Pushing gains of renewable energy for West Africa
Renewable Energy investment in Africa in general and West Africa in particular is increasing as countries in the region turn increasingly to renewable energy to enhance energy security. Over the next 10 years, billions of US dollars are set to be invested in energy related infrastructure in Africa, as demand for energy grows.
There are many investors coming into the African market, but there is a need for more bankable projects, while the IEA suggests market access and investment risks keep finance costs elevated.
The attractiveness of the renewable market is strongly dependent on the regulatory framework and market design (IEA 2015) but there is no longer any need to provide high levels of incentives for solar PV and onshore wind. Decreasing renewable energy prices are resulting in a natural tendency towards increasing renewable energy share of a country’s portfolio. This is likely to be supported by international environmental low carbon policy developments leading to phasing out of fossil fuel subsidies and increasing carbon pricing mechanisms
According to reports, over the last decade, renewable energy technologies have experienced rapid cost reductions and increased global capacity.
Reports indicate the decreasing costs of solar PV production means that in a number of locations, solar PV is becoming cost competitive with fossil fuels. In the developing world, renewable energy provides not only an opportunity for increased energy for economic growth, but distributed renewable energy systems can greatly speed up the pace for modern energy service provision in areas presently without access.
The International Energy Agency (IEA) predicted that renewable energy will represent the largest single source of electricity growth over the next five years, driven by falling costs and aggressive expansion in emerging economies.
The IEA points to government policy uncertainty as hampering such expansion. According to the IEA, renewable electricity additions will reach 700GW, and will account for about two thirds of net additions to global power capacity, with renewable energy expansion gradually shifting towards developing countries.
West African access to electricity for the people that live in the region has changed significantly over the last decade.
The IEA (2015) identified regulatory barriers, grid constraints, and macro-economic conditions as posing significant challenges to renewable energy implementation.
Improving financing conditions, adopting new business models and ensuring good policies and governance are key to increasing levels of renewable energy in the region, and they predicted that renewables should meet around two thirds of the power demand in sub-Saharan Africa by 2020.
Anticipated infrastructure development, both generation as well as transmission and distribution, are expected to increase over the next 5-10 years. A number of global initiatives aimed at increasing energy security throughout Africa have emerged recently.
The World Bank also has a programme to attract private investors to Sub-Saharan Africa. One initiative of the World Bank Services is Scaling Solar, which aims to create viable markets for solar power in each of the World Banks client countries in which Nigeria is one of. They are aiming to be a one stop shop to attract investors.
A cursory look indicates that renewable energy investment has been seen as risky, with the costs of regulation and application procedures seen as barriers to investment.
However, IEA has outlined a virtuous cycle for renewable deployment which could be created should there be clear set of policies to push for dramatic scale up of renewable energy. For developing countries, such policies include certainty in long term implementation of policy frameworks, improving the power system and grid integration, reducing regulatory barriers, strengthened financial sustainability through removal of fossil fuel subsidies, good design of price competition mechanisms and improved financing conditions.
KELECHI EWUZIE