The transformation – and the profits – that could come from ‘powering Africa’ have caught the imagination of the donor community, private investors and African governments alike.
After all, Africa’s energy sources are many and diverse. From natural gas to coal, renewables or even diesel, there are more than sufficient local sources to meet the continent’s needs.
And as the continent experiences the kind of economic growth that G7 nations like France and Germany can only dream about, to fully realise its growth potential Africa needs energy much more of it – and the infrastructure to ensure that it is delivered affordably, safely and consistently to households as well as industry.
At the moment, however, the infrastructure is not fit-for-purpose. “Across Africa investors joke about living in a ‘bring-your-own-infrastructure’ continent,” says an article in the Economist. “Firms must provide independent generators, water purification and even sewage treatment when building a factory or hotel. Of these the costliest is often power.”
And the amount of power generated also falls woefully short of what is needed. The 48 countries of sub-Saharan Africa (with a total population of 800 million) generated 90GW in 2012; that’s roughly the same amount of power as Spain, a country of 45 million. Two-thirds of the sub-Saharan population live with electricity, and the International Energy Agency’s (IEA) Africa Outlook reports that “electricity consumption per capita is, on average, less than that needed to power a 50-watt light bulb continuously.”
The social and economic costs of these failures are high. Introducing its Africa report last month, IEA’s executive director, Maria van der Hoven said: “A major crisis continues within our global system; it’s an energy poverty crisis. At [its] epicentre is sub-Saharan Africa.”
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But now that may all be about to change. A 2010 report (pdf) from the African Development Bank states: “The pipeline of clean energy projects is long and growing – hydro, wind, solar, even geothermal. All sources of energy have to be tapped, doing it right of course, ensuring all safeguards, social and environmental are respected.” And in 2013, the US became the highest profile donor partner, when President Barack Obama unveiled the Power Africa project that aims to “double the number of people with access to power in sub-Saharan Africa.”
These investments are leading to large scale projects all over the continent. Fossil fuels still attract most of the investment, with more than 500 companies currently exploring for oil and gas. Africa is second only to South America with proven oil reserves growing at a rate of 2.8% every year (pdf), most of that growth is in Libya, Nigeria, Angola and Algeria.
But interest in renewable energy is also a growing trend. The Grand Inga dam in the Democratic Republic of Congo and the Ashegoda windfarm in Ethiopia, are just two of the new developments that are ambitious both in scale and scope. The dam has a potential to generate 40,000MW of electricity and the windfarm has a capacity of 120MW. Ethiopia is seen as a leader in clean energy infrastructure, generating the bulk of its energy needs from hydropower but also investing in wind, solar and geothermal.
Still, hese are small beginnings. The World Bank estimates that 93% of Africa’s economically viable hydropower potential remains unexploited. Much of that is located in the Democratic Republic of Congo, Cameroon, Angola, Madagascar, Gabon, Mozambique, and Nigeria. A Greenpeace South Africa report found that misconceptions about what renewable energy can achieve and a lack of political will was limiting investment in clean energy infrastructure there.
And concerns about the growth in energy infrastructure include accusations of unfair acquisition of land, and anxieties about whether local communities will indeed benefit from the increased energy production. According to van der Hoven, investments in energy sector since 2000 have so far focused primarily on the development of resources for export.
Minimising the risk of graft is another challenge. Petter Matthews, director of the Construction Sector Transparency Initiative International Secretariat explained: “A study has shown that the decision-making process for … large energy projects in sub-Saharan Africa is often characterised by poor project appraisal systems, a high degree of informality and an absence of effective management. They are also often subject to undue political influence for personal or political gain. Where this occurs there is a high risk for corruption.”
Matthews added: “Mismanagement and corruption during the project selection, design and budgeting process has the biggest impact on reducing the potential socio-economic benefits to society. If the wrong project or a ‘white elephant’ is selected, then the benefits are zero.”
There is no doubt that Africa is going through an exciting period of transformation. But to capture all these gains so much more needs to be done. A good place to start would be developing the “soft infrastructure” that will underpin the performance of Africa’s energy sector. This involves complex legal and regulatory reforms, power planning and support for enhanced regional trade. It is the grunt work, the unsexy stuff that requires data, transparency and technocrats. But without it there is a genuine risk that the much-needed infrastructure will just be white elephants that deface the African landscape, a painful reminder of what could have been.
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