n The off-grid solar sector has grown tremendously over the past 10 years into a $1.75bn annual market, serving 420 million users, according to a 2020 World Bank report. From 2017 to 2019, revenues grew rapidly by an annual 30%, while sales volumes grew at 10% \n \n\n \n With one of the highest solar potentials in the world, the case for implementing solar power in Africa requires little persuasion. Touted as a real solution to energy poverty in a region where the rural access to electricity remains low, off-grid solar services \u2014 whether industrial, commercial or residential \u2014 are gaining traction. \n \n\n \n Many foreign energy companies, investors and start-ups have pegged this as a growing market ripe for experimentation, while other investors still hold fast to utility-scale projects, despite the perceived risk. \n \n\n \n \u2018Opposite\u2019 to Europe \n \n\n \n Benjamin Attia, senior research analyst at Wood Mackenzie, tells fDi that, unlike other markets, the grid is often controlled by a single state-owned utility and the development timeline can easily take twice what is needed elsewhere in the renewables space. \n \n\n \n \u201cWe see many more projects announced that go through the development process and don\u2019t end up being built,\u201d he says. \u201cMost sub-Saharan markets have single-buyer state utilities, and all but three are loss-making on every kWh they sell. Most are in fiscal distress. All this to say that they typically don\u2019t make very good counterparties to power purchase agreements,\u201d he adds. \n \n\n \n Read: Dangote Refinery on track to be the 5th largest company in Africa \n \n\n \n The result of this is that the centre of activity in the renewable energy sector in sub-Saharan Africa is off-grid, with many donor and multinational organisations flooding in to support this. In March, the World Bank approved $22.5m in additional financing to support the development of the off-grid solar market in western and central Africa. \n \n\n \n Mr Attia remarks that there has been a lot of strategic investment from a \u201cvery broad cast of characters\u201d, from oil giants such as Shell to the Mitsubishi Corporation, pointing to a transformation of the utility business. The largest distributor of solar home systems in west Africa, he says, is TotalEnergies. \n \n\n \n \u201cThis is inevitable,\u201d says Prashant Khorana, a director in the power and renewables consulting arm of Wood Mackenzie\u2019s energy transition team. He expects there will be more gigawatts of production capacity added away from the utility: \u201cThere is demand and scalable demand will come from some of these private operators. This is the opposite to Europe, [where] it\u2019s a buyers\u2019 market. That\u2019s not necessarily the case [in sub-Saharan Africa].\u201d \n \n\n \n Leapfrogging traditional power \n \n\n \n Karl Boyce, chief executive of UK-based Arc Power, says that it is this quality that gives the region its edge over other markets. \u201cI think there\u2019s an advantage leapfrogging that traditional grid structure with distributed power, and that\u2019s what we\u2019re addressing,\u201d he says. \n \n\n \n Arc Power has set up 75% of the AC solar mini-grid connections in Rwanda, where their primary focus is, with plans to expand into Malawi and Uganda this year. \n \n\n \n \u201cWe originally looked at utility scale renewables, but actually if you look at a lot of countries in Africa, just the grid infrastructure wouldn\u2019t cope with it. That\u2019s why there\u2019s been this realisation that decentralised power is the only way to go,\u201d Mr Boyce says. \n \n\n \n Norman Moyo, chief executive of Distributed Power Africa, a developer of solar energy projects on the continent and subsidiary of Mauritius-based Econet Global, says \u201cthe biggest challenge in renewable energy adoption is access to affordable capital\u201d. \n \n\n \n \u201cAlthough the pace of change does not match the power crisis, we are seeing very encouraging progress and engagements with regulators and governments,\u201d Mr Moyo says. \n \n\n \n Sticking with utility \n \n\n \n But sub-Saharan Africa is far from monolithic, and there are still several foreign investors betting on utility projects elsewhere in the region. \n \n\n \n In March 2020, French independent power producer Akuo Energy brought the country\u2019s first large-scale solar park in Mali online, which now powers the equivalent of 91,000 homes every year. \n \n\n \n \u201cWith the commissioning of [the Kita solar plant, we have reached the] first milestone that shows that it is indeed possible to develop projects in the country,\u201d Akuo\u2019s chief executive Eric Scotto told fDi . \n \n\n \n The Zambian government launched its feed-in-tariff strategy \u2018Get FiT\u2019 in 2018. The largest in the region, it awarded 120MW in solar tender projects the following year, in a bid to increase electricity generation and diversify its power mix away from hydropower. \n \n\n \n Last year, the country\u2019s state-owned electricity company Zesco partnered with PowerChina to add 600MW to the grid, through three 200MW solar parks at a total value of $548m. This follows the China Jiangxi Corporation for International Economic and Technical Co-operation\u2019s completion of the 50MW Garissa solar power station in northeast Kenya \u2014 one of the largest in central and eastern Africa \u2014 in 2019. \n \n\n \n This Also: Nigeria to launch West Africa\u2019s first Exchange Traded Derivative \n \n\n \n Different kind of FDI \n \n\n \n Rasmus Lema, associate professor in innovation and development at Aalborg University Business School, Denmark, and Padmasai Lakshmi Bhamidipati, a postdoctoral researcher at UNEP DTU Partnership, who recently penned a paper on the rapid increase of Chinese involvement in large-scale renewable-energy infrastructure projects in Africa, contend that this is a \u201ccompletely different kind of FDI\u201d. \n \n\n \n At the heart of the issue is the fact that, unlike typical renewable projects \u2014 which bring together a whole host of different donors, financiers, and engineering, procurement and construction (EPC) contractors \u2014 projects with Chinese energy companies have Chinese financing, Chinese engineering, procurement and construction, and Chinese technology suppliers. \n \n\n \n This raises the question as to whether these bundled projects become \u201cenclave\u201d projects and offer little lasting impact to the local community, Ms Bhamidipati asserts. \n \n\n \n The main concern is that renewables in Africa are being dominated by foreign companies, Mr Lema says. \u201cThe jury is still out on how dominant China is going to be. In terms of electrification and getting prices down, China is extremely important.\u201d \n \n\n \n Given the scale of the energy crisis in the region, the arrival of expertise, technology and power is necessary. Yet the population is exploding so fast that these alternative energy solutions need to outpace such demographic issues if they\u2019re really going to solve the region\u2019s power problems, many reaffirm. \n \n\n \n Africa needs a high-energy future to industrialise and withstand the impact of climate change, Mr Attia says. \u201cThe trajectory is not nearly steep enough. The primary solution is renewables, but the pace is much too slow,\u201d he says. \n "

"Solar eclipses traditional power in sub-Saharan Africa"

Finance Minister hails Ghana’s economic resilience amidst global turbulenceAMP

Nigeria misses windfall despite highest global upstream investments in 5 yearsAMP

MLS: Lionel Messi wins maiden Player of the Month AwardAMP

Man City’s Foden and Shaw win FWA Footballer of the Year awardsAMP

I wanted Harry Kane at Man United – Ten HagAMP

Bitcoin’s wild price swings point to the rising influence of ETF buyersAMP

Nigeria’s debt rating outlook lifted to positive by Fitch amid reformsAMP

Kwacha extends slump as drought worsens Zambia’s economic woesAMP

The lights are on in South Africa and many people are suspiciousAMP

Finance Minister hails Ghana’s economic resilience amidst global turbulenceAMP

Nigeria misses windfall despite highest global upstream investments in 5 yearsAMP

MLS: Lionel Messi wins maiden Player of the Month AwardAMP

Man City’s Foden and Shaw win FWA Footballer of the Year awardsAMP

I wanted Harry Kane at Man United – Ten HagAMP