How do you bring electricity to 620 million people?

June 15, 2015 — In South Africa, major cities are subject to regular power outages as electric utility Eskom periodically shuts down parts of its distribution system to take the pressure off the aging national grid. Whole areas of Cape Town and Johannesburg are without power for hours at a time, a “last resort” Eskom is forced to resort to on a regular basis.

In Nigeria, the country’s biggest wireless service provider, MTN, has said it may have to shut down its services temporarily due to a shortage of diesel, with electricity production at an all-time low.

Chronic shortages of power such as these affect the whole of sub-Saharan Africa. Almost 620 million people — 60 percent of the region’s population — lack access to electricity, according to the African Development Bank. Even those who in theory have access face very high prices for insufficient and unreliable supplies. Management consulting firm McKinsey goes so far as to say the region is “starved” of electricity.

This lack of power matters: Countries with electrification rates of less than 80 percent consistently have a lower per-capita gross domestic product than other countries, and more power is crucial if Africa is to meet basic development goals. But how the situation improves is important, too. Should electrification focus on off-grid or on-grid solutions? Should it prioritize fossil fuels or renewables? What is the appropriate role for governments, regional entities, the private sector and community initiatives? How these questions are answered will play a big role in the long-term sustainability of the region’s emerging power infrastructure as well as — thanks to implications for fossil fuel use — the well-being of our entire planet. It also will help determine the extent to which sub-Saharan African nations can meet the greenhouse gas targets they set for themselves as part of the United Nations climate negotiations process.

Grid-based electricity is necessary but not sufficient in sub-Saharan Africa, as South Africa electric utility Eskom’s reliance on rolling blackouts indicates. iStock photo © Dalchemist

Grid, Off-Grid, Mini-Grid

Southern Africa leads the way in the region in terms of installed grid-based capacity with 58 gigawatts, though 46 GW of that is in South Africa. West Africa has 20 GW, East Africa has 8.1GW and Central Africa has 4GW — compared with 80GW in the United Kingdom and 1,060 GW in the United States. This lack of grid capacity plays a big part in the region’s electricity shortage.

Obtaining access to electricity for rural sub-Saharan Africans not currently connected to these grids will require decentralized solutions. According to the International Energy Agency, 315 million people in rural areas will gain access to electricity by 2040 — 220 million of these through off-grid and mini-grid solutions, which typically involve producing electricity locally using diesel generators or renewables.

Uvie Ugono, chief executive officer and co-founder of Solynta Energy, which installs solar power kiosks in Nigeria and Ghana, says decentralization is “absolutely the way to go” with the African energy supply, the “only viable alternative” given how poor and inefficient grid infrastructure is.

“It will make trillions of dollars of investment to get [grid infrastructure] up to scratch, with sufficient power generation to meet the needs of the continent,” he says. “Added to that is the terrible state of the transmission infrastructure, which is also not fit for purpose. It would be far easier to simply rebuild the entire infrastructure … than to attempt to repair and increase its capacity.”

“A grid system remains the first best option. Decentralized solutions are really a second-best option in the absence of the former. The distinction is crucial.” — Grant McDermottGrant McDermott, a research scholar at the Norwegian School of Economics, sees the situation a little differently. Large, centralized grids still constitute the most efficient and cost-effective way of delivering electricity in modern economies, he says. Although deficient grid networks have constrained economic growth in many developing countries, that doesn’t mean “the decentralized alternative offers an intrinsically superior solution,” he says. “A grid system remains the first best option. Decentralized solutions are really a second-best option in the absence of the former. The distinction is crucial.”

Energy Ecosystem

Similar debates swirl around fossil fuels and renewables.

