Africa is on the verge of a photo voltaic vitality revolution, based on the Worldwide Power Affiliation’s (IEA) “Renewables 2022” report, with 7 GW of photo voltaic era capability on the continent set to hit 25 GW by 2027.
A lot for excellent news. Sadly, the IEA couldn’t affirm its good projection. Is the prediction plausible, or is the continent liable to turning into the world’s fossil gas outlier?
Picture: Empowering New Power
The worldwide vitality group estimates Africa put in between 1.9 GW and three.3 GW of photo voltaic final yr, about 0.9% of the worldwide determine estimated to be between 210 GW and 240 GW. If true, that might characterize a landmark yr for Africa, however how dependable is the IEA estimate?
Commerce physique Africa Photo voltaic Business Affiliation (AFSIA) estimates that the 1.8 GW of photo voltaic added on the continent in 2019 will drop to simply 700 MW in 2021 with the latter determine representing round 0.41% of the 168 GW put in throughout world two years in the past. AFSIA expects Africa so as to add 900 MW of photo voltaic final yr, lower than half the quantity introduced by the IEA and fewer than 0.4% of the worldwide whole.
The EU, by comparability, reportedly put in greater than 41 GW of photo voltaic final yr, virtually 50 occasions greater than AFSIA’s African estimate.
These numbers fall into an alarming wider sample highlighted by Bloomberg New Power in its “Scaling-Up Renewable Power in Africa” report. Whereas the world posted an all-time excessive of 4 billion price of renewables investments in 2021, Africa attracted not more than .6 billion – lower than 0.6% of the full and down 35% , yearly, to the bottom stage since 2011. Africa Reportedly boasts virtually 60% of the world’s photo voltaic sources – plus a number of hydro, wind, and bio vitality potential – and 17% of the world’s inhabitants.
The reality will chew
It may be uplifting to learn the IEA’s prediction Africa’s photo voltaic fleet will broaden by 250% inside 5 years, helped by vitality safety fears and the decarbonization objectives of main economies that increase international clear vitality in vitality. However the actuality on the bottom is that lots must be carried out to draw the $4 billion to $5 billion wanted yearly to achieve that milestone. If governments and different events don’t overcome the obstacles that forestall traders from the continent, Africa will proceed to compete for photo voltaic funding from the US, Europe, China, and India, comparable to occurred within the final two years.
A take a look at the IEA statistics exhibits that Egypt and South Africa host about 60% of the photo voltaic era capability in Africa, due to the massive Benban Photo voltaic Park is Aswan, Egypt; and the Renewable Power Unbiased Energy Producer Procurement Program (REIPPPP) in South Africa.
These two international locations – along with Morocco, Nigeria, Kenya, and Ethiopia – will enhance their present 5 GW of photo voltaic to twenty GW by 2027, based on the IEA, with 12 GW anticipated in different African international locations, which at present host only one.5 GW between them. .
Obstacles
Why is rising photo voltaic funding in Africa so troublesome? There are three primary obstacles: debt overhang, foreign money disaster, and regulation.
A lot of the utility scale photo voltaic and wind tasks introduced in Africa have since remained on maintain, ready for government-backed fee ensures for the electrical energy to be generated. Buyers and lenders are demanding such assurance as African utilities are overwhelmed by debt however many governments are additionally in dire straits, making certain fee ensures can’t be issued.
The worldwide recession anticipated because of the Covid-19 pandemic was adopted by rising rates of interest on debt held by deeply leveraged governments; rising vitality payments because of the warfare in Ukraine; and a dramatic devaluation of the native foreign money towards the greenback. Once more, Africa was the worst hit. Public debt has doubled on the continent, from making up 32.7% of GDP in 2010 to 65% final yr and the World Financial institution estimates that the majority African international locations will undergo a 30% to 40% annual enhance. which is a debt service charge. World Financial institution president David Malpass stated, “Elevated liquidity pressures are accompanied by solvency challenges.”
CASH
A pointy appreciation of the greenback towards African currencies final yr has left governments and personal vitality consumers in a worse place. For instance, the Egyptian pound and the Ghanaian cedi depreciated about 70% towards the greenback final yr. In Nigeria, the price of a greenback could formally be round 450 naira for the time being however the “actual” value paid is about 800 naira, up from 550 naira, or extra, in the beginning of the yr.
Richer international locations can keep away from foreign money shocks by turning to native traders however Africa depends on international foreign money. Worldwide traders are solely eager about earnings in {dollars} or euros, in any other case the price of capital could be prohibitive and unpredictable.
Industrial and industrial photo voltaic has the most important untapped potential for PV in Africa however regulation and fossil gas subsidies are holding it again. In most African international locations, companies usually are not allowed to buy solar energy from non-utility mills, by means of energy buy agreements, and should use much less versatile contractual agreements comparable to gear lease phrases.
Internet-meter
The absence of net-metering preparations, to compensate solar energy mills for the surplus electrical energy they inject into the grid, is one other deterrent to PV funding.
With many governments persevering with to subsidize fossil fuels by offering artificially low-cost electrical energy tariffs, there’s one other large disincentive to again photo voltaic. In Egypt, for instance, diesel prices about EGP 7.20 per liter ($0.24), about 20% of the worth it instructions in Europe.
Africa clearly has the potential for turbo-charged development in renewables, as projected by the IEA, but when governments and worldwide companions don’t handle the obstacles that forestall funding, the continent will proceed to fall . It is a danger we can not take if the world reaches web zero.
Options
So what must be carried out?
Power reform, debt restructuring, and foreign money stability are clearly essential however it’s the market-based value incentives for photo voltaic and batteries that may make an actual distinction. This might come within the type of a carbon tax, or tradable carbon credit for clear electrical energy mills, and would assist the enterprise case of huge vitality customers and microgrids that at present depend on diesel.
Going ahead, there’s a carbon offset choice – the place main polluters can offset their carbon footprint utilizing funds to fund decentralized photo voltaic in Africa. That form of measure might open up a marketplace for inexperienced hydrogen in Africa to make use of in microgrids and energy-intensive industries, together with the usage of gas cells – and will begin a clear energy that drives the African economic system.
In regards to the writer: Terje Osmundsen is the co-founder and CEO of Oslo-based industrial and industrial photo voltaic and storage investor Empower New Power, which focuses on the set up of small and medium-sized methods in Africa.
The views and opinions expressed on this article are these of the writer, and don’t essentially mirror these held by pv journal.
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