Africa’s Solar Future

published: 2011-12-13 16:08 | editor: | category: Analysis

When Soitec built a concentrating photovoltaic (CPV) power plant for the 17th annual Conference of the Parties to the United Nations Framework Convention on Climate Change (COP17) held November 28 to December 9, 2011 in Durban, South Africa, it underscored Africa’s move towards renewable energy.

Africa, with15 percent of the world’s population, has very little modern sources of energy that could increase the nation’s economy, U.N. Secretary-General Ban Ki-moon said in a November 2011statement. Ban noted that more support was needed to help the estimated 600 million people in Africa who don't have access to affordable energy.

 "Modern sources of energy will decrease dependence on primary commodities, reduce vulnerability to external shocks and increase economic resilience," he said in the statement.

Africa’s largest power producer, Eskom, produces around 60 percent of Africa’s electricity, including approximately 95 percent of South Africa’s power. The utility ranks among the top seven electric utilities in the world in terms of generation capacity. It’s also tops Africa’s list in terms of greenhouse gas emissions, ranking 13th in the world. Eskom has long relied on coal for the bulk of its electricity generation and also operates nuclear, gas turbine, hydroelectric and pumped hydro storage power plants.

But many rural villages across the continent are cut off from the national power grid. Over the years, individual companies have introduced energy sources utilizing solar and wind power, but most of these have been small scale projects targeting rural communities where the grid is unable to reach.

CSP in North Africa

The Moroccan Agency for Solar Energy’s (MASEN) solar roadmap aims to increase its solar that country’s capacity to 2,000MW by 2020. Morocco’s $9 billion Solar Power Plan - launched in 2009 – recently got a boost on November 17, 2011, when the World Bank approved a $297 million loan to finance the country’s Ouarzazate CSP Project. The first phase will have a 500-MW capacity, with 2,000 MW available by 2020. The funds were made available under the bank’s Middle East and North Africa Concentrated Solar Power scale-up program to support the Desertec Industrial Initiative intended to deliver 15 percent of Europe’s electricity by 2050 from solar and other types of plants scattered across N. Africa and the Middle East.

Ouarzazate Concentrated Solar Power Plant Project


Image source: World Bank

The financing deal takes Desertec one step closer to securing the $9 billion required to build the Ouarzazate-based project, which will be the largest in the world when all phases are completed.

Nigeria

Some 100 million of Nigeria's estimated 154 million people do not have access to the electric grid, according to the World Bank’s Energy Sector Management Assistance Program (ESMAP). The Nigerian government privatized electricity in 2005 though the Power Holding Company of Nigeria (PHCN), which has slowly increased capacity to economically depressed areas. But those rural areas which are very remote from the grid or have low consumption potential are not attractive to private investors and may remain powerless for some time, according to the Energy Commission of Nigeria.

But Jigawa, a state on the northern border of Nigeria, has obtained funding from the Japanese government to launch a rural electrification project. With additional funding from the United States Agency for International Development (USAID) and implemented by the U.S.-based Solar Electric Light Fund (SELF), the system in Jigawa powers health centers, schools, and religious centers which can now be open at night. According to SELF, Jigawa residents were also able to open a computer technology trade school and became the first state in northern Nigeria to create a broadband Internet and communications link.

Zambia

Limited energy supply still remains a major constraint to the growth of the Zambian economy while increasing demand for electricity is creating the potential for significant shortages in supply. Zambia aims to increase access by promoting the use of low-cost technologies and decentralized renewable energies. In fact, Zambia’s government has increased its allocation to energy development by almost 50 percent of its 2012 national budget.

The World Bank has signed an agreement with Zambia’s government for a $33 million credit line to support the electrification program, including $19 million for rural grid extensions and installation of small PV systems. Another $10 million from the EU is also providing support for the project.

Electricity access for urban areas stands at only 44 percent, while in rural areas it is at less than 3 percent. Compared to the number of households in the country, only 16.7 percent have access to electricity with the majority of the population relying heavily on charcoal and firewood for heating and cooking. The government, through the creation of the Rural Electrification Authority (REA), is committed to raising the rural population’s access to 15 percent by 2015 and 50 percent by 2030, according to the Sixth National development Plan (SNDP).

While Zambia pushes on to increase access to power in rural areas, it is been hit by an energy deficit by the increase in mining activity that is consuming much more power. The mining sector grew from a 2.5 percent rate in 2008, to 15.2 percent in 2010 and is currently the largest energy consumer, accounting for 68 percent of the total use, followed by the households with 19 percent, government with 7 percent, and agriculture with 2 percent.