For all the talk of renewables, fossil fuels will remain vital.Where power comes from today varies substantially from one country to another. For Sub-Saharan Africa as a whole, according to the World Bank, coal accounts for 38 percent of electricity supply; gas, 31 percent; hydroelectric, 18 percent; and oil, 10 percent. However, gas supplies 62 percent of Nigeria’s electricity, while Kenyan power comes 46 percent from hydroelectric and 19 percent from geothermal. In South Africa, coal accounts for a huge 94 percent of supply, with most of the rest from nuclear.

Fossil fuels will likely continue to play a major part in Africa’s energy future. Though coal is expected to decrease in overall importance in terms of its percentage contribution to power generation, there is potential for around 300 GW more capacity, according to the IEA. Sub-Saharan Africa also has potential for around 400 GW of gas-generated power. New oil and gas discoveries are still occurring regularly on both coasts. For all the talk of renewables, fossil fuels will remain vital.

That said, Tony Seba, ‎a lecturer in entrepreneurship, disruption and clean energy at Stanford University in California predicts that by 2030 oil, gas, coal and nuclear will be redundant sources of energy in a world powered by renewables. Other experts are more circumspect, but it is clear renewables are set to be of increasing importance. Even without active incentives, McKinsey predicts more than 25 percent of total energy across Africa in 2040 will come from clean sources such as geothermal, hydro, solar and wind.

The IEA projects solar energy will power mini-grid and off-grid systems in rural areas in the region by 2040, and account for more than 30 percent of capacity additions between 2030 and 2040. South Africa aptly demonstrates what could be the beginning of a subtle shift in this direction. Heavily reliant on coal, the government is fracking the semi-arid Karoo region in search of more fossil fuel–based capacity. But at the same time the government has also made significant investments — notably through its Renewable Energy Independent Power Produce Procurement, or REIPPP, process — that have landed it a spot on solar research firm Wiki-Solar’s list of top 10 solar producing countries globally. An increase in nuclear capacity is also on the agenda.

The IEA projects solar energy will power mini-grid and off-grid systems in rural areas in the region by 2040, and account for more than 30 percent of capacity additions between 2030 and 2040. For Sachi DeCou, who runs East African solar firm Juabar, it is key to Africa’s energy future.

“It will not be the only solution, of course, but rather an important part of the energy ecosystem that will provide access to millions of people and businesses who currently lack consistent, reliable electricity,” she says.

Investment Needed

The one certainty is that investment is required across sub-Saharan Africa, in all spheres. “If every country builds what it needs, we estimate that the region would require about $490 billion of capital for new generating capacity, plus another $345 billion for transmission and distribution,” McKinsey says.

There have been steps in the right direction, but research firms contend the pace is not fast enough. That said, reform programs are beginning to improve efficiency of grid provision, while governments are slowly removing barriers on investment, such as prohibitive regulatory regimes, capital exchange controls and duties. Grid-based generation capacity in Africa is likely to quadruple by 2040, according to the IEA.

[C]ombined investment in grid and off-grid, fossil fuels and renewables, could speed the electrification of Africa — if adequate collaboration exists. Though the IEA predicts 950 million Africans will gain access to electricity by 2040, it says this is not enough: More than half a billion people will remain cut off. But the agency says this challenge is “surmountable,” with the benefits of success “immense.”

Research firms, individuals and companies working within the energy sector agree that the resources and solutions are there, and that combined investment in grid and off-grid, fossil fuels and renewables, could speed the electrification of Africa — if adequate collaboration exists. The report “Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities,” released earlier this spring by former U.N. secretary general Kofi Annan’s Africa Progress Panel — calls for a tenfold increase in power generation and urges governments to start an “energy revolution” to connect the unconnected and meet the demands of consumers, businesses and investors. Regional “power pools” providing nations a way to share electricity across borders — of which the Southern Africa Power Pool is a reasonably strong example — could be game changers that save US$40 billion by opening the doors to more efficient use of various sources of electricity.

The electrification of Africa is a process that is ongoing, with the results set to be impressive. Slight tweaks in strategy could make sure the lights are turned on even more quickly — and, ultimately, more sustainably.