Africa is on the verge of a photo voltaic power revolution, based on the Worldwide Vitality Affiliation’s (IEA) “Renewables 2022” report, with 7 GW of photo voltaic technology 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 prone to changing into the world’s fossil gasoline outlier?
Picture: Powering New Vitality
The worldwide power 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 may symbolize 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 only 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, nearly 50 instances greater than AFSIA’s African estimate.
These numbers fall into an alarming wider sample highlighted by Bloomberg New Vitality in its “Scaling-Up Renewable Vitality in Africa” report. Whereas the world posted an all-time excessive of $434 billion price of renewables investments in 2021, Africa attracted not more than $2.6 billion – lower than 0.6% of the entire and down 35% , yearly, to the bottom stage since 2011. Africa Reportedly boasts nearly 60% of the world’s photo voltaic assets – plus a whole lot of hydro, wind, and bio power potential – and 17% of the world’s inhabitants.
Actuality bites
It may be uplifting to learn the IEA’s prediction Africa’s photo voltaic fleet will develop by 250% inside 5 years, helped by power safety fears and the decarbonization objectives of main economies that increase international clear power in power. However the actuality on the bottom is that loads must be achieved to draw the $4 billion to $5 billion wanted yearly to succeed in that milestone. If governments and different events don’t overcome the boundaries that stop buyers from the continent, Africa will proceed to compete for photo voltaic funding from the US, Europe, China, and India, corresponding 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 technology capability in Africa, due to the big Benban Photo voltaic Park is Aswan, Egypt; and the Renewable Vitality Impartial Energy Producer Procurement Program (REIPPPP) in South Africa.
These two nations – along with Morocco, Nigeria, Kenya, and Ethiopia – will improve their present 5 GW of photo voltaic to twenty GW by 2027, based on the IEA, with 12 GW anticipated in different African nations, which at present host just one.5 GW between them. .
Obstacles
Why is rising photo voltaic funding in Africa so troublesome? There are three principal obstacles: debt overhang, forex 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, guaranteeing fee ensures can’t be issued.
The worldwide recession anticipated because of the Covid-19 pandemic is adopted by a rise in curiosity on the debt that governments maintain extra strongly; rising power payments because of the struggle in Ukraine; and a dramatic devaluation of the native forex in opposition to 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 almost all African nations will endure a 30% to 40% annual improve. which is a debt servicing price. World Financial institution president David Malpass mentioned, “Elevated liquidity pressures are accompanied by solvency challenges.”
CASH
A pointy appreciation of the greenback in opposition to African currencies final yr has left governments and personal power patrons in a worse place. For instance, the Egyptian pound and the Ghanaian cedi depreciated about 70% in opposition to the greenback final yr. In Nigeria, the price of a greenback might formally be round 450 naira for the time being however the “actual” value paid is about 800 naira, up from 550 naira, or extra, originally of the yr.
Richer nations can keep away from forex shocks by turning to native buyers however Africa depends on international forex. Worldwide buyers are solely taken with revenue 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 gasoline subsidies are holding it again. In most African nations, companies aren’t allowed to buy solar energy from non-utility mills, by means of energy buy agreements, and should use much less versatile contractual agreements corresponding to tools rental phrases.
Internet-metering
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 may be one other large disincentive to deliver 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 boundaries that stop funding, the continent will proceed to fall . It is a danger we can’t take if the world reaches web zero.
Options
So what must be achieved?
Vitality reform, debt restructuring, and forex stability are clearly essential nevertheless it’s the market-based value incentives for photo voltaic and batteries that can 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 enormous power 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 type of measure might open up a marketplace for inexperienced hydrogen in Africa to make use of in microgrids and energy-intensive industries, together with using gasoline cells – and will begin a clear energy that drives the African financial system.
In regards to the creator: Terje Osmundsen is the co-founder and CEO of Oslo-based business and industrial photo voltaic and storage investor Empower New Vitality, 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 creator, and don’t essentially replicate these held by pv journal.
This content material is protected by copyright and will not be reused. If you wish to cooperate with us and need to reuse a few of our content material, please contact: editors@pv-magazine.com.
