Increasing solar energy supply in Africa could be the major driver in the continent’s goal of achieving 5.2% economic growth in 2014 despite the low investment in the renewable energy technology.
The International Energy Agency estimates Africa’s solar power installation at 73MW, an equivalent of 0.05% of the region’s total power installation or 0.025% of the total renewable power capacity in the continent.
Expanding generation from solar has been touted as one of the solutions to Africa’s power crisis, which threatens to halt the march to higher sustainable economic growth.
The region suffers from serious power outages, with the World Bank estimating that on average, the region experiences 10.5 days of outages lasting up to 6.6 hours making the outages frequent, long and erratic. Businesses with no alternative power supply are said to incur losses of up to 20% while others have been forced to invest in expensive diesel generators to back up their power supply.
Demand to grow at 3%
Analysts predict Africa’s demand for electricity is set to grow at 3% of the next 20 years creating more opportunities especially for renewable energy developers to invest.
Low investment in this source of power have denied the region access to cheaper, clean and reliable energy supply.
Despite the power supply challenges, Africa enjoys one of the highest solar irradiations in the world at about 6kWh/day, but low investment in this source of power have denied the region access to cheaper, clean and reliable energy supply.
Improved investment policies in renewable energy and the continent’s 360 days sunshine a year has made Africa an attractive investment destination for solar power developers.
South Africa, sub Saharan Africa’s largest economy, is now the largest solar market in the continent and has been ranked globally alongside markets such as Thailand, Israel and South Korea according to Bloomberg data. The country accounts for 95% of the total solar power installations in Africa, capacity which went up after the country launched the ambitious 10-year $11 billion Renewable Energy Independent Power Producer Procurement Programme (REIPPP).
The department of energy is seeking to generate an additional 3,725MW from renewable sources by 2030 to avert worsening power supply disruptions. The capacity includes 200MW of concentrated solar power and 1,450MW solar PV.
In January, IHS ranked South Africa the world's most attractive emerging market based on an analysis of the macroeconomic climate, potential market size, project profitability and pipeline maturity. The country was ranked 66 out of 100 in the IHS Emerging PV Markets Attractiveness Index in the fourth quarter of 2013, 17 points ahead of the second-most attractive market, Thailand, as presented in the figure attached.
IHS ranked the country highest in potential market size, project profitability and pipeline maturity. “South Africa has consolidated its position as a growth market for PV by cultivating a policy environment stable enough to attract financing from commercial banks,” said Josefin Berg, senior PV analyst at IHS.
Apart from South Africa, other markets in the region such as Eritrea, Ghana, Egypt and Morocco have taken measures to improve the investment climate including investor-friendly policies such as refits and a more accommodative public private partnership models.
Despite the political turmoil engulfing Egypt, the country is determined to go ahead with plans to generate 150MW additional electricity from solar sources. Egypt's ministry of energy said in January the government hopes to construct a new $1 billion solar power plant at Kom Ombo after financiers Clean Energy Fund, The World Bank, African Development Bank, European Investment Bank and AFD expressed interest in supporting its implementation. It is not yet clear what capacity of this project will incorporate PV technology.
Egypt, which expects to generate its share of renewable energy of 20% by 2020, has an existing 140MW integrated combined cycle power plant at Kuraymat, 20MW of it being solar share.
And in West Africa, UK's Blue Energy is also developing Africa's largest solar PV plant in Ghana. The 155MW Nzema project, which will be funded by a consortium of financiers, will increase Ghana's total electricity generation by 6% and meet the country's goal of 20% of generating at least 10% from renewable energy.
African Solar Designs director Mark Hanskins said previously the continent should seek to increase investment in solar by increasing “demand twenty fold.”
“And this will only occur when, as has happened everywhere else, programs are developed to bring solar on-grid and to greatly increase demand for solar.”
Written by Shem Oirere, a freelance writer based in Nairobi.