Renewables: A Driving Force in Africa’s Power Sector
Renewables are dominating the headlines on Africa’s power sector, with new projects, grants and funding deals announced weekly. The rapid growth of renewables in Africa reflects a global trend — with renewable energy accounting for 61 percent of all new power generation capacity added in 2017, according to the Global Trends in Renewable Energy Investment 2018 report conducted by the United Nations Environment Programme and Bloomberg New Energy Finance.
Driving growth is a steep decline in the cost of renewable projects, making many solar, wind and hydro projects cost competitive with power plants fueled by the traditional oil, coal and gas. In a 2018 report by the International Renewable Energy Agency, the cost of solar PV has decreased by 73 percent since 2010, achieving an average cost of USD 0.10/kWh for projects that were commissioned in 2017.
Another factor for growth is the global commitment to reduce carbon footprints outlined in the Paris Agreement of 2015. Since 2015, funding for renewables has skyrocketed, with the Middle East and Africa seeing asset finance increase by 58 percent from 2017 to 2018 to $7.4 billion, according to the Bloomberg report.
International initiatives to de-risk investments in Africa’s renewable sector are moving ahead, as well. In November, for example, five countries in Africa signed onto the Regional Liquidity Support Facility, a program of the African Trade Insurance Agency, German bank Kfw and the German Federal Ministry for Economic Cooperation and Development. Benin, Burundi, Malawi, Uganda and Zambia have all signed the agreement, which supports small and mid-scale renewable energy Independent Power Producers, with projects ranging in size from 50 MW to 100 MW.
And in December 2018, the UK announced it was providing 100 million British Pounds to fund renewable projects in Sub Saharan Africa, a pledge driven by meeting the commitments of the Paris Agreement signed in 2015 to tackle climate change. The money will go into the Renewable Energy Performance Platform, a program of the European Investment Bank and the United Nations Environment Program, to support renewable projects like wind, solar and hydro on the continent.
While the global community is trending to renewables, key countries in Africa are performing especially well.
Countries to Watch
Rwanda is the only country in Africa to make the top 10 list on Bloomberg’s Climatescope, which ranks countries on their investment conditions for clean energy. Rwanda ranked No. 5 globally, with the report noting Rwanda has had immense success attracting investment to the power sector, going from a 10 percent electrification rate in 2010 with 85MW of power installed to over 44 percent in 2018 with 216 MW of power installed. The country is one of few in Africa that has a generation surplus, but the transmission and distribution sector is lagging behind.
Rwanda saw investment in renewables increase by 8665 percent in 2017 over 2016, according to the Global Trends in Renewable Energy Investment 2018 report.
Rwanda is also home to one of the top renewable projects in Africa, the Rwanda Solar Power Field. Though small, at just 8.5 MW, this project was one of the first successful utility solar projects in Sub-Saharan Africa, coming online in 2015.
Ranking 13th on the Climatescope report, Senegal is a relative newcomer as a top performing power country in Africa. The country’s energy mix is heavily reliant on geothermal, and solar and wind projects are also increasing. The country is currently building West Africa’s first utility-scale wind power project. With a capacity of 157 MW, the Taiba N’Diaye wind farm is also expected to significantly lower power costs in Senegal.
The Climatescope report notes that Senegal boasts a partially liberalized power market, with Independent Power Producers easily operating in power generation. Senegal has set a goal to reach 15 percent renewable energy by 2025, and it is on track to meet its target. Senegal has a current electricity access rate of 64 percent.
One of Africa’s largest economies, Nigeria has been aggressively working to improve its power scenario for decades, and in recent years has turned to renewables to meet at least a portion of its country’s massive power needs. It ranks just behind Senegal on the Climatescope index, coming in at 14th globally.
According to the report, Nigeria has an installed capacity of 13 GW, but only 7.5 GW of installed capacity is actually available for use because of limitations in the transmission and distribution sector. The country is focusing on creating an enabling environment for investment in expanding grid capacity, as well as pursuing off-grid renewables.
A $1.9 million solar mini-grid project launched this year is providing 15,000 people in rural areas with reliable, cheap electricity. The country has a current access rate of 45 percent, but has a target of 75 percent access by 2020 and 90 percent by 2030 with 30 percent of its total electricity from renewable sources.
Kenya, which has been making headlines for its rapid success in creating power capacity, comes in at 16 on the Climatescope report with one of the most liberalized power sectors in Africa. Thirteen Independent Power Producers share the market with the state-owned utility, KenGen, and a vast majority of the country’s energy capacity is derived from geothermal, large hydro and other renewables. The government is also liberalizing the distribution sector, with a mandate for Ketraco to compete with Kenya Power on transmission.
The Lake Turkana Wind Project, the largest wind farm in Africa at 310 MW capacity, was commissioned in November this year and makes up 18 percent of Kenya’s total power supply. Kenya has a current electricity access rate of over 70 percent, and is on track to reach an electricity access rate of 95 percent by 2020.
Namibia comes in on the Climatescope report at 18. The country’s power sector is heavily dominated by hydro power, with the Ruacana hydropower plant making up more than 60 percent of installed capacity.
Namibia has a system open to IPPs, but the state-owned utility Nampower is the only offtaker. The country’s independent electricity regulator, the Electricity Control Board, is seeking to change the country to a modified single buyer model, allowing IPPs to sell power directly to local distributers and to large consumers.
Namibia has made strides in off-grid renewable solutions in recent years, with 55 MW of renewables installed and another 121 MW of renewable power capacity under construction.
The country’s current electricity access rate stands at 45 percent, with a country target of making basic infrastructural facilities available in rural and urban areas by 2030.