Turning to renewables to meet West Africa’s power needs

Major cities in West Africa such as Lagos, Accra, Monrovia and the likes have over the years suffered from lack access to electricity.

In report by the African Development Bank (AfDB), it disclosed that annual power consumption in sub-Saharan Africa per capita is 181 kilowatt hours (kWh), compared with 6,500 kWh in Europe and more than double that in the US.

The International Energy Agency predicts that this demand will increase at an annual growth rate of 4.6percent and by 2030 it will be more than double the current electricity production.

While West Africa’s population has grown by 2.9 percent every year over the last 25 years, it has being observed that grid extension in the region has only grown by 2.7 percent over the same period.

The AfDB estimates that it could cost $60bn per year to achieve its target of providing universal electricity access by 2025. The deficit of power and the reliance on backup solutions is a huge burden to all the sectors in West Africa region

According to industry close watchers, if there was 100 percent electrification in West Africa then growth would reach around 10–15 percent for the next 15 years.

International Renewable Energy Agency (IRENA) report indicates that investment in solar energy will provide the region with a unique opportunity to bridge the power deficit using one of West Africa’s most abundant natural resources: sunlight.

Analysts observe that the private sector has fully embraced the drive for renewable energy in West Africa, with initiatives such as the US’s Power Africa drawing investors eager to turn a profit. Despite the obvious opportunities available to both private investors and governments, the locations of solar IPPs across the region are unevenly distributed.

They observe that IPPs are the primary vehicle for private investment in the power sector and over the last 30 years there have only been around 83 IPPs in sub-Saharan Africa.

According to them, “West African countries struggle to entice renewable energy investment mainly due to a lack of creditworthy power buyers such as utilities”.

“The problem with West African countries is that there are very few creditworthy offtakers, therefore, the government has to give some kind of support over the power purchase obligations of its utility. This means the government will cover the liabilities of the utilities. But these [liabilities] are usually very large obligations which are encumbering very heavily indebted governments, so it’s an unsustainable proposition to continue down this path.”

Analysts are of the view that if solar power does provide West Africa with a great opportunity to accelerate cheap power distribution across the region, governments need to develop innovative solutions to attract foreign investment to scale up infrastructure development, and answer the burgeoning energy call.

One method would be to pool together a number of countries’ risks for their uncreditworthy utilities through a new intermediary body while the rehabilitation of utilities is taking place.

They maintain that if countries pool in on regional basis, certain levels of risk – such as the lack of cost-reflective tariffs – through an aggregator or entity, then investors would be more open to commit to projects on a regional basis.

KELECHI EWUZIE