Deepening Sub-Saharan African energy access

In a recent lecture delivered at the University of Pretoria, South Africa, Bill Gates spoke of his optimism for the future of Africa, and all the changes that need to happen for the continent to continue innovating, prominent of which was an energy miracle.

He said that about 80 percent of the African population does not have access to power, even though the continent has the resources “bequeathed by nature” to generate power. However, a World Bank publication noted that sub-Saharan Africa is most affected with over 600 million people without power. Experts say a pragmatic approach is now required to pull off the sort of energy miracle, Gates talked about.

Attaining an energy miracle

According to George Njenga, GE Power Steam Power Systems regional executive for sub-Saharan Africa, who was one of the speakers at the Power-Gen and DistribuTECH Africa 2016 conference, held in Sandton, South Africa recently said that “Energy will contribute to the Africa rising story.”

Development and economic performance is linked to generation and access to affordable, sustainable and reliable power. “Africa requires a portfolio of different technology and fuel sources, an energy mix to solve the problem. This helps as a risk mitigation strategy,” he said.

Njenga shared four key solutions to the challenges contributing to Africa’s energy crisis:

Collaboration based on mutual respect between industries, business and governments

A collaborative approach towards solving sub-Saharan Africa poor energy access will ensure free trade of electricity across boundaries, guarantee reasonable regulations that will translate to market reflective tariffs and use of smart metering technologies that will deliver the best solution where it is sorely needed.

“The gap of power is so large, no one can solve it alone,” Njenga said.

Collaboration within industries is also important. Companies recruited in the construction of Medupi and Kusile power stations in South Africa had to work together with the common goal of solving a problem; it was not a competition between companies, Njenga explained.

It is this lack of collaboration that has necessitated the absence of efficient power exchanges in West Africa. Experts say a beneficial power exchange can be driven by the knowledge that few African countries can satisfy their energy needs solely from its own sources today. Energy trading offers the possibility to ensure needed supply, and protection from supply shortages and price fluctuations.

Combine base load and distributed power

“Only 600 million Africans have access to power, and 200 million of them do not have reliable power,” said Njenga. As the rate of urbanisation increases, it places pressure on electricity infrastructure. Traditionally, there has been an over reliance on base load power in the form of hydropower, geothermal, gas, coal and diesel.

However, there is a disconnect between where the power is produced and where it is eventually delivered, explained Njenga. Transmission lines need to be constructed to get power where it is needed and this may take time.

A recent KPMG report said that transmission infrastructure is the weakest link in the sub-Saharan Africa power value chain hence investments now largely focused on power generation would have to shift to transmission infrastructure to improve energy access.

The World Bank estimates that the short-term need for power is in the region of a further 70gigawatts and that investment of between $120 billion and $160 billion is required per annum in order to provide electricity access to the entire Sub-Saharan region by 2030.

Nigeria’s failing national grid which collapsed 16 times between January and July this year has led to calls to unbundle the Transmission Company of Nigeria (TCN), increase investments in mini grids, and attract innovative project financing for the sector.

With a mere 40 percent geographical coverage and transmission capabilities of about 6,000 GW, Nigeria’s transmission infrastructure comprises about 6,680km of 330 kV lines, 7,780km of 132kV lines, 330/132kV substations with installed transformation capacity of 10,166 MVA and 132/32/11kV substations with installed transformation capacity of 11,660MVA. It suffers average transmission loss of about 9 percent and incapable of bearing all generated power.

Investment in projects

Njenga suggested that electricity generation projects need to be “bankable”. Projects need to be structured in a way so that risk involved is understood as this will enable lenders and investors to see the potential of a project and contribute the required funding.

“Once a project is mature and well-established then it is a good time to look for long-term equity to sustain it,” he said.

Industry operators say a less volatile environment encourage investments. Project risks increases where there are uncertainties surrounding the security of investments. Analysts say the recent judgment by a Federal High Court in Lagos which voided the upward review of the tariff by the National Electricity Regulation Commission (NERC) if it holds on appeal, may discourage further investment in Nigeria’s electricity sector and compound problems in the already troubled sector.

“The decision is set to go to appeal; it will be a while before we really know what is going to happen. It might tend to discourage investment in the electricity sector,” said Francois Conradie, head of research at NKC African Economics, a research firm specializing in political and economic research.

Leverage power development to stimulate other industries

Governments need to take advantage of power generation to stimulate economies. “It is important to invest in the value chain to create a whole ecosystem of skills sets, small and medium enterprises and a supply chain into projects,” said Njenga.

The power value chain comprises energy resources, generation, storage, trading, distribution, sales and smart technologies and for improved energy access, investments must flow across all segments in the value chain. Concentrated investments in generation would have trickle down along the value to deliver the best value.

“In the long run, what Africa needs is what the whole world needs: a breakthrough energy miracle that provides cheap, clean energy for everyone,” Bill Gates said during the Nelson Mandela Annual Lecture.

He drew the attention of the audience to Mission Innovation, collaboration between governments and business people (like Gates) that aims to increase energy R&D spending throughout the world, as the kind of change the African continent needs. Africa needs all the help it can get.

ISAAC ANYAOGU