Power Sector Challenges

Overcoming Africa’s Power Sector Challenges

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The African Development Bank (AfDB) says over 640 million Africans have no access to power, while the electricity access rate for African countries is just over 40 per cent - the lowest in the world. Hydropower accounts for about a fifth of current capacity but the continent's renewable energy space is showing great potential. How Africa can overcome challenges in the power sector.

Reforms in Africa have been well-intentioned but have not gone according to plan. Even with the noble Power Africa initiative, there has not been a significant increase in electricity capacity in Africa.

According to some experts, the biggest challenge is that most people don’t understand power in Africa, at any point of the value chain. It’s a big learning curve across various touch points on the continent, and the continent is still at the early ages of understanding power generation, transmission, distribution, storage and revenue collection.

The International Renewable Energy Agency (IRENA) commented by stating, “Africa is undergoing a sustained period of economic growth and transformation. Its population is growing rapidly, and its economies are developing and diversifying. In order to be sustained, this growth will need to be fuelled by a massive investment in energy.”

Brian Statham, Chair of Africa Energy Indaba Steering Committee said, “While there is a great deal of talk about what needs to be done, it seems that individual projects are too small to be attractive to traditional sources of funding.  Aggregation of projects will make them of an attractive size, but there will then be many jurisdictional hurdles to overcome.  It will be necessary to re-calibrate the risk associated with these projects and design the funding and governance processes accordingly.  Presently projects seem to be smothered in red tape.”

Africa’s next energy opportunities, the role of utilities, governments and the private sector in Africa’s energy transformation, will be discussed in depth at the ninth annual Africa Energy Indaba conference and its various side events, taking place between the 20th and 24th February 2017 at the Sandton Convention Centre in Johannesburg.

Africa’s energy transformation will not happen organically or spontaneously. It can only be made possible by a concerted effort from continental policymakers and governments to develop enabling frameworks to spur investment and facilitate market development through sound policies and regional cooperation.

The importance of the regulatory framework has been seen through the success of South Africa’s Renewable Energy Power Producer’s Procurement Programme, which was launched in 2012 and provided policy certainty and the right climate for investment to flow into the country’s largely undeveloped renewable energy sector. One of the multiplier effects has been localisation of products and services.

“Africa has the potential and the ability to utilise its renewable resources to fuel the majority of its future growth with renewable energy. Doing so would be economically competitive with other solutions, would unlock economies of scale, and would offer substantial benefits in terms of equitable development, local value creation, energy security, and environmental sustainability,” says an IRENA report.

Africa must not forget that it is in competition with the world for investment and investors will go where it’s most attractive.

There are other sectors and projects in Africa that are open for business, and several PIDA projects that are showing progress in the  Africa Energy sector, some of which will be showcased and discussed at the Africa Energy Indaba in focused energy project discussion forums.  These will provide an opportunity for Africa to join the competitive race for global investment.

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