By Peter Munaita
In the week that Kenya announced it had sold its first crude oil consignment, Zimbabwe raised electricity prices threefold in the face of a biting shortage.
Days earlier Rwanda, Tanzania and Burundi had signed commitments for the construction of the 83MW Ruzizi hydropower plant while Nigeria reached agreement with Siemens for the delivery of more than 25,000MW, a third of which is expected on the national grid by 2021.
Elsewhere, Kenya’s controversial Lake Turkana Wind Power project connected 310MW to the national grid while another 79MW came on-board from the Olkaria geothermal fields.
In South Africa, the government pumped in $4.2 billion to rescue power utility Eskom while Zambia had to take the drastic step to shut down the Kariba Dam so that more power could be generated in Mozambique and resold to Lusaka in the face of a biting drought.
This disjointed narrative of affordability, new investments, changing matrix and threats from climate change represents the crossroads at which Africa finds itself in terms of energy.
Despite continuous investments, power remains unaffordable to a majority of the population whose access is also limited by irregular distribution of transmission lines.
The direction that the continent should take to meet its power needs is also up in the air, with solutions like clean coal and nuclear being phased out in other parts of the world; renewables like solar, wind and hydro requiring heavy investments, and largely imported oil being frowned at over environmental and foreign exchange concerns.
According to the US Energy Information Agency, energy consumption in Africa per person, assuming an economic growth of five per cent driven by private investment and personal consumption, will still be half of that of India by 2040.
Already, the agency’s International Energy Outlook 2018 shows that Africa’s mining sector contribution to growth was higher than that in China and India while its construction, services and agriculture were similar to those in India in 2015.
The manufacturing share of output, however, was only a third of China’s and a half of India’s, making its growth the key determinant of Africa’s future energy consumption demand.
The launch of the Africa Continental Free Trade Area in July, which was premised on Africa raising the share of trade within the continent from 16 per cent to 56 per cent by 2025, presumes a manufacturing-led growth.
Yet it is the sector most undone by unreliable and costly power across a continent that targets a production capacity of 30,000MW by 2030.
Africa’s economic powerhouses Egypt and South Africa had taken a lead in the continent’s industrialisation on the back of hugely subsidised power.
That advantage appears to have been eroded, with the sharp fall in commodity prices a decade ago, which prompted commercialisation of energy in the two economies.
While that may have levelled the playing field for countries like Ghana, Kenya and Nigeria, civil strife in other resource-rich countries like the Democratic Republic of Congo mean that manufacturing has not started scratching the surface of its potential.
Power shortages or pricing are already a big deal for industries in Kenya, South Africa and Zimbabwe, despite the government trying various preferential tariffs without much success.
In East Africa, a surplus of 3,430MW above peak demand is projected by 2025. Getting power to the remotest of places – now called the last mile – is now the greatest poser for governments.
Only 40 per cent of Africa’s billion-plus population has access to electricity and its distribution is skewed in favour of urban areas.
According to Research and Markets, annual investments of up to $4.3 billion are required from the private sector in support of the Africa Union’s goal of connecting 60 million more people to the national grid by 2030 — a target that requires about 5,000 circuit kilometres of transmission lines.
Key transmission projects at various stages of execution include 6,500km of high voltage and 46,000MVA transformer capacity in South Africa by 2028 and 190 new integrated (generation, distribution and transmission) projects in Nigeria.
For areas that would not be economically served by a national grid, minihydros, solar farms and biofuels are coming at play especially for domestic and stand-alone factory use. Over the past decade, solar power has grown from 0.1 per cent of global power generation to 2.2 per cent in 2018.
Solar is expected to grow steadily driven by a sharp drop in installation costs which have seen it overtake nuclear and coal plants and rival natural gas and wind.
In 2018, bids for solar projects as low as 2 US cents per kilowatt hour with Egypt’s 200 Megawatt solar tender receiving bids with a ceiling of 2.8 US cents.
Latest tenders under the World Bank backed Scaling Solar Programme in Ethiopia, Madagascar, Senegal and Zambia were awarded at around 4 US cents.
In April, Zambia’s 120 Megawatts of solar capacity which is backed by German Development Bank KfW set a sub-Sahara Africa record at 3.99 US cents per kilowatt hour.