Approximately half of the sub-Saharan African continent today does not have access to power. People who do have power pay on average almost two times as much as customers everywhere in the world. Power shortages cost the continent around 2 to 4% of GDP annually. And the large electricity needs will only increase.
Given that the people in sub-Saharan Africa are expected to grow from 1 billion in 2018 to over two billion in 2050, the electricity demand is projected to expand 3 percent annually. This takes into consideration a continuous increase in access to power in addition to greater energy efficiency.
Meeting that demand with present energy sources would have severe consequences for health and the environment. The current energy mix in Africa relies mostly on burning oil, coal, and traditional biomass (charcoal, wood, dry dung fuel). This reflects the energy sources of this continent but also using technologies of the past.
While this energy combination is relatively cheap, it is insufficient to meet current demands, and negative impacts on the surroundings are left unaddressed. The continent’s energy resources need to change, mainly if African governments aim to achieve a healthful environment for their citizens and meet the emission limits for greenhouse gases set by the 2015 Paris Agreement.
Finding The Energy Mix Right
Luckily, thanks to noteworthy technological advances, Africa doesn’t have to rely on considerable fossil fuel quantities, as advanced economies did when they were in Africa’s present stage of development. There’s the choice to design an energy combination built mainly on renewable resources, supporting both strong growth and reduced emissions.
Aside from ensuring an ecologically sustainable development approach, investing in renewable energy will also create new job opportunities (IMF 2019). The perfect energy mix enables Africa to grow rapidly while respecting the emission levels needed under the 2015 Paris Agreement in which governments dedicated to reducing global warming to two °C over preindustrial levels.
One such projection, where the energy mix depends upon a variety of technology, suggests cultivating high-energy plants, using modern biomass, and using crop residue to make synthetic fuels, in addition to carbon capture and storage (CCS), which involves keeping carbon dioxide emissions underground.
Other researchers have suggested different mixes, all using these technologies. Nevertheless, these technologies carry dangers. Biomass production competes with food farming and nature conservation. CCS hasn’t yet been analyzed at an industrial scale.
Both technologies can subject to resistance from local populations. To prevent large-scale reliance on unsustainable technology, Africa will have to move toward an environmentally and economically sound energy combination. This will need addressing the financial challenges of installing renewable energy capacity when seizing opportunities offered by falling prices and technological advancement.
Costs for renewable energy have dropped substantially in the last few years, particularly for solar energy, whose price decreased 77 percent between 2010 and 2018 based on the International Renewable Energy Agency. While geothermal energy, biomass, and hydropower cost the least, these resources have limited potential. Both geothermal energy and hydropower can attain several times bigger value than the current generation capacity. The energy requirement far exceeds this capability.
Geothermal energy can be beneficial but is available only in some locations. Hydropower needs a careful balancing of environmental, social, and economic goals. It’s impossible to exploit the full technical capabilities of hydropower: it requires the inundation of large areas, which threatens local ecosystems and usually involves relocating the local people.
Hydropower is currently being hampered by constant drought in southern Africa, and relevant energy production has been seriously curtailed in Zimbabwe and Zambia because dam levels are exceptionally low. Conversely, big hydropower projects are coming on stream or preparing in west Africa, the Democratic Republic of the Congo, and Ethiopia.
More promising for large-scale renewable electricity production is solar and wind power, whose costs are currently in the same range as fossil fuels. Additionally, solar energy conditions are exceptional in Africa, where sunlight isn’t only abundant but also much more reliable than elsewhere.
And investment in renewables is picking up in Africa. Uganda, South Africa, and Zambia have held renewable-energy auctions which attained competitive rates and attracted investors.
South Africa currently has many solar power plants with a potential of at least 100 megawatts. The Lake Turkana Wind Power job in Kenya is another success story. Despite powerful examples in several countries, wind and solar accounted for just 3 percent of the energy generated in Africa in 2018 compared with 7 percent in other world areas.
The supply of power in Africa is majorly dominated by fossil fuels and, to a lower extent, by hydropower (79% and 16%, respectively). The issue with renewable energy has always been that its supply varies, posing a challenge for reliance on renewables as a source of electrical power.
Technological improvements in stabilizing the electricity supply make it possible for renewable energy to constitute a large share of their energy source. These improvements include using hydropower as a buffer during peak demand periods, pooling electricity production from other geographical areas through a well-connected electricity grid, balancing electricity needs to provide, and storing energy with flow batteries and hydrogen electrolysis.
The variable renewable energy in total energy generation is so low that variability isn’t yet a significant concern. While this share increases, these choices can be rolled out at a sensible pace. With these technological advances, Africa can rely 100 percent on renewable energy by 2050 without slowing development.
Overcoming Financial Challenges
Financing is currently the biggest challenge, though. Fossil Fuel plants are relatively cheap to build but expensive to operate as they need continued fuel purchases. In contrast, renewable sources are affordable to use but have high setup costs, which must be financed upfront.
Giving a high-quality energy basis for African Development thus needs a comprehensive approach to funding. Suppose Africa is to have a new, low-carbon approach to growth. In that case, its nations must mobilize public, private, and multilateral and bilateral donor funding to raise funds required for renewable-energy projects.
On the other hand, African governments can make significant earnings by reducing the inefficiency due to fossil fuel subsidies, which help mainly oil and coal. These subsidies are estimated at 5.6% of sub-Saharan African GDP.
Progressively phasing out subsidies–while protecting the vulnerable –could increase financing for renewable-energy jobs. Moreover, African governments could mobilize more of their national resources to pay for renewable energy’s initial capital costs. By way of instance, with a mean tax-to-GDP ratio of about 14 percent in 2017, sub-Saharan African nations have ample room to raise their tax revenues.
The use of carbon taxation could boost tax revenue while reducing fossil fuel carbon dioxide emissions. On the private sector side, African nations must make significant efforts to lure private investment into the renewable sector. Surveys have identified governance-related risks –complicated bureaucracy and changing regulation–as the greatest threat to private investment in Africa’s renewable energy projects.
Attracting private financing will require developments in governance to reduce political risk. Reforming the financial sector to enhance the incipient green bond market and reducing financial risk by moving part of it to public celebrities may also help attract private investment.
Multilateral financial institutions play an essential role in easing long-term financing to encourage investment in climate change mitigation at the international level. Besides identifying alternative financing sources, these institutions provide tailored guidance about the effective deployment of climate funding. The 2015 Paris Agreement relies on advanced economies’ commitment to mobilizing the equal of 0.12 percent of the world’s GDP annually through 2025 to address growing economies’ needs.
Respecting this financial commitment would smooth the transition to a low carbon-energy market across Africa–the continent with the lowest contribution to global warming. Only about 4% of global energy-related carbon dioxide emissions in 2018 originated there, yet Africa is most affected by climate change. This twist of fate certainly justifies more worldwide support for the continent.