Africa is a huge continent, consisting of 54 countries that are home to 17% of the world’s population. However, it has long struggled with providing a reliable and wide-reaching electricity network. While this varies widely from country to country, it is true of most rural areas, particularly in sub-Saharan Africa. Recent estimates suggest that there are 640 million people living without access to electricity on the continent.
But renewable energy is starting to change this, with both small and utility-scale projects popping up across the continent. These hold the potential to bring clean, cheap and reliable power to those who have never had access before.
“In the Western world we’re focused on decarbonisation and the benefits of renewables to the environment, but in Africa the first thing is to get any form of power,” says Hogan Lovells partner Alex Harrison. “Then if the power comes at cheapest cost and happens to be renewable then it’s hugely beneficial as well.”
There have been many optimistic predictions for the continuation of the growth seen in the last few years. In 2017, the International Energy Agency predicted that renewables in sub-Saharan Africa alone would increase capacity from 35GW to over 60GW by 2022. Hydropower in Ethiopia, solar in Namibia and Nigeria, along with wind in South Africa, will see the combined capacity of the region increase by over 70%.
Challenges remain however, as international law firm Hogan Lovells explains in its most recent report, Africa and Renewables: Wholesale Change or Short term surge? In particular, the report says, these are focused around difficulties of standardisation in procurement processes and the existing transmission grids. But how can these be overcome?
The vast potential of a vast continent
The immense potential of renewables in Africa has been widely documented, and there are increasing instances of that potential beginning to be met. Projects such as the $4.1bn Grand Renaissance hydropower dam along the Nile River, for example, will provide 6,000MW of power to Ethiopia when completed.
“I think there is wholesale change, and it’s driven by a number of factors but really the biggest change has been on the technological front,” says Harrison. “The efficiency of renewable technologies now, the speed with which they can be deployed, the cost with which they can be deployed, that broadens the envelope in terms of who will invest in them.”
Possibly the most extreme example of this technological development is solar photovoltaic panels. The cost of utility-scale solar has dropped by over 90% since 2009, allowing a corresponding increase in the adoption of solar, which led to a global capacity of 390GW in 2017.
Government and inter-government support schemes have further eased this adoption. One of the most successful is Scaling Solar, a multilateral project set up by the World Bank with projects in Ethiopia, Madagascar, Zambia and Senegal.
“Scaling Solar offers a template to assist governments in addressing obstacles to the development of utility-scale solar power,” the report states. The programme provides advisors who aim to achieve generation in two years, through easing procurement processes and tariffs.
Already, Scaling Solar has helped add nearly 600MW of solar power in Zambia. In Senegal, it has helped secure a tariff of $0.05/kWh from two projects with a combined capacity of 60MW.
Elsewhere, increases in investment have led to renewables deployment surges. In 2017, Africa’s largest windfarm opened at Lake Turkana in northwest Kenya, comprising 365 wind turbines of 850kW each, situated between two mountains that create a tunnelling effect. It is the single biggest private investment in Kenya to date, with the cumulative capacity of 310MW costing €620m.
Balancing standardisation in Africa
While progress has been made, there are a host of challenges that remain for renewables developers, including tariff disputes. Low tariffs are generally encouraged, but the speed at which they have dropped has led to confusion and concerns. Developers that have agreed on higher tariffs are finding that the state and other parties then seek to renegotiate them, often in light of incomparable projects.
“One of the messages is that you need a sustainable and realistic tariff, so the tariff needs to reflect the true cost of generation in that country; prices may not have historically been at those levels because they may have been heavily subsidised so there’s an issue there,” says Harrison.
For a clean energy project to move forward, tariffs need to be clear and attainable from the beginning. Greater certainty around tariffs would encourage international and domestic investment and ease the procurement processes.
“There’s a desire to standardise and commoditise documentation and procurement processes, to try to speed up the delivery of renewables,” says Harrison. “The auction process seems to be the dominant method of awarding rights and tariffs, and that’s attractive to projects, I think, because it seems to have the potential to offer the lowest tariffs.”
Attempts to standardise have in themselves proved challenging, given the sheer scale of Africa, the diversity of its markets and demand. “Scaling Solar, as I mentioned before, is trying to bring standardised documentation to the market,” says Harrison. “But it’s not necessarily going to work when you import it from country to country because you often find that there are real estate issues that are project-specific or there are country-specific issues around the credit, which mean that even though there is a desire to standardise there is a need for bespoke solutions.”
There is therefore a tightrope to tread, between standardisation to increase the speed at which renewables can be developed with lower tariffs, and allowing for a level of project customisation that is in-keeping with the variety of the continent itself.
Moving to microgrids
Another challenge currently facing renewables developers could turn out to be a blessing in disguise. The introduction of renewables globally causes concerns around grid stability; however, this can be more dramatic in African countries, which already struggle due to insufficient grid scale and capacity.
“Often you’re connecting into a structure that is unreliable, that has limitations and may not be able to cope with the increased challenge of balancing the network that comes from solar, wind or hydro generation,” says Harrison.
But the lack of a sufficient utility-scale grid has forced many to look at off-grid solutions such as microgrids. “If you look at how dispersed populations are in Africa and the existing infrastructure gap with grid networks not covering most of the physical area or the population, the prospect of doing microgrid, smaller scale decentralised solutions is very, very attractive,” says Harrison. “In some ways I think markets like Africa may actually be the places where those microgrid solutions really get developed in numbers and get tested.
“It’s easier to start with a blank sheet of paper than it is to retrofit that into an existing grid system complex. I think microgrids are a big part of the future, the market is looking at them very seriously to figure out how to develop them, monetise them and how to make them work but I think it’s probably going to start at the smaller scale. Villages and community-led schemes instead becoming the way in which capital cities will source their power in the near future.”
The potential for renewables in Africa is vast, bringing jobs and social benefits. The pattern of growth looks set to continue, but procurement and tariffs must become clear and achievable to safeguard continued investment.