South Africa PV Projects

The 500-kW CPV plant that powered the COP17 meeting in Durban was officially inaugurated by South African President, Dr. Jacob. G. Zuma on December 4, 2011. Of all renewable energy sources, solar power has the biggest potential in South Africa. Under the Green Economy Accord reached between the government and the business sector in November 2011, the government pledged to “secure commitments for the supply of 3,725 MW of renewable energy by 2016.” To achieve this goal, about $2.8 billion dollars will be set aside for renewable projects over the next five years with a further $375 million made available for manufacturing of green products and components.


Image source: South African Academy of Engineering

The need for alternative sources of energy in South Africa is vital to meet the growing electricity demand. According to the International Energy Agency, over 90 percent of South Africa’s electricity is generated from coal. According to IEA, South Africa consumed 194 million short tons of coal in 2008, or 91 percent of all the coal consumed on the entire continent. The South African government’s Integrated Resource Plan, introduced early in 2011, calls for increasing the country’s renewable energy to 42 percent by 2030. The government also announced in October 2011 that it will enact an emissions cap and new industry regulations in an effort to spur development of renewable energy and mitigate climate change. With these new regulations looming, several projects have been announced:

- Hot on the heels of announcing financing of Morocco’s 500-MW Ouarzazate CSP project in November 2011,the African Development Bank also announced two loans totaling $365 million to the state-owned electric utility Eskom to finance the utility’s first large-scale renewable wind and solar energy projects. Eskom is developing a 100-MW CSP plant at Upington (part of a planned5-GW South Africa solar park), as well as a 100-MW wind farm near Koekenaap in the Western Cape Province.

- In November 2011, it was also announced that four of South African airports - Tambo International, Bloemfontein, Kimberley, and Upington airports - were selected to be fitted with PV systems that will collectively generate 20MW of electricity.

Ghana

Ghanagenerates most of its electricity from two hydroelectric power plants and two thermal power plants. Although the West African country has the potential to generate electricity from renewable sources such as solar, these sources are not yet exploited to any significant degree. Because of the unreliable nature of the power grid in Ghana, the country suffers frequent power outages and that has prompted some rural areas to develop decentralized forms of electricity.

Ghana’s Ministry of Energy and the Japan International Co-operation Agency signed a memorandum of understanding in December 2011 to accelerate this rural electrification using PVs. The process actually began in February 2008 and stakeholder institutions, such as the Energy Commission, the Ghana Standards Board, and Koforidua Polytechnic, as well as 24 districts, have so far benefited from the project. Through the program some 36 solar PV agents have been trained to help those communities not likely to be connected to the grid to establish PV systems. The ministry is now committed to ensuring access to modern energy services for every community in Ghana by 2020.

Africa’s Future Solar Market

Africa is in a unique position to invest in renewable energy and “leap frog” past the pitfalls associated with further fossil fuel development and the need for massive grid extensions through lessons learned from developed countries. Much of the continent has vast renewable energy resources, including the large-scale solar potential of the Sahara and Kalahari Desert regions.

But Africa faces the multiple challenges of grid access, affordability, multiple renewable energy and government regulatory policies, and inadequate investment. An estimated $27 billion dollars annually is needed to achieve reliable and secure electricity supplies in Africa by 2030, according to Rohitesh Dhawan, a Resource Economist at KPMG. Successful development of renewable energy requires a strong political will, incentives for private sector, and innovative financing.

Currently there are two approaches to solar development throughout Africa. The first strategy is development of large-scale renewable energy plants connected to the grid. Currently, only hydropower and some geothermal plants comprise renewable grid power in Africa. And due to large-scale renewable energy development’s infrastructure cost, such development will require significant investments by the energy sector that may only happen through more public-private partnerships and institutional funding.   

The other strategy is developing small-scale solar systems, which is currently taking hold, with 11,000kWp already in South Africa, and Kenya with 3,600kWp.

At the at 4th Annual International Conference on Energy, Logistics and the Environment held October 13 -14, 2011 in Denver, the theme was A Sustainable Energy Future for Emerging Economies: Focus on Africa. The conference sought to answer one of the most pressing questions in international energy development: “Should emerging and developing nations develop their energy infrastructure from these same traditional energy sources, or are there now other, better options available to them?” The conference agreed that much of Africa may need to overhaul its energy policies to attract both local and foreign investments. One of the main issues discussed was “the difficulties encountered by African companies in raising equity or debt financing for sustainable energy projects from developed countries and how this discourages many energy companies from developing and implementing sustainable energy projects.”

But as African governments put more “solar friendly” regulations and incentives in place, it is clear that more investors will be willing enter Africa’s renewable energy market. For those companies that specialize in individual free-standing, self-contained PV units, the market seems to be currently wide open.

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